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EFFECTS OF MANAGERIAL PERCEPTIONS OF
CULTURAL CHALLENGES AND JOB CHANGES ON
MOTIVATIONAL WORK RELATED OUTCOMES
IN POST MERGER INTEGRATION STAGE OF
CROSS BORDER MERGERS AND ACQUISITIONS:
A FOCUS ON CULTURAL FRICTION
PhD dissertation
Muriel Durand
Aarhus BSS Aarhus University
Department of Management 2018
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Abstract
Danish Udviklingen af M & A er forbundet med et meget interessant paradoks. På den ene side, er det
i stigende grad et meget populært fænomen i organisationsudvikling, men på den anden side, udvises en meget stor fejlmargin. De mange mislykkede M & A tyder på, at hverken forskere eller praktikere, har en tiltrækkelig grundig forståelse af de variable, som indgår i M & A processerne og de komplekse indbyrdes forbindelser. Fusions-forskningen består stadig af markeds- og finansstudier, hvor strategier er enten ”outcomes” eller forklarende variable. Fusioner påvirker bestemt mennesker, den menneskelige side, af det centrale element i ledelsen af post fusions integrationen. (PMI) Forskningen af medarbejders rolle i resultaterne af tværnationale fusioners resultater, er ofte marginaliseret, til trods for nylige studiers erkendelse af det potentielle bidrag, som kommer fra både HR praktikker og HR aspekters vigtighed i M & A, specielt når M & A går over landegrænser.
Med disse faktuelle forhold in mente, er det dette ph.d. projekts overordnede formål at udforske ledelsesopfattelser af jobforandringer og tværkulturelle interaktioner, i post fusions integrations stadiet. Desuden foregår der en undersøgelse af, hvorledes disse opfattelser påvirker følgerne af arbejdsrelaterede forhold, så som arbejdsmotivation, stress på arbejdet, jobforandring og følelsesmæssige ”commitments” til arbejdet. Fem forskellige essays udgør dette forskningsprojekt. Projektet har givet mig et nyt syn på sociokulturel integration, ved at undersøge ”cultural frictions” begrebet på individniveau blandt aktører, som er frontliners. Der er anvendt en ”grounded methodology”, med anvendelse af CI ”critical incident” teknikken, (Flanagan, 1954) i undersøgelsen af lederes opfattelse af kultur ”friction” i PMI stadier. Dette er kernen i hele projektet. Den første del af afhandlingsprojektet tilsigter 2 formål, dels til fremme af forståelsen af socio-kulturelle dynamikker i PMI, dels til at vise anvendelse af CI metodologien, for at få adgang til ledelsesopfattelser, følelsesbetonede forhold(emotion) og stress i post fusioner. Der er gjort nogle interessante opdagelser, som lægger til de typiske M&A undersøgelsesresultater. Resultaterne strider i mod hovedstrømningerne i M&A forskningsfeltet. Resultaterne understreger positive opfattelser og følelser hos lederne, som er eksperter i tværnationale M&As. Disse resultater bidrager teoretisk til den menneskelige side, af M&A og følelserne i organisationsforandringer. Ved at ”dyrke” følelser og perceptioner, kan ledelsen ”facilitere” integrationsprocessen. Ph.d. projektets anden del fokuserer på udvikling af en måling af opfattelse af kulturel ”friction”. Der anvendes ”kritiske hændelser”, som stammer fra anvendelse af ”grounded methodoly”. I tværkulturelle M&A feltstudier er der en afhængighed af tilgængelige målemetoder, hvilket forhindrer forskere i at udvikle deres egen forståelse af, hvordan kulturforskelle påvirker det IB fænomen som interesserer os. Dette instrument, som er udviklet på en videnskabelig og rigorøs måde, åbner op for et mulig ”grounded” bidrag til frictions begrebet. I bogkapitlet ses, at ”face concerns” er en mulig del af den specifikke kontekst, for tværnationale M & As. Dette resultat kommer efter en operationaliseret måling og validering heraf. Den opfattede friktion, som resulterer fra ”face,” er særligt følsomt, når respondenternes kulturelle baggrund angår forskellig arbejdsværdier og sædvaner. Ledere, som ønsker at forbedre deres sensitivitet i forhold til at ”save face” overfor deres Asiatiske modparter, kunne formindske den opfattede friktion i IB møder og derfor formindske ubehaget, som stammer fra et højt niveau af opfattet friktion.
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At lære at bevare/give ansigt kunne blive et virksomheds- og socialt værktøj, som ledere ville kunne bruge til deres fordel. Det sidste del af afhandlingsprojektet drejer sig om en spørgeskemaundersøgelse, som foretages blandt en speciel udvalgt population af mellemledere. Der undersøges kulturfriktion, global mindset og post merger identifikation, som forudsætninger for motivationsskabte arbejdsresultater under PMI. Formålet er at undersøge hvordan opfattelser (perceptioner) af kultur friction (cultural friction) og jobforandringer, påvirker motivations baserede arbejdsresultater i en survey undersøgelse, som anvender forudsætninger fra ”job characteristic” modellen (JCM). (Hackman & Oldham, 1981). Mine hypoteser finder delvist støtte i resultaterne. De sætter fokus på specifikke forudsætninger for arbejde, identifikation efter fusionen, kultur friktion og global mindset og motiveringsbaseret arbejdsresultater. Det første markante resultat er ikke i fuld overensstemmelse med JCM modellen. JCM modellen viste, at både tilfredsstillelse af behov for autonomi og feedback er forudsætning for individers motivation og arbejdsudbytte. Selv om JCM har betydning under andre omgivelser, er den ikke tilstrækkelig til at forklare effekterne af job forandringerne i en tværkulturel M & A. Det andet markante resultat er relateret til den stærke sammenhæng mellem most fusions identifikation af motivationsrelaterede resultater, som er blevet påvist tidligere (Mirc, 2014). I denne undersøgelse, sker post fusions identifikation i forgrunden. Det tredje markante resultat er, at undersøgelsen viser en positiv relation mellem kultur friktion, som den opfattes i M & A og motivations bestemte arbejdsresultater. Disse resultater passer med mine resultater fra undersøgelsen, som anvender en ”grounded” tilgang. Dette er afhandlingsprojektet hovedresultat. Kultur perspektivet i tværkulturelle M & As understreger ofte negative effekter fra relaterede emner på resultaterne i PMI fasen. Dette gælder især fra den menneskelige side (Stahl & Tung, 2014). English
Mergers and Acquisitions (M&As) lead to a very interesting paradox being the most popular phenomenon in the development of organizations with a number of M&As still on the rise, while exhibiting such high failure rates. Unsuccessful results of M&As suggest neither scholars nor practitioners have a thorough understanding of the variables involved in the M&A process and their complex interrelationships. The merger literature, however, is still dominated by financial and market strategies as either outcomes or explicative variables. Mergers definitely affect people, leading to conclude that the human side is at the core of post merger integration (PMI) management. Despite the acknowledgment in more recent studies of the potential contribution of human resources practices, and despite recognition of the importance of human resource aspects of M&As, especially when they cross borders, research on the role of people on cross border acquisitions performance is often placed in a marginal position. According to those facts, the overall purposes of this PhD research project is to explore managerial perceptions of job changes and cross-cultural interactions in the post merger integration stage of cross border M&As, and to study how these perceptions affect motivational work related outcomes such as job stress, intention to quit and work affective commitment. Five distinct essays compose this research project, guiding me to getting fresh eyes on the socio cultural integration perspective, exploring the cultural friction concept at individual level from the actors who are at the frontlines. Using grounded methodology and critical incident technique (CIT) (Flanagan, 1954) to explore managerial perceptions of cultural friction in PMI stage, as a core concept of the whole project, two purposes composed the second essay of the dissertation to further our understanding of socio cultural dynamics in PMI using grounded approach; secondly, to show usage of CI methodology to access managerial perceptions, emotion, and stress in a post merger setting. Interesting findings beyond typical M&As studies provide a view that complements the mainstream of M&A research tradition. Findings emphasize positive perceptions and emotions among managers, experts of cross border M&As. These findings contribute theoretically to the human side of M&A and emotions in organizational changes. Regarding managerial implications, if managers can “cultivate”
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positive emotions/perceptions, integration process can be facilitated. The third essay of the dissertation is focused on the development of a measurement to assess the perception of cultural friction, using the critical incidents (CI) that have emerged from the grounded exploratory study. Cross border M&As field studies rely heavily on readily available measures preventing researchers to provide their own understanding of how cultural differences impact the IB phenomenon of interest. The instrument developed in a scientific and rigorous way opens up a new door for a possible grounded contribution to the friction concept. Next, based on the scale development and validation, a chapter (fourth essay) is added as a magnifying glass of the previous essay on cultural friction with a specific focus. It reveals “face concerns” as one possible component of perceived friction in the specific context of cross border M&As in a non-Asian setting. Perceived friction as a result of face is a particularly sensitive aspect when the cultural backgrounds of the actors involve different work values and practices. This is a novelty since the background of the respondents was from western cultures. Managers with anglo-saxon background, who could enhance their sensitivity toward “saving face” with their Asian counterparts, might reduce perceived friction in IB encounters and consequently, reduce discomfort resulting from a high level of perceived friction. Learning about saving/giving face could be a business and social tool, which managers can use to their advantage. Finally, the last section is a survey study with carefully selected population of middle managers, on cultural friction, global mindset, and post merger identification as antecedents of motivational work outcomes during PMI. The purpose is to examine how perception of cultural friction and job changes could influence motivational work outcomes in a field survey selecting work antecedents from the Job Characteristic Model (JCM) (Hackman & Oldham, 1981). Findings partially support my hypotheses and highlight specific relationships between work antecedents, post merger identification, cultural friction, global mindset and motivational work outcomes. The first significant result is not fully consistent with the JCM model, which showed that both the satisfaction of the needs for autonomy and feedback are antecedents of motivational work outcomes for individuals. Despite the importance of the JCM in other contexts, it might not be adequate to explain the effects of job changes in the context of cross border M&As. The second significant result is related to the strong relationship of post merger identification and motivational work outcomes, already highlighted (Mirc, 2014), yet in this study post-merger identification appears in the foreground. The third significant result shows a positive relationship of the cultural friction perceived in cross border M&A on motivational work outcomes, consistent with the findings I highlighted from the grounded approach (essay 2). This is a major contribution of the whole dissertation, since the main stream of the cultural perspective in cross border M&As in PMI stage often emphasizes the negative effects of cultural issues on M&A performance, and especially from the human side (Stahl & Tung, 2014).
Keywords: Culture differences, Cross Border Mergers and Acquisitions, Post Merger
Integration, Cultural Friction, Critical Incident, Job Characteristics Model, Work
commitment, Organizational identification
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Table of Contents
SUMMARIES........................................................................................................................... 3
ACKNOWLEDGEMENTS................................................................................................... 11
1. INTRODUCTION.............................................................................................................. 13
1.1 CONTEXT AND OVERALL PURPOSE OF THE PHD RESEARCH PROJECT ...........................
1.2 INTENDED CONTRIBUTIONS ...................................................................................... 14
1.3 RESEARCH GAP......................................................................................................... 15
1.4 RESEARCH QUESTIONS.............................................................................................. 16
1.5 STRUCTURE OF THE THESIS....................................................................................... 17
2. A REVIEW OF LITERATURE ON MERGERS AND ACQUISITIONS .................. 18
2.1 MERGERS AND ACQUISITIONS .......................................................................................
2.2 INTERNATIONAL MERGERS AND ACQUISITIONS .......................................................... 19
2.3 POST MERGER INTEGRATION STAGE .......................................................................... 21
2.4 THE SOCIO-CULTURAL PERSPECTIVE IN POST MERGER INTEGRATION............................
2.4.1 Organizational level.................................................................................................... 2.4.2 National level .......................................................................................................... 22
3. CULTURE DISTANCES ................................................................................................. 24
3.1 FROM DISTANCE ROUTE TO FRICTION: WHICH CONCEPTUALIZATION FOR WHICH
OPERATIONALIZATION? ............................................................................................................. 25
3.1.1 Level of analysis ...................................................................................................... 26 3.1.2 Challenges of conceptualization and measurements of culture distance................ 27
National culture distance ................................................................................................ Psychic distance ........................................................................................................... 29
Insitutional distance ..................................................................................................... 34 3.1.3 Individual level focus ..................................................................................................
3.2 THE UNCONVINCING ROUTE OF CULTURAL DISTANCE FOR STUDYING MANAGERS IN PMI:
MOVING TO CULTURAL FRICTION ................................................................................................. 35
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4. CONSIDERING THE HUMAN SIDE OF M&AS ......................................................... 38
4.1 HUMAN SIDE AND PMI .................................................................................................
4.2 ROLE OF MIDDLE MANAGERS ................................................................................... 39
5. CHANGES AND MOTIVATION .................................................................................... 40
6. JOB CHARACTERISTICS MODEL .............................................................................. 41
6.1 JOB CHANGES & JOB CHARACTERISTICS MODEL .............................................................
6.1.1 Work autonomy and cross cultural research .......................................................... 43 6.1.2 Need for autonomy in cross border acquisitions .................................................... 44
6.2 NEED FOR FEEDBACK AND CROSS CULTURAL RESEARCH.......................................... 45
6.3 LIMITS OF THE MODEL .............................................................................................. 46
7. CULTURE AND PERCEPTIONS ................................................................................... 47
8. SOCIAL IDENTITY THEORY AND POST MERGER IDENTIFICATION ............ 51
8.1 SOCIAL IDENTITY THEORY .............................................................................................
8.2 SIT AND MERGERS.................................................................................................... 52
8.3 SIT AND CROSS BORDER MERGERS .................................................................................
8.4 IDENTIFICATION TO THE ORGANIZATION IN PMI......................................................... 53
9. CHOICE OF THE METHODOLOGY............................................................................ 55
9.1 CRITICAL INCIDENT TECHNIQUE ............................................................................... 56
9.1.1 Critical incident technique background...................................................................... 10. SUMMARY OF THE ESSAYS ...................................................................................... 57
10.1 ESSAY 2: EXPLORATORY STUDY................................................................................ 59
10.2 ESSAY 3: METHODOLGICAL ESSAY ........................................................................... 60
10.3 ESSAY 4: A FOCUS ON ONE COMPONENT OF FRICTION ............................................. 62
10.4 ESSAY 5:EMPIRICAL STUDY .........................................................................................
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APPENDICES: TABLES AND FIGURES ESSAY 1......................................................... 66
REFERENCES....................................................................................................................... 70
ESSAY 2: EMPLOYING CRITICAL INCIDENT TECHNIQUE AS ONE WAY TO DISPLAY THE HIDDEN ASPECTS OF POST-MERGER INTEGRATION ............... 83 ESSAY 3: POST MERGER CULTURAL FRICTION: A NEW APPROACH TO MEASUREMENT ............................................................................................................... 133
ESSAY 4: CULTURAL FRICTIONS IN POST-MERGER INTEGRATION PROCESSES: A VIEW ON ‘FACE’ WHEN DEALING WITH ASIAN COUNTERPARTS .............................................................................................................. 171
ESSAY 5: PERCEPTIONS OF MIDDLE MANAGERS IN CROSS-BORDER ACQUISITIONS:CULTURAL FRICTION, GLOBAL MINDSET, AND POST MERGER IDENTIFICATION AS ANTECEDENTS OF MOTIVATIONAL WORK OUTCOMES DURING POST-MERGER INTEGRATION?......................................... 181
OVERALL CONCLUSION................................................................................................ 233
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Acknowledgements
I cannot express enough how thankful I have been for the huge opportunity to achieve a PhD in International Business and be able to defend it at the University of Aarhus, under the supervision of Mikael Sondergaard. It is an honor to present these research works, and I feel highly privileged. I met Mikael during a Doctoral workshop in Vienna, in 2009. He was the discussant on my project presentation and he held his role with great professional conscience. He advised me on paper’s discussion on the topic of Distance and encouraged me to write my dissertation in Denmark, in English. I want to thank him again for this good advice. He was the first to believe I had the skills to make it. Thanks for your great confidence in me Mikael, and all the steps you encouraged me to climb. Beyond being a super PhD supervisor, Mikael has been a friend, and my Danish family, providing me a place where I could reenergize along with Ulla, who was sometimes my confidant. The PhD journey is a very challenging one. Mikael believed in me since the beginning and shaped me as a researcher. Despite the ups and downs, I am now proud to have been able to finally make it. Thank for your time, always answering my questions, addressing my doubts putting me back on the right path even though I was your clandestine PhD student as you liked to repeat so many times. Thank you for your guidance, which enables me to climb each of the stages slowly but surely. I would also like to address my gratitude to: Shlomo Tarba for your encouragements and advice in developing my writing skills. All my gratitude to you Shlomo for helping in the IBR publication because you were so willing to help young Academics to publish! I will always remember your credo “PhD, better late than never!” to encourage me in finishing the PhD. To Mark Peterson, who provided comments on the critical incidents and the methodology itself. I always appreciated the fascinating courses during GCCM master classes! I am grateful for the opportunity to meet Philippe Very and Gunter Stahl at EGOS Lisbon in 2012 to work on my first collective paper, leading to a publication in the Thunderbird International Business Review. I want to thank Dr. Roger Baumgarte, “Tonton Roger” for my children. Without whom I would have never discovered the passionate field of cross-cultural psychology, which is linked to my former background in cognitive and industrial psychology. To Marc Ohana who was the first to suggest I should go for a PhD in order to continue in the academic field, and advised me on methodological issues on several occasions. To the Head Country Director of the oil industry company for the opportunity to interviewing managers to conduct the first study.
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My closest friends, which I can count on one hand: Béatrice, Christine, Florence, Isabelle and Karine. The ESC Troyes and my close research colleagues: Allane, Bruno, Christina, Damien, David, Didier, Gabriel, Hanane, Julien, Pierre, René, Simona, Stéphanie and Tatiana, and Cuiling from Kedge BS. My mother would be so proud of me if she was able to remember all the times I shared my thoughts and doubts on this project with her. I want to thank her for having given me the gifts of strength and the perseverance. Finally, above all, to my beloved kids who give meaning to this accomplishment every single day. Thanks to God.
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1. INTRODUCTION
1.1 CONTEXT PURPOSE AND STRUCTURE OF THE PHD RESEARCH PROJECT
Globalization and cross border business consolidations gave birth to an interest of a
cross-cultural research project on cross border marriages. The overall purpose of this PhD
research work is to examine managerial perceptions of cultural challenges and job changes in
cross border mergers and acquisitions1 settings, answering the question “To what degree
cultural background affects middle managers’ perceptions of job changes, in Post Merger
Integration (PMI) settings”?
I initiated my research project looking at the “cultural distance” theoretical framework
and its proxies. As difficulties and controversies emerge from the use of the construct in
International Business (IB), I decided to go into the field to ask people who have experience
in cross border mergers and acquisitions (CBM&As) what they have to teach us that we don’t
know yet. Going back to the CBM&A field, my approach was then scientific using grounded
methodology to collect information. I could develop a series of critical incidents based on real
work experiences of those experts on the frontlines. This exploratory study leads me to get
fresh eyes on cultural distance concepts as managers themselves mentioned friction in regard
to their own experiences of misunderstanding/conflict when interacting with their foreign
counterparts resulting from the CBM&A. Then, I supported the value of the critical incidents
at different stages of a tool development, from sorting process to lab survey with IB students,
re tests, lab tests and final test with target population (middle managers), confirming a
measurement of cultural friction with a specific facet on face concerns. Finally I used the
instrument developed in a field survey to test the effect of cultural friction on motivational
work outcomes in CBM&As settings (see Table 2 for chronological steps of the PhD research
project).
Because the concept of cultural distance doesn’t seem to fully explain mergers
integration processes and behaviors (and was it actually supposed to?), I moved toward the
1 In this dissertation the terms “mergers” or “acquisitions” are used interchangeably despite the author recognize although they share similarities they are quite different. In an acquisition, the control of assets is transferred from one company to another, in contrast to a merger in which assets of previously separate firms are combined onto a single new entity (Ghauri & Buckley, 2003).
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“friction” concept. Moreover, a lack of convergence of both the outcomes and the relevance
of the concepts in the CBM&As field for studying individual level rather than organizational
or national ones confirm this orientation toward the friction concept. In the first part, I
introduced the background of the whole research project, and the rationale for the necessity of
getting fresh eyes on cultural distance concepts. This constitutes the first essay of the
dissertation.
The second essay is built on an exploratory stage. I looked at the interactions between
peoples, and the managerial perceptions of changes (job and cultural) resulting from
CBM&As in an oil industry field. Cultural friction appears more relevant in this context of
research referring more about contacts between individuals interacting together, potentially
leading to conflicts. I used the Critical Incident Technique (Flanagan, 1954) to examine those
conflicts, issues, or dilemmas (Durand, 2016)2. Third, an instrument was developed from the
qualitative grounded approach and tested in order to confirm the critical incidents measuring
at best cultural friction in CBM&As from a new lens. Fourth, this chapter is added as a
magnifying glass of the previous instrumental essay with a specific focus on face concerns
when dealing with Asian counterparts3. Finally, the fifth essay constitutes the field survey,
integrating cultural friction in a model, applying the validated instrument to a sample of 142
middle managers having at least one CBM&A experience. I looked at the relationships
between those managerial perceptions of cultural friction and some work related indicators
such as commitment, intention to quit and stress. Based on the Job Characteristics Model
(JCM) of work motivation (Hackman & Oldham, 1976; 1980) and social identity theory (SIT)
(Tajfel &Turner, 1986) I propose to integrate organizational identification (to the new merged
company), cultural friction and global mindset as complementary variables.
1.2 INTENDED CONTRIBUTIONS
I expect to make academic and managerial contributions to the M&A literature,
getting complementary understanding of the integration process underlying the potential
2 This is the original version of a published work : Durand, M. (2016). Employing critical incident technique as one way to display the hidden aspects of post-merger integration. International Business Review, 25(1), 87-102. 3 This part has been published as a book chapter: Durand, M. (2017). « Cultural frictions in Post Merger Integration processes: A view on face when dealing with Asian counterparts » in Fuchs M., Henn S., Franz M., Mudambi R. Managing Culture and Interspace in Cross-border Investments: Building a Global Company. Routledge
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success of CBM&As, highlighting the role of middle managers and their perceptions of
cultural challenges, job changes and their identification to the new company in this process.
By developing a novel perspective to operationalize the complexity of cross-cultural
interactions at the inter-individual level, I offer one of the possible answers to precedent calls
to focus on managers’ actual problems rather than researcher’s preconceived solutions
(Harzing & Pudelko, 2016; Stahl & Tung, 2015). This research project presents one
alternative when looking at managers’ challenges in CBM&As regarding their experience,
and how they overcome challenges. This answer is not a claim to abandon country-level
cultural values research, but to re-think approaches, and find ways to incorporate for more
fine-grained and complementary culture approaches. It seeks to make a distinct contribution
beyond the existing cultural distance study focusing on managers on the frontlines in PMI.
Beyond academic contributions to the CBM&A literature, this PhD research project
attempts to make researchers able to make experts’ experiences to be applicable more broadly
to managers’ reactions in cross-border alliances; to anticipate and to help managers
understand the cultural orientations issues resulting from the upheaval and the changes
inherent to their cross border acquisition experiences.
1.3 RESEARCH GAPS
Although acquisition studies have increasingly begun to include cultural aspects
(Cartwright & McCarthy, 2005), I identify four research gaps within the cultural perspective
on cross border mergers and acquisitions (CBM&As):
1/ Lack of understanding about the mechanisms in post merger integration stage (Stahl
& Voigt 2005; Teerikangas & Very, 2006): Unsuccessful results of M&As suggest “neither
scholars nor practitioners have a thorough understanding of the variables involved in the
M&A process and their complex interrelationships” (Gomes, Angwin, Weber & Tarba, 2013)
2/ Lack of convergence of distance concept (Harzing, 2004; Tung & Stahl, 2015)
3/ Lack of research at individual level in CBM&As despite mergers affect people
(Sinkovics & Kusstatscher, 2011)
4/ Lack of research on middle managers in CBM&As: limited and insufficient
understanding on how job changes may result in job outcomes and motivational process in
CBM&As, especially for middle management in PMI (Rouzies, 2011; Weber & Drori, 2011)
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1.4 RESEARCH QUESTIONS
For the overall purpose of the PhD dissertation, the following questions are addressed:
1/ Why does the concept of cultural distance does not fully explain post integration
stage in CBM&As?
2/ Are there alternative ways to measure cultural differences in the context of
CBM&As?
3/ How do these perceptions of changes and cultural challenges affect work
motivation outcomes?
1.5 STRUCTURE OF THE THESIS
The whole dissertation is articulated in the following manner (see Figure 1).
Figure 1: PhD structure: compilation of five essays
CULTURAL FRICTION (Shenkar,
2001)
1/From Cultural Distance to
Cultural Friction
2/Critical incidents to explore cultural
friction (exploratory study)
3/An index of perception of
cultural friction (instrumental
study) 4/ A focus on « face » as one component of
perceived cultural friction
5/Cultural Friction: disruptive or synergistic? (field study)
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In the next section, I develop (see Figure 2) how I intended to fill those gaps and to
answer the research questions. By presenting the literature review on mergers and
acquisitions, I highlight post merger integration stage difficulties and complexities preventing
scholars for a thorough understanding of the variables involved in the M&A process and their
complex interrelationships (gap 1). Then, I introduce the theoretical framework related to
cultural distance and its limits, not fully explaining post integration stage in CBM&As (gap
2). These points allow me to switch to the culture friction concept, and the interest of studying
individual level perceptions (gap 3). In a following part, I point out the focus on the human
side of CBM&As and the role of middle managers (gap 4). I finally outline the method used
as a starting point, be it the critical incident technique (CIT), to study how perceptions of
changes and cultural challenges affect work motivation outcomes (field study). In a last
section I summarize the different essays composing the dissertation (see figure 6).
Figure 2: Structure of the following section,
Introducing the whole PhD research project
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2. A REVIEW OF LITERATURE ON MERGERS AND ACQUISITIONS
2.1 MERGERS AND ACQUISITIONS
Due to globalization, technological change, and deregulation, mergers are increasingly
being used to seek competitive advantage by combining existing companies (Marks & Mirvis,
1992). The degree of success or failure is usually defined in terms of shareholder value,
financial performance (e.g. return on investment), resale, or expert judgments.
Mergers and Acquisitions (M&As) lead to a very interesting paradox being the most
popular phenomenon in the development of organizations with a number of M&As still on the
rise while exhibiting such high failure rates (King, Dalton, Daily & Covin, 2004; Tarba,
2013). Indeed, studies continue to report high failure rates, ranging from 80 percent (KPMG,
2000) to 50 percent (Buono et al., 2002; HBR, 2015). Traditionally, mergers are considered to
fail due to rational economic reasons (e.g. poor strategic fit). Yet a recent meta‐analytic study
of merger performance found that the most commonly studied variables in the finance and
strategy literature offered no significant explanation of merger outcomes (King et al., 2004;
Gomes, Weber, Brown & Tarba, 2011), concluding the unsuccessful results of M&As suggest
‘‘neither scholars nor practitioners have a thorough understanding of the variables involved in
the M&A process and their complex interrelationships’’ (Gomes, Angwin, Weber & Tarba,
2013, p. 30).
The merger literature, however, is still dominated by financial and market strategies as
either outcomes or explicative variables. Cartwright (2005) reported that only about 5 percent
of publications listed in all the major management and psychology databases are related to the
psychological aspects of mergers – and even fewer related to empirical studies. She concludes
in her review “[…] there are still many psychological variables, such as leadership,
motivation, commitment, consultation, trust, and readiness for change, which have been little
investigated in M&A settings” (2005, p. 28).
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2.2 INTERNATIONAL MERGERS AND ACQUISITIONS
Cross border Mergers & Acquisitions (CBM&As) have become the dominant mode of
growth for firms seeking competitive advantage in an increasingly complex and global
business economy (Adler, 1997). In cross border acquisitions, the acquiring firm and the
acquired one have a different country of origin, and thus are embedded in two different
national cultural contexts.
Initial goals for any merging structures are to create synergies to leverage the potential
of the new organization born as a result of the merger. However those expectations are rarely
met. Despite decade of research on the effect of cultural differences in CBM&As, the
explanations remain flowed, the methodology used to study cultural differences is
controversial and leads to different interpretations, and some aspects are still underexplored.
For example, what are the cultural dimensions that really matter? Do national culture
differences more salient than organizational ones in CBM&As settings? If yes, how it relates
to individual and firm behavior? What specific challenges and opportunities are created for
organizations and for individuals when crossing borders? What is the role of cultural
dynamics on multicultural teams’ success or failure in these international mergers? What
about the perception of the challenges of individuals implied in these entities in
transformation? And how does it affect their attitudes toward work?
2.3. POST MERGER INTEGRATION STAGE
Post-acquisition integration is defined as the integration of the acquiring and acquired
firms after the acquisition deal is closed (Haspeslagh & Jemison, 1991). The integration
period during M&As refers to the final stage of combining organizations that operated until
then separately. Authors considering acquisitions from a process perspective stress the
importance of appropriate integration management of this stage for ensuring acquisition
performance (Jemison & Sitkin, 1986; Haspeslagh & Jemison, 1991; Buono & Bowditch,
2003). The choice of the type of integration according to the organization’s needs (do we
need high or low interdependence and/or autonomy) for value creation and performance
(Haspeslagh & Jemison, 1991; Weber, Drori & Tarba, 2012) is crucial in determining synergy
20
potential and the subsequent success of the marriage (Oberg & Tarba, 2013; Almor, Tarba &
Benjamini, 2009; Ellis, Weber, Ravek & Tarba, 2012).
According to Haspeslagh and Jemison (1991) organizational cultural changes are
especially important in mergers with high levels of integration. In this common type of
merger, the main strategy is to gain cost and market synergies through economies of scale and
scope. Thus, redundancies in function, personnel and technical systems are generated and
consequently generally eliminated, many work activities shared, and cultures, systems and
resources integrated. The frequency and magnitude of changes as well as the accumulation of
ambiguities or uncertainties at both organizational and individual levels are on average higher
in this type of mergers. In preservation acquisitions, on the contrary, a low need for
interdependencies and a high need for autonomy of the acquired firm lead to a weak level of
integration (Haspeslagh & Jemison, 1991). A mix of both former integration models
characterizes symbiosis acquisitions. At the same time, entities need to preserve their
autonomy to maintain capacities and value sources at the acquired firm while the creation of
strong interdependencies is necessary to promote cooperation and joint innovation at the
operational level.
Regarding the PMI stage in CBM&As, empirical evidence suggests that acquisitions
across borders perform even more badly than those within borders. The empirical findings
suggest that the culture differences are crucial on the post-merger integration process for
M&As success (Almor, Tarba & Benjamini, 2009; Brannen & Peterson, 2009; Rottig, 2007).
Cultural integration is the most critical and challenging type of integration (Shirastava,
1986) since the parties lack of common frame of references. It represents the human side of
integration and involves developing an organizational culture with compatible value systems
by combining the cultures and managerial viewpoints of the acquiring and the acquired firm
(Shrivastava, 1986). Cultural integration holds several advantages such as: facilitating
communication between the members of the acquiring and the acquired firms, decreasing the
negative impact of cultural differences, bridging the organizational cultural differences
between the acquiring and the acquired companies by unifying organizational frames of
reference (Teerikangas & Very, 2006), yet the difficulty of adequately managing the post-
acquisition integration phase is pointed out (Haspeslagh & Jemison, 1991; Larsson &
Finkelstein, 1999; Weber, Drori & Tarba, 2012).
21
2.4 THE SOCIO-CULTURAL PERSPECTIVE IN POST MERGER INTEGRATION
From a cultural perspective, the reason evoked for success or failure in international
consolidations is cultural differences. This study builds mostly on the cultural perspective on
post-acquisition integration. Cultural variables and their impact on post-acquisition
integration are the particular focus of the cultural perspective. Cultural effects occur when
people interact, and most interactions of employees occur in the post-merger integration phase
(Mirc & Very, 2015). In foreign acquisitions, double-layered integration is needed, which
refers to the need to integrate not only two different organizational cultures but also two
national cultures (Barkema, Bell & Pennings 1996; Weber et al., 1996).
In this part, I discuss culture and its role in post-acquisition integration. I start by
presenting different perspectives on culture and positioning the thesis within socio-cultural
integration research. I discuss different levels of culture such as national and organizational
cultural levels that have been considered to be particularly important in international
acquisitions. Then, I introduce the friction route, i.e the extent to which two or more entities
from different countries culturally resist with one another in real contact or interactions over
the course of IB activities or transactions.” (Shenkar, 2011; p.2), as the focus of this study at
individual level in the cross border acquisition (CBA) context, and conclude with a
framework for the thesis.
2.4.1 Organizational level
According to Buono et al. (1985), post-acquisition integration can be seen as an
attempt to combine two different organizational cultures. At the organizational cultural level,
researchers have argued that organizational cultural differences – differences in organizational
beliefs and values – are major causes of organizational problems. When organizational
differences are great, a common frame of reference between the organizational members is
missing (Buono et al., 1985; Cartwright & Cooper, 1996; Weber, 1996; Weber et al., 1996).
Several quantitative studies have found that organizational cultural differences have a
negative effect on acquisition performance (Chatterjee, Lubatkin, Schweiger & Weber, 1992;
Datta, 1991; Lubatkin, Schweiger & Weber, 1999).
22
It is increasingly argued that a strategic fit between the partners is not enough, and that
the success or failure of M&As ultimately depends on the individual and group-level
responses to the evolutionary and planned change processes following the establishment and
implementation of such partnerships (Gomes et al., 2011).
A complex set of variables seems to influence the development of PMI in different
ways. For example, the impact of mergers and acquisitions on individuals and groups may
differ widely depending on national and organizational cultural differences (Liu & Woywode,
2013; Vaara, Sarala, Stahl & Bjorkman, 2012; Xing, Liu, Tarba & Cooper, 2016), human
resource management practices (Weber & Tarba, 2010), knowledge transfer (Ahammad,
Tarba, Liu & Glaister, 2016; Junni & Sarala, 2013), and leadership approaches (Zhang et al.,
2014). Some of these variables seem underexplored. Some contributing factors seem not only
poorly understood but also missing, partly because they are very difficult to study.
2.4.2 National level
Developing business abraod is far more challenging than doing it in a domestic
setting. Managing national cultural differences can be demanding during the post-acquisition
integration (Child, Falkner & Pitkethly, 2001) because they are often associated with
differences in legal systems, administrative practices, and working styles (Hofstede, 1980;
Olie, 1994; Zaheer, 1995). Major findings report that national cultural differences tend to
create additional challenges for post-acquisition integration due to the lack of familiarity with
the target country and the ways of organizing and conducting business, risks and costs
associated in conducting business across borders, which emphasized the importance of culture
in foreign acquisitions (Angwin & Savill, 1997; Olie, 2005; Zaheer, 1995).
The concept of “national cultural differences” captures the differences in the norms,
routines and repertoires that are found in the acquirer’s and the acquired firm’s countries
(Morosini, Shane & Singh, 1998). A large part of research has focused on the negative impact
of cultural differences (Buono, Bowditch & Lewis, 2002) while other researchers argue that
because the international cultural challenges are more obvious they increase the awareness of
cultural factors in the M&A process (Stahl, 2001), and actually result in better performance
for CBM&As. Integration management is simply more cautious in these cases (Stahl, 2001).
23
Cultural incompatibility is often cited as a source of PMI issues (Nahavandi &
Malekzadeh, 1988). Researchers argue that a lack of national cultural fit (i.e., cultural
distance) is the key issue that leads to cultural clashes between the merged workforces (Datta
& Puia, 1995; Larsson & Risberg, 1998) and complicates the PMI process (Very &
Schweiger, 2001). However, a substantial amount of research in the M&A field leads to
inconsistent findings, knitted variables, highlighting the positive effects of cultural differences
on organizational performance4 (Very, Lubatkin, & Calori, 1996; Larsson & Risberg, 1998;
Morosini et al., 1998; Sarala & Vaara, 2010), negative ones (Buono, Bowditch & Lewis,
2002; Cartwright & Schoenberg, 2006; Johnson et al., 2005), or mixed results (Reus &
Lamont, 2009). Cultural differences have even been labeled the ‘‘double-edged sword’’ (Reus
& Lamont, 2009), arguing that both constraints and enrichments are important effects of
cultural differences; or the ‘‘distance paradox’’ (O’Grady & Lane, 1996) to refer to the
inconsistency of these findings. In their literature reviews of the role of culture in M&As,
both Stahl and Voigt (2005) and, Teerikangas and Very (2006) assert the importance of better
understanding the impact mechanisms of culture in PMI as a way to explain more fully those
contradictory findings.
Weber & al. (1996) argue that culture research in acquisitions usually defines only one
level of culture, which has led the bodies of literature on national and corporate culture to
exist in isolation from each other. Those two levels of cultural differences (national and
organizational) have to be studied together and not separately to identify if they involve
different results. Concerned with the importance of discriminating between these two levels
of culture, Sarala (2009) found that national and organizational cultural differences in
acquisitions were clearly two different constructs.
4 For more details on contradictory findings related to the impact of cultural differences on culture in acquisitions, see Stahl and Voigt (2005) and Teerikangas and Very (2006) literature reviews as well.
24
3. CULTURE DISTANCES
Distance is an important trend of International Management (IM) research when
comparing cultures. A wave of IB research focuses on distance as a metaphor for cross-
national differences to be used as a key predictor variable (Baack, Dow, Parente & Bacon,
2015; Beugelsdijk, Kostova, Kunst, Spadafora & Van Essen, 2018). Since 2005, the study on
distance under various forms has accelerated and has even doubled between 2005 and 20105,
despite criticisms (Harzing, 2004; Shenkar et al., 2008; Smith, 2002; Zaheer, Schomaker &
Nachum, 2012). The cultural distance literature in particular has grown at an uncomparable
speed (Beugelsdijk & Mudambi, 2013).
The differences between the cultures of the two original organizations are often
subsumed under the concept of Cultural Distance (CD), and was popularized by the compact
composite index introduced by Kogut and Singh (1988), offering an aggregate measure of
Hofstede’s (1980, 1991, 2001) dimensions. The generic CD concept is used to predict
associated performance of joint ventures, (Agarwal, 1994; Barkema & al., 1997; Hennart &
Zeng, 2002), mergers and acquisitions (Morosini, Shane & Singh, 1998); entry mode
selection (O’grady & Lane, 1996; Lee 1998; Evans & Mavondo, 2002; Dow & Larimo,
2009), foreign direct investment (Kogut & Singh, 1988; Benito & Gripscrud, 1992),
internationalization process of firms (Nordström & Vahlne, 1994; Fletcher & Bohn, 1998).
The CD metaphor assumes the larger the national cultural difference, the more likely the
values and beliefs of the organizational members from the acquiring and acquired firms will
differ (Hofstede, 1980).
The CD concept was central when I initiated my research project. The inconsistent and
even contradictory results of the impact of national culture differences (Reus & Lamont,
2009) suggest that the impact of cultural differences on acquisitions remains an interesting
and valuable area for research.
5 For a comprehensive exploration of the distances concepts over the last 20 years, see Elm L. (2014)
25
3.1 FROM DISTANCES ROUTE TO FRICTION: WHICH CONCEPTUALIZATION FOR WHICH
OPERATIONALIZATION?
Researchers have a plethora of concepts in International Business Literature (IBL) that
could have been used in the context of this study to comprehend culture differences, yet they
all have their own gaps, drawbacks and even lack of relevance sometimes. After a deep, long
and insightful literature review I had to make some choices suitable to the study of middle
managers perceptions of differences in CBM&As contexts.
As stated above, a closely related concept to national cultural differences is “national
cultural distance”, which attempts to mathematically quantify the overall level of national
cultural differences. Other concepts using the distance metaphor (Culture Distance, Psychic
Distance, Institutional distance, Geographic Distance, Cognitive Distance and Cultural
Friction) are not properly distinguished and defined in the IBL. However cultural distance,
that is, the difference in cultural values between two countries, remains the most widely used
type of distance in international business (Beugelsdijk & Mudambi, 2013; Shenkar, Luo, &
Yeheskel, 2008; Tihanyi et al., 2005)
In international merger literature, Morosini et al. (1998) found a positive association
between national cultural distance index and acquisition performance. The distance concepts
are also used to explain the failures of such international operations. The main assumption
refers to the fact that different underlying customs, values, social norms, organizational
patterns, attitudes toward leadership, patterns of work, can greatly complicate the functioning
of the implied organizations and consequently their success. There are a number of
discussions and controversies regarding the overlapping nature of the term (Sousa & Bradley,
2005; 2006)6, and the lack of consistencies in findings (Berry et al., 2010; Kim and Gray,
2009; Shenkar, 2001; Tihanyi et al., 2005; Kirkman et al., 2006). It is still difficult to find
common ground to define this construct and the associated ones, and the measurements as
well (Brewer, 2006). It is surprising that a concept so trenchantly criticized by Shenkar
(2001), Harzing (2004) and Drogendijk and Zander (2010) among others continues to be so
widely used in so many research projects. If this usage has a valid rationale beyond custom
and convenience, it is necessary to look at the underpinnings of the concept. Why has it
6 See in table 2 in appendix, studies with ***
26
become so popular and described as «a must have» in IM research, (Shenkar & al., 2008) or
from «neglected to myopia» (Harzing, 2004). This paradox in the usage has been
demonstrated in a recent analysis of the lexicography of those concepts7 (except for friction).
Is distance metaphor relevant in this case? Is distance concept relevant when we focus at
individual level of study? Which concept could we use then?
3.1.1 Level of analysis
Kogut and Singh (1988) define national cultural distance as the degree to which the
cultural norms in one country are different from those in another country. This construct has
been examined from a variety of perspectives, has been criticized (Harzing, 2004; Shenkar et
al., 2008; Smith, 2002; Tung & Verbeke, 2010) for its implicit and over simplistic
assumptions and the fact that it is based on data collected over than 40 years ago (Kirkman,
Lowe & Gibson, 2006; Shenkar, 2001). With over 5,000 citations, CD is among the most
cited papers in management (Harzing & Pudelko, 2016). Similarly, Lopez-Duarte, Vidal-
Suarez, and Gonzalez-Diaz (2016) found that more than 80% of the articles on culture and
firm internationalization focused on cultural distance. Despite decades of research using
distance and the large criticism addressed, the awareness of the limitations of the concept and
the measurements, it still overused and even misused in IB research because of its
convenience (Tung & Verbeke, 2010; Zaheer et al., 2012).
What has been done so far is still unsatisfying. This construct is still confusing and
problematic both at its conceptualization and operationalization levels.
Shortcomings have been pointed out (Harzing, 2004; Luo & Shenkar, 2011; Shenkar,
2001; 2008, 2012; Smith, 2002). Kirman et al. (2006), Zaheer et al. (2012) listed suggestions
for researchers to make the CD more credible and to inspire future research at the national
level of focus. Similarly, Beugelsdijk et al. (2018) demonstrate in their meta analysis of the
literature on culture distance on firm internationalization, that inconsistencies may result of
the conceptual and /or methodological properties of the CD construct and its proxies, the
choice of the method of measurement and the differentiation of the levels of analysis.
Newman (2008) already pointed this out, but her paper didn’t receive the deserved attention. 7 For a comprehensive overview and a deeper understanding of the application of these concepts (except friction) see Elm L. (2014)
27
Culture Distance, Institutional Distance and Psychic Distance constructs are actually
occupying different levels of analysis, and may capture different phenomena. The choice of
using one or the other depends on the central focus of our study (Newman, 2008; Beugelsdijk
et al., 2018). Those controversial concepts are used interchangeably (Sousa & Bradley, 2008;
Stöttinger et al., 2000). They should be applied at different levels, respectively:
- Cultural distance lies in the national level: based on Hofstede’s work, defined as the norms
and values that underpin business activity at the country level.
- Psychic distance is defined at the individual level as decision makers’ perceptions of
differences between cultures.
- Institutional distance is defined broadly as country-level institutional arrangements and be
measured objectively or through publicly available expert ratings (Newman, 2008).
However the study of culture in international business country-level culture research
remains mostly in terms of cultural distance. Yet, the misattribution of country-level scores to
individuals when examining the effects of culture at the individual level of analysis has
steadily declined (Beugelsdijk et al., 2018).
3.1.2 Challenges of Conceptualization and Measurement of Cultural Distance
National culture distance (CD)
The CD topic leads to many conceptual and operational challenges, which need to be
clarified. Harzing (2004) is very critical regarding the lack of consistency in CD effects on
Foreign Direct Investments (FDI) for two main reasons: firstly, the blind confidence in one
specific and very convenient measure of CD (using Kogut and Singh index, 1988) and
secondly the idiosyncrasies of the samples studied that led them to overestimate the role of
culture. This latent overestimation combined with “the blind confidence” in one measurement
seems dysfunctional to solving the complexities of the post merger integration, and could be
misleading if cultural differences are perceived as an issue (Beugelsdijk et al., 2017;
Kirkman, Lowe & Gibson, 2006; Kirkman Lowe & Gibson, 2017; Very & al., 1996)
Most country-level Hofstede-based research is still cultural distance research (Tihanyi
et al. 2005; Kirkman et al., 2006). Zaheer et al. (2012) even describe International
Management as the management of distance. A number of critical reviews have questioned
28
the validity of the CD index, a formula developed by Kogut and Singh (K&S) (1988), e.g.
Harzing (2004)8. First, some researchers have addressed the implicit assumption of
equivalence, i.e. that differences along the various dimensions are equally problematic
(Shenkar, 2001). In M&A context, Morosini and Shane (1994) have shown that cultural
differences on the power distance dimension may affect top management turnover, whereas
differences on uncertainty avoidance may be more explicative for post acquisition
performance.
Second, the assumption of reciprocity of the cultural distance has been highlighted.
Shenkar (2001) and Brewer (2007) showed that perceptions between two nations are not
necessary symmetrical. This point is particularly relevant in M&A where there is an uneven
status between the merging organizations. The assumption of equality is questionable as
mergers predominantly are asymmetric. Between 1985 and 2002 only 0.05 or 0.10 per cent of
mergers and acquisitions in Europe and in the US were identified as mergers among equals
(Zaheer et al., 2003).
Third, studies using K&S considered distance as one-dimensional (Kogut & Singh,
1988; Brouthers & Brouthers, 2001), referring to the sole cultural values dimensions. The
multidimensional nature of the concept of distance makes it difficult to comprehend and this
aspect shouldn't be underestimated (Angué & Mayrhofer, 2008; Child et al. 2009; Dow &
Karunaratna, 2006). Alternatives of CD as measured by the K&S index are increasingly used
in CD research such as Schwartz’ and GLOBE’s dimensions (Drogendijk & Slangen, 2006;
Siegel et al., 2012; Koch et al., 2016; Shin et al., 2016 ). Dow and Larimo (2009) compared
Hofstede, Schwartz, and the GLOBE dimensions of cultural differences. They found that, as
an overall index, all three of the cultural frameworks appear to have a positive impact on a
firm’s preference for green-field investments (vs. acquisitions). Those different CD measures
have been used without proper explanation of their reliability or relative advantages
(Beugelsdijk et al. (2017). In their comprehensive view of the firm internationalization
process, Beugelsdijk et al. (2017) considered a wide range of studies employing different
operationalizations and measures of CD. Their rigorous analysis provides solid foundations
for drawing on important insights and upon which to base their conclusion that the addition of
Hofstede’s fifth and sixth dimension and the subsequent integration of Hofstede, Schwartz,
8 See Harzing, 2004 for a critic review of 30 publications using CD as an independent variable in entry mode studies.
29
and GLOBE in a Mahalanobis based distance index yields country level cultural profiles that
can be considered valid.
Finally, the dynamic and evolutionary nature of the concept add to the inherent
complexity of what started out as a simple measure of cultural distance, based on Hofstede’s
aggregated measurement of work related values. M&A research, however, needs to address
the dynamic nature of cultural distance as the issues included in cultural distance evolve over
time e.g. in the post merger integration. Change with experience is part of the dynamic.
Previous research tends to assume that pre-acquisition cultural distance drives post-
acquisition outcomes (Morosini, Shane & Singh, 1998). However, this assumption does not
take into account the dynamic nature of cultural distance. Studies have pointed to the
importance of cultural change (Sarala & Vaara, 2010), but the measures of cultural change
require development. So it would suggest that used in isolation, cultural distance as measured
by the K&S index is a poor predictor of distance perceptions.
However, in Beugelsdijk et al. (2018), the most comprehensive review and meta-
analysis of the literature on cultural distance and firm internationalization to date, the authors
examine for the entire process the decisions of how to integrate the foreign subsidiary into the
organization. They redress this warning on the dynamic and evolutionary nature of the CD
concept. Beugelsdijk et al. (2018) demonstrate that the CD effect is not sensitive to time but
rather to the cultural framework used (Hosfstede vs. GLOBE), and that CD is relatively stable
across time while cultures evolve in parallel.
Psychic distance
There are several alternatives to the use of the CD index (see Table 1 in appendix). In
the early studies, another way to conceptualize and measure the distance between cultures is
the construct of “psychic distance” (PD), borrowing the theoretical foundation of the U-
model of internationalization introduced by the Uppsala School (Johanson & Vahlne, 1977;
Vahlne & Wiedersheim-Paul, 1973), as part of their work on understanding the success of
foreign market development effort. They proposed that firms select international markets
based on psychic proximity. They used “psychic distance” to mean the degree to which a
firm is uncertain of the characteristics of a foreign market. As a fully formed concept, Vahlne
and Wiedersheim-Paul (1973) defined PD as, “the sum of factors preventing or disturbing the
flow of information from and to the market” (p.24). Psychic distance (PD) is the origin of
30
inferring culture distance in business. The term can be traced back to research conducted by
Beckerman (1956) and Linnemann (1966), and was originally defined as the subjectively
perceived distance to a given foreign culture. This definition integrates a cognitive
dimension, consistent with the semantic origins of the term (from the Greek “psychikos,”
meaning mind and soul), but also in line with several studies (Dow, 2000; Dow &
Karunaratna, 2006; Holzmuller & Kasper, 1991; Sousa & Bradley, 2005; Stöttinger &
Schlegelmilch, 1998). According to those authors, PD refers to individuals’ or collective
perceptions of foreign countries. As stipulated in Hakanson and Ambos (2010), “[t]he
Psychic Distance to a specific foreign country is a reflection of the perceiver’s knowledge,
familiarity and sense of understanding of it” (Dichtl et al., 1990; Dow & Karunaratna, 2006).
Dow and Karunaratna (2006) highlighted that culture distance is a driver of psychic distance.
O’Grady and Lane (1999) define psychic distance as, “a firm’s degree of uncertainty
about a foreign market resulting from cultural differences and other business difficulties that
present barriers to learning about the market and operating there” (p.330). They proceed to
use psychic and cultural distance interchangeably, as others have (e.g., Eriksson, Majkgard, &
Sharm, 2000; Fletcher & Bohn, 1998; Sethi, Guisinger, Phelan & Berg, 2003).
Psychic distance is generally understood to be determined by both individual level and
country-level characteristics, including differences in language, political regimes, geographic
distance and also cultural distance (Dow & Karunaratna, 2006; O’Grady & Lane, 1996), and
is in essence perceptual unlike cultural distance (based on a comparison of ‘objective’ sets of
values that people in different countries hold).
Interpreting the way described above, psychic distance would be influenced by
differences in the culture and language of the home and target country. However, subsequent
researchers changed the definition, and it became increasingly confused and blurred. These
definitions combine uncertainty and distance, psychic and cultural distance, and risk and
distance. Sousa and Bradley (2005, 2006) define psychic distance, as an individual-level
phenomenon, as perceived differences between countries. That seems to be the clearest
discussion of psychic distance in the research to date. According to Sousa and Bradley
(2005), psychic distance is a multifaceted construct determined by cultural, geographic, and
economic factors. Sousa and Bradley (2008) showed that psychic distance is influenced by,
and, indeed, includes one element of, cultural distance. From a multidimensional perspective,
31
the CAGE (Cultural, Administrative/Political, Geographic, and Economic) framework
(Ghemawhat, 2001) is commonly used to analyze psychic distance when investigating
international expansion opportunities.
Studies highlighting that since psychic distance is based on perception (Baack, Dow,
Parente & Bacon, 2015), it cannot be calculated using hard data, as has been attempted to
date. It should be measured through perceptions, but this has rarely been the case. Hakanson
and Ambos (2010) measured perceptions when studying psychic distance (average country
level perception of distance). The data collected in their work represent the subjective
distance perceptions of respondents in 25 countries, aggregated to the national means. They
empirically tested the relationship between cultural distance and psychic distance while
controlling for geographic and economic distance. They found that cultural distance is
positively related to psychic distance, but the effect of cultural distance is relatively smaller
than that of geographic distance. Culture as a variable, was part of the original Uppsala
model, but it was the first variable to be dropped because of unconvincing results.
However, this construct is still confusing and problematic, both at the
conceptualization and the operationalization levels. Similarity between the two concepts
(cultural and psychic distance) has been assumed, and they have even been used
interchangeably (Eriksson, Majkgard, & Sharma, 2000). However, studies have shown they
capture two different phenomena (Norström & Vahlne, 1994; Hakanson & Ambos, 2010).
Psychic distance embodies other factors, such as differences in religion, language, business
practices, education, etc. Harzing (2004) called for operationalization of the PD concept from
the perspective of managers, arguing that perceptions are unique to every manager. Baack et
al. (2015) investigated, experimentally, a confirmation bias of psychic distance at the
individual level of perceptions. They conclude that a confirmation bias appears to
significantly impact managerial perceptions of psychic distance. Individual-level perceptions,
since they are biased, might diverge from national level averages; however, this has not yet
been tested in IB settings.
To sum up, psychic distance is a multidimensional construct based on perception. As
we consider perceptions, the psychic distance concept, as initially defined, could have been
used in this research context. However the concept is not precise enough. Psychic distance is
undermined by a lack of theory, as demonstrated by inconsistent results in practice (Brewer,
32
2007; Brouthers et al., 2001). Psychic distance is not a synonym of cultural distance, as has
been assumed in its operationalization (Ambos & Hakanson, 2014; O’Grady & Lane, 1996;
Brewer, 2007; Hakanson & Ambos, 2010); while it includes culture distance, it is not limited
to it.
Institutional distance
Institutional difference is another well-established research topic. The “Institutional
Distance” construct entered the debate (Kostova, 1999), in parallel with the continuous use of
the CD construct, referring to country differences with respect to institutional features. It aims
to capture features that create distance between countries, cultures, and people referring to
differences in institutional profiles among national environments (Kostova & Zaheer, 1999;
Kostova & Roth, 2002; Brouthers, 2002; Xu & Shenkar, 2002; Dow & Karunaratna, 2006;
Guar & Lu, 2007). Perception of differences with respect to societal rules and regulations
compose the measurement.
The concept has gained substantial attention in the last decade (Magnusson et al., 2008).
Despite being derived from a different theoretical framework (Kostova & Zaheer, 1999), this
concept is consistent with the previous definition of “psychic distance”, emphasizing that
“differences in institutional environments may disrupt the flow of information or influence a
person’s perceptions of distance”. The link between managers’ cognitive capabilities in the
PD concept and the institutional cognition of laws and regulations in foreign countries need to
be recognized. Managers hold knowledge about rules institutions processes, and parallels can
be drawn with cognitive or knowledge distance. Indeed, both Johanson and Wiedersheim-
Paul (1975) and Evans and Mavondo (2002) explicitly identified institutional factors, such as
political systems, as potential drivers of PD. Luo and Shenkar (2011) raise the same criticisms
of institutional distance as those directed to cultural distance, especially regarding the lack of
knowledge development on process or outcome of the interaction between entities, and the
liability of illusions (such as symmetry) associated with CD measurement.
INSERT TABLE 2 HERE
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
In table 2, I present different categories of business distance, (psychic, national culture
and institutional) operating in M&As at three levels of analysis, individual, organizational and
33
national levels. Each category of distance at each level of analysis offers a distinct
contribution to further our understanding of cross-cultural M&As. The table provides an
overview of the combination of levels of analysis and methods of data collection, exemplified
with studies, though it does not provide a full list of all research conducted regarding the
various combinations.
Other alternative distance concepts have been used in IB studies such as demographic
distance (Davidson & McFetridge, 1985), economic, administrative (Ghemawat, 2001),
institutional (Kostova, 1996, 1997; Kostova & Roth, 2002), linguistic (Dow & Karunaratna,
2006), Ronen and Shenkar (1988) countries clusters (Gatignon & Anderson, 1988);
geographic distance (Eden & Miller, 2004; Ragozzino, 2009), unfamiliarity (Kim & Hwang,
1992), cultural-distance analysis using multiple frameworks (Beugelsdijk, Nell, & Ambos,
2017; Drogendijk & Slangen, 2006).
Besides contradictory findings resulting from a conceptual ambiguity, difficulties of
conceptualizing and operationalizing the CD construct seems to be rooted in in researchers’
tendency to over-use the concept of distance without any regard to the level of their analysis
(Newman, 2008; Sousa & Bradley, 2005). Each level explicated above involves different
logical considerations. At the national and organizational culture consideration, the reasoning
is the dynamic of change (organizational change and development); the individual level
considers the knowledge transfer and the learning processes dynamic. Researchers in this
field could conduct a pre and post-acquisition survey using an established instrument, such as
the competing values framework (Cameron & Quinn, 1999). This approach would enable
researchers to distinguish between the influence of initial “static” cultural distance and the
evolving “dynamic” cultural distance between the two firms. This could be accomplished by,
for instance, continuously following a multinational company that engages in multiple
acquisitions.
Future research on cross cultural perspectives in the M&A field can benefit from the
usage of the concept of distance which has been developed mostly in other disciplines of
international management research using broader measures of country differences, including
legal/administrative, language and institutional differences as well as combining cultural
differences framework should be included (Beugelsdijk et al., 2018). In addition, as suggested
by Harzing (2004), geographical distance should be included as a control variable or at least
34
discussed as a potential alternative explanation. However, the study of the effects of cultural
differences in international management shouldn’t be limited to national culture distance
research.
3.1.3 Individual level focus
Numerous authors (e,g. Shenkar, 2001; Harzing, 2004) have argued that there should
be more analysis concerning the impact of individual dimensions of culture. In their work
Drogendijk and Slangen (2006) developed an Euclidean distance index based on Schwartz
(1999) dimensions of culture to analyze the individual dimensions (managerial perceptions).
A broader measure of PD proposed by Dow and Karunaratna (2006) included differences in
religion, language, culture, education-levels, industrial development and time zones.
To better understand the interaction and the mechanisms to link cultural differences
and M&A performance we still need new lenses to better capture the complexity of cultural
differences. An instrument that focuses on managerial perceptions could be complementary to
the other measures (institutional and national, “hard “ data or direct measurement) and could
enhance our understanding of the dynamics of individuals involved in CBM&A processes.
Focusing on the individual level would also be coherent with the need for further research
using mixed method for deeper accuracy. The overall approach has to be a multilevel one to
analyze “distances”. Kirkman et al. (2017) paper offers great promise for future research into
the IM field by relating culturally embedded mechanisms to individual outcomes. As stated
by Beugelsdijk et al. (2018), this approach fundamentally “evolves around values held by
individuals, who in their interaction with others develop norms and cognitive schema on how
to behave in groups. What complicates the relation between cultural and individual level is
that the sum of individually held values does not necessarily equal the country-level cultural
values, even though we often assume so empirically” (2018, p.42).
35
3.2 UNCONVINCING APPROACH OF DISTANCES FOR STUDYING MANAGERS IN PMI:
MOVING TO CULTURAL FRICTION
Following the reasoning above, the distance theory approach is not convincing for the
purpose of this research. Distance terminology itself is biased and might not be appropriate as
it implies something symmetrical and continuous.
When considering a managers’ perception, the difference managers perceive between
them and their interlocutor is not necessarily the same as the difference perceived from the
interlocutor’s viewpoint (asymmetry). Moreover, this perception could change over time and
is not continuous. Thus, what I am seeking is a concept that could describe the interactions (or
contacts) between people, leading either to conflict or synergy. The core focus of this study is
encounters between people from different cultural orientations in a work context, holding
different cultural solutions to solve the same problem issues.
The friction metaphor provides a “superior representation of what is arguably the
heart of the matter in IB, namely the interaction between viable entities” (Shenkar, 2012,
p.15). The cultural friction perspective (Shenkar, Luo & Yeheskel, 2008) offers a framework
for investigating the relationships and more precisely the contacts between individuals in
intercultural encounters, whether nations, firms, teams or individuals, with regard to their
national cultural backgrounds. Generally, there are many meanings of the conception of
friction in multicultural environments such as misalignment (Rosen et al., 2008), collision
(Buono et al., 2003) or culture dissonance (Irrman, 2005).
Shenkar and colleagues’ conception of friction (Luo & Shenkar, 2011; Shenkar, 2001;
2012; Shenkar, Luo & Yeheskel, 2008) emphasizing on “contact”, “interactions” and
“cultural resistance” is appropriate when targeting individual encounters in cross border
settings. Luo and Shenkar (2011) define cultural friction in IB as “the extent to which two or
more entities from different countries culturally resist with one another in real contact or
interactions over the course of IB activities or transactions.” (2011; p.2). Friction, hence,
focuses on the complexity of cultures and the interaction within group (Drogendijk & Zander,
2010) and posits that cultural differences may be either synergistic or disruptive (Luo &
Shenkar, 2011). Empirical research indicates that synergies may emerge from cultural value
differences (Koch et Shenkar, 2016), especially when the organization is able to foster
36
boundary-spanning managers to generate “creative tensions” (Mudambi & Swift, 2009;
Schotter & Beamish, 2011). Tensions emerging from those interactions are not necessarily
“dysfunctional and disruptive” (Coser, 1956: 23) but can have positive effects and create
synergy (Morgan, 1997; Shenkar et al., 2008). Therefore, friction can result in positive
outcomes and facilitate synergies. Though conflict is sometimes regarded as dysfunctional, it
should be considered a normal process when managing across cultures (Schoetter & Beamish,
2011).
In a recent publication, Stahl and Tung (2015) highlight that traditional IB studies on
the effect of cultural differences tend to overemphasize the negative over the positive and call
for a more nuanced understanding of the multifaceted relationship between culture and IB
processes and outcomes. There is increasing evidence of a so-called “double edged sword”
(Reus & Lamont, 2009) of cultural diversity, which can be both an asset and a liability in
multicultural teams (Stahl et al., 2010). The basic linear assumption that cultural
heterogeneity leads to higher conflict (cultural friction) should be redressed. However, the
aspects and the mechanism through which perceived cultural friction influences motivational
work outcomes also need to be considered.
Despite Shenkar and colleagues’ several attempts (Luo & Shenkar, 2011; Shenkar,
2001; Shenkar, 2012; Shenkar, Luo & Yeheskel, 2008) to more rigorously conceptualize
cultural differences, substituting the “distance” metaphor with “friction”, the concept has not
gained the attention it deserves (Ambos & Hakanson, 2014). The lack of convergence of
conceptualizations causes it to remains at a metaphorical level. Shenkar (2001) outlines the
hidden assumptions of the cultural distance construct and challenges and its theoretical and
methodological properties9. Though Shenkar and his colleagues (Shenkar, Luo & Yeheskel,
2008; Luo & Shenkar, 2011) proposed a useful and more meaningful framework to replace
that of culture distance, the empirical work is yet to be conducted.
Ten years after their first attempt to substitute the «distance» metaphor with «friction»
Luo and Shenkar (2011) proposed a rich, more refined and robust conceptualization
accompanied by a full set of formulae for measuring “cultural friction” (CF) (Shenkar et al.,
2008; Salk, 2011), capturing the “nature and magnitude” of interactions between cultural 9 For full critics on conceptual foundations see: Brewer, 2007; Dow & Karunaratna, 2006; Harzing, 2003; Shenkar, 2001; Smith, 2002; Tung & Verbeke, 2010.
37
systems engaged in cross border businesses. Substituting distance with friction refers more
accurately to cultural contacts between organizations and integrates multi-levels wherever
culture differences occur. This construct lies at the firm level to capture culture differences.
Luo and Shenkar (2011) define Cultural Friction in IB as “the extent to which two or more
entities, such as organizations, units, teams, groups, and individuals, from different countries
culturally resist with one another in real contact or interactions over the course of
international business activities or transactions» (2011; p.2). Shenkar et al (2008; 2011; 2012)
formulated a detailed case in support of their viewpoint. Despite their very persuasive and
well-written former article (which received the JIBS Decade Award 2011), they do not really
offer a measure of cultural friction per se. Instead, their paper contains a detailed description
of all the factors relevant to such a measure. Each of these factors is very carefully defined,
and its relevance to cultural friction is spelled out very explicitly. Their paper ends with a
formula incorporating each of these factors and how they would relate to CF. This formula is
intended to constitute the preliminary basis for eventually deriving the friction measure, the
strengths of which redress the major limitations of the distance concept and construct. It also
mitigates the distance's drawbacks. Finally, the CF concept is situation specific.
Through CF, socio-cultural differences are addressed as frictional effects between
individuals. As stated by Drogendijk and Zander (2010) the notion of friction places strong
emphasis on the interaction of executives’ carriers. As such notions about cultural friction
have not yet been operationalized due to its complexity at the empirical level (Koch et al.,
2016), it seems necessary to focus on frictions in managers’ interactions (Ambos &
Hakanson, 2014).
Thus I propose an alternative grounded measurement to obtain information from
individuals. It aims to comprehend fully specific situations about middle managers’ own
perception of work related issues during the ongoing post-merger processes, thereby
capturing facets of the intercultural friction from the field observations (essay 3,
methodological paper under review).
38
4. CONSIDERING THE HUMAN SIDE OF M&As
The socio cultural M&A literature reveals that the human side of M&As is often
referred to as the ‘‘forgotten’’ or “neglected” factor (Marks & Mirvis, 1986; Kusstatscher &
Cooper, 2005; Stahl & Voigt, 2005, 2008). Yet in the 1980s, a trend emerged emphasizing
human resource aspects in acquisitions (Buono & Bowditch, 1989; Napier, Simmons &
Stratton, 1989; Schweiger, Ivancevich & Power, 1987) linking strategic fit and performance.
Studies within the human resources perspective were more organizational behavior oriented
and attempt to explain organizational resistance and its consequences (Cartwright & Cooper,
1990; 1993).
4.1 HUMAN SIDE AND POST MERGER INTEGRATION
An important M&A research strand focusing on merger integration indicates that
human factors are major reasons for failure or underperformance (Cartwright & Cooper,
1992; Gomes, Mellahi, Sahadev & Harvey, 2015). Weber, Drori and Tarba (2012) open the
‘‘black box’’ of behavioral issues in M&As, considering it a complementary approach to
finance and strategy issues in PMI settings. They emphasize the role of trust and the removal
of autonomy in moderating the effects of culture clash in PMI. Ahammad, Glaister, Weber
and Tarba (2012) state that the main reason for inconsistent results in M&A studies is the
failure to take human resources practices into account.
Despite the acknowledgment in more recent studies of the potential contribution of
human resources practices, and despite recognition of the importance of human resource
aspects of M&As, especially when they cross borders, research on the role of people on CBA
performance is often placed in a marginal position (Kusstatcher & Cooper, 2005; Mirc, 2013;
Sinkovics, Zagelmeyer & Kusstatscher, 2011; Teerikangas, 2012).
It seems important to examine the causes of international acquisitions failures through
a different lens. The inconsistent findings reveal that there are different entries to explain the
high failure rates of CBM&As, and the multidisciplinary nature of CBM&As makes it
impossible to use only one perspective to elucidate the ‘‘gray box’’ conditions that exist in
M&As.
39
Related human problems during the PMI process have been identified (Buono et al.,
1985; Nahavandi & Malekzadeh, 1988) and conceptualized (Weber & Drori, 2011). Yet the
complex nature of the study of soft factors such as managers’ perceptions in PMI may be one
of the reasons why they do not receive sufficient attention, especially at the micro level.
Human factors are increasingly recognized as playing an important role in PMI (Mirc, 2013).
A critical question is whether managerial perceptions of cultural challenges affect middle
managers’ behavior and motivational work outcomes in CBM&As.
4.2 ROLE OF MIDDLE MANAGERS
The focus on middle managers is relevant because of their role in organizational
change (Cartwright & Cooper, 2000), for their peculiar “sandwich position”: they are led and
lead at the same time, thus influencing their direct reports with their personal commitment
level. Research has shown that employees often react very negatively to an organizational
combination (Schweiger & Denisi, 1991). The M&A literature confirms they are the people
most affected by organizational change (Kusstatscher & Cooper, 2005): ‘‘they are responsible
for the implementation of top management’s decision, they are subject to decision makers’
expectations, to uncertainty due to the lack of top-down information and are exposed to
employees’ irritations, fears and questions. Middle managers are also regularly in contact
with colleagues (middle managers) from the partner company, but generally on a more
informal level than top managers are. Therefore they get more insights and confront more
problems’’ (Kusstatscher & Cooper, 2005, p. 159).
The motivational process in CBA settings is interesting to further understand as I
focus on performance from the human side. Mergers involve a multitude of decisions that can
affect managers in various ways (Sinkovics, Zagelmeyer, & Kusstatscher, 2011). A decrease
in organizational commitment, motivation and work performance are typical characteristics
for both of the merging firms. The managers' commitment to the merged company might
motivate themselves and their followers to develop a more positive attitude about the merger
and to overcome areas of poor fit. This can lead to better performance, as Weber (1996) found
in an analysis of 73 horizontal mergers that the affective commitment of acquired top
managers was positively related with integration effectiveness and the acquiring firms'
financial performance.
40
Cultural differences keeps occupying serious consideration for managers and
organizations that want to expand across borders. Understanding for which aspects during the
PMI process cultural differences really matter for managers is a necessary step in learning
how to manage and potentially leverage such differences.
5. CHANGE & MOTIVATION
Mergers and acquisitions constitute a specifically important area of organizational
change (Haspeslagh & Jemison, 1991). What about individuals interacting in those entities
with major upheavals?
As a result of the merger, jobs change for managers with different work values, norms,
behavior, and set of routines. It can be either very challenging or quite frightening for some of
them. Can we establish the relative importance of managerial perception of cultural
differences in determining the level of post-acquisitions conflict? How do middle managers
deal with it, and overcome it?
Many researchers agree that organizational transitions, such as M&As, are typically
followed by major structural and cultural changes (Haspeslagh & Jemison, 1991; Very,
Lubatkin & Calori, 1996). Changes and disruption resulting from M&As lead individuals to
experience stress and negative emotions (Kiefer, 2002; Kusstatscher & Cooper, 2005; Huy,
1999; 2012). M&As are different from other forms of organizational change because of the
scale of such events as well as the stress of dealing with so many unknowns (Schweiger &
Ivancevich, 1985). Negative emotions such as anger, anxiety, fear, disorientation, frustration,
and confusion can result (Kusstatscher & Cooper, 2005). Some experts refer to these reactions
as ‘‘merger syndrome’’ (Marks & Mirvis, 1986; Sinkovics, Zagelmeyer & Kusstatscher,
2011). They describe these reactions as ranging from denial and fear at the beginning to final
acceptance toward the end of the process; the way an organization deals with these reactions
determines outcomes such as levels of employee commitment and productivity, the amount of
staff turnover, and the level of satisfaction with, and loyalty to, the organization. Cartwright
and Cooper (1993) found that under M&As ‘‘managers had significantly higher abnormal
mental health scores than the normal population’’. Some common merger stressors include
uncertainty, insecurity, and fears over job loss, job changes, job transfers, compensation
41
changes, and power, status, and prestige changes (Schweiger & Ivancevich, 1985). These
stressors can lead, in turn, to organizational outcomes such as absenteeism, poor performance,
and higher employee turnover. Organizations that acknowledge, recognize, and attend to their
members’ emotional reactions can significantly increase group and organizational
effectiveness (Huy, 1999; Reus, 2012).
To date, few researchers have so far rarely reflected on how job changes may result in
job outcomes and motivational processes in CBA. Existing research on international M&As
provides a limited and insufficient understanding of this important phenomenon, especially
concerning the middle management in PMI process.
6. JOB CHARACTERISTICS MODEL
The job characteristics model (JCM) (Herzberg, 1966; Hackman & Oldham, 1976;
1980) offers a window for exploring job changes and human resources outcomes at individual
level as the model includes immediate relationship between the job and the performer,
proposing how this relationship should be designed to increase the psychological
meaningfulness of the job. In the context of organizational changes such as mergers, this job
design model may prove its usefulness to explain the effect of job changes. The classic JCM
(Hackman & Oldham, 1975; 1976; 1980) can be used to redesign jobs to engage work
motivation, and then to explain effects of job changes in the context of CBM&As.
6.1 JOB CHANGES AND JOB CHARACTERISCTCS MODEL (JCM)
In this part, I present how the JCM is related to job change, and why I chose to focus
on two work antecedents composing the model: the need for autonomy and the need for feed
back. Then I present findings regarding the two antecedents in cross cultural research settings,
and specifically in CBM&As. I then discuss the limitations of the former model, leading to
the integrated research model for the project.
42
Work outcomes can be influenced by various situational job characteristics. The JCM
(Hackman & Oldham, 1975; 1976; 1980) argues that the most effective means to motivate
workers is through the job design. In the model, the authors present a set of principles and
recommendations to optimize job designs and to implement them in the organization.
Motivational and demotivational paths occur through satisfaction and dissatisfaction,
respectively, of situational job antecedents as formulated by Hackman & Oldham (1976;
1980) in their situational approach of jobs on work motivation.
The JCM is a useful research tool for this area of study on job changes as it is a robust,
reliable and tested instrument to analyze the effect of job change according to a review of a
large number of findings based on the usage of the JCM (Oldham & Hackman, 2010).
The model assumes that autonomy and feedback are more important than the other
work characteristics, and have been the most studied variables. Those two antecedents
constitute one aspect of individual manifestations of job characteristics with respect to
national level dimensions of power distance and uncertainty avoidance (Hosftede, 1980;
2001). For this reason in this dissertation, I will focus on need for autonomy and need for feed
back as antecedents since they are likely to be the more salient variables in a context of CBA.
The need for autonomy refers to “the degree to which the job provides substantial
freedom, independence, and discretion to the employee in scheduling the work and in
determining the procedures to be used in carrying it out” (Hackman & Oldham, 1975, p. 162).
Supervisor feedback has been defined as “the degree to which the employee receives clear
information about his or her performance” (Hackman & Oldham, 1975, p. 162).
Integration as a process of organizational change may induce changes in job
descriptions. This in turn results in changes regarding job antecedents such as satisfaction for
the need for autonomy and need for feedback. According to the JCM, the satisfaction of the
needs for autonomy and feedback as antecedents of work motivation for individuals might
have negative effects if not fulfilled, and consequently effects on work motivation outcomes
in PMI settings.
43
Figure 3: Hackman & Oldham Job Characteristics Model (1981)
The central proposition of job design models is that optimal functioning in terms of,
for instance job satisfaction, and depends on the joint satisfaction of the psychological needs.
Indeed, research has found that needs for satisfaction in a work context enhances
work motivation, job performance, psychological well-being, commitment, and retention
(Baard, Deci & Ryan, 2004; Gagne & Deci, 2005). In regard to job related outcomes, several
empirical studies have found autonomy to be significantly related to commitment (Agarwal &
Ramaswami, 1993; Hunt et al., 1985; Losocco, 1989; Rabinowitz et al., 1977), performance
(Hackman & Oldham, 1975) and job satisfaction (Becherer et al., 1982; Katz & Kahn, 1978;
Kulik et al., 1988).
6.1.1 Work autonomy and cross cultural research
Cross-cultural research has pointed out that work autonomy affects work related
outcomes, such as satisfaction and job performance, differently across culture. Erez (2010)
suggests that culture moderates the effect of job autonomy on employees’ self motives and on
performance outcomes. According to Erez, when designing jobs in different geographical
zones, the national cultures, as well as the economic conditions, should be taken into
consideration. Hence, in cross-border M&A context, I may ask if national culture issues could
affect job design-work outcomes. In a study on cultural influence of job characteristics on job
satisfaction, Hauff, Richter and Tressin (2015) demonstrated the moderating effect of key
44
dimensions of national culture on the relationship between situational work antecedents and
work motivation outcomes. Robert et al. (2000) found that in India, employees who were
empowered by their boss were less satisfied than employees who were simply told what to do.
They argued the low satisfaction resulted from the conflict of this form of work with cultural
deference to hierarchy and status. However, authors said it would be premature to conclude
that autonomy is less valued in Indian culture. In earlier studies on autonomous work groups
in Indian textile companies, Rice (1958) described how autonomous work groups emerged
relatively spontaneously; on the basis of workers’ ‘intuitive recognition’ (p. 81) this was a
more satisfying method of work organization than the traditional methods. Thus, whether
members of different cultures vary in their responses to enriched work design remains to be
established. Kirkman and Shapiro (1997) demonstrate how cultural values might influence
autonomy through authority and power distance. Cordery (1999) has shown that a directive
style of management can act to constrain autonomy. The opposite was found for employees in
the United States, who were more satisfied when given high rather than low autonomy
(Robert, Probst, Martocchio, Drasgow & Lawler, 2000). Work autonomy and empowerment
are considered to be key motivational factors in individualistic cultures, and is congruent with
individualistic values, emphasizing freedom of choice and providing the opportunity to
influence and to attribute the behavioral outcomes to oneself (Chua & Iyengar, 2006;
Chirkov, Ryan, Kim & Kaplan, 2003). What if middle managers perceived autonomy removal
in post merger integration as dissatisfying?
6.1.2 Need for autonomy in cross border acquisitions
In CBA, the level of need for autonomy may change across managers with different
cultural backgrounds. On a study, Yildiz (2016) shows that all the differences are not the
same and that status has a particular impact on the success or failure of a CBM&As. In line
with these results, how individuals react to autonomy removal in PMI is likely to depend on
the level of power distance in a culture (Angwin, 2001; Goulet & Schweiger, 2006). Power
distance reflects the extent to which a society accepts and endorses authority, status
privileges, and unequal power distribution in organizations (Hofstede 1980). Higher power
distance indicates a greater acceptance and reliance on centralization of authority. Thus, in
societies with higher power distance, subordinates tend to display a greater tolerance for lack
of autonomy, and they are accustomed to taking orders from their supervisors. Various studies
have found that job autonomy has a stronger effect on job satisfaction in lower power-
45
distance cultures than in higher power-distance cultures (e.g. Hui et al., 2004; DeCarlo &
Agarwal, 1999). Conversely, we can expect autonomy removal to be met with less negative
reactions for managers with higher power-distance background than lower power-distance
one’s. Comparative studies have shown that Germany has significantly lower power distance
scores than Singapore and most other Asian countries (Hofstede, 1980; House et al., 2004).
German takeover targets are thus more likely to respond negatively when subjected to high
levels of integration and a resulting loss of autonomy than do Singaporean takeover targets.
Angwin (2001) has argued that German employees are not accustomed to high levels of
supervision and control. Disregarding this could lead to PMI negative outcomes.
6.2 NEED FOR FEEDBACK AND CROSS CULTURAL RESEARCH
Regarding the need for feedback, Bassett (1994) argued that feedback is the most
effective device for improving job performance. Empirical research has shown that supervisor
feedback is an important predictor of employees’ job related outcomes such as satisfaction
(Churchill et al., 1976; Teas & Horrell, 1981; Teas et al., 1979; Becherer et al., 1982), is
positively related to commitment (Agarwal & Ramaswami, 1993; Hunt et al., 1985; Johlke et
al., 2000; Moch et al., 1979; Porter & Steers, 1973). Empirical research top management
turnover demonstrates that acquired executives may leave the organization due to removed
autonomy and status, and feelings of inferiority in relation to the acquirer (e.g. Hambrick &
Cannella, 1993; Lubatkin et al., 1999).
Cross-cultural studies point out different expectations concerning the need for
feedback (Masumoto, 2004). What about new expectations from supervisors or subordinates
as a result of the implementation of CBA, regarding initiative responsibility or obedience? In
collectivistic cultures, workers are more willing to accepting feedback on collective versus
individual performance (Van de Vliert, Shi, Sanders, Wang & Huang, 2004). Masumoto
(2004) showed that American interns who spent the summer in a Japanese company
complained about not getting enough feedback from their Japanese manager. This can be
easily understood through the high value that Japanese, as a collectivistic culture, put on
group harmony and saving face. Providing explicit feedback to individual members is a threat
to group harmony. If one team member is recognized as better than the others, group harmony
is at risk because this member is singled out as different from the rest of the team. It may also
affect the likelihood of being accepted by the team since this person is no longer the ‘‘same as
46
us’’. On the other side if the feedback is negative, it leads the person to lose face. Losing face
has negative implications for the individual’s sense of belongingness and for being part of the
group. Moreover, failure of one team member puts the reputation and performance of the
entire team at risk. For these reasons, Japanese managers typically provide implicit feedback,
often not when the event occurs, but informally when they think it is the right time (Earley,
1997). To summarize, the type of feedback, whether explicit or implicit, and whether directed
to the individual employee or to the team, seems to have differential effects on employees in
collectivistic versus individualistic cultures (Erez, 2010). Nevertheless positive feedback is
universally perceived as having a positive effect, as also shown in a cross-cultural study
comparing China and the Netherlands (Lam, 2002; Van de Vliert et al., 2004). Furthermore,
collectivists are more open to accepting feedback on collective versus individual performance
(Van de Vliert et al., 2004). For similar reasons, feedback seeking varies across cultures, with
individuals from individualistic and low power distance cultures (United States) being more
proactive seekers, and members of collectivistic and high power distance cultures seeking
feedback far less (Hong Kong) (Chen, Brockner & Katz, 1998; Morrison, Chen & Salgado,
2004).
6.3 LIMITS OF THE MODEL
Even though the model offers a window for exploring job changes and human
resources outcomes at individual level, some critics have to be addressed to the JCM. First,
Job characteristics design is culturally biased since it doesn’t take into account culture
challenges. Oldham and Hackman (2010) themselves admit the cultural variables have been
neglected in respect to using their model. They suggest incorporating cultural variable in the
context of their model.
Second, the lack of context sensitivity is highlighted. The universal dimension of
work design model and job characteristics are not sustainable in the current context of work,
which implies globalized teams, if not virtual teams. Parker, Wall and Cordery (2001)
addressed the following critic: «the restricted range of characteristics and outcomes addressed
by traditional theory is insufficient to capture the salient aspect of modern work». The modern
context of work (composition of workforce for e.g.) and the transformation resulting from
M&As lead to jobs changes and change in job perceptions as well. The current work context
is much more different today than that from which the major work design theories developed.
47
That doesn't mean JCT is obsolete but rather needs for some re-orientation (Parker & al.,
2001; Oldham & Hackman, 2010). The neglect social and contextual aspects of work in the
JCM have been already pointed out (Humphrey & Morgeson, 2007), but importance of social
environment in work design research has been recognized earlier (Turner & Lawrence, 1965).
The work context and the nature of work have dramatically changed (increased competition,
workforce composition, task more cognitively demanding) (Morgeson & Campion, 2003;
Parker, Wall & Cordery, 2001), yet work design do not address the impact of these change on
behavioral outcomes. Established work design theories developed principally from studies
conducted in the mid-20th century of male shop-floor workers working in a large scale
manufacturing plants in the US and UK. Rousseau and Fried (2001) argue for a much greater
attention to context in organizational research more generally. Existing theory are context
insensitive. This theory doesn’t embody the reality and the complexity of the situation.
Consequently in CBM&As context, I assume in this research project that cultural
differences particular focus must be integrated in the general theoretical framework, since the
relative salience of particular work characteristics will depend on the context. For Oldham
and Hackman, these differences in work context offers opportunities for new directions on
work motivation. “The phenomenon has changed but the issues have not” (Oldham &
Hackman, 2010). In that regard, I propose to add antecedents of work motivation such as
cultural perception of challenges into the Hackman and Oldham’s former model (1975). What
is the role of cultural friction perception on work motivation outcomes? Does that inhibit or
enhance work motivation outcomes?
7. CULTURE & PERCEPTIONS
The cultural background of organizational members will shape their cultural
perceptions, rendering them subjective. Perceptions are biased by our own cultural
background and reinforced by a cognitive process of categorization (Tajfel & Turner, 1986;
Triandis, Vassiliou & Nassiakou, 1968). Although culture is a group-level construct, it
influences individuals’ perceptions, values, and behaviors, especially with respect to social
interactions (see Figure 4 for the structure of this part).
Rottig (2013) pointed out that cultural differences are a perceived phenomenon, and it
becomes important for organizations to actively manage these perceptions in PMI.
48
Managerial perceptions may be affected in different ways, depending on the middle
manager’s background (experience, age, religion, status, experience of M&As, and past
experiences with other cultures). Employee perceptions start being shaped from their initial
interactions with their new managers. As a result, their perceptions of subsequent actions and
procedures will be influenced by their initial interactions (Klendauer & Deller, 2009).
Several authors suggest the use of individual-level perceptual measures to assess
cultural differences among managers, since their perceptions drive their strategic decisions
and behaviors (Johanson & Vahlne, 1977; O’Grady & Lane, 1996; Shenkar, 2001; Zhao, Luo
& Suh, 2004). In their study on M&A performance, Vaara, Junni, Sarala, Ehrnrooth, &
Koveshnikov (2013) found a linear association between performance and the kinds of
attributions managers make about cultural differences. Drawing on attribution theory, they
found that underperformance was often attributed to external factors (cultural differences),
while success was attributed to one’s own actions, thus reflecting a typical attribution bias.
Moreover, studies in CBM&As have already highlighted that cultural differences
cause communication problems, misunderstandings, and conflicts between the top
management teams of the acquiring and target firms, which in turn can cause stress and
negative attitudes among the acquired managers (Weber, Drori, & Tarba, 2012). The
perception and the understanding of emotional experiences are different among people from
different cultures because culture influences which events trigger emotions and determines
the norms of emotional expression (Matsumoto, 2001).
Using a measure first developed by Kluckhohn and Strodtbeck (1961), Maznevski, Di
Stefano, Gomez, Noorderhaven, and Wu (2002) found that the cultural backgrounds of
business people and business students from five countries had a very strong influence on their
perceptions of business matters. These findings reinforce the importance of assessing
individual-level cultural perceptions to gain a comprehensive picture of cultural influences.
49
Figure 4: Perception and culture in CBM&As settings
To overcome those cultural perceptions’ effects in M&As, Zueva, Jackson and Ghauri
(2007) describe a theoretical approach to culture during interactional experiences in M&A.
They offer a conceptual contribution to an integration management approach that fits the
purpose of this research project investigating, as it does, subjective managerial perceptions.
The management of cultural integration implies that cultural change processes can be
influenced by managers’ actions, on the assumption that cultural perceptions are shaped by
circumstances. Managers, in turn, have power to shape their circumstances. The authors of
that study draw two major conclusions regarding this approach that are relevant to my study:
‘‘First, managers, in their attempt to control the cultural integration process, can construct
cultural perceptions either through discourse (e.g. by emphasizing similarity between merging
companies and positive M&A outcomes) or through actions (e.g. by rewarding those who
comply with change). Second, managers can promote a rational understanding of each other’s
cultures among members of both M&A partners through educational initiatives and
interaction’’ (Zueva et al., 2007, p. 11). Their model of the integration management approach
shows the link between perception and attitudes toward cultural changes.
50
The interest to look at perceptions stemmed in the observation there is empirical
evidence against the traditional belief of a negative relationship between national cultural
differences and acquisition outcomes. Several case studies report problems particularly in
acquisitions between culturally close countries. Hence, these results lead us to conclude that it
wouldn’t be on “objective “cultural difference that the problem is addressed but rather on
subjective culture differences (perception). Very et al. (1996) warn against the fallacy of
assuming familiarity simply because the acquiring and the acquired firms share the same
national culture. In fact, they found that some cultural problems were more amplified in
domestic than in international acquisitions (Very et al., 1996). Thus problems do not occur
because of high national level of difference. This phenomenon is referred to as psychic
distance paradox. Operations in psychically close countries may result in failure because the
perception of similarity with home country prevents the managers from addressing the subtle,
but critical, differences, which exist between the countries (Fenwich, Edwards & Buckley
2003; O’Grady & Lane, 1996). Problems would occur more because of the perceived cultural
difference than the objective difference. Hence it would be more about perception of different
values, beliefs, lack of common frame of reference that would lead to some conflict during
interaction between managers in M&As.
These perceptions of differences would increase the likelihood of “friction”
occurrence in PMI context. Triandis, Vassiliou and Nassiajou (1968) examined in their cross-
cultural studies the role perceptions, behavioral intentions and perceptions of social behavior.
The meaning of social behavior is not the same across culture. Culture influences ineluctably
cognitions. Perceptions are about cognitions and cognitive processes, and perceptions are
biased. In their study, Triandis et al. (1968) analyzed the way persons perceive social
environment through the concept of subjective culture. Cultures differ in their perception of
the meaning of social behavior and intentions are misunderstood because misperceived.
Perceptions are biased, and reinforced by cognitive process of categorization (Tajfel &
Turner, 1985; Triandis et al., 1968).
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8. SOCIAL IDENTITY THEORY AND POST MERGER IDENTIFICATION
A number of important underexplored areas in CBA research still remain to be better
understood, such as organizational identification to the new firm born from the merger
(Rouzies, 2011; Weber & Drori, 2011). This study proposes to address these gaps, looking at
the motivating and retaining impact of work characteristics (job antecedents) on job related
outcomes, adding the role of post merger identification to the new firm.
8.1 SOCIAL IDENTITY THEORY
Organizational identification is rooted in Social Identity Theory (SIT) (Tajfel, 1982;
Tajfel & Turner, 1986). Hogg and Terry (2000) suggest that identity-related constructs and
processes have the potential to inform our understanding of organizational behavior, allowing
for developing a new conceptualization of motivation associated with social identity and a
better understanding of salience processes. To varying degrees, people derive part of their
identity and sense of self from the organizations or work-groups to which they belong. Thus,
the development of SIT is relevant to contribute to the context of this study since it can
particularly address a range of organizational phenomena and organizational changes such as
M&As (Hogg & Terry, 2000). Hogg and Terry developments advance our understanding of
social identity processes in intergroup contexts and the way in which people may internalize
group norms and align their behavior with these norms.
Although SI is a well-established theory in social psychology, scholars have only
begun to apply it to the multinational enterprise (MNE) context. At individual level of
analysis, a stream of research examined the antecedents and consequences of the identities
that subsidiary managers hold toward the local subsidiary and the wider MNE (Reade, 2003;
Vora & Kostova, 2007). At the team level, studies have focused on the factors that explain the
salience of identity-based sources of categorization and their implications for intra-group
cooperation (e.g., Hinds & Mortensen, 2005; Salk & Brannen, 2000).
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8.2 SOCIAL IDENTITY THEORY AND MERGERS
M&As are a particular group phenomenon since they benefit from the self-
categorization-based extension of SIT, capturing the inter- play of inter group and intra group
relations (Hogg & Terry, 2000). SIT offers an interesting explanation of why employees often
react so negatively to organizational changes or mergers (Hogg & Terry, 2000). Mergers may
be perceived as a threat to the stability and continuation of employees’ current identities.
Group membership is important in the creation and development of the self-concept. Social
identity lays on intergroup social comparisons that seek to confirm or to establish in group-
favoring evaluative distinctiveness between in-group and out-group, motivated by an
underlying need for self-esteem (Turner, 1975).
8.3 SIT AND CROSS BORDER MERGERS
In cross border mergers, where groups identities are even more salient because of
multiple sources of differences, such as organizational and national level of culture, in-group
and out-group effects can be over exaggerated (Tajfel & Turner, 1986). Tajfel and Turner
indicate that intergroup categorization leads to in-group favoritism biases and discrimination
against the out-group. Stereotyping process are more developed, relations between groups
become competitive and mistakes or violations of social rules by members of another group
are met with less tolerance (Hogg & Terry, 2000). Strong attachment to the in-group,
combined with current conflicts and/or a history of conflicts between the groups, will
intensify these effects. In post merger integration (PMI) processes, those group biases can
help in better understanding surrounding problems, increasing conflicting identities frames
between merging organizations. This would create strong feelings of ‘us vs. them’ and
additional barriers to achieve socio-cultural integration (Stahl & Voigt, 2008; Yildiz, 2016).
Cultural differences in the two organizational cultures can lead to competition between
employee groups and hostile ‘we-they’ attitudes.
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8.4 IDENTIFICATION TO THE ORGANIZATION IN PMI
SI serves as a basis for self-evaluation as well for comparison for others via in-group
identification (Salk & Shenkar, 2001). Organizational identification is defined in this study
as “the perception of oneness with or belongingness to an organization, where the individual
defines him or herself in terms of the organization(s) in which he or she is a member” (Mael
& Ashforth, 1992, p. 104). Firm members will identify more strongly with an organization
when they experience similarities between the organizational identity and their own personal
identity, and when they feel acknowledged as a valued member. The extent to which
employees are willing and able to identify themselves with the post-merger organization can
be considered a key factor in the (socio-psychological) success of mergers (Van Knippenberg
& Sleebos, 2006). In a study focusing on pre merger identification, Jetten, O’Brien and
Trindall (2002) found that high initial organizational identification had a positive effect on
long- term organizational commitment (Kroon, Noorderhaven & Leufkens, 2009)
.
Rouzies (2011) focused on dynamics of identification change throughout the merger
process. Rouzies concludes that the process of identification is not that employees identify to
the new born company giving up their identification to the old one, but that the two could co-
exist. Weber and Drori (2011) likewise draw attention to the role of organizational
identification with the acquired members during and after a merger. This variable has a direct
effect on acquired management’s behavior and also acts to moderate the effects of culture
clash in M&A, thus explaining contradictory findings in the literature.
Based on Seo & Hill’s (2005) integrative framework suggestions, the job
characteristics model (JCM) and social identity theory (SIT) will be used to better understand
how changes in job design may affect work motivation outcomes, such as affective
commitment, stress and intention to quit, and the effect of organizational identification (See
figure 5 attempt for an integrated model).
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Figure 5: Attempt for an integrated model of job characteristics: effect of organizational
identification, global mindset and perception of cultural friction.
Changes such as mergers are often characterized by a decrease in organizational
identification (Bartels et al., 2007), which in turn could affect motivational processes. These
effects are expected to occur through the satisfaction of basic psychological needs as
described in JCM, selecting only the need for autonomy and feedback (Hackman & Oldham,
1975) for reasons explained earlier in this paper. In the field study, I hypothesize that the
strength of these motivational effects depends also on a manager’s perception of cultural
friction and his/her global mindset (ability for managers to reorganize the way of thinking and
achieve an altered mindset so that they are able to recognize complex interconnections,
(Maznevski & Lane, 2004). Yet, little empirical evidence exists to support this hypothesis.
Only a limited number of management studies has focused on identifying the factors that
might contribute to post merger integration success rather than failure, highlighting the
creative potential of high diverse teams (Primecz, Romani & Sackmann, 2012). Stahl and
Tung (2015) conclude that it is not cultural differences per se that leads to conflicts but rather
the way the cultural differences are recognized, understood and managed.
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9. CHOICES OF METHODOLOGY
Cross-border acquisitions field studies often use quantitative measurements with ex-
ante categories which fail to provide a deeper understanding of cultural differences (Stahl &
Tung, 2015), Harzing and Pudelko (2016) suggest focusing instead on managers’ individual
problems in cross-border encounters on a qualitative basis and to return to explorative
groundwork instead of applying generic distance measures (Harzing & Pudelko, 2016; Stahl
& Tung, 2015).
It is interesting to look back to the definition of culture itself and the nature of culture,
to move to nature of distance, and then ripen the operationalization. The measurement
depends of the relevance and the accuracy of the conceptualization. There are distinct natures
of the construct that should be measured distinctly: culture, can be defined with its subjective
vs. objective aspects; this would imply subjective distance and objective distance. Objective
distance is already measured in fixed index, or studies using hard data (geographic, economic,
language, administrative). Qualitative approach is congruent with the subjective nature of
culture distance that has not been fully explored yet. More over it is obvious that most
international management research predominant research focuses on firm level of analysis in
the 2000s, while a small minority of studies is at the individual level (Werner, 2002). It is also
in line with Birkinshaw, Brannen & Tung (2011) reclaiming opportunities for qualitative
research in IB. Switching concept or measurement toward new perspectives are not
competitive choices. The choice of using one or the other depends on the central focus of any
study.
The individual level approach might bring complementary knowledge and accurate
understanding into individual motivation for instance, and decision-makers perceptions of
cultural issues. Researchers in CBA need to observe perceived differences of decision makers
to understand how it drives decisions. More research at the individual level of perception is
needed to gain a comprehensive picture of cultural challenges. Qualitative grounded approach
is consequently the first step for getting insights into it.
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9.1 CRITICAL INCIDENT TECHNIQUE (CIT)
Critical incident methodology, based on managers’ lived-experience dealing with
cross border acquisitions, may contribute to our understanding of these events by providing a
grounded, concrete picture of the various challenges which mergers and acquisitions elicit
(Brookfield, 1995). The use, the value and the relevance of the critical incident technique for
studying managerial perceptions in post merger integration will be discussed especially
highlighting the frictional effects linked to “face issues” (face saving, face giving, face losing)
during cross cultural interactions.
9.1.1 Critical incident technique background
The Critical Incident Technique (CIT) has been introduced 60 years ago in social
sciences. Flanagan (1954) is the father of this innovative technique. It presents a lot of
advantages regarding my objectives for this step of the project: focusing on individual
perceptions, getting more insight into the cultural differences phenomenon. It is a very
resourceful and relevant method when studying interaction situations, and especially when
studying perceptions, and when studying cultures. The method relies on a set of procedures to
collect, content analyze and classify observations of human behavior. This procedure is aimed
to “facilitate investigation of significant occurrences (events, incidents, processes, or issues)
identified by the respondent, the way they are managed, and the outcomes in terms of
perceived effects. The perspective is to gain understanding of the incident from the
perspective of the individual, taking into account cognitive, affective, and behavioral
elements” (Flanagan, 1954, p.56).
In respect to this definition, CIT appears to be relevant in the context of my study for
assessing perceptions of middle managers in PMI. According to Stauss and Mang (1999), CIT
method suits for assessing customers’ perceptions from different cultures. Hence, using this
method for assessing managers’ perceptions in a multicultural environment appears to be
appropriate.
Nevertheless, I have to be aware of the limitations of the method and control some of
the drawbacks when using it. Issues of sampling, objectivity, reliability, and systematization,
following the guidelines of Kolbe and Burnett (1991) can be criticized when using CIT
57
method. Respondent stories reported in incidents can be misinterpreted or misunderstood
(Edvardsson, 1992; Gabbott & Hogg 1996), design might be flawed by recall bias (Michel,
2001), sampling might be too small, or irrelevant with target population (very often students).
The instrument developed and discussed in this dissertation (essay 3) aims at
redressing one measurement problem when studying cultural effects, relying on ready-to-use
measures in cross-border acquisitions studies. The measurement focuses on one facet of
friction, be it derived from face concerns (essay 4), as a key concern for middle managers’
cultural interaction in post-merger integration settings, arising from grounded critical
incidents (Durand, 2016). Cultural friction occurs, under certain conditions, when individuals
from different cultural backgrounds interact and are in discord.
10. SUMMARIES OF THE ESSAYS
I divide my PhD thesis into four distinct essays (see figure 6), excluding the previous
part described. This part includes a theoretical reflection on new lenses on the concept of
distance with the aim of being published (first essay). In the second essay, I look at the
managerial perceptions of cultural challenges and job changes, using grounded theory in an
oil industry company10. Then the qualitative information collected from middle managers and
based on the critical incident technique will be transformed into a quantitative instrument
intending at measuring perception of cultural friction in CBM&As, in the third essay. I
develop and test the instrument with a sample of international business students. The fourth
essay is a specific focus on a component of the perceived friction related to face saving and
losing concerns11. Finally, the fifth essay is a field survey, and examines how cultural
perception of differences, global mindset and post merger organizational identification could
influence motivational work outcomes using the job characteristics model and the social
identity theory frameworks.
10 This essay has been published in International Business Review (Durand, 2016) 11 This essay has been published as a book chapter by Routledge (2017)
58
FIGURE 6: ESSAYS’ BRIEF DESCRIPTION AND CHRONOLOGY
Essay 1 Conceptual
essay
• Introduction to the PhD project & Theoretical framework • Why does the concept of cultural distance not fully explain the post-integration stage in CBM&As?
• Are there alternative ways to measure cultural differences in the context of M&As? • How do these perceptions of changes and cultural challenges affect work motivation outcomes ?
• Integrating an essay addressing the following questions“Fresh eyes on cultural distance in cross border M&As” • Moving from distance to friction
Essay 2 Grounded study
• Exploratory study • “Employing critical incident technique as one way to display the hidden aspects of post-merger integration. » published paper
• Durand, M. (2016). Employing critical incident technique as one way to display the hidden aspects of post-merger integration. International Business Review, 25(1), 87-102 • Purpose
• Further our understanding of socio-cultural dynamics in PMI using grounded approach, qualitative study • Show usage of CI methodology (Flanagan, 1954) to access managerial perceptions, emotion, and stress in a post merger setting
Essay 3 Methodological
essay
• Methodological paper • “Post Merger Cultural Friction: A New Approach To Measurement”
• Purpose • Presenting one possible solution to the measurement problem of cultural friction in PMI with the case of middle managers • Developing & confirming a critical incidents based instrument that measures cultural friction
Essay 4 Focus on one component of
friction
• Purpose • To shed light on cultural contacts, looking at cross-cultural frictions resulting from cross-border acquisitions from a grounded perspective.
• This is a published work, as a book chapter published in Routledge (2017) • Durand, M. (2017). « Cultural frictions in Post Merger Integration processes: A view on face when delaing with Asian coutnerparts » in Fuchs M., Henn S., Franz M., Mudambi R. Managing
Culture and Interspace in Cross-border Investments : Building a Global Company. Routledge
Essay 5 Empirical study
• Field Study • “Perceptions of Middle Managers in Cross-Border Acquisitions: Cultural friction, global mindset, and post merger identification as antecedents of Work Motivation Outcomes in Post-Merger
Integration?” • Purpose
• Examining how perception of culture differences and job challenges (friction tool), global mindset and post merger identification could influence motivational work outcomes in a field survey
59
10.1 ESSAY 2: EXPLORATORY STUDY
EMPLOYING CRITICAL INCIDENT TECHNIQUE AS ONE WAY TO DISPLAY THE HIDDEN ASPECTS
OF POST-MERGER INTEGRATION.12
This paper explores perceptions of job changes and cross-cultural interactions in a
multicultural team resulting from a CBM&A. It is based on a grounded qualitative study
interviewing and debriefing nine managers who are experts in cross-border acquisitions
(CBA). The purpose of this work is to demonstrate the relevance of Critical Incident
Technique methodology to accessing managerial perceptions, emotions, and stress in a post-
merger integration (PMI) stage. Critical incident technique (CIT) is examined from a novel
perspective to capture uncovered contextual conditions of PMI and show its relevance to
studying soft factors of CBA. The paper explains how CIT can be used to gain greater
understanding and to reveal the ‘‘hidden’’ aspects of M&A systematically. Interview results
are described: 22 critical incidents have been developed. Employing CIT, the conclusions
focus on the insights gained from the counter-intuitive positive emotional reactions of
managers to cross-border M&As.
Purposes
•Further our understanding of socio cultural dynamics in PMI using grounded approach
•Show usage of CIT methodology (Flanagan, 1954) to access managerial perceptions,
emotion, and stress in a post merger setting
Research Question: Is CIT a valuable/powerful and relevant method to explore managerial
perceptions and emotion in PMI in CBM&As?
Research Method
•Grounded approach
•CIT is examined from a novel perspective investigating “significant occurrences” managers
encounter in a cross-cultural context as a result of CBA
•Theoretical sampling technique: Interviews with 9 M&A experts
12 Paper published: Durand, M. (2016). Employing critical incident technique as one way to display the hidden aspects of post-merger integration. International Business Review, 25(1), 87-102
60
Because they have insights (Cartwright & Cooper, 2000)
Reflect their perceptions of the job changes and cultural challenges in PMI contexts
Control for industry (oil industry company)
Unit of analysis: individuals’ managerial perceptions on their experiences
Results
• Development of a series of 22 grounded CI from “experts” of CBA
• Providing a rich description of what managers see as important challenges they face in CBA
• Interesting findings beyond typical M&A studies
• Provide a view that contradicts the mainstream of M&A research tradition emphasizing
positive perceptions and emotions among managers experts of cross border M&As
• Formalization of general characteristics in the specific setting of PMI from those experts of
CBM&As experiences.
Contribution
•Theoretical: this exploratory study investigating ‘‘significant occurrences’’ (or critical
incidents) that managers encountered in a cross-cultural context due to an M&A contributes
to the human side of M&A and emotions in organizational changes using grounded
methodology
•Managerial: if managers can “cultivate” positive emotions/perceptions, integration process
can be facilitated
10.2: ESSAY 3: METHODOLOGICAL PAPER:
CULTURAL FRICTIONS IN POST MERGER INTEGRATION PROCESS: A NEW APPROACH TO
MEASUREMENT.
This is a methodological paper that aims at redressing one measurement problem
when studying cultural effects, relying on ready-to-use measures in cross border acquisitions
CBA studies. The paper presents the stages for building and developing a self-grounded
instrument in order to investigate managerial perceptions during cross cultural interactions in
international mergers and acquisitions. Validating critical incidents (CI) is presented as one
way to move towards building a rigorous measurement. The critical incidents generated from
61
a previous study can be incorporated into a measurement tool used to develop an index of
cultural friction assessing managerial reactions to the M&A process. The nature of this
friction derived from face concerns is discussed. Potentially, this line of research could allow
for a richer evaluation of factors that both promote and hinder successful IM&As.
•Purposes
•Developing and confirming a critical incident based instrument that measures cultural
friction
•Presenting one possible solution to the measurement problem of cultural friction in PMI with
the case of middle managers
Research Questions: What are the accurate critical incidents? / Are they reliable to measure
cultural friction?
•Research Method
•Scale development
Lab testing & Retesting (with IB students) and sorting process
- instrument developed from former critical incidents based questionnaire
•That better reflects the lived experience of those in the frontline
•Problem solving approach
Adjusting /Retesting #2/ Readjusting/Retesting #3 with target sample
•Results
- 7 selected out 22 CI/ 1 disregarded loading to both positiv behaviour (low cultural friction)
and negative behaviour (high cultural friction); 6 interrelated with a common factor (EFA) ;
Cronbach Alpha 0.605 (low but acceptable for exploratory research purposes)
- One facet of friction: “Friction derived from Face concerns”
- Reliability and validity confirmed
•Academic contribution
The instrument developed in a scientific and rigorous way opens up a new door for a possible
grounded contribution to the friction concept in the CBM&A field.
The novelty is to highlight face concerns as one facet of cultural friction for managers in PMI
stage after CBM&As, in a non Asian setting
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10.3 ESSAY 4: SPECIFIC FOCUS ON FACE AS ONE FACET OF CULTURAL FRICTION
CULTURAL FRICTIONS IN POST-MERGER INTEGRATION PROCESSES: A VIEW ON ‘FACE’ WHEN
DEALING WITH ASIAN COUNTERPARTS13
This chapter is added as a magnifying glass of the previous essay on cultural friction
with a specific focus on face concerns. The intent of this chapter is to shed light on cultural
contacts, looking at cross-cultural frictions resulting from cross-border acquisitions from a
grounded perspective. This is a possible grounded contribution to the friction concept at the
inter-individual level, revealing “face concerns” as one component of perceived friction, in a
specific context. Managers may have difficulties finding the behavior required by such
situations; yet this can be decisive for developing synergies and managing long term
relationships with colleagues, partners, and customers across international mergers (Brannen
& Wilen, 1998; Rottig, 2007). Perceived friction as a result of face is a particularly sensitive
aspect when the cultural backgrounds of the actors involve different work values and
practices. In particular, a focus on Asian and ‘Western’ middle managers could be inspiring
for future research directions.
10.4 ESSAY 5: FIELD STUDY
PERCEPTIONS OF MIDDLE MANGERS IN CROSS BORDER ACQUISITIONS: CULTURE FRICTIONS,
GLOBAL MINDSET AND POST MERGER IDENTIFICATION AS ANTECEDENTS OF MOTIVATIONAL WORK
OUTCOMES DURING POST MERGER INTEGRATION.
This study examines how perceptions of cultural challenges and job changes influence
work motivation and work related outcomes of middle managers, such as affective
commitment, job stress and intention to quit in cross border acquisition settings. Work
commitment and work satisfaction have been studied for decades, yet the human side of cross
border acquisitions on post merger integration phases has been the forgotten factor in research
on socio cultural dynamics. Building on job characteristics model and social identity theory, 13 Book chapter, published Durand, M. (2017). « Cultural frictions in Post Merger Integration processes: A view on face when dealing with Asian counterparts » in Fuchs M., Henn S., Franz M., Mudambi R. Managing Culture and Interspace in Cross-border Investments: Building a Global Company. Routledge
63
this study addresses this gap. Hypotheses are tested on 142 middle managers that have
experienced at least one CBA. I expect to find support for a positive effect of the friction
perceived (an index of friction derived from face concerns), global mindset inventory (GMI),
and identification to the new organization on work motivation outcomes. Theoretical
contribution to the M&A field will be demonstrated and recommendations for middle
managers to facilitate socio cultural integration discussed.
•Purpose
–Examining how perception of culture differences and job challenges resulting from a merger
(friction tool) could influence work motivation and related work outcomes in a field survey.
•Gap
–Limited and insufficient understanding on how job changes may result in job outcomes and
motivational process in CB M&As, especially for middle management in PMI (Rouzies,
2011; Weber & Drori, 2011)
•Research Method
– Data collection: Qualtrics on line survey software
– Population: 142 respondents with CBM&A experience were retained, middle
managers selected randomly among a database, English speakers (native language or
professional language)
—The questionnaire included 63 questions: 17 questions for the respondent profile, and 46
for the variables studied
•Data analysis and main findings
Using the partial least squares regression (PLS) model (Chin, 1998; Fernandes, 2012)
Analyses partially support my hypotheses and highlight specific relationships between work
antecedents, post merger identification, cultural friction, global mindset and work motivation
outcomes: 3 out 5 hypotheses are validated.
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•Contributions
Academic contributions:
- Extreme importance of organizational identification, already highlighted (Mirc, 2014), yet in
this study post-merger identification appears in the foreground
- Despite the importance of the JCM in other contexts, it might not be adequate to explain the
effects of job changes in the context of CBM&As.
- Cultural friction underlines a positive direct effect on work motivation outcomes. This result
seems counter intuitive at the first sight
Major contribution since the main stream of cultural perspective in CBM&As in PMI stage
often emphasizes the negative effects of cultural issues on M&A performance, and especially
from the human side (Stahl & Tung, 2014).
Managerial implications:
Consideration of the level of managers’ post-merger identification is crucial for successful
post-acquisition integration and managers should not neglect or downgrade organizational
identification to second place.
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APPENDIX
Table 1: Chronological steps of development of the research project for the PhD.
Step Time Research activity Outcomes/Comments Distance pre-study 2010-2012 Literature study • Feedback at conferences (EIBA Wienna,
GCCM Maastricht, EGOS Lisbon, AIB SE Fort Lauderdale)
Design of project 2011 Focus on friction
Writing a contribution on distance in CBM&As, collective paper (published in TIBR14)
• PhD project will be a compilation of essays following different steps to best capture managerial perceptions of cultural challenges and their effects in PMI stage of CBM&As
• Core concept: Cultural Friction (CF)
Exploratory study I CBM&As, Cultural Friction, Perceptions, Emotions, CIT
2012 Grounded study using Critical Incident Technique in an oil industry field
Open questions among experienced managers of CBM&As during post integration stages
Writing article on grounded study (published in IBR)
• Development of 22 critical incidents re situation of interest providing a rich description of what managers see as important challenges they face in CBA
• Formalization of general characteristics in the specific setting of PMI from those experts of CBM&As experiences.
• Interesting findings beyond typical M&A studies providing a view that contradicts the mainstream of M&A research tradition emphasizing positive perceptions and emotions among managers experts of cross border M&As
Methodological study II
2014-2016
Could the exploratory study based critical incidents be developed as an instrument to measure CF
Presenting one possible solution to the measurement problem of CF in PMI with the case of middle managers
Presented at EDEN seminar, Brussel, PhD workshop on CBM&As, received feedback, and opportunity for Routledge book chapter
14 Stahl, G. K., Angwin, D. N., Very, P., Gomes, E., Weber, Y., Tarba, S. Y., ... & Durand, M. (2013). Sociocultural integration in mergers and acquisitions: Unresolved paradoxes and directions for future research. Thunderbird international business review, 55(4), 333-356.
66
Refinement of instrument
2016
- Building a « provisory » instrument to be tested - First lab test of instrument with IB students - Readjusting of the instrument - Second lab test with IB students - Building Third test - Testing 3rd version for final instrument (3 CI added to increase items discriminant validity) - Completing the process to confirm a CI based instrument - Having a sample of target population (managers with experience of CBM&As) to answers the 3rd version of the instrument
Writing Art 2 What are the accurate critical incidents? / Are they reliable to measure cultural friction?
• Descriptive statistics to select relevant CI Selecting 7 out of 22 CI
• Using SPSS discriminant validity and reliability are tested using EFA : 4/7 CI confirmed /Cronbach Alpha=0.605
• Using SPSS discriminant validity and reliability are tested using EFA: 6/7 CI confirmed /Cronbach Alpha=0.933
• Confirmation of a measure of cultural friction (with 6 CI) for managers in PMI stage of CBM&As
• Developing the findings on “the common factor” that appeared to be measured (“friction derived from face concerns”)
Survey based study 2016 Examining how perception of culture differences and job challenges resulting from a merger (CF tool) could influence work motivation and related work outcomes in a field survey
Survey questionnaires with population of 142 managers in CBM&As
• Model tested using Path modeling: Analyses partially support my hypotheses and highlight specific relationships between work antecedents, post merger identification, cultural friction, global mindset and work motivation outcomes: 3 out 5 hypotheses are validated.
Overall findings 2017 • Positive effect of Cultural friction on Work motivational outcomes in
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International Post M&A
Overall Contributions: 1/explaining why the concept of culture distance doesn’t fully explain the complexity of PMI stage;
2/studying managerial insights from a grounded approach highlighted the relevance of the usage of critical incident technique;3/Offering an alternative measure of perceptions of cultural differences for middle managers in PMI stage, revealing face concerns as one component of friction
Source: M.Durand’s project diary
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Table 2: Examples of studies including different measures of distance
(Either qualitative or quantitative) at different levels of analysis
Table of examples of studies including different measures of distance (either qualitative or
quantitative) at different levels of analysis:
Three categories of distance in (m &a) business organizations
Culture Institution Psychic
Measurement method of collecting & interpretating information about distance
Level of analysis
Qualitative Quantitative Quali-tative
Quantitative Qualita-tive
Quantitative
Individual Definition Sum of factors prventing the flow of information from and to the market Vahlne & Wiedersheim-Paul (1973) Johanson & Vahlne (1977)
Definition Distance in the minds of individuals Measure Kogut & Singh Fletcher and Bohn (1998)
(Lee 1998) Definition Individual perceptions of factors affecting the understan-ding of a foreign business Measure Likert scale to measure per-ceived similarty between home and host coun-tries Nordstrom&Vahlne (1994) Sousa and Bradley (2005)
Group (work grouping) Department, functional units
Organizational Buono et al 1985 Elsass & Veiga, 1994 Olie, 1994
Chatterjee et al 1992 Weber et al. 1996
O’Grady & Lane 1996) Evans& Mavondo (2002)
National Definition Cultural differences between nations Hofstede : Morosini&al (1998) Barkema and Vermeulen (1997) Hennart and Larimo (1998) GLOBE : Sarala & Vaara, 2010 Doney & Cannon (1997) Schwarz : Drojendijk, 2006
Definition Country dif-ferences in respect to institutional fea-tures Kostova& Zaheer (1999) Shenkar& Xu (2002) Kaufman et al (1999) Dow & Karunaratna (2006) Gaur & Lu (2007) Guillé & Zhou, ( 2010)
Stöttinger a & Schlegelmilch (1998) Sousa& Bradley (2005
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ESSAY 2: EMPLOYING CRITICAL INCIDENT TECHNIQUE
AS ONE WAY TO DISPLAY THE HIDDEN ASPECTS OF
POST-MERGER INTEGRATION15
ABSTRACT
This paper explores perceptions of job changes and cross-cultural interactions in a multicultural team resulting from a cross-border merger and acquisition (M&A). It is based on a grounded qualitative study interviewing and debriefing nine managers who are experts in cross-border acquisitions (CBA). The purpose of this work is to demonstrate the relevance of Critical Incident Methodology to accessing managerial perceptions, emotions, and stress in a post-merger integration (PMI) stage. Critical incident technique (CIT) is examined from a novel perspective to capture uncovered contextual conditions of PMI and show its relevance to studying soft factors of CBA. The paper explains how CIT can be used to gain greater understanding and to reveal the ‘‘hidden’’ aspects of M&A systematically. Interview results are described: 22 critical incidents have been developed. Employing CIT, the conclusions focus on the insights gained from the counter-intuitive positive emotional reactions of managers to cross-border M&As.
Keywords: Emotion, Managers’ perception, Merger Acquisition, Post-integration stage,
Critical incident technique
1. Introduction
A series of merger waves has characterized recent decades (Buckley & Ghauri, 2002)
with questionable results. Mergers and acquisitions are undertaken on the assumption that
‘‘the combined company will have greater value than the two companies alone’’ (Marks &
Mirvis, 1992, p. 69). A body of research in international business has focused on financial and
strategic reasons to explain the high failure rates of M&As (Gomes, Weber, Brown, & Tarba,
2011; Cartwright & Cooper, 1996, 2000; Morosini & Singh, 1994). Indeed, the unsuccessful
results of M&As suggest ‘‘neither scholars nor practitioners have a thorough understanding of
15 Published paper in its original version : Durand, M. (2016). Employing critical incident technique as one way to display the hidden aspects of post-merger integration. International Business Review, 25(1), 87-102.
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the variables involved in the M&A process and their complex interrelationships’’ (Gomes,
Angwin, Weber, & Tarba, 2013, p. 30).
However, it seems important to examine the causes of international acquisition failure
through a different lens. The inconsistent findings show that there are different routes to
explain the high failure rates of M&As, and the multidisciplinary nature of M&As makes it
impossible to use only one perspective to elucidate the ‘‘gray box’’ conditions that exist in
M&As. CBA underperformance seems to be often attributed to human factors (Cartwright &
Cooper, 1992; Gomes, Mellahi, Sahadev, & Harvey, 2015), the cultural challenges involved
(Stahl & Voigt, 2008; Teerikangas & Very, 2006), and the difficulty of adequately managing
the post-acquisition integration phase (Haspeslagh & Jemison, 1991; Larsson & Finkelstein,
1999). It is increasingly argued that a strategic fit between the partners is not enough, and that
the success or failure of M&As ultimately depends on the individual and group-level
responses to the evolutionary and planned change processes following the establishment and
implementation of such partnerships (Gomes et al., 2011).
A complex set of variables seems to influence the development of PMI in different
ways. For example, the impact of mergers and acquisitions on individuals and groups may
differ widely depending on national and organizational cultural differences (Liu & Woywode,
2013; Vaara, Sarala, Stahl, & Bjorkman, 2012; Xing, Liu, Tarba, & Cooper, 2014), human
resource management practices (Weber & Tarba, 2010), knowledge transfer (Ahammad,
Tarba, Liu & Glaister, 2014; Junni & Sarala, 2013), and leadership approaches (Zhang et al.,
2014). Some of these variables seem underexplored. Some contributing factors seem not only
poorly understood but also missing, partly because they are very difficult to study
systematically. The sociocultural M&A literature reveals that the human side of these
phenomena is often referred to as the ‘‘forgotten’’ factor (Marks & Mirvis, 1986;
Kusstatscher & Cooper, 2005; Stahl & Voigt, 2005, 2008; Weber, Drori & Tarba, 2012).
However, despite the significant amount of research carried out on the human side of M&As,
the psychological dimension of the phenomenon has been disregarded (Gomes et al., 2015).
The study of the impact on individuals of cultural and corporate changes resulting from CBA
is still very scarce in the PMI stage and needs further investigation.
Moreover, there are very few streams of grounded theory work based on in-depth
interviewing or case research that could reframe the view of acquisitions and create new
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distinctions and links rooted in observation. Consequently, more research is needed to assess
individual psychological and emotional reactions to the organizational change resulting from
CBAs (Kusstatscher & Cooper, 2005). PMI cultural change has been considered a crucial
factor in the success of M&As for over 20 years (Faulkner, Child, & Pitkethly, 2003). It has
also long been recognized that people involved in M&As often resist cultural change (e.g.
Cartwright & Cooper, 1993; Buono, Bowditch, & Lewis, 1985). Despite this recognition, few
studies provide insights into the management of PMI cultural change (Schweiger & Goulet,
2005; Ellis & Lamont, 2004).
To address these research gaps at the individual level, this study introduces the critical
incident technique (CIT) as one potential methodology to investigate the individual
perceptions, interactions, and emotions of managers, who, in a sense, are the real ‘‘experts’’
in cross-border mergers. This grounded, approach-based study (Charmaz, 2008; Glaser, 1998;
Glaser & Strauss, 1967; Stern & Porr, 2011) focuses especially on managers’ emotional
reactions to their intercultural encounters and their perception of cultural challenges in PMI in
an oil industry company.
The theoretical contribution of this qualitative grounded work is to further our
understanding of the socio-cultural aspects of PMI by investigating managerial perceptions.
This paper advances our current understanding by developing a richer appreciation of the
socio-cultural factors that affect merging organizations. By eliciting a qualitative approach,
depicting critical incidents from the managers themselves16, attempts to assess and monitor
PMI processes will better reflect the lived experiences of those on the front line of these
processes, thus allowing for clearer understandings, more informed interventions, and the
development of ways to facilitate the PMI process.
Hence, the purpose of this study is twofold: to shed light on the challenges faced by
individuals in PMI settings from the perspective both of organizational and of cultural
change. In particular, I seek to investigate more deeply individual reactions to the change
processes triggered by PMI; to support the value, the strength, and the relevance of the CIT
16 i.e. getting managers themselves to describe critical incidents.
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methodology as one way to reveal managerial perceptions, emotions, and stress in the PMI
stage.
Additionally, most studies rely heavily on quantitative and analytical tools (Rottig,
Reus, & Tarba, 2013). This approach does not necessarily capture the socio-cultural aspects
of the complex and multifaceted organizational change processes stemming from M&As
(Almor, Tarba, & Benjamini, 2009). A grounded perspective, based on people who have
actually experienced a merger, rather than developing theories and inferring hypotheses from
existing theories, would fill this gap. This aims to explore the question: ‘‘ How do middle
managers perceive cultural challenges and job changes in the PMI stage?’’ Stahl et al. (2013)
calls for new methodological approaches to develop a more holistic understanding of these
complex phenomena, instead of simply replicating the same variables within the same
research frameworks. The CIT used in this study could enable researchers to reveal the hidden
aspects of PMI in a systematic way, by grasping managers’ perceptions of job changes and
cultural challenges in this specific context.
In the next section, I will develop the theoretical background to the socio-cultural
dynamics and their accompanying emotional reactions in the PMI stage, consequently context
of job changes and upheaval. I will then introduce the CIT methodology as one way to
investigate emotions and perceptions in CBA; and explain how I used it to develop a series of
critical incidents derived from interviews with middle managers about their experiences with
M&As. These critical incidents all reflect managers’ perceptions of job changes and cultural
challenges in PMI settings. The final sections provide counter-intuitive discussion of what
emerges from the interviews, i.e., that conflict or difficulties due to change are perceived in a
positive way; and conclusions from both theoretical and practical/managerial perspectives, as
well as limitations to the study.
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2. Discussion of prior literature and analytical framework
2.1. Mergers and socio-cultural integration
A trend in management research is to focus on the cultural aspects of international
M&A performance (Arikan, 2004; Cart- wright & Schoenberg, 2006; Rottig & Reus, 2006).
Buono et al. (1985) conceptualized M&As as an attempt to combine different organizational
cultures. Some researchers have argued that the complexity of integrating the different
cultures of the combined firms is what impedes M&A performance (Marks & Mirvis, 2001;
Schweiger & Walsh, 1990; Shrivastava, 1986). The effects of differing cultures have been
examined at both the organizational level (Chaterjee, Lubatkin, Schweiger, & Weber, 1992;
Stahl, Medenhall, & Weber, 2005; Stahl & Voigt, 2008) and at the national level (Barkema,
Beld, & Pennings, 1996; Calori, Lubatkin, & Very, 1994; Morosini, Shane, & Singh, 1998;
Reus & Lamont, 2009; Weber & Shenkar, 1996). According to Very, Calori, and Lubatkin
(1993, p. 343), ‘‘cross-national mergers are a complex phenomenon, sometimes influenced by
national cultural differences, sometimes by organizational influences, sometimes by both and
sometimes by neither’’. This statement is apparently still valid (Weber, Tarba, Stahl, & Rozen
Bachar, 2012). Most research has considered one level of cultural influence (Teerikangas &
Very, 2006), and only a few studies combine both levels, national and organizational cultural
differences (Sarala & Vaara, 2010; Ahammad et al., 2014). Yet combining both levels is in
line with the trend toward multilevel perspectives, and contradictory findings may result,
depending on whether we examine the effects of corporate culture or of national culture.
Sarala and Vaara (2010) address both organizational and national culture differences in their
analysis of how cultural factors influence knowledge transfer, which, in turn, may influence
post-acquisition outcomes, and they clarify the role of cultural factors as an explanation of
post-acquisition knowledge transfer. They find a positive effect of national culture difference
on knowledge transfer and no significant effect of organizational culture difference. In
another study combining both organizational and national levels of culture differences,
Ahammad et al. (2014) finds no effect of national culture on knowledge transfer, but a
mediating effect of differences at an organizational level on knowledge transfer and CBA
performance. These studies support the need to clarify the role of organizational or national
cultural differences and to clearly differentiate the two concepts (Ahammad et al., 2014).
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PMI has increasingly attracted researchers’ attention in recent decades (Birkinshaw,
Bresman & Hakanson, 2000; Angwin, 2004). Successful integration17 is essential to realize
the business potential of an acquisition, whether domestic or cross-border (Child, Faulkner, &
Pitkethly, 2001). The acquisition literature has stressed the importance of an appropriate
management of this stage for value creation and performance (Haspeslagh & Jemison, 1991;
Weber, Drori, & Tarba, 2012), since it is crucial in determining synergy potential and the
subsequent success of the marriage (Oberg & Tarba, 2013; Almor, Tarba, & Benjamini, 2009;
Ellis, Weber, Ravek, & Tarba, 2012). Despite the importance of cultural challenges during the
PMI process on organizational performance (Rottig, 2007; Almor, Tarba, & Benjamini,
2009), the tendency has been to focus more on financial and strategic questions instead
(Buono et al., 1985; Cartwright & Cooper, 1996; Ivancevich, Schweiger, & Power 1987;
Marks & Mirvis, 2001; Pablo, 1994; Schweiger & Weber, 1989).
Regarding the PMI stage in cross-border M&As, empirical evidence suggests that
acquisitions across borders perform even more badly than those within borders (Angwin &
Savill, 1997; Olie, 2005), and shows that national culture differences increase integration
problems. Other researchers argue that because the international cultural challenges are more
obvious they increase the awareness of cultural factors in the M&A process (Stahl, 2001), and
actually result in better performance for M&As. Integration Management is simply more
cautious in these cases. Cultural incompatibility is often cited as a source of PMI issues
(Nahavandi & Malekzadeh, 1988). Researchers argue that a lack of national cultural fit (i.e.,
cultural distance) is the key issue that leads to cultural clashes between the merged
workforces (Datta & Puia, 1995; Larsson & Risberg, 1998) and complicates the PMI process
(Very & Schweiger, 2001). However, a substantial amount of research in the M&A field leads
to inconsistent findings, inter- twining variables, highlighting the positive effects of cultural
differences on organizational performance (Very, Lubatkin, & Calori, 1996; Larsson &
Risberg, 1998; Morosini, Shane, & Singh 1998; Sarala & Vaara, 2010), negative ones
(Buono, Bowditch, & Lewis, 2002; Cartwright & Schoenberg, 2006; Johnson et al., 2005), or
mixed results (Reus & Lamont, 2009). Cultural differences have even been labeled the
‘‘double-edged sword’’ (Reus & Lamont, 2009), arguing that both constraints and
enrichments are important effects of cultural differences; or the ‘‘distance paradox’’
17 In this paper: ‘‘Integration as a Process of Organizational Change’’ (Graebner & Eisenhardt, 2004).
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(O’Grady & Lane, 1996) to refer to the inconsistency of these findings. In their literature
reviews of the role of culture in M&As, both Stahl and Voigt (2005) and Teerikangas and
Very (2006) assert the importance of better understanding the impact mechanisms of culture
in PMI as a way to explain more fully those contradictory findings. Shrivastava (1986) argued
that cultural integration is the most complex and most important aspect of the PMI process.
The socio-cultural M&A literature reveals that the human side of these phenomena is
often referred to as the ‘‘forgotten’’ factor (Marks & Mirvis, 1986; Kusstatscher & Cooper,
2005; Stahl & Voigt, 2005, 2008). An important M&A research strand focusing on merger
integration seems to indicate that human factors are major reasons for failure (Gomes et al.,
2015). Weber, Drori and Tarba (2012) open the ‘‘black box’’ of behavioral issues in M&A,
considering it a complementary approach to finance and strategy issues in PMI settings. They
emphasize the role of trust and the removal of autonomy in moderating the effects of culture
clash in PMI. Ahammad, Glaister, Weber and Tarba (2012) state that the main reason for
inconsistent results in M&A studies is the failure to take human resources practices into
account. Despite the acknowledgment in more recent studies of the potential contribution of
human resources practices, and despite recognition of the importance of understanding the
human side of M&As, especially when they cross borders, research in this area remains scant
(Sinkovics, Zagelmeyer, & Kusstatscher, 2011; Teerikangas, 2012).
Related human problems during the PMI process have been identified (Buono et al.,
1985; Nahavandi & Malekzadeh, 1988) and conceptualized (Weber & Drori, 2011). Yet the
complex nature of the study of soft factors such as managers’ perceptions in PMI may be one
of the reasons why they do not receive sufficient attention, especially at the micro level. A
critical question is whether managerial perceptions affect managerial behavior and
motivation.
2.2. Perception and culture
Understanding the potential impact of perceptions is impor- tant, as they can influence
employees’ attitudes and behavior, and subsequently organizational performance. The role of
managerial perceptions in cross-border M&As is relatively complicated and may be a
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neglected area in management and international business research because it is difficult and
delicate to access.
The cultural background of organizational members will shape their cultural
perceptions, rendering them subjective. Perceptions are biased by our own cultural
background and reinforced by a cognitive process of categorization (Tajfel & Turner, 1986;
Triandis, Vassiliou, & Nassiakou, 1968). Although culture is a group-level construct, it
influences individuals’ perceptions, values, and behaviors, especially with respect to social
interactions. Rottig (2013) pointed out that cultural differences are a perceived phenomenon,
and it becomes important for organizations to actively manage these perceptions in PMI.
Managerial perceptions may be affected in different ways, depending on the middle
manager’s background (experience, age, religion, status, experi- ence of M&As, and past
experiences with other cultures). Employee perceptions start being shaped from their initial
interactions with their new managers. As a result, their perceptions of subsequent actions and
procedures will be influenced by their initial interactions (Klendauer & Deller, 2009). Several
authors suggest the use of individual-level perceptual measures to assess cultural differences
among managers, since their perceptions drive their strategic decisions and behaviors
(Johanson & Vahlne, 1977; O’Grady & Lane, 1996; Shenkar, 2001; Zhao, Luo & Suh, 2004).
In their study on M&A performance, Vaara, Junni, Sarala, Ehrnrooth, and Koveshnikov
(2013) found a linear association between performance and the kinds of attributions managers
make about cultural differences. Drawing on attribution theory, they found that
underperformance was often attributed to external factors (cultural differences), while success
was attributed to one’s own actions, thus reflecting a typical attribution bias.
Using a measure first developed by Kluckhohn and Strodtbeck (1961), Maznevski, Di
Stefano, Gomez, Noorderhaven, and Wu (2002) found that the cultural backgrounds of
business people and business students from five countries had a very strong influence on their
perceptions of business matters. These findings reinforce the importance of assessing
individual-level cultural perceptions to gain a comprehensive picture of cultural influences.
A theoretical approach to culture during interactional experiences in M&A is
described by Zueva, Jackson, and Ghauri (2007). They offer a conceptual contribution to an
integration manage- ment approach that fits the purpose of this paper investigating, as it does,
subjective managerial perceptions. The management of cultural integration implies that
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cultural change processes can be influenced by managers’ actions, on the assumption that
cultural perceptions are shaped by circumstances. Managers, in turn, have power to shape
their circumstances. The authors of that study draw two major conclusions regarding this
approach that are relevant to my study: ‘‘First, managers, in their attempt to control the
cultural integration process, can construct cultural perceptions either through discourse (e.g.
by emphasizing similarity between merging companies and positive M&A outcomes) or
through actions (e.g. by rewarding those who comply with change). Second, managers can
promote a rational understanding of each other’s cultures among members of both M&A
partners through educational initiatives and interaction’’ (Zueva et al., 2007, p. 11). Their
model of the integration management approach (below) shows the link between perception
and attitudes toward cultural changes.
2.3. Organizational changes and perception of job changes
Members of organizations experiencing M&As often face significant changes in their
organizational culture. This often involves some kind of change to employees’ jobs. The
individuals involved may react differently, some seeing the changes as non- threatening and
as an opportunity (Kusstatscher & Cooper, 2005; Larsson & Lubatkin, 2001). Resistance to
such change is common- place and is recognized as a critical factor for M&A success (e.g.,
Cartwright & Cooper, 1993; Harman, 2002; Larsson & Lubatkin, 2001; Schweiger,
Ivancevich, & Power, 1987). In other words, all managers operating in highly uncertain or
certain environments do not necessarily perceive the same degree of uncertainty (or
certainty). This perceptual difference in turn affects work-related attitudes. Job changes may
hold both positive and negative outcomes. Positive outcomes are seen in the form of job
enrichment, fulfillment of development needs, more satisfaction, or improved labor market
opportunities (e.g., Campion & McClel- land, 1991; Cordery, Sevastos, Mueller, & Parker,
1993). Job changes may also imply costs, such as the end of a satisfying work situation, an
unwanted career move, increased workload, new training requirements, or increased traveling
time. As a result of these various benefits and drawbacks, employees’ attitudes toward such
changes may differ.
The job design model (Herzberg, 1966; Hackman & Oldham, 1976, 1980) offers a
window into exploring job changes and human resources outcomes at an individual level, as
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the model includes the immediate relationship between the job and the performer, and
suggests how this relationship should be designed to increase the psychological
meaningfulness of the job. This model has stimulated much research and received
considerable empirical support (Fried & Ferris, 1987; Hackman & Oldham, 1976; Loher,
Noe, Moeller, & Fitzgerald, 1985; Spector, 1985).
The job characteristics model of work motivation (Hackman & Oldham, 1976, 1980)
has resulted in a robust, reliable, and tested instrument to analyze the effects of job change
(Oldham & Hackman, 2010). Job Characteristics Theory (JCT) (Hackman & Oldham, 1976,
1980) describes the relationships between job characteristics and individual responses to
work. The authors suggest that motivational work characteristics (namely skill variety, task
identity, task significance, autonomy, and feedback) affect behavioral and attitudinal
outcomes through their influence on three psychological states (Experienced meaningfulness,
i.e., the degree to which an employee feels the job has value and importance, Experienced
responsibility, i.e., the degree to which an employee feels liable and accountable for job
results, and Knowledge of results, i.e., the degree to which the employee is aware of his or her
level of performance).
The challenge is to reframe the Job Characteristics Model in the context of cross-
border mergers. Regarding the need for autonomy, for example, Very, Lubatkin, Calori, &
Veiga (1997) and Krug and Nigh (2001) suggest that culture clashes are more likely in
situations where managers feel a loss of autonomy and appreciation from superiors. In a
recent study on the role of trust in PMI, Weber, Drori and Tarba (2012) investigate the effect
of culture clash and autonomy removal on stress and on M&A performance. Removal of
autonomy often causes human behavior problems and turnover among the acquired managers
and employees (Lubatkin, Schweiger, & Weber, 1999). In their study comparing the effect of
trust on a German–Singaporean merger, Stahl, Chua, and Pablo (2012) found a significant
effect of national culture on autonomy removal. This ‘‘autonomy’’ characteristic seems to be
a determining factor in the integration stage of CBA.
The questions raised are: in the context of change implied by the mergers, to what
degree did employees perceive job changes as cultural challenges? How do these perceptions
affect their performance and motivation? Employees who are not ready for a job change that
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is required of them may react to the organization’s change initiatives with feelings of stress
(Lu, Siu, & Cooper, 2005).
2.4. Change and emotion
Many researchers agree that organizational transitions, such as M&As, are typically
followed by major structural and cultural changes (Haspeslagh & Jemison, 1991; Very,
Lubatkin, & Calori, 1996). Changes and disruption resulting from M&As lead individuals to
experience stress and negative emotions (Kiefer, 2002; Kusstatscher & Cooper, 2005; Huy,
1999, 2012). M&As are different from other forms of organizational change because of the
scale of such events as well as the stress of dealing with so many unknowns (Schweiger &
Ivancevich, 1985). Negative emotions such as anger, anxiety, fear, disorientation, frustration,
and confusion can result (Kusstatscher & Cooper, 2005). Some experts refer to these reactions
as ‘‘merger syndrome’’ (Marks & Mirvis, 1986; Sinkovics, Zagelmeyer, & Kusstatscher,
2011). They describe these reactions as ranging from denial and fear at the beginning to final
acceptance toward the end of the process; the way an organization deals with these reactions
determines outcomes such as levels of employee commitment and produc- tivity, the amount
of staff turnover, and the level of satisfaction with, and loyalty to, the organization.
Cartwright and Cooper (1993) found that under M&As ‘‘managers had significantly higher
abnormal mental health scores than the normal population’’. Some common merger stressors
include uncertainty, insecurity, and fears over job loss, job changes, job transfers,
compensation changes, and power, status, and prestige changes (Schweiger & Ivancevich,
1985). These stressors can lead, in turn, to organizational outcomes such as absenteeism, poor
performance, and higher employee turnover. Organizations that acknowledge, recognize, and
attend to their members’ emotional reactions can significantly increase group and
organizational effectiveness (Huy, 1999; Reus, 2012).
Cultural differences cause communication problems, misunderstandings, and conflicts
between the top management teams of the acquiring and target firms, which in turn can cause
stress and negative attitudes among the acquired managers (Weber, Drori, & Tarba, 2012).
The perception and the understanding of emotional experiences are different among people
from different cultures because culture influences which events trigger emotions and
determines the norms of emotional expression (Matsumoto, 2001).
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Emotional reactions are central to the ‘‘human side’’ of M&As (Buono & Bowditch,
1989), and it seems critical for organizations to pay more attention to them (Huy, 1999, 2012;
Kusstatscher, 2006). Negative emotions and stress may occur at any level of the
organizational hierarchies involved in an M&A and can result from both friendly and hostile
takeovers (Marks & Mirvis, 1997), although one study suggests that a friendly takeover is
more likely to result in more positive employee reactions (Fairfield-Sonn, Ogilvie, &
DelVecchio, 2002). Negative reactions seem to be greatest in the early stages of a merger, and
research suggests that these reactions can become more positive over time if they are well
managed (Ashkanasy & Holmes, 1995; Graves, 1981; Ivancevich et al., 1987; Schweiger,
Ivancevich, & Power, 1987).
Although most M&A studies have focused on negative perceptions and emotions, it
has nevertheless been argued that employees may perceive M&As positively (Amiot, Terry,
Jimmie- son, & Callan, 2006; Cartwright, Tytherleigh, & Robertson, 2007; Hassett, 2012;
Teerikangas, 2012). The Amiot et al. (2006) study argues that the use of expert consultants,
effective leadership, and a well-informed workforce can lead to feelings of self-efficacy
among employees at the beginning of the merger and an appraisal of the event later on as
being less stressful. Cartwright et al.’s (2007) study demonstrated the critical importance of
open and genuine communications for the success of the entire M&A process. Employees
who perceive that their concerns are both being heard and addressed experience less stress
and show greater organizational commitment. Appelbaum, Gandell, Yortis, Proper, and Jobin
(2000) have made similar arguments. Teerikangas (2012) found positive employee reactions
in six pre-merger settings because the employees viewed the acquisition as an opportunity
rather than a threat. Hassett (2012) noted that most of the research on the human side of PMI
tends to focus on the problems that arise, such as turnover, dissatisfaction, low motivation,
and low commitment. She proposed a model to deal effectively with these issues by building
high organizational commitment to the merged organization. Kusstatscher and Cooper (2005)
have also argued for the importance of promoting organizational commitment during the PMI
process. The assumption is that this will result in better organizational performance.
Yet, with few exceptions, even very recent reviews suggest that the psychological,
cultural, and people issues with regard to M&As are still not being adequately addressed
(Reus, 2012; Sinkovics, Zagelmeyer, & Kusstatscher, 2011; Tarba, personal communication,
Egos Rotterdam, July 2014). This study proposes to systematically explore the perceptions
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and emotional reactions of managers in the M&A context. The starting point will be the
accounts of the managers themselves, thus employing a grounded perspective. Such first-hand
accounts have been vastly under-represented and under-explored (Huy, 2012), and this
research hopes to address that oversight. Employing the critical incident methodology is one
potential way to fill this gap.
3. Core concepts and analytical framework
Drawing on the literature just reviewed to provide the background, this research
explores managers’ perceptions of the critical incidents that arise during M&As. The results
will be the critical incidents themselves, which provide a rich description of what managers
see as the important challenges they face in M&As, especially when the merging
organizations cross national borders. Future research will demonstrate how these critical
incidents can be incorporated into measurement tools used to assess employee reactions to the
M&A process. Ultimately, this line of research will allow for a richer evaluation of factors
that promote or hinder successful M&As.
3.1. Critical incident technique: a qualitative approach
Critical Incident (CI) methodology (Flanagan, 1954), based on managers’ lived
experience in dealing with M&As, contributes to our understanding of these events by
providing a more grounded, concrete picture of the various challenges M&As elicit
(Brookfield, 1995). These qualitative data can be developed into quantitative tools to assess
managers’ attitudes toward their new peers, their decision-making strategies, and motivational
factors in the merger environment. They capture important cultural aspects such as work
values and culturally variant ways of thinking and behaving (Rottig et al., 2013). These
measurement tools will reflect the realities of these events, rather than depending on abstract
theoretical assumptions about cultures and their distances, and what such distances imply for
the merging organizations. The advantage of this approach is that it depicts, in a very concrete
fashion, the cultural values that underline conflicts arising in a PMI context.
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3.2. Analytical framework
On the basis of the arguments developed in the previous sections, the following
questions are addressed (Fig. 1):
(1) Is the CIT method a relevant tool for surfacing emotions, perceptions of cultural
challenges, and job changes in a structured way in the organizational change due to the
M&A?
(2) Could the Job Characteristics model be tested from a grounded perspective in this context
of job changes?
It follows that managerial perceptions collected using CIT methodology will deepen
our knowledge of the nature of the misunderstandings that arise when middle managers
perceive differences or cultural and job challenges. The next table (Fig. 2) presents a model
that synthesizes our current understanding of the influences of organizational and national
culture on CBA perfor- mance, including mediating variables such as managerial percep-
tions and stress and emotion.
4. Empirical study
This section describes the implementation of the CI method to produce the critical
incident outcomes of this study. This is an exploratory, qualitative method that allows for the
evaluation of this framework and the eventual development of a quantitative instrument to
assess managers’ perceptions of the stress they experience in the context of M&As. What
follows is a brief description of the methodology of critical incidents. Drawing on the
characteristics of the systematic collection of these critical incidents, I describe how the
company and the informants within that organization were selected, how the data was
collected and classified, and how short versions of the incidents themselves were developed.
The detailed description in this section aims at helping future qualitative researchers who are
interested in reproducing this methodology to follow the systematic stages and potentially to
run future research projects using CIT.
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4.1. Research method
4.1.1. CIT
A rather neglected investigative tool in international business research is CIT, first
developed by Flanagan (1954). He developed this technique as a suite of procedures for job
analysis purposes, with the aim of identifying the critical requirements for job success among
US Air Force pilots. It relies on a set of procedures to collect, to content-analyze, and to
classify observations of human behavior. Data are gathered through semi-structured
interviews focusing on how people actually behaved in order to solve practical problems in
specific situations. This procedure is aimed at facilitating the investigation of significant
occurrences (events, incidents, processes, or issues) identified by the respondent, the way they
are managed, and the outcomes in terms of perceived effects (Edvardson & Roos, 2001). The
objective is to ‘‘gain understanding of the incident from the perspective of the individual,
taking into account cognitive, affective, and behavioral elements’’ (Chell, 2004, p. 56). Such
an incident can either be negative, i.e., an incident which could have resulted in an ineffective
outcome, or positive, i.e., an incident which can be characterized as an opportunity and
caused, or could have caused, a positive outcome (Olsen, 1992). The event being related is
typically unusual and memorable for the teller, and thus is seen as ‘‘critical’’ (Flanagan,
1954). It is often seen as an event that elicited strong emotions on the part of the teller (Cope
& Watts, 2000). The CIT methodology itself ensures that only important or critical events are
considered. Olsen (1992) and Edvardsson (1992) both refer to the unexpected nature of an
event that is required to make it ‘‘critical’’, namely, when it deviates from the expectations of
the actor, that is, from what is considered normal or expected. This differs from studies on
storytelling and narratives (e.g., Vaara, 2002; Vaara & Tienari, 2011), where the stories are
sources of conversation in the organizational discourse. Critical incidents, specifically, are
exceptional or turbulent situations in which the sensitivities of the parties are heightened
(Holmlund & Strandvik, 2005). The emotionally laden nature of the critical events has been
highlighted by Cope and Watts (2000). According to them, a perceived ‘‘critical incident’’ is
essentially an emotional event, in that it represents a period of intense feelings, both at the
time and during its subsequent reflective interpretation (Cope & Watts, 2000).
INSERT FIG.1 HERE
_ _ _ _ _ _ _ _ _ _ _ _
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INSERT FIG.2 HERE
_ _ _ _ _ _ _ _ _ _ _ _
Yet, although it has become a widely used qualitative research method, and today is
recognized as an effective exploratory and investigative tool, the use and the value of this
methodology in the M&A field have not been fully explored. Kusstatscher and Cooper (2005)
used it as a ‘‘warm-up’’ step (combined with other techniques) in their interview process for
exploring the emotions of top managers, middle managers, and employees in PMI settings.
Hajro (2014) employed the critical incident approach in a longitudinal study to develop a
model of sociocultural integration processes. Her focus was on how individuals coped with
problems resulting from cultural differences, and her work demonstrates the tremendous
value of this technique. Her data resulted in numerous detailed descriptions that were later
used for purposes of triangulation (Hajro, 2014).
The above review supports the choice of CIT as a useful tool in situations such as
cross-border PMIs, where emotional reactions to cross-cultural issues are at stake. Chell
(1998, chap. 3) makes claims for the high ‘‘versatility’’ of this qualitative method that makes
it adaptable to many contexts.
4.1.2. Sampling
The sampling process aimed to identify an organization and individuals to provide the
information necessary for developing and improving the analytical framework. As regards
this goal, the sampling process initially followed the principles of theoretical sampling. Glaser
and Strauss (1967, p. 45) describe theoretical sampling as ‘‘a process of data collection for
generating theory whereby the analyst jointly collects, codes and analyses his data and
decides what data to collect next and where to find them, in order to develop his theory as it
emerges’’. The population from which the sample was drawn for this study was defined as
middle managers with recent exposure to international mergers and acquisitions. The
organization, an oil industry company, did experience a sequence of several successful
mergers.
99
The focus on middle managers is relevant because of their role in organizational
change (Cartwright & Cooper, 2000). The M&A literature confirms they are the people most
affected by organizational change (Kusstatscher & Cooper, 2005): ‘‘they are responsible for
the implementation of top management’s decision, they are subject to decision makers’
expectations, to uncertainty due to the lack of top-down information and are exposed to
employees’ irritations, fears and questions. Middle managers are also regularly in contact
with colleagues (middle managers) from the partner company, but generally on a more
informal level than top managers are. Therefore they get more insights and confront more
problems’’ (Kusstatscher & Cooper, 2005, p. 159).
The informant sample includes nine middle managers18. It was based on volunteer
participation, and on a random sample among the 24 managers belonging to this multicultural
team. The managers were not obliged to participate and the ‘‘snowball effect’’ biases
(representativeness) were avoided by having the sample fixed before the interviews started.
Different job positions and departments are represented such as Drilling Manager, Financial
Director, Financial Analyst, Geologists, Administrative Assistant, Hygiene and Security
Manager.
The nine managers who participated as ‘‘key informants’’ had all experienced
international M&As: five had been directly involved in at least two CBAs, and four had
experienced M&As, but had not been directly involved in the strategic or financial decision of
the takeover. Yet those four informants have been treated the same way as the more
knowledgeable agents, since they have stories to share regarding the generalization of their
experiences of CBA. As suggested in Gioia et al. (2013), I give an extraordinary voice to the
key informants. They had all worked with different interlocutors from different backgrounds,
and for most of them (except for one19), the interlocutors were in a different country. The
interest of such a sample is not that they belong to the same company, or the same country,
but rather than they have this expertise in M&A in common, irrespective of the company or
the country. They are able to inform about their own experiences of M&As, and maybe to
generalize on these experiences. This is applying to Child’s suggestions (1981) of how to
compare cultures: factors such as industry, technology, and education are kept constant by
18 For more details on the sample, see Appendix A. 19 But this respondent had worked in previous multicultural teams as a result of an M&A, but not on an international assignment.
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sampling information for the same industry, which uses the same organizational technology
and the same education with the same high level of information processing capacity.
4.1.3. Method
Initial contact was made with one executive within the team. A preliminary interview
was conducted with him, another executive and the Head of the Country to verify the criteria,
explain the purpose of the research, and secure firm participation and cooperation. The ‘‘Head
of the Country’’ informed potential participants via email of the opportunity to participate in
this program, ending up with a feedback session offered to introduce findings and key
challenges for them.
A preparatory questionnaire was sent 1 week before the interviews, and managers
were asked to fill it out and bring it to the interview. The questions asked in the preparatory
questionnaire are coherent with the factors influencing the perception of psychic distance
(Dow & Karunaratna, 2006). Our previous literature review on cultural differences has shown
that cultural differences are often subsumed under the concepts of cultural distance (Kogut &
Singh, 1988) and psychic distance (Johanson & Vahlne, 1977). These elements drive the
focus on those factors of influence when studying perceptions in a multicultural setting.
4.1.4. Interview procedure
Interviews took place at the workplace during working hours, in a company office
where each manager could talk in a quiet environment. A semi-structured interview protocol
was developed to allow for open interviews with middle managers to maintain open-
mindedness and an exploratory character unconstrained by preconceptions. The flexibility to
adjust the interview protocol in accordance with informants’ responses was preserved (Gioia
et al., 2013). Semi-directive, not tape-recorded, face-to-face, one-on-one interviews20 were
conducted, in English, with only the respondent and the researcher present. Participants were
assured of the confidentiality of the interview. I gave them a very simple instruction to frame
the context of the interview and I informed them they would get a feedback session about the
different issues identified. In order to solicit critical incidents in the in-depth interview,
20 Tape recording was not allowed as stipulated in a confidentiality agreement.
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respondents were asked to recall and relate specific events following the CIT guidelines
(Flanagan, 1954). An interview grid with four main topics served as a guideline for the semi-
structured interviews, some flexibility being left to collect new information21. The topics are
based on the Behavioral Event Interview (BEI) used by McClelland (1998), to facilitate the
identification of behavior associated with business development. The most important thing is
to focus on how interviewees actually did behave or react rather than how they think they
should have reacted in the specific situation recalled. In order to be identified, the critical
incidents must describe the cause, description, and outcome of an experience, users’ feelings
and perceptions of the situation, actions taken during the incident, and changes (if any) in
their future behavior (Flanagan, 1954). In a cross-border M&A context, when a manager
perceives a challenge to an important value or an important goal in the work interaction,
conflict may arise. This event will be considered a critical incident in my study. Because of
the emotional nature of those events, people remember M&A-related episodes in detail over a
long time (Harris, 1995; Penfield, 1952). Kusstatscher and Cooper (2005) found no difference
between interviews from people who had recently gone through the merger and those who
had experienced the big changes several years prior to the time of interview. In both cases,
respondents could easily recall the emotional intensity and express what kinds of emotions
emerged.
Copious notes were taken while the situation was being described, to facilitate the
reconstruction of the interview and to decrease recall biases. The information contained in
these notes was recorded through voice memo immediately after each interview was
conducted in order to overcome recovery biases. Interviews voice memos were transcribed
and converted into textual data and analyzed. To proceed with the reconstruction of the nine
interviews, recordings were listened to and rewritten three times, namely, until nothing new
appeared.
4.1.5. Transcripts
The transcripts from the interviews were analyzed manually since the sample size was
small. As the primary activity of analysis, coding was carried out. It was an evolving process,
an ongoing process of interpretation and examination of the textual data from different
21 For the interview grid detail see Appendix B.
102
perspectives. Data were initially examined to name incidents that relate to the phenomena
under scrutiny. This discovery and identification process resulted in designated ‘‘concepts’’
or ‘‘nodes’’. For example, whenever interviewees reported a challenging situation and
commented, ‘‘must ask the supervisor for any trivial authorization’’, that part of the situation
was attributed to the ‘‘need for autonomy’’ node. The nodes that expressed similar concepts
were summarized and a collective term was applied to the new categories. For example, the
node ‘‘need for autonomy’’ was attached to the category ‘‘hierarchy’’. Following Gioia et
al.’s (2013) methodology in grounded theory as a template (Fig. 3), in the initial data coding,
I maintained the integrity of first order (3rd column in Fig. 3), keeping ‘‘informant-centric’’
terms. Then I organized ‘‘first-order’’ codes into second-order themes (theory-centric) (2nd
column), which are aggregate dimensions. Then these themes lead to dimensions (1st column
in Fig. 3). They are the key informants, grounded dimensions, yet they are relevant to
theories. In the following table you can find an example of the data structure for the hierarchy
dimension.
While data were collected on all elements within the framework, the focus of the
analysis here is more on the misunderstandings that occurred during the cross-cultural
interaction. Distinct stories were identified, and scenarios were written based on the events
described by the respondents.
INSERT FIG.3 HERE
_ _ _ _ _ _ _ _ _ _ _ _
4.2. Consolidated results
This study reports on developing Critical Incidents based on interviews with nine
mergers and acquisitions ‘‘experts’’ from the same oil industry company. In Fig. 4 a diagram
of one category’s occurrence in the critical incidents is represented. As part of the validation
process, a feedback session was needed. It presented an opportunity for gathering additional
information beyond the validation of the data analysis. The results from the examination of
the experts’ contribution were introduced. Seven out of the nine interviewees attended the
presentation, three others managers who did not take part in the interview sessions, and the
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new Head Country Manager22. The interviewees reported that the findings faithfully reflected
the way they told their stories. The HQ team was highly satisfied with the interviews
restitution and the analysis of their own ‘‘team culture’’. The managers felt very aware of
their own social representations, i.e. their role and image representing the field in which they
worked, and the misperceptions it could cause among their interlocutors23. The workplace
‘‘stories’’ collected during the interviews were used as a basis for developing critical
incidents. In Fig. 4, the categories are presented according to how often they occurred in the
storytelling. ‘‘Hierarchy’’, ‘‘Communication issues’’ and ‘‘Drive for performance’’ are the
most represented categories.
INSERT FIG.4 HERE
_ _ _ _ _ _ _ _ _ _ _ _
Each category that was identified from the coding process was then defined according
to the content of the related events. The following table (Fig. 5) presents a descriptive
approach to the categories identified.
INSERT FIG.5 HERE
_ _ _ _ _ _ _ _ _ _ _ _
4.3. Story writing
To write the final version of the incidents, the interviews were rewritten to bring out a
meaning from what respondents said, to identify stories out of their discourse, the context in
which the situation emerged, their reaction, the outcome, i.e., how they solved it, and, where
possible, how they understood it analyzed it a posteriori. Information contained in the stories
was carefully scrutinized to identify data categories that summarize and describe the incidents
(Stauss, 1993; Grove & Fisk, 1997; Charmaz, 2008; Gioia et al., 2013). The idea was to
develop a sufficient number of valid scenarios from the grounded experiences. The scenarios
have been carefully constructed to simulate situations encountered by informants. Cultural
issues, job change, the context of the misunderstanding, the impact of the mergers on 22 The ‘‘Head Country Manager’’ who accepted the research project quitted the company. 23 For the timeline of the whole process see Appendix C.
104
interviewees, and work-related issues were elicited. This stage avoids referring to concepts
such as conflict or friction to talk about misunderstandings that arose when negotiating,
communicating, interacting, and managing. Twenty-two critical incidents (CI) have been
generated24 from the nine interviews. The CIs were written several times to improve
readability, to make sense, to reorganize their ideas and the sequences of the stories from the
earlier responses. They are clearly related to distinct and well-known work topics relating to
challenges in intercultural studies. The critical incidents can be summarized under the
following recurrent topics that appear clearly after analysis of the interviews25. Some CIs
overlap with more than one dimension (category) and could appear in several dimensions.
Other topics were commented on during the interviews, but no critical incidents could be
written from those ‘‘fragments’’ (e.g., changes to workload, fairness of contract terms for
people from different national backgrounds) (Fig. 6).
5. Discussion
The findings from the interviews and the category coding reveal that managers’
perceptions are related to emotional states when recording critical events. Those events, even
if challenging, do not mean necessarily negative outcomes. Overall, the events are recalled in
terms of disagreement over practices, as conflict events. Nevertheless, surprisingly, most of
the time, they are not perceived as having negative effects, but rather as a motivating factor.
Conflict or difficulties due to the changes entailed by the merger (workload, cultural
challenges with new colleagues, negotiators, partners, or clients) are perceived as challenging,
but in a positive way. The challenges due to the merger are perceived as a driver to
satisfaction, motivation, and success. ‘‘It is challenging to succeed in this context’’; ‘‘Change
is an opportunity to do something else’’; ‘‘Changes are good drivers for performance and
achievement’’. This counter-intuitive finding is in line with a few other pieces of research
(Cartwright et al., 2007; Hassett, 2012; Teerikangas, 2012) that highlight positive perceptions
of cross-border M&As, as mentioned in the earlier literature review. These positive
perceptions could be explained by the numerous successful experiences of the mergers the
24 For a complete view of the 22 critical incidents see Appendix D. 25 NB: the dimensions found are the interviewees’ own dimensions, not theoretical dimensions (but they fit different theoretical frameworks of intercultural studies).
105
organization went through. Teerikangas (2012) demonstrated that the accumulation of
previous international exposure to international M&As was a variable affecting the positive
perception of the merger as an opportunity rather than a threat. It is important to mention that
the key informants were referring to any events among their experiences of M&As.
Moreover, they were in a favorable context for generating positive perceptions, since the need
to be acquired and the reciprocal attractiveness of the acquired/acquiring firms may have
influenced those positive perceptions: the acquiring firm really needed the contract to get
drilling authorizations, the acquired firm considered itself small and felt more secure
belonging to a bigger and well recognized group. The influence of reciprocal attractiveness on
positive perceptions is supported in Teerikangas (2012).
Moreover, the high performance orientation of the team should be mentioned. In this
oil industry M&A context, people are obviously more concerned with the perception of the
opportunity for changes and with performance orientation in all their story telling, especially
when justifying the action taken to solve the dilemma; their discourse is always regarding the
performance orientation (even if it turned out afterwards not to have been the best decision to
make). In Teerikangas’ (2012) grounded study, because informants perceived the acquisition
as an opportunity rather than a threat, employees were more motivated and less uncertain. In
my sample, some were dissatisfied because the amount of work increased, others because it
decreased; fairness in the different contract terms was one of the issues mentioned as well, but
no critical incident could be generated from those fragments of discourse. Managers evoked
the changes relating to autonomy in their job as one of the most challenging things. The
perception of injustice in the remuneration strategy, higher status and rewarding opportunities
for some of the managers can be a source of conflict. The dilemma perceived when facing
such a situation requires managers to make adjustments, yet it is not insurmountable.
Managers emphasized how such a change boosted work motivation and commitment. Most of
the time, they did not emphasize the problems inherent in the change, but rather the positive
aspect of it, the potential that could arise from it, and what they could gain from it, beyond the
upheaval. The interviewees never associated it with negative outcomes in terms of
motivation; the only negative aspect was the time needed to adjust. These findings support
Teerikangas (2012), who emphasizes employees’ motivation in six pre-acquisition settings
because of their positive perception of the merger as an opportunity rather than a threat.
106
Seven out of the nine managers in the present study insisted on the communication
being explicitly carried out (a face-to-face information meeting, not merely via an email) by
the CEO regarding the future acquisition, and emphasized the importance of the
announcement in their positive perception of the mergers: ‘‘The announcement is crucial’’.
Managers who had been involved in several mergers said: “Each time the CEO communicates
about it, it goes smoothly”. Emphasizing explicit face-to-face, top-down communication
seemed to be crucial, particularly before the takeover, in smoothing the integration process. In
this case, the generalization the managers were able to make across their different M&A
experiences is very valuable. This is in line with other research (Cartwright et al., 2007;
Kusstatscher & Cooper, 2005; Sinkovics et al., 2011), highlighting the importance of the
announcement of the M&A in the organizational change process, to prepare employees and
decrease resistance, stress, and other negative emotions, and the role of consultation and
involvement in positive perceptions. Amiot et al. (2006) point out the importance of ensuring
that employees are satisfied with the manner in which the merger is implemented, that they
have access to timely and accurate change-related information, and that they perceive that the
management is effective in implementing the merger-related changes. Cartwright et al. (2007)
highlight the positive role of prior consultation in a public-sector domestic merger. If
individuals feel that their views are not listened to, negativity toward the merger is likely to be
heightened. This is in line with the literature that communication is the most important
variable during the entire merger process (Appelbaum et al., 2000), and the process of
consultation ‘‘must be genuine and not a fallacy’’ (Cartwright et al., 2007, p. 475).
Spontaneously, comments during the face-to-face interviews were collected regarding
perceptions of conflict: for example, ‘‘Frictions are more about personalities’’/‘‘It is not about
cultural background most of the time’’/‘‘It is a personality problem above all’’/ ‘‘we
experienced tremendous friction with foreign teams.’’ It is clear that participants were dealing
with the perception of conflict, referring to friction when experiencing those
misunderstandings. But again, that was not necessarily negative: most of the time, they
viewed it as a positive challenge. When the interviewees explicitly expressed the conflict,
they tended to find someone responsible for it. It was often attributed to the interlocutors
themselves, and sometimes to the other person’s cultural background. Attribution biases are
found in M&A studies. Vaara, Junni, Sarala, Ehrnrooth, & Koveshnikov (2013) found a linear
association between performance and attributions to cultural differences. To explain M&A
107
failure, managers tend to attribute them to cultural issues, whereas success is attributed to
personal actions.
6. Conclusions
A noteworthy aspect of today’s international business (IB) landscape is the growing
importance of cross-border mergers and the paradoxically increasing number of cross-border
M&As, despite the high failure rates observed.
Drawing on CIT, this paper explores and analyzes managers’ perceptions of job
changes and cultural aspects in a single case from a novel critical incident perspective, as one
potential way to investigate the PMI process from the ground. It introduces underlying
dimensions in the managerial perception of individual interactions in a multicultural team as a
result of an M&A. Despite the importance of cultural challenges for organizational perfor-
mance during the PMI process (Rottig, 2007; Almor, Tarba, & Benjamini, 2009), few
international business studies have targeted grounded studies of middle managers interacting
in this context. This exploratory study investigated ‘‘significant occurrences’’ (or critical
incidents) that managers encountered in a cross-cultural context due to an M&A. The findings
make it possible to go beyond typical M&A studies. They provide a view that contradicts the
mainstream of the M&A research tradition: they emphasize positive perception and emotions
among managers who are experts in cross-border M&As.
6.1. Theoretical implications
The paper contributes to the understanding of the socio-cultural aspects of PMI, with a
focus on middle managers’ perception and emotions and their impact on the integration
process in cross- border acquisitions. To reflect this research context, I chose the critical
incident methodology. The strength of this qualitative study was that it allowed key
informants to relate events and positive emotions and perceptions, which are traditionally
underestimated in M&A literature. Beyond the use of a novel critical incident perspective, the
findings show that the study participants recognize that in the post-merger process they
experienced difficulties arising from cultural challenges and job changes. They were not
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‘‘demotivated’’ by these challenges, but rather motivated and committed. This finding
provides an opportunity to explore in depth the causes of negative versus positive outcomes.
The current findings posit a more positive image than existing research, which portrays a
‘‘dark side’’ in M&A and individuals’ feelings.
The unit of analysis is definitely managerial perceptions: expert managers’ perceptions
of contextual changes due to the merger. This is independently of the company, organization,
or country they worked in or are working in. Managers interviewed could generalize on their
own experiences of mergers. They could infer many transversal issues according to their
expertise of what mergers involve. They referred not only to the company they were now
working in, but also to any company they had worked in before in which they had had to deal
with integration following a merger, namely, what integration involved in terms of changes
and adjusting their interactions in multicultural encounters.
6.2. Managerial implications
The findings highlight positive perceptions and emotions in cross-border M&As as a
potential driver of success. The literature review on positive emotions supports the findings.
Those findings have to be put in an M&A performance context. If it is assumed that when
managers perceive the takeover positively it facilitates the integration process, and
consequently increases M&A performance with less staff turnover and more commitment
(Very et al., 1996; Hassett, 2012), then it becomes important for organizations to actively
manage perceptions. Kusstatscher has already called for it, in addressing the importance of
cultivating positive emotions in the post-merger period. Rottig (2013, p. 441) clearly stated
that ‘‘if organizations are able to influence the perceptions of cultural contingencies of the
involved managers (…), then cultural differences may not be detrimental to, and perhaps even
be beneficial for M&A performance if managed effectively. The recommendations should be
implemented on a proactive rather than on a reactive basis. Communication on cultural
differences is the key to insure this efficiency’’. Such an approach enables managers to
provide support to their employees as well, enhancing positive perceptions to help them to
cope with uncertainty and stress. Kusstatscher (2006) points out the important role of
‘‘emotion managers’’, and states that managers should be aware of their impact on
employees’ emotions. It is imperative for management to recognize that ‘‘merger emotions
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syndrome’’ exists, to try to assist employees in working through the merger emotions
syndrome, and to develop tools to help employees overcome difficult stages. Emotions are
contagious and may predict team performance. As a result, firm management could become
proactively involved in promoting the success of the acquisition. These findings could offer a
promising future for M&A performance.
6.3. Limitations and future research orientation
Some limitations on the validity of these results have to be acknowledged, given the
exploratory and inductive nature of this study. The aim of this study was to explore the
emotions and perceptions of managers who were experts in cross-border M&As using a
grounded approach. First, because of the method, the information selected was not neutral and
unbiased, but affected both by the priorities of the informants and by my own biases and
expectations. Only one researcher conducted and analyzed the interviews. My own projection
of the context of this merger may have influenced my expectations about the related events.
The aim of inductive, theory-grounded study is not the development of a perfect model, but
rather a model that is context specific (Charmaz, 2008) and subject to later development
(Glaser & Strauss, 1967; Gioia et al., 2013). Second, the small number of interviews
conducted means that the findings have to be considered with caution and subjected to further
validation. However, as the unit of analysis is the perceptions of experts, the number of
experiences of the interviewees themselves is also part of the ‘‘sample’’ to allow for
generalization. Yet those findings should be ground-tested and validated in further studies
with a larger sample, in order to develop more critical events. Third, one of the participants
had experienced only one domestic merger in the banking industry before working for the oil
industry. No critical incident has been made from this interview, but the information
regarding the emotional experience was used as part of the data collection. Fourth, the
interviewees may have suffered from a desirability bias, exaggerating positive perceptions.
The fact that they were informed about a feedback session could have influenced what they
said. Nevertheless, they were told that the feedback session was for interviewees only, and the
CEO, for example, was not necessarily expected. The newly appointed CEO actually attended
the session, but asked if he could do so. I think the interviewees were not affected by a
desirability bias. Most of the informants have an Anglo-Saxon background. They
acknowledge that they are all driven by performance, and their team shares this common
110
dimension. The high performance orientation of the key infor- mants’ team may have turned
into the article’s strength. This could be overcome in further similar grounded research by
sampling diverse cultural backgrounds.
These findings offer insights into interesting avenues for future research on M&As.
Regarding the use of the methodology, this study could stimulate other researchers, as it is a
valuable procedure for obtaining information about stress, emotions, and values at the
individual level in situations of PMI involving organizational changes. The critical incident
technique is a highly valuable methodology to obtain insights on perception as the unit of
analysis. It is also a very appropriate method to make participants generalize their own
experience in cross-border M&As.
111
Fig. 1. Conceptual contribution of the integration management approach (Zueva et al.,
2007).
Fig. 2. Analytical framework integrating different levels of influence on organizational
outcomes, and relationship with mediating variables (perceptions, emotion, integration
process).
a well-informed workforce can lead to feelings of self-efficacyamong employees at the beginning of the merger and an appraisalof the event later on as being less stressful. Cartwright et al.’s(2007) study demonstrated the critical importance of open andgenuine communications for the success of the entire M&Aprocess. Employees who perceive that their concerns are bothbeing heard and addressed experience less stress and show greaterorganizational commitment. Appelbaum, Gandell, Yortis, Proper,and Jobin (2000) have made similar arguments. Teerikangas (2012)found positive employee reactions in six pre-merger settingsbecause the employees viewed the acquisition as an opportunityrather than a threat. Hassett (2012) noted that most of the researchon the human side of PMI tends to focus on the problems that arise,such as turnover, dissatisfaction, low motivation, and lowcommitment. She proposed a model to deal effectively with theseissues by building high organizational commitment to the mergedorganization. Kusstatscher and Cooper (2005) have also argued forthe importance of promoting organizational commitment duringthe PMI process. The assumption is that this will result in betterorganizational performance.
Yet, with few exceptions, even very recent reviews suggestthat the psychological, cultural, and people issues with regard toM&As are still not being adequately addressed (Reus, 2012;Sinkovics, Zagelmeyer, & Kusstatscher, 2011; Tarba, personalcommunication, Egos Rotterdam, July 2014). This study proposesto systematically explore the perceptions and emotionalreactions of managers in the M&A context. The starting pointwill be the accounts of the managers themselves, thus employ-ing a grounded perspective. Such first-hand accounts have beenvastly under-represented and under-explored (Huy, 2012), andthis research hopes to address that oversight. Employingthe critical incident methodology is one potential way to fillthis gap.
3. Core concepts and analytical framework
Drawing on the literature just reviewed to provide thebackground, this research explores managers’ perceptions of thecritical incidents that arise during M&As. The results will be thecritical incidents themselves, which provide a rich description ofwhat managers see as the important challenges they face in M&As,especially when the merging organizations cross national borders.Future research will demonstrate how these critical incidents canbe incorporated into measurement tools used to assess employeereactions to the M&A process. Ultimately, this line of research willallow for a richer evaluation of factors that promote or hindersuccessful M&As.
3.1. Critical incident technique: a qualitative approach
Critical Incident (CI) methodology (Flanagan, 1954), based onmanagers’ lived experience in dealing with M&As, contributes toour understanding of these events by providing a more grounded,concrete picture of the various challenges M&As elicit (Brookfield,1995). These qualitative data can be developed into quantitativetools to assess managers’ attitudes toward their new peers, theirdecision-making strategies, and motivational factors in the mergerenvironment. They capture important cultural aspects such aswork values and culturally variant ways of thinking and behaving(Rottig et al., 2013). These measurement tools will reflect therealities of these events, rather than depending on abstracttheoretical assumptions about cultures and their distances, andwhat such distances imply for the merging organizations. Theadvantage of this approach is that it depicts, in a very concretefashion, the cultural values that underline conflicts arising in a PMIcontext.
3.2. Analytical framework
On the basis of the arguments developed in the previoussections, the following questions are addressed (Fig. 1):
(1) Is the CIT method a relevant tool for surfacing emotions,perceptions of cultural challenges, and job changes in astructured way in the organizational change due to the M&A?
(2) Could the Job Characteristics model be tested from a groundedperspective in this context of job changes?
It follows that managerial perceptions collected using CITmethodology will deepen our knowledge of the nature of themisunderstandings that arise when middle managers perceivedifferences or cultural and job challenges. The next table (Fig. 2)presents a model that synthesizes our current understanding of theinfluences of organizational and national culture on CBA perfor-mance, including mediating variables such as managerial percep-tions and stress and emotion.
4. Empirical study
This section describes the implementation of the CI method toproduce the critical incident outcomes of this study. This is anexploratory, qualitative method that allows for the evaluation ofthis framework and the eventual development of a quantitativeinstrument to assess managers’ perceptions of the stress theyexperience in the context of M&As. What follows is a briefdescription of the methodology of critical incidents. Drawing onthe characteristics of the systematic collection of these criticalincidents, I describe how the company and the informants withinthat organization were selected, how the data was collected andclassified, and how short versions of the incidents themselves weredeveloped. The detailed description in this section aims at helpingfuture qualitative researchers who are interested in reproducingthis methodology to follow the systematic stages and potentially torun future research projects.
4.1. Research method
4.1.1. CITA rather neglected investigative tool in international business
research is CIT, first developed by Flanagan (1954). He developedthis technique as a suite of procedures for job analysis purposes,with the aim of identifying the critical requirements for job successamong US Air Force pilots. It relies on a set of procedures to collect,to content-analyze, and to classify observations of humanbehavior. Data are gathered through semi-structured interviewsfocusing on how people actually behaved in order to solve practicalproblems in specific situations. This procedure is aimed atfacilitating the investigation of significant occurrences (events,incidents, processes, or issues) identified by the respondent, theway they are managed, and the outcomes in terms of perceived
Fig. 1. Conceptual contribution of the integration management approach (Zuevaet al., 2007).
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effects (Edvardson & Roos, 2001). The objective is to ‘‘gainunderstanding of the incident from the perspective of theindividual, taking into account cognitive, affective, and behavioralelements’’ (Chell, 2004, p. 56). Such an incident can either benegative, i.e., an incident which could have resulted in anineffective outcome, or positive, i.e., an incident which can becharacterized as an opportunity and caused, or could have caused,a positive outcome (Olsen, 1992). The event being related istypically unusual and memorable for the teller, and thus is seen as‘‘critical’’ (Flanagan, 1954). It is often seen as an event that elicitedstrong emotions on the part of the teller (Cope & Watts, 2000). TheCIT methodology itself ensures that only important or criticalevents are considered. Olsen (1992) and Edvardsson (1992) bothrefer to the unexpected nature of an event that is required to makeit ‘‘critical’’, namely, when it deviates from the expectations of theactor, that is, from what is considered normal or expected. Thisdiffers from studies on storytelling and narratives (e.g., Vaara,2002; Vaara & Tienari, 2011), where the stories are sources ofconversation in the organizational discourse. Critical incidents,specifically, are exceptional or turbulent situations in which thesensitivities of the parties are heightened (Holmlund & Strandvik,2005). The emotionally laden nature of the critical events has beenhighlighted by Cope and Watts (2000). According to them, aperceived ‘‘critical incident’’ is essentially an emotional event, inthat it represents a period of intense feelings, both at the time andduring its subsequent reflective interpretation (Cope & Watts,2000).
Yet, although it has become a widely used qualitative researchmethod, and today is recognized as an effective exploratory andinvestigative tool, the use and the value of this methodology in theM&A field have not been fully explored. Kusstatscher and Cooper(2005) used it as a ‘‘warm-up’’ step (combined with othertechniques) in their interview process for exploring the emotionsof top managers, middle managers, and employees in PMI settings.Hajro (2014) employed the critical incident approach in alongitudinal study to develop a model of sociocultural integrationprocesses. Her focus was on how individuals coped with problemsresulting from cultural differences, and her work demonstrates thetremendous value of this technique. Her data resulted in numerous
detailed descriptions that were later used for purposes oftriangulation (Hajro, 2014).
The above review supports the choice of CIT as a useful tool insituations such as cross-border PMIs, where emotional reactions tocross-cultural issues are at stake. Chell (1998, chap. 3) makesclaims for the high ‘‘versatility’’ of this qualitative method thatmakes it adaptable to many contexts.
4.1.2. SamplingThe sampling process aimed to identify an organization and
individuals to provide the information necessary for developingand improving the analytical framework. As regards this goal, thesampling process initially followed the principles of theoreticalsampling. Glaser and Strauss (1967, p. 45) describe theoreticalsampling as ‘‘a process of data collection for generating theorywhereby the analyst jointly collects, codes and analyses his dataand decides what data to collect next and where to find them, inorder to develop his theory as it emerges’’. The population fromwhich the sample was drawn for this study was defined as middlemanagers with recent exposure to international mergers andacquisitions. The organization, an oil industry company, didexperience a sequence of several successful mergers.
The focus on middle managers is relevant because of their rolein organizational change (Cartwright & Cooper, 2000). The M&Aliterature confirms they are the people most affected byorganizational change (Kusstatscher & Cooper, 2005): ‘‘they areresponsible for the implementation of top management’s decision,they are subject to decision makers’ expectations, to uncertaintydue to the lack of top-down information and are exposed toemployees’ irritations, fears and questions. Middle managers arealso regularly in contact with colleagues (middle managers) fromthe partner company, but generally on a more informal level thantop managers are. Therefore they get more insights and confrontmore problems’’ (Kusstatscher & Cooper, 2005, p. 159).
The informant sample includes nine middle managers.3 It wasbased on volunteer participation, and on a random sample amongthe 24 managers belonging to this multicultural team. The
Fig. 2. Analytical framework integrating different levels of influence on organizational outcomes, and relationship with mediating variables (perceptions, emotion,integration process).
3 For more details on the sample, see Appendix A.
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Fig. 3. Data structure for coding logic: example for hierarchy.
Fig. 4. Table of categories identified and their occurrence in stories told in percentages.
identified, and scenarios were written based on the events describedby the respondents.
4.2. Consolidated results
This study reports on developing Critical Incidents based oninterviews with nine mergers and acquisitions ‘‘experts’’ from thesame oil industry company. In Fig. 4 a diagram of one category’soccurrence in the critical incidents is represented. As part of thevalidation process, a feedback session was needed. It presented anopportunity for gathering additional information beyond thevalidation of the data analysis. The results from the examination ofthe experts’ contribution were introduced. Seven out of the nineinterviewees attended the presentation, three others managers
who did not take part in the interview sessions, and the new HeadCountry Manager.7 The interviewees reported that the findingsfaithfully reflected the way they told their stories. The HQ teamwas highly satisfied with the interviews restitution and theanalysis of their own ‘‘team culture’’. The managers felt very awareof their own social representations, i.e. their role and imagerepresenting the field in which they worked, and the mispercep-tions it could cause among their interlocutors.8 The workplace‘‘stories’’ collected during the interviews were used as a basis fordeveloping critical incidents. In Fig. 4, the categories are presented
Fig. 3. Data structure for coding logic: example for hierarchy.
HierarchyHierarchy
SenioritySeniority“merit-based system, where the qualifica!ons are based on one’s
technical competencies”
“merit-based system, where the qualifica!ons are based on one’s
technical competencies”
“you r new supervisor sends yo u an email that includes some
errors for the billing amounts asked for”
“you r new supervisor sends yo u an email that includes some
errors for the billing amounts asked for”
Demands from supervisorDemands from supervisor“you have bee n aske d to do jobs
like prin!ng and binding documents that are no t part of
your job descrip!on”
“you have bee n aske d to do jobs like prin!ng and binding
documents that are no t part of your job descrip!on”
Confronta!on wit h supervisorConfronta!on wit h supervisor
“asking you r ne w boss for valida!ng any single thing
(sending a fax, making a phone call, leaving the workplace for
lunch, going back home)”
“asking you r ne w boss for valida!ng any single thing
(sending a fax, making a phone call, leaving the workplace for
lunch, going back home)”Autonomy removalAutonomy removal
Fig. 4. Table of categories identified and their occurrence in stories told in percentages.
7 The ‘‘Head Country Manager’’ who accepted the research project quitted thecompany.
8 For the timeline of the whole process see Appendix C.
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identified, and scenarios were written based on the events describedby the respondents.
4.2. Consolidated results
This study reports on developing Critical Incidents based oninterviews with nine mergers and acquisitions ‘‘experts’’ from thesame oil industry company. In Fig. 4 a diagram of one category’soccurrence in the critical incidents is represented. As part of thevalidation process, a feedback session was needed. It presented anopportunity for gathering additional information beyond thevalidation of the data analysis. The results from the examination ofthe experts’ contribution were introduced. Seven out of the nineinterviewees attended the presentation, three others managers
who did not take part in the interview sessions, and the new HeadCountry Manager.7 The interviewees reported that the findingsfaithfully reflected the way they told their stories. The HQ teamwas highly satisfied with the interviews restitution and theanalysis of their own ‘‘team culture’’. The managers felt very awareof their own social representations, i.e. their role and imagerepresenting the field in which they worked, and the mispercep-tions it could cause among their interlocutors.8 The workplace‘‘stories’’ collected during the interviews were used as a basis fordeveloping critical incidents. In Fig. 4, the categories are presented
Fig. 3. Data structure for coding logic: example for hierarchy.
HierarchyHierarchy
SenioritySeniority“merit-based system, where the qualifica!ons are based on one’s
technical competencies”
“merit-based system, where the qualifica!ons are based on one’s
technical competencies”
“you r new supervisor sends yo u an email that includes some
errors for the billing amounts asked for”
“you r new supervisor sends yo u an email that includes some
errors for the billing amounts asked for”
Demands from supervisorDemands from supervisor“you have bee n aske d to do jobs
like prin!ng and binding documents that are no t part of
your job descrip!on”
“you have bee n aske d to do jobs like prin!ng and binding
documents that are no t part of your job descrip!on”
Confronta!on wit h supervisorConfronta!on wit h supervisor
“asking you r ne w boss for valida!ng any single thing
(sending a fax, making a phone call, leaving the workplace for
lunch, going back home)”
“asking you r ne w boss for valida!ng any single thing
(sending a fax, making a phone call, leaving the workplace for
lunch, going back home)”Autonomy removalAutonomy removal
Fig. 4. Table of categories identified and their occurrence in stories told in percentages.
7 The ‘‘Head Country Manager’’ who accepted the research project quitted thecompany.
8 For the timeline of the whole process see Appendix C.
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Fig. 5. Description of the categories identified.
Hierarchy
The relative importance placed on status distinctions, age distinctions (in
some cases in-group vs. out-group distinction), and the consequences
regarding autonomy retained and initiative allowed. The need for feedback
is associated with this category as well as with the degree of autonomy left.
These are perceived by the respondents as exerting a great influence on
motivation.
Communication
Language barriers
Attitudes toward language use, and the difficulties of learning language as
it is actually spoken rather than “read from a book” are part of this
knowledge area. Lack of language proficiency leads to frustration, and in
some cases to paranoia.
Implicit communication
The exchange of information between individuals is less verbal, and based
on implied knowledge of the context, message could be understood by
itself, and not fully expressed. This could lead to a lot of frustration from
the receiver when expecting more detailed information, and misperception
of the former intended message or sender’s intention when the receiver
was unaware of it.
Business Ethics
Degree of acceptance of a behavior perceived as deviant or not in the work
context according to one’s moral principles. At the same time, in some
cases, this category might be linked to sensitivity to face-saving, and may
lead to a cognitive dilemma as reported by an informant. This category
could actually be validated later on as a work attitude, being a consequence
of one’s own value or an adaptation to a specific cultural environment.
Face-saving
Action to prevent a person from getting into an embarrassing situation, to
avoid loss of dignity and shame, using strategies to avoid recognizing a
mistake, for example.
Willingness to
change
As a challenging experience, change can be perceived either in a very
optimistic way, such as a new job opportunity, an opportunity to work with
new colleagues, new strategies to improve performance, or rather from a
very pessimistic perspective, as an obstacle to well-being in the workplace.
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Need for
Initiative
Need for the managers to initiate actions independently, taking charge of
things before others without requirements and without being encouraged or
assisted by the others
Drive for
Performance
Attempt to attain the goal in an efficient way, efficiency-driven. This
category straddles most of the incidents, and was reported by all the
informants. A strong need for achievement characterized the team
interviewed.
Fig. 6. Categories and related critical incidents.
Topics Related CI #
Hierarchy
(Status, seniority, status of women) 11; 12; 13; 14; 15
Communication style (Directness) 9; 16; 17; 20; 22
Business Ethic Bribery 4; 6
Face issues Face saving 5; 7; 19; 22
Attitude toward change Opportunity 1
Need for Autonomy 2
Need for Initiative 3
Drive for Performance 8; 9; 10; 12; 13
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APPENDIX A: INTERVIEWEES PROFILES
for generalization. Yet those findings should be ground-tested andvalidated in further studies with a larger sample, in order todevelop more critical events. Third, one of the participants hadexperienced only one domestic merger in the banking industrybefore working for the oil industry. No critical incident has beenmade from this interview, but the information regarding theemotional experience was used as part of the data collection.Fourth, the interviewees may have suffered from a desirabilitybias, exaggerating positive perceptions. The fact that they wereinformed about a feedback session could have influenced whatthey said. Nevertheless, they were told that the feedback sessionwas for interviewees only, and the CEO, for example, was notnecessarily expected. The newly appointed CEO actually attendedthe session, but asked if he could do so. I think the intervieweeswere not affected by a desirability bias. Most of the informants
have an Anglo-Saxon background. They acknowledge that they areall driven by performance, and their team shares this commondimension. The high performance orientation of the key infor-mants’ team may have turned into the article’s strength. This couldbe overcome in further similar grounded research by samplingdiverse cultural backgrounds.
These findings offer insights into interesting avenues for futureresearch on M&As. Regarding the use of the methodology, this studycould stimulate other researchers, as it is a valuable procedure forobtaining information about stress, emotions, and values at theindividual level in situations of PMI involving organizationalchanges. The critical incident technique is a highly valuablemethodology to obtain insights on perception as the unit of analysis.It is also a very appropriate method to make participants generalizetheir own experience in cross-border M&As.
Appendix BInterview grid
Asking very simple and basic questions from this grid, andrephrasing regularly.
Merger and job change
What does the merger implied in term of changes for you?Regarding your job, did you feel any change? Before and afterthe merger?How did you deal with changes?Do you feel satisfied? Confident with the changes implied? Orscared? (afraid to lose their job, to be useless?)
Merger and people and motivation
What about people you have to work with?Do you feel they work in different ways? Before and after?
Do you feel any difference regarding commitment into your job,other people’s commitment? Before and after?
Merger and culture
Do you think it is more linked to Corporate culture?Personality? Activity field? National culture? To which degreeyou perceive differences in your ways of. . .Did you experience any conflict/challenge? What is (was) themain challenge for you?
Story telling
Do you have an example/a situation you could think about?Could you develop when does that happen? What was(were)the reason(s) underlined? Who was involved? How has it beensolved out? Were you satisfied with the issues?Do you think those challenges are specific to a Merger context?
Appendix A. Interviewees profiles
Interviewee 1 2 3 4 5 6 7 8 9Age 36 34 61 64 54 36 55 24 37Educ. level Master Master BS Master
petroleumengineer
Master2 Univ MasterSciences
Bachelorsciencesbiochem &geology
Bachelor Masterin UK
Native country France France Ireland Italy USA USA Canada France FranceNative language French/Arabic French Irish
EnglishItalian English English English French French
Numbers oflanguage spokena
4 4 3 4 3 2 2 4 4
Job position EHS leaderproject
Financialanalyst
Drillingmanager
Contractsspecialist
Financialmanager
Seniorgeologist
Seniorgeologicaladvisor
Administrativeassistant
Seniorgeologist
No. internat. exper. 8 All overEurope
13 10 8 3 4 3
No. diversityb 5 4 4 3 4 7 2 5 10No. of M&A
processesexperienced
2 3 N/A (notdirectlyinvolved)
2 A lot N/A (notdirectlyinvolved)
3 N/A (notdirectlyinvolved)
N/A (notDirectlyinvolved)
Religion Agnostic Hindouist Atheistbut JudeoChristianbackground
Catholic
Work contract Externalconsultant
French CDI US contractexpatriate
Externalconsultant
Oil companyUS contract
Oil companyUS expatriate
Externalconsultant
CDI OilIndustryFrance
UK employee
Seniority 2Y 1,5Y 8 months 21Y 7Y +7Y 1,5Y 13Y
a Including native language.b Number of countries you’re working with/or country people in your team come from.
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APPENDIX B: INTERVIEW GRID
Asking very simple and basic questions from this grid, and rephrasing regularly. Merger and job change What does the merger implied in term of changes for you? Regarding your job, did you feel any change? Before and after the merger? How did you deal with changes? Do you feel satisfied? Confident with the changes implied? Or scared? (Afraid to lose their job, to be useless?) Merger and people and motivation What about people you have to work with? Do you feel they work in different ways? Before and after? Do you feel any difference regarding commitment into your job, other people’s commitment? Before and after? Merger and culture Do you think it is more linked to corporate culture? Personality? Activity field? National culture? To which degree you perceive differences in your ways of... Did you experience any conflict/challenge? What is (was) the main challenge for you? Story telling Do you have an example/a situation you could think about? Could you develop when does that happen? What was (were) the reason(s) underlined? Who was involved? How has it been solved out? Were you satisfied with the issues? Do you think those challenges are specific to a Merger context?
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APPENDIX C: TIMELINE OF THE PROCESS
Appendix CTimeline of the process
From company selection, data collection, interviews, coding toscenario writing.
May 2012 Company selectionJune 13, 2012 Email to the contact in the company selected,
including a cover letter to introduce the researchproject
June 14, 2012 Agreement for a meetingJune 15, 2012 Introducing the research project to the contact
during an informal interview to the French HQJuly 9, 2012 Agreement from head country manager for the
research projectJuly 10, 2012 Appointment at French HQ to introduce the project
to the Head of HQ and the communication directorJuIy 15, 2012 Signing confidentiality agreement with Huston
Communication Department, highlighting the mainpoint of our contract
From July, 2012,16th–20th
Identifying participants: having resource people tocollect subjective data regarding a multiculturalteam’s perception of cultural influences, jobchanges and motivation in cross border M&Acontext. I made sure that the managers have notbeen obliged to participate in order to avoid ‘‘snowball effect’’. Criteria selection was based onvolunteer participation, and a random sample of the24 managers belonging to this multicultural teamInterview grid development
July 21, 2012 Sending Preparatory questionnaire: the items askedin the preparatory questionnaire are coherent withthe factors influencing the perception of psychicdistance (Dow & Karunaratna, 2006). Thequestionnaire has been sent 1 week before theinterviews, and managers were asked to fill it outand bring it for the interview
From July, 2012,23rd–31st
Face to face InterviewsSample population: 9 managers participated: allvolunteers, informed by email by the head of thecountry of the interest of the study. The samplerepresented different jobs such as drilling manager,financial director, financial analyst, geologists,administrative assistant, hygiene and securitymanager
From July, 2012,23rd–31st
Transcription of the interview: right after theinterview has been conducted, information is taperecorded (15–20mn)
August–September2012
Interview restitution and coding
October 2012 Feed back to participants at HQNovember 2012 Critical incidents writings
Appendix DCritical incidents
Critical incident 1You belong to a company that just merged, and have subsidiaries
all over the world. You have to face the implementation of asystematization process of invoicing, involving new methodology, anddeadlines in your way of working. Consequently to those new rules, theperson in charge is supposed to review in real time, and then checkback. You are not used to it, and you think it was working quite wellbefore the merger.
Critical incident 2You’ve been working for a global company for years. You were used
to having a lot of autonomy doing your job. You’re sent to a subsidiarythat your company just took over. You have to ask your new boss forvalidating any single thing (sending a fax, giving a phone call, leavingthe workplace for lunch, going back home etc.. . .).
Critical incident 3As an expert, you are sent to train people in a Corporate School
abroad after a merger. You spend a lot of time at the workplace and it islike your new home in this foreign environment. One morning, one ofthe trainees arrives in the classroom with 5 friends with him, not fromthe company, to have breakfast together.
Critical incident 4After the merger took place, you have to visit new suppliers in a
foreign country. You succeed in negotiating the new formalities of thecontract. To thank you, the supplier you negotiated with offers you abrown envelop with money inside.
Critical incident 5You are sent to a country to negotiate shipping contracts, this time,
with a new colleague from the merged company. He approaches thetask very differently than you have done in the past. Unfortunately, thecolleague rejected a first offer without even trying to negotiate. As aresult, all of the other shippers refused to negotiate with you and yournew partner. The initial outright rejection of one of the shippers hasresulted in all of them boycotting your group. The negotiators are usedto working very competitively to gain your business, and now they areall ignoring you. Finally, one of the shippers offers to work with you,but at a price that is 20% higher than the original offer.
Critical incident 6A major company planned a construction project that traversed a
remote area of an overseas country. This site used to belong to thecompany they just merged with. They wanted to be seen to be bothenvironmentally aware and also sensitive to the local peoples and theircultures. Consequently, much effort and expense was invested in bothissues. Social responsibility experts were brought in to advise thecompany on how to ensure the minimal disruption to the locals whowould be adequately compensated for any disturbance. One keyconcern of the local peoples was the potential to disturb ancient burialsites, considered sacred. Construction eventually began. To everyone’ssurprise and regret, the crew came across old skeletons relativelyfrequently necessitating lengthy negotiations with locals concerningcompensation.
Critical incident 7(1)A negotiator of a global company had contracted a new supply boat
to support its operations. As with all such contracts there was a periodduring which the boat had to be delivered. If the boat was unavailableuntil after this period, the owner of the boat company would bepenalized. In addition, the global company also had its obligations. Itwould have to pay the owner if it didn’t call for the boat in theprescribed time. The negotiator kept his part of the contract. Theowner, however, did not have the boat available because it was on aspecial charter to another of his important clients.
Critical incident 7(2)The global company decided option 3, to ask the owner for a
feasible solution. After several days the owner’s representativesreturned with their proposal. A substitute boat would be provided untilthe original boat became available. The substitute was a bigger, betterboat and would be provided at the same rate. When the original boatbecame available it would be changed out. The cost of moving thebigger boat to and from the company’s location would be borne by theowner. This outcome was satisfactory to the negotiator although itadded some inconvenience. It was more costly for the owner.
Critical incident 9Subsequent to the take over, you are assigned to a new team in your
department. The person in charge does not come to meetings with anagenda. Rather, he/she tends to beat around the bush, talking aboutthings unrelated to the tasks at hand, such as politics or the last timeworkers went out on strike.
Critical incident 10You have just been assigned to work in another country for an
organization that has just merged with your company. You’re attendinga meeting with workers mostly from the new organization. The meetingis about resolving a problem with an ongoing project. The meeting seemsto go in a lot of different directions; progress is slow, with everyonetalking about lots of things only marginally related to the task.
Critical incident 11You work in the HR department of a newly merged company and
your team has been charged with writing new job descriptions. Some
M. Durand / International Business Review xxx (2015) xxx–xxx 13
G Model
IBR-1218; No. of Pages 16
Please cite this article in press as: Durand, M. Employing critical incident technique as one way to display the hidden aspects of post-merger integration. International Business Review (2015), http://dx.doi.org/10.1016/j.ibusrev.2015.05.003
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APPENDIX D: CRITICAL INCIDENTS
Critical incident 1 You belong to a company that just merged, and have subsidiaries all over the world. You have to face the implementation of a systematization process of invoicing, involving new methodology, and deadlines in your way of working. Consequently to those new rules, the person in charge is supposed to review in real time, and then check back. You are not used to it, and you think it was working quite well before the merger. Critical incident 2 You’ve been working for a global company for years. You were used to having a lot of autonomy doing your job. You’re sent to a subsidiary that your company just took over. You have to ask your new boss for validating any single thing (sending a fax, giving a phone call, leaving the workplace for lunch, going back home etc.. . .). Critical incident 3 As an expert, you are sent to train people in a Corporate School abroad after a merger. You spend a lot of time at the workplace and it is like your new home in this foreign environment. One morning, one of the trainees arrives in the classroom with 5 friends with him, not from the company, to have breakfast together. Critical incident 4 After the merger took place, you have to visit new suppliers in a foreign country. You succeed in negotiating the new formalities of the contract. To thank you, the supplier you negotiated with offers you a brown envelop with money inside. Critical incident 5 You are sent to a country to negotiate shipping contracts, this time, with a new colleague from the merged company. He approaches the task very differently than you have done in the past. Unfortunately, the colleague rejected a first offer without even trying to negotiate. As a result, all of the other shippers refused to negotiate with you and your new partner. The initial outright rejection of one of the shippers has resulted in all of them boycotting your group. The negotiators are used to working very competitively to gain your business, and now they are all ignoring you. Finally, one of the shippers offers to work with you, but at a price that is 20% higher than the original offer. Critical incident 6 A major company planned a construction project that traversed a remote area of an overseas country. This site used to belong to the company they just merged with. They wanted to be seen to be both environmentally aware and also sensitive to the local peoples and their cultures. Consequently, much effort and expense was invested in both issues. Social responsibility experts were brought in to advise the company on how to ensure the minimal disruption to the locals who would be adequately compensated for any disturbance. One key concern of the local peoples was the potential to disturb ancient burial sites, considered sacred. Construction eventually began. To everyone’s surprise and regret, the crew came across old skeletons relatively frequently necessitating lengthy negotiations with locals concerning compensation.
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Critical incident 7(1) A negotiator of a global company had contracted a new supply boat to support its operations. As with all such contracts there was a period during which the boat had to be delivered. If the boat was unavailable until after this period, the owner of the boat company would be penalized. In addition, the global company also had its obligations. It would have to pay the owner if it didn’t call for the boat in the prescribed time. The negotiator kept his part of the contract. The owner, however, did not have the boat available because it was on a special charter to another of his important clients. Critical incident 7(2) The global company decided option 3, to ask the owner for a feasible solution. After several days the owner’s representatives returned with their proposal. A substitute boat would be provided until the original boat became available. The substitute was a bigger, better boat and would be provided at the same rate. When the original boat became available it would be changed out. The cost of moving the bigger boat to and from the company’s location would be borne by the owner. This outcome was satisfactory to the negotiator although it added some inconvenience. It was more costly for the owner. Critical incident 9 Subsequent to the take over, you are assigned to a new team in your department. The person in charge does not come to meetings with an agenda. Rather, he/she tends to beat around the bush, talking about things unrelated to the tasks at hand, such as politics or the last time workers went out on strike. Critical incident 10 You have just been assigned to work in another country for an organization that has just merged with your company. You’re attending a meeting with workers mostly from the new organization. The meeting is about resolving a problem with an ongoing project. The meeting seems to go in a lot of different directions; progress is slow, with everyone talking about lots of things only marginally related to the task. Critical incident 11 You work in the HR department of a newly merged company and your team has been charged with writing new job descriptions. Some of the team members think that qualifications for the new positions should be based on seniority. You prefer a merit-based system, where the qualifications are based on one’s technical competencies. The two systems are quite different, like they come from different planets. Critical incident 12 You are now working in a newly merged company. In you initial team meeting, you felt uncomfortable when asked by the new leader to offer your ideas for solving an ongoing production problem. In the past, in your old company, workers never suggested to the leaders how things should be done. Offering such opinions was viewed badly. Critical incident 13 You’re on a new team as the result of a merger, and your new supervisor sends you an email that included some errors for the billing amounts.
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Critical incident 14 On your new team, you notice that some men do not respect women team members. Relations on the team grow tense as a result. Since you are younger than the rest, you don’t feel it is your place to say anything. You have also been asked to do jobs like printing and binding documents that are not part of your job description. Critical incident 15 Since the merger, you’re required to work with new suppliers. You notice than some of them are very arrogant, especially some of the women. On one recent phone call, the woman asked very aggressively, ‘‘I want to talk to the other person, not you. . .’’ Critical incident 16 As the result of a recent merger, your company has outsourced some of the accounting work. You have difficulty communicating with the outsource people because of their accents. You often end up explaining things step by step over and over again, in order to get them to follow expected procedures. And then, at the end of the conversation, the outsource person asks you to send an email to confirm what has just been said. Critical incident 17 In your new assignment in a foreign country after the merger, you are surprised by the low education level of the people working for you. You also notice that other bosses act like dictators, shouting at the workers, telling them what to do without taking any backtalk. Critical incident 18(1) You just received an assignment to manage a construction project for your company in a foreign country. You run into difficulties with the trade unions involved with the project. Negotiations are in a stalemate. The project is starting to run behind schedule. Critical incident 18(2) You decide to ask HQ to bring in a new crew to replace the locals. The new crew arrives and goes immediately to work. The reaction from the local union is fast. They are very upset and go on a rampage destroying cars in the parking lot and damaging parts of the construction project. Critical incident 20 You are sent to work with a new team in a subsidiary abroad. It is very challenging working with these people. They are always bringing up counter-arguments, as if they were always finding fault with all of your proposals. They seem to love playing devil’s advocate. Critical incident 21 You are in a new country, working with a new team, as the result of a merger. You have a hard time telling these people when they haven’t done their job properly. But you’re under a lot of pressure and you push hard to get the work done on time. Your workers keep telling you it will get done on time, but you know they are lying, that things are way behind schedule.
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Critical incident 22 Subsequent to the new merger, a team from headquarters is coming to the foreign subsidiary you’ve been working in already for years. You have to conduct a meeting with both this new team and the local team to introduce the new objectives. At the end of this meeting, the visiting team asked if there are any questions and no one responded. But the second they left, it was clear the local team had lots of questions and they request additional meeting time with you privately to clear things up.
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133
ESSAY 3: POST MERGER CULTURAL FRICTION: A NEW
APPROACH TO MEASUREMENT
Abstract
This paper addresses problems associated with cross-border merger and acquisition (CBM&As) studies that rely on ready-to-use tools to measure cultural effects. To test the hypothesis that a more rigorous measurement tool would add value to further our understanding of the post-merger integration process challenges, a tool was developed, stemming from a grounded research to identify the variables at stake, from the managers experiences themselves. The objective of this paper is to build and test a research instrument. This research doesn’t attend to dismiss other existing instrument. No comparison has been conducted with older tool since no other measure of cultural friction for similar purpose exists so far and couldn’t be taken into consideration. Thus, I rely on Durand (2016) grounded approach to start with and to elaborate the instrument. Stages for elaborating a self-grounded instrument to investigate managerial perceptions regarding intercultural interactions experiences of managers in CBM&As are described. Use of this tool to develop an index of cultural friction derived from “face” concerns in the context of CBM&As is discussed. Critical incidents validation is presented as one way to move towards designing a rigorous tool for improved evaluation of cultural factors affecting cross-border M&A’s.
Keywords: Cultural friction, Cross-border mergers & acquisitions, Mixed method, Post-
merger integration, Critical incident technique
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INTRODUCTION
Cross-border acquisition (CBA) field studies rely heavily on readily available measures such
as cultural distance index from Kogut and Singh (1989) or psychic distance (Johanson &
Vahlne, 1977). Consequently, researchers using them fail to provide their own understanding
of how cultural differences might impact the international business (IB) phenomena of
interest (Stahl & Tung, 2015), whether foreign entry markets, organizational behavior, or
managerial decisions, and from firm to team to individual levels of analysis.
The cultural friction concept (Shenkar, 2001; Shenkar, Luo & Yeheskel, 2008) offers a
perspective for investigating relationships and, more precisely, the contacts between
individuals in the aftermath of cross-border mergers and acquisitions (CBM&As). Yet, this
concept has not received the attention it potentially deserves, either because of a high degree
of complexity in its operationalization or because of its organizational, rather than individual,
focus (Shenkar et al., 2008). The operationalization of the concept of cultural friction seems
to be underdeveloped. This paper is an attempt to develop such an operationalization further,
and to show both accuracy of the critical incidents and the reliability of the measurement. No
comparison has been done with any other tool. To my knowledge, no other measure of
cultural friction for similar purpose exists so far and couldn’t be taken into consideration.
Thus, I rely on Durand (2016) grounded approach to start and elaborate the instrument.
This paper attempts to consider friction at the inter-individual level. An interesting
view of face when dealing with Asian counterparts is revealed as one possible way to
disentangle the friction concept and shed light on the nature of individual interactions in
CBM&As. This paper also considers how middle managers assess “losing face” in particular
situations and thus produce cultural friction in cross-border acquisition settings.
Socio-cultural differences are addressed as frictional effects between individuals. As
stated by Drogendijk and Zander (2010), the notion of friction places a strong emphasis on
the interaction of executive carriers. Moreover, the cultural friction concept posits that
cultural differences may be either synergistic or disruptive (Luo & Shenkar, 2011). Still, as
such notions about cultural friction have not been operationalized due to empirical complexity
(Koch et al., 2016), it seems necessary to focus on friction in managerial interactions (Ambos
& Hakanson, 2014). This paper suggests grounded critical incidents as a methodological
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approach (Durand, 2016). The concept of grounded critical incidents appears to be an
appropriate starting point to capture facets of intercultural friction in the field, measuring
middle managers’ own perceptions of cultural friction. The paper emphasizes a holistic
approach to the research process by combining qualitative methods (from an exploratory
stage using qualitative data) to quantitative ones in order to develop an index of cultural
friction. (Hurmerinta-Peltomäki & Nummela, 2006).
This paper intends to address the measurement gap from a new lens to capture the
impact of cultural differences or distances in global business, in general, and, in particular, to
investigate managerial perceptions during intercultural interactions in cross-border
acquisitions, with a special focus on “face”. The facet of cultural friction related to the
concern for “face-saving and -keeping” is a particularly sensitive topic when the cultural
backgrounds of the actors involve different work values and practices.
First, the theoretical background built on the foundational concepts of friction and face
is addressed. Next, the development of the research tool is elaborated, including testing,
sorting process, re-testing, and adjustment to assure the final usable version validates
adequately the strength of the relationships the items have to the latent construct. The
outcomes gained from the validation process of a potential instrument will be discussed,
emphasizing mutual understanding or misunderstanding of the facet of friction related to face-
saving as a key concern for middle managers’ cultural interaction in post-merger integration,
and the added value of mixed methods in research process to create knowledge (Hurmerinta-
Peltomäki & Nummela, 2006).
This is a methodological contribution, lying in the use of the critical incident
technique for the development of a new scale to measure cultural friction, “face” in particular,
experienced by managers during CBM&As. It seems, therefore, important to clarify the
boundaries of the research context and the unit of analysis. A clear definition of the unit of
analysis might sometimes be tricky and challenging, in social sciences and even more in
international business studies. The phenomenon evolving over time, capturing managerial
perceptions of cultural challenges across middle managers’ experiences of cross border
M&As might have fuzzy boundaries because of the interconnections of the systems studies.
The unit of analysis is then the number of experiences of interactions of a population of
middle managers in different contexts of cross border acquisitions. The author attempts to
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look at the challenges emerging from the managers’ cross-cultural interactions during their
PMI experiences. The qualitative data used to build the tool are collected from individuals
regarding their professional various experiences of interaction with colleagues during PMI.
The author seeks to understand the process and mechanisms through which cultural
differences affect individual outcomes, as well as the role of context in CBA. A tool was
designed to test the hypothesis that a more rigorous measurement tool would add
complementary insights to the post-merger integration process. The general question
addressed in this paper is how to scale the data from a grounded qualitative study and make it
usable in a quantitative field study on middle managers in CBA. The two specific questions
are:
(1) What are the accurate critical incidents from the grounded theory-based qualitative
empirical study?
(2) Are selected critical incidents reliable to measure cultural friction perceptions?
Theoretical framework
Cultural friction
According to Shenkar, the friction metaphor provides a “superior representation of what is
arguably the heart of the matter in IB studies, namely, interaction between viable entities”
(2012, p. 15). The cultural friction concept first coined by Shenkar (2001) offers a perspective
for investigating the relationships and more precisely the contacts between individuals in
intercultural encounters; such encounters can appear in different nations, firms, or teams.
Generally, there are many meanings of “friction” in multi-cultural environments, such as
misalignment (Rosen et al., 2008), collision (Buono et al., 2003), or culture dissonance
(Irrman, 2005).
Shenkar and colleagues’ concept of friction (Luo & Shenkar, 2011; Shenkar, 2001;
2012; Shenkar, Luo, & Yeheskel, 2008), which emphasize “contact”, “interactions”, and
“cultural resistance”, are appropriate when targeting individual encounters in cross-border
settings. Luo and Shenkar (2011) define cultural friction in IB as “the extent to which two or
more entities from different countries culturally resist with one another in real contact or
interactions over the course of IB activities or transactions” (2011, 2).
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Friction focuses on the complexity of cultures and the interaction within (Drogendijk
& Zander, 2010). Luo and Shenkar (2011) posit that cultural differences may be either
synergistic or disruptive. Hence, friction can result in positive outcomes and facilitate
synergies. Conflict may be regarded as dysfunctional but also considered to be a normal
occurrence when managing across cultures (Schoetter & Beamish, 2011). Empirical studies
indicate that synergies may emerge from cultural value differences (Koch et al., 2016),
especially when the organization is able to foster managers who span boundaries to generate
“creative tensions” (Mudambi & Swift, 2009; Schotter & Beamish, 2011). Tensions emerging
from those interactions are not necessarily “dysfunctional and disruptive” (Coser, 1956: 23),
but can have positive effects and create synergy (Morgan, 1997; Shenkar et al., 2008). Stahl
and Tung (2015) observe that traditional IB studies on the effect of cultural differences tend
to overemphasize the negative over the positive and call for a more nuanced understanding of
the multifaceted relationship between culture and IB processes and outcomes. There is more
and more evidence for a so called “double-edge sword” (Reus & Lamont, 2009) of cultural
diversity, that can be both an asset and a liability in multicultural teams (Stahl et al., 2010;
Doz, 2016). The linearity of the basic assumption that cultural heterogeneity leads to higher
conflict (cultural friction) should be redressed. Yet, what about the mechanism of perceived
cultural friction on work outcomes?
Despite Shenkar and colleagues’ several attempts (Luo & Shenkar, 2011; Shenkar,
2001; Shenkar, 2012; Shenkar, Luo & Yeheskel, 2008) to conceptualize in cultural
differences a more rigorous way, substituting the “distance” metaphor with “friction”, the
concept has not gained the attention it deserves (Ambos & Hakanson, 2014). A lack of
convergence of conceptualizations of the term makes it remain at a metaphorical level.
Shenkar (2001) outlines the hidden assumptions of the cultural distance construct and
challenges its theoretical and methodological properties. (For a full critique of conceptual
foundations, see: Brewer, 2007; Dow & Karunaratna, 2006; Harzing, 2003; Shenkar, 2001;
Smith, 2002; Tung & Verbeke, 2010).
My study proposes an alternative grounded measure to obtain information from
individuals, specifically, middle managers’ perceptions of work-related issues occurring
during the post-merger process. There are very few streams of grounded theory work based
on in-depth interviewing or case research that could reframe the view of acquisitions and
create new distinctions and links rooted in observation (Durand, 2016). The aim of inductive,
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theory-grounded study is the development of a model that is context specific (Charmaz, 2008)
and subject to later development (Glaser & Strauss, 1967; Gioia et al., 2013).
Face as a facet of friction
To understand the nature of friction as one aspect of cross-cultural encounters in post-merger
integration, this paper focuses on one facet underlying friction, revealed from the grounded
critical incidents: face concerns, i.e. the face-giving, face-keeping, and face-losing concerns,
which represent a core social value in Asian cultures (Ho, 1976; Hofstede, 2001).
The importance of “face” is a consequence of a society that is very conscious of social
contexts. For Hofstede (2001), “face” is part of the practice in a collectivist-oriented culture,
which is a fundamental cultural dimension. Face concern in the sense of dignity, respect, and
honor is a way to maintain harmony within the group in a collectivist culture. Causing
someone to "lose face", even if done by accident, is an infraction rarely forgiven (Ho, 1976).
One may try to restore face, using indirect and subtle communication, gift-giving, tokens of
honor, and compliments. People concerned about face-saving may not talk openly about a
problem to avoid losing face, and may not challenge their superior in front of others. For
example, in a conflict resolution study, researchers find that US respondents tend to use more
direct conflict styles, such as domination, whereas participants from collectivist cultures (i.e.,
Chinese, South Korean, and Taiwanese) are more likely to use indirect, mutual face-saving
conflict styles, such as connoting either high mutual face or concern for another’s face
(Cocroft & Ting-Toomey, 1994).
Face represents an individual’s claimed sense of positive image in the context of
social interaction to avoid humiliation or embarrassment, to maintain dignity, or preserve
reputation (Ho, 1976). “Face” is an active phenomenon that can be sought, saved, granted,
lost, and regained (Goffman, 1958). “Face is lost when the individual, either through his
action or that of people closely related to him, fails to meet essential requirements placed
upon him by virtue of the social position he occupies” (Ho, 1976, p. 867). The Chinese also
speak about “Giving someone face” (“gei mianzi”), which is a very important basic value of
their society, meaning demonstrating respect to someone and honoring him by actual
behavior. In other words, “giving face to someone else” is as important as not “losing face”.
Basically, face describes the proper relationship with one’s social environment, which is
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essential to a person (or that person’s family) as a primary characteristic of his or her
appearance to others.
In the strategies proposed to manage successfully cross-border acquisitions, Rottig
(2007) highlights the need for understanding and being sensitive to face in order to avoid
conflicts or frictions. Rottig warns against using domination strategy to control the acquired
firm, especially in international alliances where disdain and condescendence is an
inappropriate type of control. From the perspective of the culture-related issue of saving face,
avoidance of this approach is of high importance. Business practice has shown that in a large
number of acquisitions, managers failed to treat this sensitive issue carefully, not treating the
acquired workforce with the necessary deference (Rottig, 2007). The friction emerging form
this lack of sensitivity may lead to failure. In a case study relating the failure of the cross-
border acquisition between Siemens and BenQ, Cheng and Seeger (2012) described face
concern as a subtle cultural factor, e.g., how the directors at BenQ rejected chairman Lee’s
resignation to avoid him losing face and to avoid the firm losing face, using an intermediary
as a key role to reduce the loss of face towards the stakeholders.
In the context of post merger integration, I therefore argue that cultural friction
between new team members may arise because of a lack of sensitivity of face value from
middle managers having different cultural backgrounds.
Critical Incident Technique: a new direction from a grounded perspective
CBA field studies often use quantitative measurements with ex-ante categories which fail to
provide a deeper understanding of cultural differences (Stahl & Tung, 2015), Harzing &
Pudelko (2015) suggest focusing instead on managers’ individual problems in cross-border
encounters on a qualitative basis and to return to explorative groundwork instead of applying
generic distance measures (Harzing & Pudelko, 2015; Stahl & Tung, 2015).
Critical incident technique (Flanagan, 1954) methodology, based on managers’ real
life experiences dealing with CBA, may contribute to our understanding of these events by
providing a grounded, concrete picture of the various challenges M&A’s elicit (Brookfield,
1995). The method is not innovative per se, yet it offers a new perspective to look at cultural
friction in CBM&As settings and for instrument design. The data collected by in-depth
qualitative interviewing can be developed into a quantitative measurement to assess
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managers’ attitudes toward their new peers, their decision-making strategies, and motivational
factors in the merger environment.
Qualitative and quantitative approaches are not mutually exclusive. While a qualitative
approach allows the researcher to look at firsthand experience to provide meaningful data, a
quantitative research design strives to identify and isolate specific variables within the
context, seeking correlations and causality. Qualitative design focuses on a holistic view of
what is studied via documents, observations, and interviews. What happens in natural settings
using a grounded approach enables a better understanding of the people, and the events in
these settings. This approach captures important cultural aspects, such as work values and
culturally variant ways of thinking and behaving (Rottig et al., 2013). Rottig notes that the
qualitative way is a first step. The grounded way is to go from the field to conceptualization
and measurement.
Middle managers: from grounded data to cultural friction index
How can researchers scale the data from a grounded qualitative study to a quantitative field
study on middle managers and develop an index of CBA cultural friction? This mixed method
approach (Hurmerinta-Peltomäki & Nummela, 2006) may add value to IB research in
CBM&As. Building an instrument from a grounded approach is beneficial because this
measurement tool will reflect the realities of these events, rather than depending on abstract
theoretical assumptions about cultures and their distances, and what such distances imply for
the merging organizations.
The focus on middle managers is an important, but understudied, topic with respect to
organizational change (Cartwright & Cooper, 2000). M&A literature confirms that middle
managers are the people most affected by organizational change: “
[T]hey [middle managers] are responsible for the implementation of top
management’s decision, they are subject to decision makers’ expectations, to
uncertainty due to the lack of top-down information and are exposed to
employees’ irritations, fears and questions. Middle managers are also
regularly in contact with colleagues (middle managers) from the partner
company, but generally on a more informal level than top managers are.
Therefore, they get more insights and confront more problems. (Kusstatcher &
Cooper, 2005, p.159).
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Middle management behavior is a very important aspect of M&A implementation,
being a part of the critical phase that contains the clues for why a particular M&A may or
may not succeed, or perform as expected at the time of the M&A decision and design.
However, there are still some disagreements on how to measure post M&As’ performance,
the time period it should be measured, leading to significant errors on success versus failure
attribution (Straub, 2007). This high dependency rooted on accounting based measures
(economics, stock return) to label M&As success or failure leads to the main controversy.
Straub (2007) proposed a more comprehensive model integrating strategic logic, financial
aspects and organizational behaviour.
The use, the value and the relevance of CIT for studying managerial perception in
post-merger integration (PMI) has been discussed in an earlier paper (Durand, 2016), but, to
the author’s knowledge, only very few papers deal with CIT in IB field studies. For example,
Hajro (2015) employs the critical incidents approach in a longitudinal study to develop a
model of socio-cultural integration processes. Hajro’s focus was on how individuals coped
with problems resulting from cultural differences. This work demonstrates the tremendous
value of CIT: Hajro’s data resulted in numerous detailed descriptions, later used for purposes
of triangulation (Hajro, 2015). The importance of critical incidents arising from cross-cultural
interactions and choice of managerial response was highlighted. The study concludes that the
way incidents are handled can, either harm, or facilitate, the socio-cultural integration
processes.
Methodology
Proving the validity and reliability of critical incidents
To test the psychometric properties of the instrument, rigorous guidelines were followed for
items generation, questionnaire administration for content validity, initial items reduction,
item validity testing, and instrument replication, as suggested by Hinkin (1998) to develop
measures for a survey.
Antecedents of questionnaire development: item generation
The development of the instrument is based on a preliminary study aimed at documenting
middle managers’ perceptions of cultural challenges, job changes, and emotions in post-
merger integration settings (Durand, 2016). Instrument items are derived from this earlier
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qualitative field study using grounded methodology focusing on managerial experiences of
cross cultural interactions and challenges as the unit of analysis. This preliminary
investigation used the critical incident methodology to demonstrate its relevance in PMI. A
series of 22 critical incidents had been generated, derived from interviews with 9 middle
managers, regarding their entire CBA experiences. This sample size is consistent with
scholars’ recommendations for exploratory research purposes (McCracken, 1988).
To organize the data, information contained in the stories was carefully scrutinized to
identify data categories that summarize and describe the incidents (Charmaz, 2008; Gioia et
al., 2013, Grove & Fisk 1997; Stauss 1993). The CI’s are revised several times to improve
readability and coherence, to reorganize middle managers’ ideas, and to place the stories in
the actual sequence of events. A label was assigned for each situation, which appeared to be
the topic at stake. Similar labels were assigned to situations that described similar situations.
The procedure was repeated for all the stories. A sufficient number was reached when no new
dimensions appeared in the situations (saturation point). In this grounded approach, the
categories and corresponding labels were not predetermined but derived from the analysis of
the empirical data26. They are clearly related to distinct and well-known work topics relating
to challenges in intercultural studies.
To ensure face validity, the categories were doubled checked by having a peer
researcher attribute categories to the grounded scenarios. Categories identified in both cases
were overlapping. Some CIs overlapped with more than one dimension (category) and could
appear in several dimensions (e.g., both status and face concerns). Also, some dimensions are
redundant in several CI’s. This issue was overcome by selecting CI’s having only one CI for
each dimension.
The grounded scenarios have been carefully built to simulate situations encountered
by key informants. The critical incidents can be summarized under the following recurrent
topics that appear clearly after analysis of the interviews. Seven labels are identified related to
the following topics: autonomy and initiative left, business ethic, negotiation, privacy
26 The dimensions found are the interviewees’ own dimensions, not theoretical dimensions (but they fit different theoretical frameworks of intercultural studies)
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boundaries, willingness to change, communication style and problem solving approach. Other
topics were commented on during the interviews, but no critical incidents could be written
from those fragments (e.g., changes related to workload, (un)fairness of contract terms for
people from different national backgrounds).
Content validity assessment and scale construction
The interest in switching from qualitative to quantitative data lies in the fact that qualitative
data can be observed empirically, whereas quantitative data can be measured systematically to
express quantitative relationships of an observable phenomenon. Using qualitative and
grounded data makes it possible to gather information about cultural difference perception at
stake in PMI, to look for a certain construct (e.g., “friction derived from face”?) in order to
design an instrument with greater construct validity and reliability. Can we make the
construct observed from the grounded approach tangible? Methodological problems emerge
since the perceptions generated from the interviews regarding interpersonal interactions are
unconscious issues and difficult to decode. Those perceptions are rooted in internalization of
inter individual social relations (Doise & Mugny, 1979). These are artifacts made through
cognitive processes.
The initial version of the questionnaire is based on the issues identified during the
exploratory interviews, and includes a pool of 22 critical incidents generated for the purposes
of scale construction (Durand, 2016). This version is long and contains many items and sub-
questions, which are not usable for field study purposes (see Appendix 1). The purpose is to
select the CI’s usable for the final version, and potentially in a field survey. There are fewer
CI’s in the final version of the questionnaire, thus, it is more readable, simpler, and less
cognitively demanding.
Questionnaire development
The original critical incident-based instrument was built with a problem-solving approach,
culture being viewed from an anthropological perspective (Inkeles & Levinson, 1954). People
in any culture have to face the same sets of problems, but the way they have learnt to deal
with them is different. In this functional orientation, culture is defined by its primary function
of active adaptation to the environment and to societal problems that individuals must resolve
in order to survive (Inkeles & Levinson, 1954; Kluckhohn & Strodtbeck, 1961; Rokeach,
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1973). Trompenaars & Hampden-Turner (1998) applied this functional approach in their
method to reconcile dilemma in cross cultural settings.
The questionnaire in its original version was built as follows:
- The situation (CI) is described and the first sub-question (Q1) proposes alternatives to
deal with the situation. For each CI (22), four alternatives are described to complete
the story, and respondents are asked to choose one of those. Alternatives are based on
the experience of the “managers” (what is the actual behavior chosen by the
interviewee in the given situation); for other alternatives it can be either on what the
interviewee realized he might have done a posteriori, or, in some cases, on the
theoretical background regarding manifestations of cross cultural dimensions, when
possible27.
- The sub-question 2 (Q2) is related to the causal attribution of the situation (national,
organizational, buyer position, personality). Participants have to choose between four
options as to which level they perceive the event could be attributed to.
- The sub-question 3 (Q3) is connected to the feeling of dilemma perceived if exposed
in such a situation. Participants have to rate on a 10-point Likert scale from “Very
Low” to “Very High” their degree of dilemma.
- In the sub-question 4 (Q4) respondents are asked to indicate their intention to continue
to work or not within the team. This question was an open question giving the
opportunity to write reasons or comments on the participant’s behavioral intention.
- The sub-question 5 (Q5) refers to the respondent’s exposure to similar circumstances.
Participants were asked to answer on a 10-point Likert scale from “Never” to “Very
frequently”.
The sub-questions were developed to determine the most valid critical incidents
among the 22 possibilities after administration of an initial questionnaire (pretest).
Lab Testing 1: pretest
The process of instrument development followed some rigorous steps: selecting the CI’s, lab
testing various versions of the questionnaire, readjustment, and final instrument ensuring
items consistency and content validity. The first lab test served as a pretest for items
reduction. Different scales were developed and readjusted to measure the component of
cultural friction.
27 Alternatives have been validated during a feedback session with the interviewees (the manager experts from the oil industry company) (Durand, 2016).
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After a preliminary test with three global managers28 and a feedback session with the
interviewees (exploratory stage) to insure face validity of situations described and alternative
choices for each of them, the questionnaire was re-tested. The total sample of 156
International Business students was divided into two test groups, receiving the same stimuli,
in September 2013 and October 2013, for two business schools in France. The first group
received a lecture in English on multicultural team management, and the second group, a
lecture on global and virtual team management. Hence, the sample was not targeted
randomly; respondents needed to have an international experience, a basic knowledge of
cultural issues and sufficient English proficiency to understand the instructions and fill out the
survey. Although this is a student sample, it still allows checking for the variables causing
cultural friction when dealing with foreign counterparts because students face the similar
issues as professional sample. Therefore, I consider this is an acceptable proxy. They are all
English speakers (non-native for most of them) with work experience(s) (internships) across
border. They answered the questionnaire via the Internet, with the author present in order to
increase the response rate, to hear any comments (to improve the tool), and to answer any
questions, if needed. Accompanying the questionnaire was a letter explaining the general
purpose of the study. As expected, it took 45 minutes to one hour to answer this first version
of the questionnaire. When a respondent clicked “submit” at the end of the form, the data
were saved on the survey website and an Excel file was subsequently exported. The response
rate was only 55% despite the author’s presence: a total of 86 respondents, 46 from the first
sample, and 40 from the second, including only respondents who completed the full
questionnaire and submitted it. No group comparison was done, they all were submitted to the
same questionnaire and had all the same pre requisites.
Lab test 1: sorting process
Selection of the 22 critical incidents was conducted according to the first lab test to
answer the research question: what are the accurate CIs? The selection criteria, in order of
priority, were:
- First, when the causal attribution (Q2) percentage for each case is the highest or above
40% for national level, this means it relates to a cultural issue and the CI had to be
selected.
28 i.e. middle managers doing business in a global environment.
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- Second, when the percentage of perceived dilemma (Q3) was high, this contributed to
the selection of the items because when a discomfort is perceived (high percentage of
perceived dilemma), it potentially leads to a cognitive conflict.
- Third, the percentage of occurrence was considered because high occurrence of a
similar event makes it more credible.
- Comments regarding “intention to keep working with” (Q4) were considered for their
potential to add complementary information to the perceived discomfort. “Intention to
leave” and “Intention to stay” are coded in a binary way (“0” for “Intention to leave”,
and “1” for “Intention to stay”). Written comments were very informative regarding
the adaptation issue for staying.
The critical incidents selected according to the first criterion (causal attribution to
national level) were coherent with the other criteria.
Adjusting the instrument: number of items
Seven out of the total 22 critical incidents were selected in the sorting process described
above (see Appendix 2). Fifteen have been disregarded because of content validity. In order
to introduce a measurement that corresponds to the situations, and to the construct to be
measured, among the four alternatives suggested in Q1, the two alternatives most frequently
chosen were selected. Actually, for each situation described, the respondents either did not
choose, or only rarely chose, two of the four alternatives. They more frequently chose two
others. Those two were then considered to be extreme manifestations of behavioral answers to
the situational challenge. They constituted the extreme poles on the 5-point Likert scale where
1 is considered “high friction”29 and 5 is considered “low friction”. With respect to scaling
the items, it is important that the scale generate sufficient variance among respondents for
subsequent statistical analyses (Stone, 1978).
The seven CI’s chosen as the most suitable were related to the following dimensions:
(1) concern for privacy vs. public boundaries; (2) business ethics (concern for moral
principles and intra-individual issues (Doise & Mugny, 197930); (3) business ethics (societal
issue/dealing with partners); (4) sharing ideas in superior/subordinate relationships; (5)
performance orientation; (6) conflict management using confrontation; and (7) public opinion
29 NB: This construct is assumed, it has to be validated 30 Term used by Doise and Mugny (1979) to suggest cognitive conflict experienced in inter-individual situation of social interaction
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vs. private opinion. They all refer to a cultural challenge identified from the exploratory study
(see Table 1). Selecting only some of the 22 critical incidents induces a risk of losing
information regarding contexts of cultural friction, yet the deletion of items is a necessary
stage to build a usable scale.
In the second version, sub-questions from Q1 to Q5 were deleted as well, since they
aimed at selecting the CIs from the pretest. In the profile description, the question regarding
religious background was deleted as well since some people complained about the private
nature of this question. A substitute question, “Any other background you want to mention?”
was inserted.
TABLE 1: Critical incidents elicited and related dimensions identified
Concern for Privacy Vs. Public boundaries CI 1
Business Ethic (concern for moral principles/ intra
individual issue)
CI 2
Business Ethic (societal issue/ dealing with partners) CI 3
Sharing ideas in Superior/subordinates relationship CI 4
Performance orientation CI 5
Conflict management using confrontation CI 6
Public opinion vs. private opinion CI 7
Scale development: second lab test
The aim of the second lab test was to confirm the critical incidents that survived from the
assessment of content, and to check how the items were interrelated and to what degree they
measured the same construct. Thus, an exploratory factor analysis (EFA) was conducted to
test the psychometric qualities of the scale.
Students’ lab test 2
A sample of 51 International Business students in France, all foreigners was surveyed in May
2014. They were recruited after listening to a lecture in English on International Human
Resources Management, fulfilling the prerequisite for English proficiency and international
experiences, with a high knowledge of cultural issues and cultural sensitivity. All of the
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respondents had studied abroad and had cross-border work experience or internships.
Students completed the questionnaire on the Internet, with the author present to insure
acceptable response rate. As with the first test, accompanying the questionnaire was a letter
explaining the general purpose of the study. The questionnaire took 6-8 minutes to answer.
The data were directly saved on the survey website when the respondents clicked “submit” at
the end of the form and an Excel file was subsequently exported. The response rate was
100%.
Data analysis and test revision
An Exploratory Factor Analysis (EFA) was conducted to further refine the new scale. It
allowed the reduction of a set of variables, providing evidence of construct validity
(Guadagnoli & Velicer, 1988). The objective was to identify and retain items that most
clearly represented the content domain of the underlying construct (Hinkin, 1998), in this case
revealing friction derived from face concerns.
The internal consistency of the seven items was tested. The Cronbach’s Alpha
coefficient was 0.4. This result indicated the scale was not reliable. Any variable that
correlates at less than 0.4 with all other variables may be deleted from the analysis (Kim &
Mueller, 1978). A more refined analysis followed, extracting 1, 2, and 3 factors (3 factors
yielded Eigen values greater than 1.0). Varimax rotation was used when extracting 2 and 3
factors. Four items appeared to be interrelated (critical incidents # 3, 5, 6, 7), i.e., items
measured the same construct with a Cronbach’s alpha coefficient of 0.605, which was still
relatively low, but acceptable for exploratory research purposes (Ford, MacCallum & Tait,
1986).
A more subtle examination of the four remaining items, all loaded on a single
appropriate construct according to the analysis, was necessary to check their common content.
Even though they described different issues (business ethics, conflict management,
performance concerns, face-saving), do they measure friction as targeted? Will the test
precisely measure components of this cultural friction? The validity of each item is
determined by the strength of its relationship with the latent construct. This stage aimed at
uncovering the nature of friction or facet of friction that is relevant to managers in PMI stage
in CB M&As.
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After re-examining the remaining items and returning to the reconstructed interviews,
it was determined that those items revealed commonality (beyond the dimensions or topics
described for each critical incident) with concerns regarding face-saving. For this individual
measure of perception regarding PMI cultural challenges, the more accurate construct to
define the specific nature of those items was “friction derived from the face concern”. This
relevance was achieved through a field approach, and the items generated were different from
those that could have been generated by other researchers.
A complementary test was proposed, repeating the process while controlling some
variables, using a more homogeneous sample to increase internal consistency and to confirm
that the four items were interrelated. The four items seemed to measure the same thing, yet
did they target the construct?
“Real life” test: refinements of the scale and test of target population
The four items left after the EFA led to conclude that a common factor is measured, emerging
from the grounded exploratory study. The “friction derived from face concerns” appears to be
the construct shared by all four items. The low, but acceptable, Cronbach’s Alpha coefficient
might have been the result of the sample’s high heterogeneity. The diverse cultural
backgrounds of respondents may have biased their interpretations of hypothetical
management situations (Harzing, 2006).
To control for bias in the retest phase, a more homogeneous sample was selected
including CBM&A managers who were native English speakers or bilingual with an Anglo-
Saxon background and representative of the population of interest.
To verify the existing correlations between the four items, three more items were
added to measure the same construct (“friction derived from face concern”), and to increase
the Cronbach’s Alpha coefficient. The new additional items came from the exploratory stage,
based on a challenging managerial experience, but had been eliminated because of misfit
regarding the selection criterion (e.g., low cultural attribution score) before scale refinements.
This was a way to demonstrate that the four items worked well together. Also, for each item,
one question was added in order to confirm the nature of the event: “For the above questions,
I would have behaved the same way if the person was for my own country.” Possible answers
range from “Strongly disagree” to “Strongly agree” on a 5-point Likert scale.
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Final scale development: refining the instrument
Some more changes were made for this third version of the questionnaire and this validation
step. Instead of having two poles (the alternatives) on one continuum, two sub-questions were
created regarding the degree of agreement for each alternative. Taking into account some
comments from respondents and informal reviews from IB scholars, it was not clear that the
two poles were “opposed”. Having the respondents positioning their degree of agreement on a
5-point Likert scale for each pole could decrease this methodological bias31. Likert-type
scales are the most frequently used in survey questionnaire research (Cook et al., 1981) and
are the most useful tool in behavioral research (Kerlinger, 1986). They also are suitable for
use in factor analysis. Although researchers have used 7-point and 9-point scales, Likert
(1932) developed the scales to be composed of five equal appearing intervals with a neutral
midpoint, such as strongly disagree, disagree, neither agree nor disagree, agree, strongly
agree.
TABLE 2: Labels for summarizing each critical incident
Critical Incident 1 Trainer in Corporate School
Critical Incident 2 Negotiating shipping contracts with a new colleague
Critical Incident 3 New supply boat unavailable as contracted
Critical Incident 4 Tricky construction project on ancient burial site
Critical Incident 5 Trade unions difficulties
Critical Incident 6 New crew to replace local teams
Critical Incident 7 Meeting for new team arrival
Scale replication
In the scale development process when items are added or deleted from a measure, it is
advisable to test the “new” scale to another independent sample (Anderson & Gerbing, 1991;
Schwab, 1980). The population for this field test was the target population of the instrument,
i.e., CBM&A managers, English native speakers or bilingual with an Anglo-Saxon
31 Coefficient alpha reliability with Likert-type scales has been shown to increase up to the use of five points, but then it levels off (Lissitz & Green, 1975)
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background. Data were collected from Qualtrics survey on line in May 2016. A total of 142
middle managers filled in the Qualtrics online questionnaire. A mobile friendly version is also
available to increase response rate. About 48% of the respondents had at least one CBA
experience in his work life, the other 52% had more than one (See Table 3 above for a
summary demographic data). They were all English speakers (native language or
professional used language). The questionnaire was anonymous to avoid responses with
desirability biases.
TABLE 3: Summary of demographic data
AGE GENDER CBA exper
25-34 51.4 female 37.3 at least one 52 35-44 36.6 male 62.7
45-54 9.9
55-64 2.1
Three extra critical incidents were added in a successful attempt to increase the
reliability of the scale.
Findings
The structure of the 21 items proposed for the cultural friction index was tested: 2 factors
could be extracted, and as a result, one was disregarded (CI #4), loading to both factors: both
are measuring friction (derived from face concerns). One is related to the positive attitude
(representing low culture friction: 12 items/b+c) with Cronbach’s Alpha .954, the other to the
negative one (representing high cultural friction: 6 items/a) with Cronbach’s Alpha .802.
Reliability of the total scale of 18 items is Cronbach’s alpha .933.
The high score for Cronbach alpha in the case of the sample with managers compared
to IB students may result from the refinements made for the final test: three more items have
been added to improve the reliability and consistency of the items; in addition, the two initial
poles used for the sorting process have been split into two subscales for each CI.
I didn’t conduct a confirmatory factor analysis (CFA) at this stage since changes have
been made and needed to be tested from an exploratory perspective: Then EFA seems
relevant to test the reliability of the scale as a new one. A CFA could be led when the
instrument is used in a field survey to measure the effect of cultural friction (with face
concerns component)
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The final instrument now has to measure a unique construct, a component of friction
derived from face concerns with one negative alternative and one positive as showed in table
4. The sub-issues identified are related to the perceived cultural friction and more specifically
to one aspect of the friction perceived by middle mangers, be it face concerns leading to
friction when not properly managed.
TABLE 4: Final scale EFA: Suppression du CI#4
Rotation of the component matrixa
Component 1 2
CF1a .636
CF1b .597
CF1c .861
CF2a .735
CF2b .784
CF2c .870
CF3a .574
CF3b .655
CF3c .853
CF5a .676
CF5b .796
CF5c .876
CF6a .799
CF6b .778
CF6c .856
CF7a .695
CF7b .701
CF7c .864 Extracting method : Principal component analysis Rotation Method : Varimax normalisation Kaiser. a. Convergence of rotation/ 3 iterations.
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To clarify the process described above and to illustrate how these aspects are sub
issues of “losing, giving, keeping face”, below is an example of a critical incident generated
from the preliminary study32.
As an expert, you are sent to train people in a Corporate School abroad after a
merger. You spend a lot of time at the workplace and it is like your new home
in this foreign environment. One morning, one of the trainees arrives in the
classroom with 5 friends with him, not from the company, to have breakfast
together.
This critical incident is referring to practices. The manager who experienced this event
felt invaded at the workplace, and overreacted, asking people to leave the place (that he
associates as his “home”, a place where he could find familiar elements). Hence, the CI is
assigned to the label “privacy boundaries.”33 From a cultural perspective, the manager
experienced a friction and realized a posteriori that he had made a mistake by asking the
trainee to leave the workplace, making him and his friends to lose face. From the trainee’s
point of view, it was natural to come to the workplace and share breakfast there with his
friends even though they did not belong to the company. He felt insulted to be ordered to
leave without understanding the reason why.
TABLE 5: Summary of the different steps followed in the tool validation
Steps Items Outcomes
Lab test 1/ Sorting process 22 CI 7/22 selected
Lab test 2/ Construct validity 7 CI 4/7 validated
Field test/ Scale replication 4+ 3 CI 6/7 validated
Discussion
The intent of this paper was to shed light on cultural contacts, looking at cross-cultural
frictions resulting from cross-border acquisitions combining methods at different phases in
the research process. It presents one possible solution to the measurement problem regarding
a study of “cultural friction” at inter-individual level, emphasizing one facet of friction, such
as face concerns, in PMI, with particular attention to middle managers’ interactions. 32 Because of length constraints, full-length version of the 22 CI is not included in this article, but is available in Durand (2016), see chapter 2 of this dissertation. 33 For detailed description of the coding process, using Gioa et al., 2013, see Durand (2016)
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According to the prior grounded study (Durand, 2016), the perception of cultural friction lies
at the level of interactions between individuals (and not between firms, or between cultures).
CIT was used to define the core dimension of cultural friction, namely, concerns for
face (losing, saving, giving, keeping face). This is a possible grounded contribution to the
friction concept. At the inter-individual level of interaction, it reveals “face concerns” as one
component of perceived friction in a specific context of CBM&As. Cultural friction reflects
the relative differences of perception of situations where a high sensitivity for face is present.
Perceived friction derived from face is a particularly sensitive aspect to deal with when the
cultural backgrounds of the actors involve different work values and practices. This research
suggests the importance of paying more attention to the process and mechanisms through
which cultural differences affect individual outcomes, as well as the role of context in PMI.
Outcomes regarding friction from the grounded research
Spontaneous comments during the face-to-face interviews with middle managers in the
preliminary study were collected regarding conflict perceptions: for example, “friction are
more about personalities and linked to individuals”; “it is not about cultural background
most of the time”; “It is a person problem above all”; “We experienced tremendous friction
with foreign teams”. Participants reported perception of conflict, referring to friction when
experiencing those misunderstandings. Yet, it is not necessarily negative, most of the time
they attribute a positive challenge to it. When the interviewees explicitly expressed conflict,
they tended to identify a responsible party, someone to blame. Often the conflict was
attributed to the manager, sometimes to the cultural background of the person. Culture is a
mental construct (Hofstede, 2001), as is friction, so the informants may underestimate the
cultural part in conflict perception.
Those comments were of great importance in the tool development and validation
procedure. As stated above, in the grounded field study the interviewees mention “friction”
spontaneously to express the challenges resulting from their job changes and their cultural
interactions. Use of this word in an unprovoked manner suggests that “friction” is intuitively
appropriate when dealing with inter-individual interactions and contacts, and that friction can
have both negative and positive outcomes (friction as a physical metaphor can have a positive
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impact as well)34. The sources of friction identified from the grounded study result from
differences in terms of: 1) business practices and behavioral patterns (degree of initiative
expected, degree of employee autonomy, ethical questions, negotiation practices, respect for
privacy or intrusion on personal space); and 2) cognitive patterns, such as communication
styles and problem-solving approaches. The final instrument should be able to assess the level
of perceived friction (high or low) between a given situation and real life behavior to confront
the situation (and potentially solve the problem).
Refining cultural friction in regard to middle managers in PMI
In this study, tests and retests of a questionnaire using an EFA contribute to the validation of
six critical incidents based items that tend to measure a same construct related to perceived
friction of intercultural actors when exploring cultural and job changes challenges in
CBM&As. The instrument developed in a scientific and rigorous way opens up a new door
for a possible grounded contribution to the friction concept in specific contexts of CBM&As.
Different conceptualizations of culture differences used so far actually occupy different levels
of analysis, and may capture different phenomena. The terminology of distance used so far
might not be appropriate, preventing researchers from relevant operationalization of cultural
challenges.
More precisely, the nature of friction as it is measured here seems to be derived from
concerns with face. "Face" is an active phenomenon that can be saved, granted, lost and
striven for (Goffman, 1958). The friction derived from face concerns seems to bring
complementary information regarding the nature of the cultural challenge managers have to
confront in PMI stage of CBM&As. This finding might be deduced from the Anglo-Saxon
background of the interviewees who reported the stories. The “face sensitivity” they have to
overcome with their counterparts might be more challenging than they are aware of. Face
sensitivity doesn’t have the same place and scope in Western cultures as in Asian; people in
Western cultures are not raised with this high concern for face, as “it is a consequence of
living in a society [Asian] that is very conscious of social contexts” (Hofstede, 2001, p. 230).
From an individualistic perspective, the concern for face would be centered on personal
achievement and goals to answer the need to strive to achieve fame and glory, rather than the
public face highlighted in collectivistic societies, related to embarrassment, reputation, shame,
34 In Durand (2016) the conclusions focus on the insights gained from the counter-intuitive positive emotional reactions of managers to cross-border M&As.
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preservation of positive image (Ho, 1976). Individuals use behavioral strategies, such as
demonstrating respect, paying attention to status, complimenting and honoring interlocutors,
which are of the highest importance in some social contexts, and result from a person’s
specific cultural background. This report of interviews with Asian-born middle managers
compared with Western managers could inspire future research directions and be beneficial to
validate these assumptions. Managers may have a hard time to find the behavior required in
such situations; yet such behavior can be decisive in managing long-term relationships with
colleagues, partners, and customers in IB relationships (Brannen & Wilen, 1998; Rottig,
2007).
Managerial implications
Developing sensitivity toward “saving face” might help to reduce perceived friction in IB
encounters, and, consequently, reduce discomfort resulting from a high level of perceived
friction in PMI stage. This could be done through cross-cultural training workshops. Learning
about saving/giving face could be a business and social tool, which managers can use to their
advantage to operate after a cross border merger. For instance, it is easier to negotiate because
the other party may give into your demands to avoid being embarrassed provided you are also
willing to compromise. The framework of face negotiation (Ting-Toomey, 1988; 1997)
described above for conflict behaviors could be an avenue for future research aimed at
capturing cross-cultural interaction issues with managers in PMI.
Limitations
However, some limitations have to be acknowledged regarding generalization. First, because
of the method, the information selected was not neutral and unbiased, but was affected both
by the priorities of the informants and the author’s personal biases and expectations. Only one
researcher conducted and analyzed the interviews.
As stated earlier, the aim of inductive theory-grounded study is not the development of
a perfect model, but rather a model that is context specific (Charmaz, 2008) and subject to
later development (Glaser & Strauss, 1967; Gioia et al., 2013). Yet, the emergence of friction
derived from a face concern had not been expected. The small number of interviews
conducted in the exploratory stage means the findings need to be considered with caution, and
subject to further validation. But as the unit of analysis is the individual perceptions of
experts, i.e. people who have actually experienced a cross border merger, the number of
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experiences is also part of the sample to allow formalization of general characteristics in the
specific setting of PMI. Managers interviewed could generalize on their own experiences of
cross border mergers. They could infer many transversal issues according to their expertise of
what those mergers involve. They referred not only to the company they were now working
in, but also to any company they had worked in before in which they had to deal with
integration following a merger. However, findings should be ground-tested and confirmed in
further studies with a larger sample to develop more critical events.
Finally, the understanding and social representation of the situation can be
misperceived and biased according to the cultural background of the respondents. A control
of the background of the sample should be done if using the instrument in another context
than an Anglo-Saxon one, but keeping a homogeneous sample. For example, a similar study
could be done in further similar grounded research by sampling diverse cultural backgrounds
to identify other components of friction for experts of CBM&As from an Asian perspective.
Would face concerns as a component of friction be revealed as the most challenging issue
from a Chinese point of view in comparable situations?
CONCLUSION
The objective of this paper was to develop and to confirm a measurement of culture friction,
using critical incidents from a grounded theory-based qualitative empirical study to test their
accuracy and reliabiltity to measure the contruct of friction. The scale was developed by
eliciting CI’s from the managers themselves, reflecting the real life experiences of those on
the CBI frontlines. Thus, the final measurement possesses reliability and validity, and the six
items left measure a single and common construct that would be suitable for use in future
research in similar settings.
Designing and confirming a measurement of friction in a systematic way from fresh
eyes adds value to the post-merger integration field of CBM&As. It contributes to develop an
operationalization of “cultural friction” further, focusing at inter-individual levels of
interactions, that can be used for measurement in future study on post merger integration.
Developing a novel perspective to operationalize the complexity of cross-cultural interactions
at an inter-individual level is one of the possible answers to preceding calls to focus on
managers’ actual problems rather than researcher’s preconceived solutions (Harzing &
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Pudelko, 2015; Stahl & Tung, 2015). The use of mixed methods at different stages of this
research process has enabled a more complete picture of the phenomenon under study. Mixed
methods seem to have a vital function in cross-cultural research, in which the researcher
needs to confirm understanding of the measures and the concepts by the respondents
(Hurmerinta-Peltomäki & Nummela, 2006). Regarding the experience of CBM&A managers,
this study offers an alternative way to look at cultural challenges from new lenses and how
managers can overcome such challenges.
The inter-individual level approach might bring complementary knowledge and
insights on individual motivation and emotions of decision-makers in CBM&As, and their
perception of cultural issues in post merger settings. The approach reveals that mutual
understanding of face issues, such as face-saving, face-keeping, or face-losing, is crucial for
cross-cultural encounters in such contexts. However, face might not always be the most
relevant issue when studying friction. There may be broader issues that are not relevant in the
sample targeted in this research. Future research in CBM&As could benefit of the explicit
steps described to uncover other components of cultural friction for managers in PMI stage.
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APPENDICES
APPENDIX 1:
Illustration of the 5 sub-questions for CI 1
C1R1: Critical incident 1
After a merger, your company has changed practices regarding invoices. To keep deadlines
the Financial Manager in charge is now to remind those new rules in real time. You really
think it was working quite well before the merger. What would you do?
1/ Keep invoicing, even late, at least since you don’t see why you would
change what was working before
2/ Reporting on time according to the deadline
3/ Reporting in advance regarding the deadline
4/ Not reporting at all
5/ Reporting on time but sending boatshed work
6/ Other:
C1R2: Critical incident 1*
Regarding the situation given above, do you perceive the challenge as due to :
1/ Personality
2/ Buyer position
3/ Merger context
4/ Country
5/ Other:
C1R3: Critical incident 1*
Indicate to which degree you would feel in dilemma with such a situation (i.e. choosing
between different alternatives to solve out the described issue)
0 1 2 3 4 5 6 7 8 9 10
Very Low Very High
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C1R4: Critical incident 1*
In this situation do you think you could continue to work or not with the team? Try to explain
why you would or not.
C1R5: Critical incident 1*
Have you been already exposed to a similar situation?
1 2 3 4 5 6 7 8 9 10
Never Very frequently
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APPENDIX 2:
Critical incidents selected after the first lab test
IT IS STIPULATED IN THE INSTRUCTIONS THAT ALL THE SITUATIONS TAKE
PLACE AS A RESULT OF A MERGER, AND THAT FOR MORE CONVENIENCE, I
DIDN’T REPEAT THIS CONTEXT IN EACH STORY.
1. CI 1: Critical Incident 3 * As an expert, you are sent to train people in a Corporate School
abroad after a merger. You spend a lot of time at the workplace and it is like your new
home in this foreign environment. One morning, one of the trainees arrives in the
classroom with 5 friends with him, not from the company, to have breakfast together.
1………2………3………4………5
You order them to leave You kindly explain the policy
in an authoritarian way, of the organization
explaining that this is a but you allow it this time,
private space reserved to and offer the friends coffee or tea
people working there
In your opinion, what is at stake in this situation? ………………
2. CI 2: Critical Incident 4 * After the merger took place, you have to visit new suppliers in
a foreign country. You succeed in negotiating the new formalities of the contract. To
thank you, the supplier you negotiated with offers you a brown envelop with money
inside.
1………2………3………4………5
You accept it, this is how business works
You refuse, explaining you don’t work this way even if you know this will offend the person
In your opinion, what is at stake in this situation? ………………
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3. CI 3: Critical Incident 6 * A construction project takes place in a remote area of an
overseas country. The locals are ensured they would be adequately compensated for any
disturbance. One key concern of the local peoples was the potential to disturb ancient
burial sites, considered sacred. Construction eventually began. To everyone’s surprise and
regret, the crew came across old skeletons necessitating lengthy negotiations with locals
concerning financial compensation. You later realize that the local people have tricked
you.
1………2………3………4………5
You engage a procedure for getting your money back
You may have avoided this problem by cultivating closer relationships with key people
In your opinion, what is at stake in this situation?………………
4. CI 4: Critical Incident 17 * You’re now assigned in a foreign country and work with
locals. You also notice that other bosses act like dictators, shouting at the workers, telling
them what to do without taking any responses. What style of management would describe
this as?
1………2………3………4………5
You wouldn’t be able to behave this way —even if workers expect bosses act like that, and are not offended—it’s just too different from your ideas of effective management
You think there’s a better way to do things—you are going to be more diplomatic as a boss
In your opinion, what is at stake in this situation?………………
5. CI 5: Critical Incident 18 * You just received an assignment to manage a construction
project for your company in a foreign country. You run into difficulties with the trade
unions involved with the project. Negotiations are in a stalemate. The project is starting
to run behind schedule. What do you feel is the best strategy to pursue?
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1………2………3………4………5
You think of importing an You seek out other avenues to entire work crew from your negotiate with the unions, perhaps home country to move the an intermediary whom project forward you’ve worked with in the past
In your opinion, what is at stake in this situation?………………
6. CI 6: Critical Incident 19 * You decide to ask HQ to bring in a new crew to replace
the locals. The new crew arrives and goes immediately to work. The reaction from the
local union is fast. They are very upset and go on a rampage destroying cars in the
parking lot and damaging parts of the construction project. You realize you made a
mistake…
1………2………3………4………5
You continue with the new crew, You make another attempt disregarding what is happening to negotiate with the local union, using an intermediary In your opinion, what is at stake in this situation?………………
7. CI 7: Critical Incident 22 * You have to conduct a meeting for the new team arrival. You
have to introduce the new objectives with both the new team and the local team. At the end
of the meeting, the visiting team asked if there are any questions and no one responded.
But the second they left, it was clear the local team had lots of questions and they
requested additional meeting time with you privately to clear things up. You’re stupefied
and don’t know how to react.
1………2………3………4………5
You tell the local team it is unfortunately too late, you have to go now, they already had their chance to ask questions
You realize the local team didn’t want to embarrass you in front of the visitors, and stay a long time afterwards explaining the objectives
In your opinion, what is at stake in this situation?………………
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APPENDIX 3:
Illustration of one item of the questionnaire after the third test (field test)
CI 1: As an expert, you are sent to train people in a Corporate School abroad after a
merger. You spend a lot of time at the workplace and it is like your new home in this
foreign environment. One morning, one of the trainees arrives in the classroom with 5
friends with him, not from the company, to have breakfast together.
CI 1.1/ a: You strongly order them to leave, explaining that this is a private space reserved for
people working there, and not for the others
1 2 3 4 5
Strongly disagree Strongly agree
CI 1.1/ b: You kindly explain the policy of the organization but you allow it, only for this
time, and share a cup of coffee/tea
1 2 3 4 5
Strongly disagree Strongly agree
CI 1.1/ c: FOR THE ABOVE QUESTIONS (a & b), I WOULD HAVE BEHAVED THE
SAME WAY IF THE PERSON WAS FROM MY OWN COUNTRY
1 2 3 4 5
Strongly disagree Strongly agree
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COMPLEMENTARY TABLES FOR DEMOGRAPHIC DATA: 1-3
Table 1: Age distribution AGE Freq. Percent Cum.
25-34 73 51,41 51,41 35-44 52 36,62 88,03 45-54 14 9,86 97,89 55-64 3 2,11 100
Total 142 100
Table 2: Gender distribution GENDER Freq. Percent Cum.
Male 89 62,68 62,68
Female 53 37,32 100
Total 142 100
Table 3: Educational level EDUCATION
LEVEL Freq. Percent Cum.
Bachelor 45 31,69 31,69 Master 45 31,69 63,38 MBA 26 18,31 81,69 PhD 17 11,97 93,66
Other 9 6,34 100
Total 142 100
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ESSAY 4 : CULTURAL FRICTIONS IN POST-MERGER
INTEGRATION PROCESSES: A VIEW ON ‘FACE’ WHEN
DEALING WITH ASIAN COUNTERPARTS35
Abstract
This chapter is added as a magnifying glass of the previous essay on cultural friction with a specific focus on face concerns. The intent of this chapter is to shed light on cultural contacts, looking at cross-cultural frictions resulting from cross-border acquisitions from a grounded perspective. This is a possible grounded contribution to the friction concept at the inter-individual level, revealing “face concerns”, as one component of perceived friction, in the specific context of CBM&As with managers from a non-Asian background. Managers from anglo saxon backgrounds may have difficulties finding the behavior required by such situations; yet this can be decisive for developing synergies and managing long term relationships with colleagues, partners, and customers across international mergers (Brannen & Wilen, 1998; Rottig, 2007). Perceived friction as a result of face is a particularly sensitive aspect when the cultural backgrounds of the actors involve different work values and practices. In particular, a focus on Asian and ‘Western’ middle managers could be inspiring for future research directions.
Keywords: post merger integration, cultural friction, face saving, face giving, face losing
Introduction
The cultural friction perspective offers a framework for investigating the contacts between
individuals in post-merger integration processes in cross-border M&A. This contribution
reconsiders the study of friction at the individual level, exploring ‘face’ when dealing with
Asian counterparts as one possible way of disentangling the friction concept. The chapter asks
how middle managers interpret ‘losing face’ in particular situations and how this produces
cultural friction in cross-border acquisitions.
As stated by Drogendijk and Zander (2010) the notion of friction places strong
emphasis on the interaction of executives. Moreover, cultural friction posits that cultural 35 Published book chapter in its original version : Durand, M. (2017). « Cultural frictions in Post Merger Integration processes: A view on face when delaing with Asian counterparts » in Fuchs M., Henn S., Franz M., Mudambi R. Managing Culture and Interspace in Cross-border Investments: Building a Global Company. Routledge
172
differences may be either synergistic or disruptive (Luo & Shenkar, 2011). Still, as such
notions of cultural friction have not been operationalised due to their empirical complexity
(Koch et al. 2016), it seems appropriate to specifically focus on friction in managers’
interactions (Ambos & Hakanson, 2014). This chapter puts forward grounded critical
incidents as a methodological approach (Durand 2016) and offers a specific example of how
to apply this in practice. Grounded critical incidents seem a suitable starting point for
empirically capturing facets of intercultural friction in that they measure middle managers’
own perceptions of cultural friction. This contribution intends to address the measurement gap
from a novel perspective, capturing the impact of cultural differences or distances in global
business and investigating managerial perceptions during intercultural interactions in cross-
border acquisitions with a particular focus on “face saving and keeping”.
The first section gives some theoretical background on the concepts of friction and
face. Next, a selected example is discussed, emphasising the understanding or
misunderstanding of face-saving as a facet of friction. The results, discussion and
perspectives section highlights the relevance of ‘face’ for research and the common practice
of middle managers.
Cultural Friction
The friction metaphor provides a “superior representation of what is arguably the heart of the
matter in International Business, namely the interaction between viable entities” (Shenkar,
2012a; 15). The cultural friction perspective offers a framework for investigating the
relationships, or more precisely the contacts between individuals in intercultural encounters.
Such encounters can occur in different nations, firms, or teams (Shenkar et al., 2008).
Generally there are many meanings of the concept of friction in multi-cultural environments,
such as misalignment (Rosen et al., 2008), collision (Buono & Bowditch 2003) or cultural
dissonance (Irrman, 2005).
Shenkar et al.’s conception of friction, emphasising “contact”, “interactions” and
“cultural resistance”, is appropriate when targeting individual encounters in cross-border
settings (Luo & Shenkar 2011; Shenkar 2012a; 2012b; Shenkar et al., 2008). Luo and Shenkar
(2011, 2) define cultural friction in international business as “the extent to which two or more
entities from different countries culturally resist with one another in real contact or
interactions over the course of international business activities or transactions”. Friction hence
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focuses on the complexity of cultures and the interactions within (Drogendijk & Zander
2010), suggesting that cultural differences may be either synergistic or disruptive (Luo &
Shenkar, 2011).
Friction can result in positive outcomes and facilitate synergies. Hence, although
conflict is sometimes regarded as dysfunctional it could be considered a normal process when
managing across different socio-cultural settings (Schotter & Beamish 2011). Empirical
research indicates that synergies may emerge from cultural value differences (Koch et al.
2016), especially when the organisation is able to foster boundary-bridging managers who are
able to generate “creative tensions” (Mudambi & Swift 2009; Schotter & Beamish 2011).
Tensions emerging from those interactions are not necessarily “dysfunctional and disruptive”
(Coser, 1956, 23), but can have positive effects and create synergy (Shenkar et al. 2008). In a
recent publication, Stahl and Tung (2015) highlight that traditional International Business
studies focusing on the effect of cultural differences tend to overemphasise the negative over
the positive; the authors call for a more nuanced understanding of the multifaceted
relationship between culture and international business processes and outcomes. Thus there is
growing evidence of the “double-edge sword” (Reus & Lamont, 2009) of cultural diversity in
that it can be both an asset and a liability in multicultural teams (Stahl et al. 2010). The
example below shows a problematic situation of communication in a cross-border acquisition
and explains the occurring friction.
Face concerns as one facet of friction
To understand the nature of friction as one mechanism of cross-cultural encounters during
post-merger integration, this contribution focuses a particular facet that underlies friction in
grounded critical incidents: face concerns, i.e. face giving, face keeping and face losing
concerns as a core social value in Asian cultures (Ho, 1976; Hofstede, 2001). ‘Face’ is a
phenomenon in societies that are very conscious of social contexts. In that way, for Hofstede
(2001) it is directly linked to ‘collectivism’ as a fundamental cultural dimension. Face
concern in a sense of dignity, respect and honor is a way to maintain harmony within the
group in a ‘collectivist’ culture. Causing someone to ‘lose face’, even if done by accident, is
an infraction rarely forgiven (Ho, 1976). One may try to restore face using indirect and subtle
communication, gift giving, honoring and complimenting. People concerned with face saving
may not talk openly about a problem to avoid losing face and may not challenge their superior
in front of others. “Gei mianzi”, “Jiu mianzi” or “Xiexie gei mianzi” find an equivalent in
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“thank you for coming”, to thank someone for accepting a dinner invitation for example, and
would literally translate as “thank you for having given me face” (Hofstede, 2001). Basically,
face describes the proper relationship with one’s social environment, which is essential to a
person (or that person’s family) as the part of the self that is shown to the world. In a case
study of the failed cross-border acquisition between Siemens and BenQ, Cheng and Seeger
(2012) describe the face concern as a subtle cultural factor, illustrating how the directors at
BenQ rejected chairman Lee’s resignation to avoid his and also the firm losing face, and how
they used an intermediary in a key role to reduce the loss of face toward the stakeholders.
Critical incident technique
Despite several attempts by Shenkar and colleagues to more rigorously conceptualise cultural
difference (Luo & Shenkar 2011; Shenkar, 2012a; 2012b; Shenkar et al., 2008), the notion of
cultural difference has not gained the attention it deserves (Ambos & Hakanson, 2014). Often,
the term still remains at the metaphorical level. Shenkar (2012b) outlines the hidden
assumptions behind the cultural ‘distance’ construct, the challenges associated with it and its
theoretical and methodological properties.
This study proposes an alternative grounded measure for obtaining information from
individuals, designed to capture middle managers’ perception of work-related issues during
specific situations of the ongoing post-merger processes (see Harzing & Pudelko, 2015; Stahl
& Tung, 2015). Critical incident methodology, based on managers’ lived experience of cross-
border acquisitions, is used to understand critical events by providing a grounded picture of
the various challenges posed by mergers and acquisitions (Brookfield, 1995). The use, the
value and the relevance of the critical incident technique for studying managerial perception
in post-merger integration have been discussed in an earlier paper (Durand, 2016). The
instrument developed and discussed in this study focuses on face as a key concern for the
cultural interaction of middle managers in post- merger integration settings. The “face
concern” is based on a preliminary grounded study that aimed at documenting middle
managers’ perceptions of cultural challenges, job changes and emotions during post-merger
integration. The initial version of the questionnaire was based on issues identified during
exploratory interviews and includes a pool of 22 critical incidents generated for the purposes
of scale construction. To test the psychometric properties of the instrument, we followed the
guidelines suggested by Hinkin (1998). The grounded scenarios were carefully built to
simulate situations encountered by key informants. Later, a quantitative study followed to
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further refine the new scale. A total of 163 middle managers filled in the survey online, of
which 142 responses were kept for data analysis (only those managers that had experienced at
least one cross-border merger). The mean for the first alternative (strong order to leave, see
text box below) is 2.9648 on a five points Likert scale, which is just above the midpoint, and
3.2113 for the second alternative (sharing time and explain the policy), which is quite high.
People in this case would have behaved the same way with someone from the same cultural
background (m = 3.6056). From this we can infer that the frictional effect has been
anticipated, as if it were the norm for the cross-border M&As experts (respondents) in these
contexts.
The case of “losing, giving, keeping face”
The following gives a specific example of “losing, giving, keeping face”:
Textbox:
CI 1: As an expert, you are sent to train people in a Corporate School abroad after a merger. You spend a lot of time at the workplace and it is like your new home in this foreign
environment. One morning, one of the trainees arrives in the classroom together with five friends who are not with the company to have breakfast together.
a: You strongly order them to leave, explaining that this is a private space reserved for people
working here and not for others.
b: You kindly explain the policy of the organization but you allow them to stay, just this once,
and share a cup of coffee/tea.
This critical incident is assigned to the label “privacy boundaries”. The manager who
experienced this event felt invaded at the workplace and asked people to leave the place (a
place he considers “home” and one where he could find familiar elements). From a socio-
cultural perspective, the manager experienced friction and realised a posteriori that he made a
mistake in asking the trainee to leave the workplace, making him and his friends lose face.
From the trainee’s perspective it was natural to come to this workplace to share breakfast with
his friends even though they were not part of the company. He felt insulted to be ordered to
leave without understanding the reason why.
176
The manager could have accepted to spend this time with the group and developed a
strong relationship and trust. Both are necessary ingredients for successful management in
that they decrease perceived friction and prevent the group from losing face. The consequence
of this loss of face is distrust, not only on the part of the trainee but also the whole group. It
would require some strategies to repair the damaged relationship.
Understanding the friction that stems from face concerns adds information on the
character of the cultural challenge managers have to confront. In the case described above,
friction arises when a manager orders a trainee to leave the workplace and does not allow his
friends to have breakfast there. The manager fails to see that in a collective context, such
behaviour is the consequence of the values linked to strong group cohesion. At the same time,
the manager feels troubled because the trainee does not show enough respect for his position
as a manager; hence, he expected respect related to his hierarchical position. This may be
related to a ‘Western’ management style (see Fuchs and Schalljo36) and matches the insight
that US tend to use more direct conflict styles such as domination, whereas participants from
‘collectivist’ cultures are more likely to use indirect, mutual face-saving conflict styles, such
as according high importance to each other’s face or face concerns (Cocroft & Ting-Toomey,
1994). In the strategies proposed for successfully managing cross-border acquisitions, Rottig
(2007) warns of using such a direct strategy of domination to control the acquired firm,
especially in international alliances. Indeed, business practice has shown that in a large
number of acquisitions, managers failed to treat this sensitive issue carefully, not treating the
acquired workforce with the necessary deference (Rottig, 2007).
Perspectives
The intent of this chapter was to shed light on cultural contacts, looking at cross-cultural
frictions resulting from cross-border acquisitions from a grounded perspective. This is a
possible grounded contribution to the friction concept at the inter-individual level, revealing
“face concerns” as one component of perceived friction in a specific context. Developing a
novel method to operationalise the complexity of cross-cultural interactions at the inter-
individual level is one possible answer to calls that researchers should focus on managers’
actual problems rather than their own preconceived solutions (Harzing & Pudelko, 2015;
Stahl & Tung, 2015). Managers may have difficulties finding the behaviour required by such
36 Forthcoming 2018, Fuchs and Schalljo. Behind the Scenes: Managers’ Interpretations of Foreign Takeovers by Investors of Emerging Economies In Managing Culture and Interspace in Cross Border Investments: Building a global company. Routledge
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situations; yet this can be decisive for developing synergies and managing long term
relationships with colleagues, partners, and customers across international mergers (Brannen
& Wilen, 1998; Rottig, 2007). Perceived friction as a result of face is a particularly sensitive
aspect when the cultural backgrounds of the actors involve different work values and
practices. In particular, a focus on Asian and ‘Western’ middle managers could be inspiring
for future research directions.
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REFERENCES Ambos, B., and L. Håkanson. 2014. “The concept of distance in international management research.” Journal of International Management 20(1): 1-7. Brannen, C., and T. Wilen. 1998. Doing business with Japanese men: A woman's handbook. Stone Bridge Press. Brookfield, S. 1995. Becoming a critically reflective practitioner. Thousand Oaks, CA: Sage. Buono, A. F., and J. L. Bowditch. 2003. The human side of mergers and acquisitions. Managing collisions between people, cultures and organizations. Washington, DC: BeardBooks. Cheng, S. S., and M. W. Seeger. 2012. “Cultural differences and communication issues in international mergers and acquisitions: A case study of BenQ debacle.” International Journal of Business and Social Science 3(3): 116-127. Cocroft, B. A. K., and S. Ting-Toomey. 1994. “Facework in Japan and the United States.” International Journal of Intercultural Relations 18(4): 469-506. Drogendijk, R., and L. Zander. 2010. “Walking the cultural distance: in search of direction beyond friction.” Advances in international management 23: 189-212. Durand, M. 2016. “Employing critical incident technique as one way to display the hidden aspects of post-merger integration.” International Business Review 25(1): 87-102. Harzing, A. W., and M.Pudelko. 2016. “Do we need to distance ourselves from the distance concept? Why home and host country context might matter more than (cultural) distance.” Management International Review 56(1): 1-34. Hinkin, T. R. 1998. “A brief tutorial on the development of measures for use in survey questionnaires.” Organizational research methods 1(1): 104-121. Ho, D. Y. F. 1976. “On the concept of face.” American journal of sociology 81(4): 867-884. Hofstede, G. 2001. Culture’s consequences: Comparing values, behaviors, institutions and organizations across nations. Thousand Oaks: Sage Publications. Irrman O. 2005 “Communication dissonance and pragmatic failures in strategic processes: the case of cross-border acquisitions.” Advances in strategic management 22: 251-266. Koch, P. T., Koch, B., Menon, T., and O. Shenkar. 2016. “Cultural friction in leadership beliefs and foreign-invested enterprise survival.” Journal of International Business Studies 47(4): 453-470. Luo, Y., and O. Shenkar. 2011. “Toward a perspective of cultural friction in international business.” Journal of International Management 17(1): 1-14.
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Mudambi, R., and T. Swift. 2009. “Professional guilds, tension and knowledge management.” Research Policy 38(5): 736-745. Reus, T., & Lamont, B. T. (2009). The double-edged sword of cultural distance in international acquisitions. Journal of International Business Studies, 40(8), 1298-1316. Rosen, M. A., Wildman, J. L., Bedwell, W. L., Fritzsche, B., Salas, E., and C. S. Burke. 2008. “Diagnosing Friction Points in Multicultural Team Performance: A Rationale and Measurement Approach.” Proceedings of the Human Factors and Ergonomics Society Annual Meeting 52(11): 753-757. Rottig, D. 2007. “Successfully managing international mergers and acquisitions: A descriptive framework.” International Business: Research Teaching and Practice 1(1): 103-126. Schotter, A., and P. W. Beamish. 2011. “Performance effects of MNC headquarters– subsidiary conflict and the role of boundary spanners: The case of headquarter initiative rejection.” Journal of International Management 17(3): 243-259. Shenkar, O. 2012a. “Beyond cultural distance: switching to a friction lens in the study of cultural differences.” Journal of International Business Studies 43(1): 12-17. Shenkar, O. 2012b. “Cultural distance revisited: Towards a more rigorous conceptualization and measurement of cultural differences.” Journal of International business studies 43(1): 1-11. Shenkar, O., Luo, Y., and O. Yeheskel. 2008. “From “distance” to “friction”: Substituting metaphors and redirecting intercultural research.” Academy of Management Review 33(4): 905-923. Stahl, G. K., and R. L. Tung. 2015. “Towards a more balanced treatment of culture in international business studies: The need for positive cross-cultural scholarship.” Journal of International Business Studies 46(4): 391-414.
Acknowledgements: I am very grateful to Mikael Sondergaard for advising and encouraging me on this chapter. Many thanks to Mohammad Ahammad, Yipeng Liu, Marc Ohana, Mark Peterson and Shlomo Tarba for their guidance and insightful comments on the scale development; and final thanks to the reviewers for this book project, Martina Fuchs and Ram Mudambi.
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181
ESSAY 5:
PERCEPTIONS OF MIDDLE MANAGERS IN CROSS-
BORDER ACQUISITIONS: CULTURAL FRICTION, GLOBAL
MINDSET, AND POST MERGER IDENTIFICATION AS
ANTECEDENTS OF MOTIVATIONAL WORK OUTCOMES
DURING POST-MERGER INTEGRATION?
Abstract
This study examines how perceptions of cultural challenges and changes in job characteristics influence motivation and related middle manager work attitudes, such as affective commitment, job stress and intention to quit in cross-border acquisition (CBA) settings. The study addresses these phenomena of the human side of post-merger integration not fully understood in the research on cross-border socio-cultural dynamics. A better understanding is sought by using the argument of the job characteristics model and social identification theory. Respondents were selected randomly among a database because of their Anglo-Saxon background (native and/or professional) from different countries and different industries. Hypotheses were tested on data retrieved from 142 middle managers that had experienced at least one CBA. Supports for relationships between the need for feedback, identification with the new organization, and cultural friction on motivational work outcomes are confirmed. This research contributes to theoretical knowledge in the field of mergers and acquisitions and provides recommendations for middle managers to facilitate socio-cultural integration focusing on the positive impact of perceived cultural friction.
Keywords
Cross-Border Mergers & Acquisitions, Cultural Friction, Global Mindset, Work
Motivation, Affective Commitment, Post-Merger Organizational Identification
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INTRODUCTION
A number of challenges have been identified to occur at the stage of the post merger
integration (PMI) (Seo & Hill, 2005). Specific challenges related to integration problems, e.g.
worker resistance and conflicts, start at the merger implementation stage (Seo & Hill, 2005;
Shrivastava, 1986; Weber, 2011). Major organizational changes are one of such challenges
during PMI (Capron, Dussauge & Mitchell, 1998). Despite an increasing focus on integration
as a process of organizational change (Graebner & Eisenhardt, 2004), the organizational
changes as a result of the M&A are still under-explored, for instance in respect to changes in
job descriptions and organizational identification processes.
Psychological states and both individual and organizational outcomes are taken to be
part of the puzzle of the many M&As that do not meet performance (Buono & Nurick, 1992).
The human side of M&A implementation has for long been considered a part of the critical
phase that contains the clues for why an M&A may or may not succeed or perform as
expected when the M&A decision was made (Buono & Nurick, 1992). Studies of post-merger
socio-cultural integration provide so far mixed results. Some scholars have found that cultural
differences impede success (Weber, Shenkar & Raveh, 1996), while others have
demonstrated the huge potential of cultural differences for creating synergies and value
(Morosini, Shane & Singh, 1998; Stahl & Tung, 2015; Vermeulen & Barkema, 2001).
Furthermore, middle managers constitute an important but understudied topic with
respect to their role in organizational change (Cartwright & Cooper, 2000) despite some
problems appear to be connected specifically to the manager’s role during the integration
process (Scriber, 2012). This study focuses on middle managers for a number of reasons.
We still do not fully grasp the role of work antecedents and psychological states have
on work outcomes in radical organizational changes such CBMAs. King et al. (2004), in their
large meta-analytic study on the effects of finance and strategy variables in M&As, conclude:
“Researchers simply may not be looking at the ‘right’ set of variables as predictors of post-
acquisition performance” (p. 197). Below top management, middle managers are likely to
experience changes in their job tasks (Brannen & Peterson, 2009; Sinkovics, Zagelmeyer &
Kusstatscher, 2011). The strategic change and M&A literature establish that middle managers
are those employees most affected by organizational change (Kusstatcher & Cooper, 2005).
The merger process is particularly demanding for middle managers, which are caught
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between implementation strategy created by their superiors and subordinates’ expectations
and fears (Balogun & Johnson, 2004).
[Middle managers] are responsible for the implementation of top
management’s decisions, they are subject to decision makers’ expectations, to
uncertainty due to the lack of top-down information and are exposed to
employees’ irritations, fears and questions. Middle managers are also regularly
in contact with colleagues (middle managers) from the partner company, but
generally on a more informal level than top managers are. Therefore, they get
more insight and confront more problems (Kusstatcher & Cooper, 2005, p.
159).
Changes in job task have an impact on work outcomes. This argument is offered by
the Job Characteristic Model (Hackman & Oldham, 1975; 1976; 1980). In addition to the
JCM, I use the social identity theory as a framework for global mindset and post merger
identification, and cultural friction to provide a further understanding of work antecedents and
psychological states effects on motivational work outcomes in CBM&As.
Researchers have so far rarely reflected on how job description changes may result in
motivational work outcomes. Changes such as mergers are often characterized by a decrease
in organizational identification (Bartels et al., 2007), which in turn could affect motivational
work outcomes.
Past research stipulated that organizational identification is rooted in Social Identity
Theory (SIT) (Tajfel, 1982; Tajfel & Turner, 1986; Hogg & Terry, 2000). SIT suggests that
identity-related constructs and processes have the potential to inform our understanding of
organizational behavior by allowing a new conceptualization of motivation associated with
social identity. SIT is relevant to this study since it addresses a range of organizational
phenomena and changes which take place during M&As (Hogg & Terry, 2000).
The highly complex process of integrating two previously separate organizations
represents a huge challenge to managers as well as scholars. Weber (2011) lists human
behavior problems that lead to resistance and conflict in the implementation process and
various detrimental factors, such as the lack of implementation strategy or a lack of value
creation. The organizational changes implied by such mergers have been studied from
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different perspectives and highlight the underestimation of cross-cultural issues as a major
factor for high failure rates in CBA.
I have developed a measure of cultural friction in a previous study using critical
incidents with a problem solving approach that better reflects the lived experience of those in
the frontline (Durand, 2016). The instrument is composed of six critical incidents after sorting
process, tests and refinements. It focuses at inter individual levels of interactions. It measures
a unique construct of perceived friction of intercultural actors when exploring cultural and job
changes and challenges in CBM&As. It reveals to be derived from face concerns as one
possible component of perceived friction in a specific context. It is one of the possible
answers to preceding calls to focus on managers’ actual problems rather than researcher’s
preconceived solutions (Harzing & Pudelko, 2015; Stahl & Tung, 2015).
Existing research on international M&As provides a limited and insufficient
understanding of this important phenomenon, especially concerning the role of middle
management in the post-merger integration (PMI) process. Furthermore, a number of
important underexplored areas in CBA research still remain to be explored, such as
organizational identification with the new firm arising from the merger (Rouzies, 2011;
Weber & Drori, 2011), or the impact of ‘global mindset’ (Kedia & Mukherji, 1999; Levy
Beechler, Taylor & Boyacigiller, 2007) which offers a perspective for exploring managerial
perceptions of job changes and work-related outcomes at the individual level.
This study addresses these gaps by looking at how managerial perceptions of cultural
friction, post merger organizational identification, global mindset and, job characteristics
affect work motivational outcomes in CBAs. I hypothesize that the strength of these
motivational effects depends on the job characteristics, the middle manager’s perception of
cultural friction, their global mindset, and the post-merger organizational identification. Yet,
little empirical evidence exists to support this hypothesis. Only a limited number of
management studies have focused on identifying the factors that might contribute to post-
merger integration success, rather than failure, highlighting the creative potential of highly
diverse teams (Primecz, Romani & Sackmann, 2012). Stahl and Tung (2015) conclude that it
is not cultural differences per se that lead to conflicts but rather the way the cultural
differences are recognized, understood, and managed.
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In this paper, I select only the needs for autonomy and feedback (Hackman & Oldham,
1975). The model assumes that autonomy and feedback are more important than the other job
characteristics. Those two antecedents constitute one aspect of individual manifestations of
job characteristics with respect to national level dimensions of power distance and uncertainty
avoidance (Hofstede, 1980; 2001).
My study shows positive impacts of need for feedback, post-merger identification, and
cultural friction. Hence, these findings contribute to the M&A literature by ameliorating our
understanding of the CBA integration process at the human resource level. First, by
conducting a field survey to examine how middle manager’s perceptions of cultural friction
and changes in job characteristics could influence motivational work outcomes and looking at
micro-level variables, I offer a way to reconcile the human side of M&As’ other performance
measures. Hardly any earlier studies on post-merger work-related outcomes focus on this
motivational process. Second, by focusing on the impact of post-merger organizational
identification on work motivation outcomes, I approach job transitions in a more nuanced
fashion than Hackman and Oldham. Third, by applying SIT and JCM, I show that these
theoretical models are useful to better understand the impact of the process of cross-border
organizational changes and cultural challenges. Integration is not a static process but rather a
highly dynamic one with events that are not foreseeable, such as resistance and clashes (Megli
& Risberg, 2010).
In the following sections, I discuss the theoretical framework used for the empirical
study together with our hypothesis. We continue then with the methodological part, results
and discussion of our results finishing with the limitation and future avenues for the research
and managerial implications of our study.
Theoretical Framework and Hypotheses Development
In the area of human resources, the socio-cultural literature on M&As focuses primarily on
understanding employees’ psychological and behavioral reactions to an acquisition. M&As
increase negative reactions, such as anxiety (Ivancevich, Schweiger & Power, 1987),
ambiguity (Risberg, 2001; Vaara, 2003), and lack of organizational commitment (Cartwright
& Cooper, 1996). An important M&A stream of research focusing on merger integration
challenges indicates that human factors are major reasons for failure (Lubatkin & Véry, 1994;
Gomez, Angwin, Weber & Tarba, 2013; Gomes, Weber, Brown & Tarba, 2011; Sarala, Junni,
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Cooper & Tarba, 2014; Stahl, Angwin, Very, Gomes, Weber, Tarba, ... & Durand, 2013;
Stahl & Voigt, 2008; Teerikangas & Véry, 2006).
Integration is decisive for value creation in acquisitions (Haspeslagh & Jemison,
1991). There are multiple ways to create value. If a firm finds good reasons not to integrate
(Paruchuri, Nerkar & Hambrick, 2006; Puranam, Singh & Chaudhuri, 2009), nobody will be
adversely affected. Researchers in organizational behavior have often depicted acquisitions as
leading to negative outcomes for acquired employees (Sales & Mirvis, 1984; Buono &
Bowditch, 1989) and organizational theorists have characterized some acquired companies as
misfits (Thorton, 2001) or even failures (Carrol et al., 1996).
Weber et al. (2011) in a study combining pre-and post-merger stages show that
different integration approaches may fit different cultural settings. Strategic compatibility is
advanced as a crucial factor in CBA success. Meyer & Altenborg (2008) emphasize the lack
of compatible strategy rather than the misfit between the two state-owned Scandinavian
telecom corporations, Telenor & Telia. Their research suggests that the strategy of
implementation leads to failure, unexpectedly, despite a context of organizational fit. Even
M&A with good organizational fit and complementarities may have to deal with problems if
there is strategic incompatibility. The problem lies in the challenge of realizing potential
synergies (Ahammad & Glaister, 2013) 37.
However, despite the significant amount of research carried out on the human side of
M&A, the psychological and cognitive dimension of the phenomenon have been
underestimated and the role of people in CBA performance is often placed in a marginal
position (Kusstatcher & Cooper, 2005). The motivational process in CBA settings is
interesting and important to understand; therefore, this study focuses on work outcomes from
the human perspective.
Job Characteristics Model
Changes in work content in M&As can be perceived very negatively (Buono & Bowditch,
2002). The job characteristics model (JCM) (Herzberg, 1966; Hackman & Oldham, 1976,
1980) offers a window for exploring job changes and work motivation outcomes at the
37 See also Straub (2007) for a comprehensive analysis of the reasons for frequent failures in M&As.
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individual level since it is about the motivational potential of jobs. JCM suggests that positive
outcomes occur for the individual and the organization measured by motivation, quality of
work performance and satisfaction with job and well-being as absenteeism and turnover.
Hackman and Oldham (1975; 1976; 1980) argue that the most effective means to motivate
workers is through job design. In JCM they present a set of principles and recommendations
to optimize job designs and to implement job design in the organization. The model includes
the immediate relationship between the job and the performer. The classic JCM (Hackman &
Oldham, 1975; 1976; 1980) can be used to redesign jobs to engage work motivation. It may
also prove useful to explain the effects of job changes in the context of cross-border M&As.
Work motivation can be influenced by various situational job characteristics. I expect
these motivational and demotivational paths to occur through satisfaction and dissatisfaction,
respectively, of job antecedents as formulated by Hackman and Oldham (1976, 1980) in their
situational approach to work motivation.
JCM is a useful research tool for this area of study on job changes. According to a
review of a large number of findings about the usage of JCM, it is a robust, reliable, and
tested instrument to analyze the effect of job change (Oldham & Hackman, 2010). The model
assumes that autonomy and feedback are more important than the other job characteristics,
and they have been the most studied variables. Hence, in regard to cross cultural focus of this
study, I choose to focus only on those two antecedents as they constitute one aspect of
individual manifestations of job characteristics with respect to national level dimensions of
power distance and uncertainty avoidance (Hosftede, 1980; 2001). In this study, I am not
replicating the JCM. I focus on the need for autonomy and the need for feedback as
antecedents since they are likely to be the more salient variables in the context of cross border
M&As.
Need for autonomy in Job Characteristics Model
Hackman and Oldham (1975) define the need for autonomy as “the degree to which
the job provides substantial freedom, independence, and discretion to the employee in
scheduling the work and in determining the procedures to be used in carrying it out” and
define supervisor feedback as “the degree to which the employee receives clear information
about his or her performance” (p. 162). Integration as a process of organizational change may
induce changes in job descriptions. This, in turn, results in changes regarding job antecedents,
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such as the need for autonomy and the need for feedback. According to the JCM, failure to
satisfy these needs as antecedents of individual work motivation might have negative effects,
and, in particular, effects on work motivation and work related outcomes in PMI settings. The
central proposition of job design models is that optimal functioning is related to job
satisfaction and depends on the joint satisfaction of psychological needs. The relationship is
influenced by the psychological states that occur thanks to the jobs characteristics. Indeed,
research has found that needs satisfaction in a work context enhances work motivation, job
performance, psychological well-being, commitment, and employee retention (Baard, Deci, &
Ryan, 2004; Gagne & Deci, 2005).
With regard to work related outcomes, several empirical studies have found autonomy
to be significantly related to commitment (Agarwal & Ramaswami, 1993; Losocco, 1989;
Rabinowitz et al., 1977); performance (Hackman & Oldham, 1975); and job satisfaction
(Becherer et al., 1982; Katz & Kahn, 1978; Kulik, Oldham & Langer, 1988). Concerning
turnover outcomes, empirical research on top management turnover demonstrates that
acquired executives may leave the organization due to removal of autonomy and status and
feelings of inferiority in relation to the acquirer (e.g. Hambrick & Cannella, 1993; Lubatkin et
al., 1999).
Cross-cultural research has pointed out that work autonomy affects work satisfaction
and job performance differently across cultures. Robert, Probst, Martocchio, Drasgow and
Lawler (2000) found that in India, employees who were empowered by their boss were less
satisfied than employees who were simply told what to do. They argued that low satisfaction
resulted from the conflict of this form of work with cultural deference to hierarchy and status.
However, they said it would be premature to conclude that autonomy is less valued in Indian
culture. In earlier studies on autonomous work groups in Indian textile companies, Rice
(1958) described how autonomous work groups emerged relatively spontaneously; on the
basis of the workers’ “intuitive recognition” (p. 81) that this was a more satisfying method of
work organization than the traditional methods. Thus, whether members of different cultures
vary in their responses to enriched work design remains to be established.
Kirkman and Shapiro (1997) demonstrate how cultural values might influence
autonomy through authority and power distance. Cordery (1999) has shown that a directive
style of management can act to constrain autonomy. The opposite was found for employees in
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the United States, who were more satisfied when given high rather than low autonomy
(Robert et al., 2000). Work autonomy and empowerment are considered to be key
motivational factors in individualistic cultures. These job characteristics are congruent with
individualistic values, which emphasize freedom of choice and provide the opportunity to
influence outcomes and take credit for them (Chua & Iyengar, 2006; Chirkov et al., 2003).
In CBA, the level of need for autonomy may change across managers with different
cultural backgrounds. Yildiz (2016) shows that cultural differences imply different needs.
Status has a particular impact on the success or failure of a CBM&A. In line with these
results, how individuals react to removal of autonomy in PMI is likely to depend on the level
of power distance in a culture (Angwin, 2001; Goulet & Schweiger, 2006). Power distance
reflects the extent to which a society accepts and endorses authority, status privileges, and
unequal power distribution in organizations (Hofstede 1980). Higher power distance indicates
a greater acceptance and reliance on centralization of authority. Thus, in societies with higher
power distance, subordinates tend to display a greater tolerance for lack of autonomy, and
they are accustomed to taking orders from their supervisors. Various studies have found that
job autonomy has a stronger effect on job satisfaction in lower power-distance cultures than
in higher power-distance cultures (e.g. Hui et al., 2004; DeCarlo & Agarwal, 1999).
Conversely, we can expect autonomy removal to be met with less negative reactions for
managers from a higher power-distance culture than those from lower power-distance
cultures. Comparative studies have shown that Germany has significantly lower power
distance scores than Singapore and most other Asian countries (Hofstede, 1980; House et al.,
2004). German takeover targets are thus more likely to respond negatively when subjected to
high levels of integration and a resulting loss of autonomy than do Singaporean takeover
targets. Angwin (2001) has argued that German employees are not accustomed to high levels
of supervision and control. Disregarding this could lead to PMI negative outcomes.
Regarding the role of autonomy in mergers of equals, although, theoretically, the
integration process should result in a balanced merging of the two organizational cultures and
workforces, this balance rarely occurs. Instead, the acquiring firm typically removes
autonomy from the acquired firm and imposes a rigorous set of rules, systems, and
performance expectations to gain quick control (Jemison & Sitkin, 1986; Marks & Mirvis,
1998; Pablo, 1994).
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Need for feedback in The Job Characteristics Model
Regarding the need for feedback, Bassett (1994) argued that feedback is the most
effective device for improving job performance. Empirical research has shown that supervisor
feedback is an important predictor of employees’ work related outcomes, such as satisfaction
(Churchill, Ford & Walker, 1976; Teas and Horrell, 1981; Teas, Wacker & Hughes, 1979;
Becherer et al., 1982). Feedback has been shown to be positively related to commitment
(Agarwal & Ramaswami, 1993; Hunt, Chonko & Wood, 1985; Johlke & Duhan, 2000; Moch,
Bartunek & Brass, 1979; Porter & Steers, 1973).
Cross-cultural studies point out different expectations concerning the need for
feedback (Masumoto, 2004). What about new expectations from supervisors or subordinates
as a result of the implementation of CBA, regarding initiative, responsibility, or obedience? In
collectivistic cultures, workers are more willing to accept feedback on collective versus
individual performance (Van de Vliert, Shi, Sanders, Wang & Huang, 2004). Masumoto
(2004) showed that American interns who spent the summer in a Japanese company
complained about not getting enough feedback from their Japanese manager. This can be
easily understood through the high value that Japanese, as a collectivistic culture, put on
group harmony and saving face. Providing explicit feedback to individual members is a threat
to group harmony. If one team member is recognized as better than the others, group harmony
is jeopardized because this member is singled out as different from the rest of the in-group
(work team). It may also affect the likelihood of being accepted by the team since this person
is no longer the “same as us” (Yildiz, 2016). On the other hand, if the feedback is negative,
the person may lose face. Losing face has negative implications for the individual’s sense of
belonging to the group. Moreover, failure of one team member puts the reputation and
performance of the entire team at risk. For these reasons, Japanese managers typically provide
implicit feedback, often not when the event occurs, but informally when they think it is the
right time (Earley, 1997). To summarize, the type of feedback, whether explicit or implicit,
and whether directed to the individual employee or to the team, seems to have different
effects on employees in collectivistic versus individualistic cultures (Erez, 2010).
Nevertheless positive feedback is universally perceived as having a positive effect, as also
shown in a cross-cultural study comparing China and the Netherlands (Lam, 2002; Van de
Vliert et al., 2004). Furthermore, collectivists are more open to accepting feedback on
collective versus individual performance (Van de Vliert et al., 2004). For similar reasons,
feedback-seeking varies across cultures, with individuals from individualistic and low power
191
distance cultures (e.g., United States) being more proactive seekers, and members of
collectivistic and high power distance cultures (e.g., Hong Kong) seeking feedback far less
(Chen, Brockner & Katz, 1998; Morrison, Chen & Salgado, 2004).
The study model is centered on direct effects of the two work antecedents: the need for
feedback and the need for autonomy on work related outcomes. The JCM is an argument
about the job and the outcomes measured in different ways. These individual and
organizational outcomes are associated with measured by outcomes beyond the work
motivation itself. According to the model there is a relationship between tasks and individual
and organizational outcomes.
Applying the above-described research to CBM&A settings, I made the following
hypotheses:
H 1: Satisfaction of a middle manager’s need for autonomy will have a positive relationship
on motivational work outcomes.
H 2: Satisfaction of a middle manager’s need for feedback will have a positive relationship on
motivational work outcomes.
INSERT FIGURE 1 HERE
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Individual work outcomes: a focus on Work Commitment
The concept of work commitment has been defined in many ways and has been extensively
studied in the organizational behavior field (Allen & Meyer, 1991; Morrow, 1993; Mowday et
al., 1982). “Commitment occurs when individuals identify with and extend effort towards
organizational goals and values” (Porter et al., 1974. p. 604). The Organizational
Commitment Questionnaire (OCQ) developed by Porter and his colleagues is the primary
operationalization of this definition.
Several forms of commitment can be identified, such as organizational commitment or
job commitment. I will refer to work commitment as the likelihood that an individual will
“stick with a job, and feel psychologically attached to it, whether it is satisfying or not”
(Rusbult & Farrell, 1983, p.430). I deliberately choose not to use the concept of
organizational commitment as “the relative strength of an individual's identification with and
192
involvement in a particular organization” (Mowday et al., 1979, p. 226) because it does not
distinguish between commitment to and identification with the organization. Theoretically,
the constructs of identification and commitment are not necessarily the same (Mael & Tetrick,
1992; Van Knippenberg & Sleebos, 2006; Van Dick, Wagner, Stellmacher & Christ, 2004):
Identification reflects the extent to which the organization is incorporated in the self-concept,
whereas commitment focuses on the attitudes that employees hold towards their organization
by considering costs and benefits (Van Dick et al., 2004). Blending these concepts could be
confusing in this study. Nevertheless, the findings of organizational commitment studies are
of interest because the two constructs may—to a certain extent—overlap: There appears to be
a strong relationship between employees’ identification and their commitment (Siegel &
Sisaye, 1997; Witt, 1993). The concept of commitment to organizational change also offers
an interesting perspective, especially in this context of organizational change associated with
a merger. It is defined as “a psychological state that binds an employee to a course of action
deemed necessary for the successful implementation of a change initiative” (Herscovitch,
1999, p.17). Yet, this conceptualization of commitment could overlap with the concept of
readiness for change (Holt et al., 2007).
Meyer & Allen (1991) conceptualize commitment as multidimensional, including
three components: affective, normative and continuance. Affective commitment is described
as “the employee’s emotional attachment to, identification with, and involvement in the
organization” (Meyer & Allen, 1991; p.67) and it has been studied in correlation with change
settings (Meyer et al., 2007; Rafferty & Restubog, 2010). According to Meyer and Allen
(1991) the concept is probably best represented by the work of Porter and his colleagues
(1974; 1976; 1979), who conceptualize and measure commitment with strong affective
attachment (intention, decision and act) and demonstrate links with turnover in longitudinal
studies.
Huy (2002) investigated the importance of managing the emotional states of
employees in a radical change situation. His research findings show that managerial
emotional commitment (affective) to change situations, as well as the capacity of attending to
employees’ emotions, can facilitate successful organizational adaptation.
A strong interest in studying work commitment in CBA is justified by the
conceptualization commonly expressed in the literature that employees who are committed
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are those who are least likely to leave the organization (Allen & Meyer, 1990; Mowday et al.,
1979; Porter et al., 1974). Evidence suggests that the reasons behind corporate failure in CBA
are increasingly connected to the “human factor” (Cartwright & Cooper, 1992; Stahl et al.,
2013; Teerikangas & Very, 2006; Teerikangas, Very & Pisano, 2011; Weber & Fried, 2011),
with organizational commitment, as a psychological variable, part of the analysis. Some
studies have examined organizational or work commitment in the PMI stage and show that it
is an important means for people retention (Allen & Meyer, 1990; Mowday et al., 1982) and
knowledge-sharing (Thompson & Heron, 2005; Van den Hoof & De Ridder, 2004). Work
commitment seems to be critical to the success of M&As, yet this topic has received little
attention and remains an underexplored factor in the success of CBM&As (Hassett, 2012).
Affective commitment is defined as the emotional attachment, identification, and
involvement that an employee has with the organization and organizational goals, and their
willingness to remain in the organization (Meyer & Allen, 1997). Researchers have found
affective commitment to be the key sub-dimension of organizational commitment and have
focused on it in their research (Purba et al., 2015; Buitendach & Witte, 2005; Rafferty &
Restubog, 2009). Similar approaches have been observed in research on affective
commitment during mergers (e.g., Ambrose & Schminke, 2009). In the organizational change
context, Herscovitch and Meyer (2002) define affective commitment as “a desire to provide
support for a change based on a belief in its inherent benefits,” which is essentially the
construct that we are interested in and that I aim to adapt to a merger context (p. 475).
In this study, I expect that two job characteristics (the need for autonomy and the need
for feedback) would be antecedents with positive effects on individual motivational work
outcomes, including work affective commitment.
Organizational Identification: Integrating post merger identification as an antecedent of
motivational work outcomes
I expect that work motivation outcomes are directly linked to the degree of post-merger
organizational identification i.e., identification with the new-born firm.
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Organizational identification has become an increasingly important domain of inquiry
for scholars and is now recognized as key in efforts to understand strategic change (He &
Brown, 2013) and also a key issue for managers.
Organizational identification is embedded in Social Identity Theory (SIT) (Tajfel,
1982; Tajfel & Turner, 1986). To varying degrees, people derive part of their identity and
sense of self from the organizations or work-groups to which they belong. Thus, the
development of SIT is relevant to contribute to the context of this study since it can
particularly address a range of organizational changes such as M&As. Hogg and Terry (2000)
developments advance our understanding of social identity processes in intergroup contexts
and the way in which people may internalize group norms and align their behavior with these
norms.
Although SIT is a well-established theory in social psychology, scholars have only
begun to apply it to the context of multinationals. At the individual level of analysis, a stream
of research examined the antecedents and consequences of the identities that subsidiary
managers hold toward the local subsidiary and the wider multinational company (Abrams,
Ando & Hinkle, 1998; Reade, 2003; Vora & Kostova, 2007). At the team level, studies have
focused on the factors that explain the salience of identity-based categories and their
implications for intra-group cooperation (e.g., Hinds & Mortensen, 2005; Salk & Brannen,
2000).
M&As are a particular group phenomenon since they benefit from an extension of SIT
self-categorization, capturing the inter-play of inter-group and intra-group relations (Hogg &
Terry, 2000). SIT offers an interesting explanation of why employees often react so
negatively to organizational changes or mergers (Hogg & Terry, 2000). The changing nature
of those specific organizations creates new opportunities to study employee organizational
identification. M&A is a cause of fundamental change in an organization that has implications
for the workers (Van Dick & al., 2004; Van Knippenberg & al., 2002).
Mergers may be perceived as a threat to the stability and continuation of employees’
current identities. Group membership is important in the creation and development of the self-
concept. Social identity evinces inter-group social comparisons that seek to confirm or to
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establish in-group evaluative distinctiveness compared with the out-group and motivated by
an underlying need for self-esteem (Turner, 1975).
In cross-border mergers, where group identities are even more salient because of
multiple sources of differences, such as organizational and national levels of culture, in-group
and out-group effects can be exaggerated (Tajfel & Turner, 1986). Tajfel and Turner indicate
that intergroup categorization leads to in-group favoritism or biases and discrimination
against the out-group. Stereotyping process are more robust, relations between groups become
competitive, and mistakes or violations of social rules by members of another group are met
with less tolerance (Hogg & Terry, 2000). Strong attachment to the in-group, combined with
current conflicts and/or a history of conflicts between the groups, will intensify these effects.
In PMI processes, those group biases can help in better understanding surrounding problems,
and the increase in conflicting identities between merging organizations, which create strong
feelings of “us vs. them” and additional barriers to achieving socio-cultural integration (Stahl
& Voigt, 2008; Yildiz, 2016, or friction. Differences in the two organizational cultures can
lead to competition between employee groups and hostile “we-they” attitudes.
SIT serves as a basis for self-evaluation as well as for comparison with others via in-
group identification (Salk & Shenkar, 2001). Organizational identification is defined in this
study as “the perception of oneness with or belongingness to an organization38, where the
individual defines him- or herself in terms of the organization(s) in which he or she is a
member” (Mael & Ashforth, 1992, p. 104). Firm members will identify more strongly with an
organization when they experience similarities between the organizational identity and their
own personal identity, and when they feel acknowledged as a valued member. The extent to
which employees are willing and able to identify themselves with the post-merger
organization can be considered a key factor in the socio-psychological success of mergers
(Van Knippenberg & Sleebos, 2006).
In a study focusing on pre-merger identification, Jetten, O’Brien and Trindall (2002)
found that high initial organizational identification had a positive effect on long-term
organizational commitment. Rouzies (2011) focused on dynamics of identification change
throughout the merger process. Rouzies concludes that the process of identification is not that
38 NB: The new born organization, resulting from the merger
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employees identify with the newborn company, giving up their identification with the old one,
but that the two co-exist. Weber and Drori (2011) likewise draw attention to the role of
organizational identification with acquired workers during and after a merger. This variable
has a direct effect on acquired management’s behavior and also acts to moderate the effects of
culture clash in M&A, thus explaining contradictory findings in the literature.
In this study, I expect a positive relationship between post merger identification and
individual work related outcomes. When middle managers do not identify with the newborn
organization, the work outcomes will be lower than when these managers identify strongly
with the organization (Van Knippenberg & Sleebos, 2006).
Applying the above-described research to CBM&A settings, I made the following
hypotheses:
H 3: Post-merger firm identification will have a positive relationship on work motivation
outcomes.
In the following sections, using socio-cultural integration literature to investigate
managerial perceptions of cultural friction and their effects on work motivation outcomes in
CBM&As, I posit that the friction perceived can lead to either synergistic or disruptive
effects. More specifically, I add two variables with potential antagonist roles: cultural friction
and global mindset. It is coherent with the global changes and the competitive context to
integrate those antecedents in job design framework (Hackmand & Oldham, 2010; Morgeson
& Campion, 2003).
Role of Cultural Friction and global mindset as antecedents of individual work related
outcomes
Role of cultural friction
The question raised here is how, when and why perception of cultural friction affects work
attitudes of managers in CBA settings. Cultural friction (Shenkar, 2001) builds on the culture
distance hypothesis: the difficulties, costs, and risks associated with cross-cultural contact
increase with an increase in cultural differences (Kogut & Singh, 1988). Harzing & Pudelko
(2015) question the usefulness of the “distance concept” and suggest an alternative approach.
They call for contextualization regarding home and target country in international business
(IB) research. They recognize that focusing on managers’ actual problems rather than
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preconceived solutions is difficult, yet they urge a return to groundwork more commonly
practiced by prior generations of scholars, rather than applying generic distance measures
(Harzing & Pudelko, 2015; Stahl & Tung, 2015).
Friction at a conceptual level is better than distance, emphasizing contacts between
two entities, but not operationalized. Shifting the attention from the macro level of countries
to the micro level of acting managers renders the concept of distance meaningless (Ambos &
Hakanson, 2014). As no one has operationalized the “friction concept” at the micro level, the
grounded critical incidents generated from an exploratory study on perceived cultural friction
(Durand, 2016) are an appropriate starting point to capture the nature of intercultural friction
from the field.
Friction is defined this way in the present paper: when values, behavior, and practices
are incoherent to a well-organized system, it provokes contradiction. This tension results from
behaviors and practices, including conflicting demands for individuals involved and willing to
solve the dilemma.
A grounded instrument complements the existing theory-based measures, institutional
and national “hard” data or direct measurement, and could help M&A scholars understand the
dynamics of middle managers involved in the CBA processes, operationalizing these
managerial perceptions of cultural friction.
The grounded instrument used in this study redresses one measurement problem when
studying cultural effects, relying on ready-to-use measures in CBA studies. In this
operationalization, the focus is on one aspect of friction, i.e., derived from face concerns
(behaviors associated with saving, keeping, giving, and not losing face), arising from
grounded critical incidents (Durand, 2016). Cultural friction occurs, under certain conditions,
when individuals from different cultural backgrounds interact and are in discord.
Cultural friction related to the concern for face is a particularly sensitive issue when
the cultural backgrounds of the actors involve different work values and practices. Face
concern as a sense of dignity, respect, and honor is a way to maintain harmony within the
group in a collectivist culture (Hofstede, 2001). Causing someone to “lose face,” even if done
by accident, is an infraction rarely forgiven (Ho, 1976). One may try to restore face using
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indirect and subtle communication, gift-giving, honoring, and complimenting. People
concerned about face-saving may not talk openly about a problem to avoid losing face and
may not challenge their superior in front of others. In a conflict resolution study, researchers
found that US respondents tend to use more direct conflict styles, such as domination,
whereas participants from collectivist cultures (e.g., Chinese, South Korean, and Taiwanese)
are more likely to use indirect, mutually face-saving conflict styles, such as connoting either
high mutual face or concern for the other’s face (Cocroft & Ting-Toomey, 1994).
In the strategies proposed to manage CBA successfully, Rottig (2007) highlights the
need for understanding and being sensitive to face. Business practice has shown that in a large
number of acquisitions, managers failed to treat this sensitive issue carefully, i.e., did not treat
the acquired workforce with the necessary deference (Rottig, 2007). In a case study
describing the failure of the CBA between Siemens and BenQ, Cheng and Seeger (2012)
described face concern as a subtle cultural factor, specifically, how the directors at BenQ
rejected chairman Lee’s resignation to protect him from losing face and to save face for the
firm and the use of an intermediary to reduce loss of face from the perspective of
stakeholders.
The friction derived from face concerns is part of the cultural challenge managers have
to confront. Managers may have a hard time finding the behavior required by such situations;
yet it can be decisive in managing long-term, cross-border relationships with colleagues,
partners, and customers (Brannen & Wilen, 1998; Rottig, 2007).
I expect that cultural friction affects motivational work related outcomes. In line with
this reasoning, a few studies have found conflict to lower the demotivating impact of
emotional and physical demands. Conflict is not necessarily “dysfunctional and disruptive”
(Coser, 1956: 23), but can have positive effects and create synergy (Morgan, 1997; Shenkar &
al., 2008). However, Stahl and Tung (2015) observe that traditional IB studies on the effect of
cultural differences tend to overemphasize the negative over the positive and call for a more
nuanced understanding of the multifaceted relationship between culture and IB processes and
outcomes. There is more and more evidence that friction is a so-called “double-edged sword”
(Reus & Lamont, 2009; Doz, 2016) of cultural diversity that can be both an asset and a
liability in multicultural teams (Stahl et al., 2010). That is what I attend to demonstrate in the
present study.
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Applying the above-described research to CBM&A settings, I made the following
hypothesis:
H 4: Cultural friction will have a positive relationship on work motivation outcomes.
Role of Global Mindset
The global mindset concept (Kedia & Mukherji, 1999; Levy et al., 2007) offers a perspective
for exploring managerial perceptions of job changes and work-related outcomes at the
individual level. As suggested by Morgeson and Campion (2003), and Hackman and Oldham
(2010), the nature of work has dramatically changed. Integrating managerial global mindset
concept in the former job characteristics model deals with the ability for the managers to scan
the world within the context of work changes, work composition diversity, implying more
cognitively demanding work, increased global competition. The concept includes the
immediate relationship between cognitive processes and actions. Levy et al.’s model (2007)
of global mindset may be useful to explain the effect of job changes and organizational
identification on work-related outcomes at the individual level as this model is directly linked
to managerial identity constructions.
Researchers who study the concept of global mindset at the individual level (Adler &
Bartholomew, 1992; Estienne, 1997; Maznevski & Lane, 2004; Rhinesmith, 1992; 1993;
1996; Tichy et al., 1992) suggest global mindset managers reorganize their way of thinking
and achieve an altered mindset so that they are able to recognize complex interconnections, as
in the case of a CBA. A global mindset involves cultural self-awareness, openness to and
understanding of other cultures, and selective incorporation of foreign values and practices.
A number of researchers have suggested that meeting globalization challenges and, by
extension, CBA challenges, requires the development of a managerial global mindset (Bartlett
& Ghoshal, 1989; Javidan & Teagarden, 2011; Kedia & Mukherji, 1999; Levy et al., 2007).
Levy et al. (2007) is one of the best reviews of the field to date. They made a comprehensive
study of previous research. Based on that review and their own findings, they combined
information processing perspectives and social identification theory to build their model.
Managerial global mindsets have been associated with expatriate success (Caligiuri &
Tarique, 2016; Javidan & Teagarden, 2011), effective management, and the ability to grasp a
competitive advantage (Levy et al., 2007), having a better understanding of the dynamics of
operating in diverse marketplaces and cross cultural settings. Global mindset allows managers
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to make decisions in a way that increases the ability of their firms to compete internationally
(Maznevski & Lane, 2004). It is associated with higher risk tolerance (Harveston et al., 2000).
A transnational (or global) mindset is hypothesized to lead to superior long-term performance
(Bartlett and Ghoshal, 1989, 1990).
The managerial global mindset challenges complex global realities, and then has to
hold a global perspective supported by appropriate skills and knowledge to increase and
maintain organizational effectiveness (Kedia & Mukherji, 1999). Managers with a global
mindset have a broader global outlook and a “global business orientation and are adaptable to
the local environment and culture” (Story & Barbuto, 2011, p. 380). For Kedia & Mukherji
(1999) it is an orientation to the world that allows individuals to see certain things that others
do not, the skill of “scanning the world” from a broad perspective.
The global managerial mindset is characterized by this ability to recognize, understand
and manage cultural differences and deserves attention from a cognitive perspective of CBAs
study. According to Story and Barbuto (2011), global mindset managers demonstrate more
organizational commitment than those without it.
Applying the above-described research to CBM&A settings, I made the following
hypothesis:
H 5: Global mindset will have a positive relationship on motivational work outcomes.
The research model below (Figure 2) depicts the relationships hypothesized: a direct
relationship between job characteristics (need for autonomy and need for feedback),
organizational identification, global mindset, cultural friction and work motivation and related
outcomes (work affective commitment, job stress, and intention to quit).
INSERT FIGURE 2 HERE
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
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Summary of the hypotheses
H 1: Satisfaction of a middle manager’s need for autonomy will have a positive relationship
on motivational work outcomes.
H 2: Satisfaction of a middle manager’s need for feedback will have a positive relationship on
motivational work outcomes
H 3: Post-merger firm identification will have a positive relationship on work motivation
outcomes.
H 4: Cultural friction will have a positive relationship on work motivation outcomes
H 5: Global mindset will have a positive relationship on motivational work outcomes.
Empirical Study: Research Method and Measures
To test my model, I collected data through an online survey using Qualtrics on line survey
software and analyzed the collected data using the partial least squares regression (PLS)
model (Chin, 1998; Fernandes, 2012). For purpose of finding causal relationships I use PLS
approach that offers rich and subtle opportunities for research in management (Fernandes,
2012; Tenenhauss et al., 2005) and especially for exploratory purposes. I followed the two
steps of the PLS model: first, building latent variables on the basis of the manifest variables
(items in the questionnaire), and second, testing the structural model with latent variables.
Sample and data collection
Respondents were middle managers selected randomly among a database because of their
Anglo-Saxon background (native and/or professional) from different countries, different
industries, different company size, and having experienced at least one CBA. A total of 163
middle managers completed the online questionnaire in May 2016. I excluded 21 respondents
from the data analysis because they did not have cross-border M&A experience. A total of
142 respondents with CBM&A experience were retained. They were all English speakers
(native language or professional language), and they matched the population I was targeting
(global company, international experience, English speaker, CBM&A experience). The
questionnaire included questions for the profile, and items linked to the variables studied. It
was anonymous to avoid responses with desirability biases. A mobile-friendly version was
also available to increase the response rate. The sample size is appropriate using PLS path
modeling. The sample size can be considerably smaller in PLS path modeling in contrast with
SEM. For example, ‘‘there can be more variables than observations and there may be a small
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amount of data that are missing completely at random’’ (Tenenhaus et al., 2005, p. 202).
Among respondents, 37.3 % were females, 62.7% were males. The average age for 51.4% of
respondents was 25-34 years old; 36.6% were 35-44 years old; 9.9% were 45-54 years old;
and 2.1% were 55-64 years old. About 48% of the respondents had one CBA experience in
their work life; 37%, between 2 to 4 experiences; 9%, between 5 and 8; and 6% had more
than 8 CBA experiences (For details, see demographic data, tables 1 to 4).
Measurements and variables construction
Dependent variable measurement: motivational work outcomes
Before building our latent variable of motivational work outcomes, we have performed a PCA
analysis. The items grouped in 3 factors that help us to build three manifest variables: work
commitment, job stress and intention to quit (see table 2). The latent variable, individual
motivational work related outcomes, is constructed based on the 3 manifest variables
corresponding to the means of belonging items work affective commitment, job stress, and
intention to quit.
Work affective commitment is measured with the scale developed by Meyers and
Allen (1991) since it has become the standard approach to measuring commitment (Hassett,
2012). This scale comprises of four items, which the respondents have to rate on a 5-point
Likert-type scale their degree of agreement from 1 = strongly disagree, 5 = strongly agree
(e.g., « I am proud to belong to this organization”).
Turnover intentions are measured with the three-item “Intention-to-Quit” scale from
Jiang and Klein (2002). A sample item is “As soon as I have the opportunity, I will leave this
organization.” Responses are rated on a 5-point Likert-type scale ranging from “1” (strongly
disagree) to “5” (strongly agree).
I measure job stress using the scale developed by House and Rizzo (1972). The scale
used includes 5 items (e.g., “My job tends to directly affect my health”). Responses are rated
on a 5-point Likert-type scale ranging from “1” (strongly disagree) to “5” (strongly agree).
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Independent Variable Measurements related to job characteristics model: Need for Autonomy
and Need for Feedback
The work antecedents are represented by the two independent variables linked to the JCM, the
need for autonomy and the need for feedback. Those variables are constructed based on the
items affected by each dimension. To measure the need for autonomy and the need for
feedback, I used the scales developed by Oldham and Hackman (1980). Need for autonomy
and need for feedback address the degree to which a worker has control over “how” and
“when” work is done. Respondents are asked to rate 6 items on a 5-point Likert-type scale, 3
items for the need for autonomy (e.g., “In general, how much influence do you have about the
range of tasks you do in your job?”) and 3 items for the need for feedback (e.g., “In general,
how much influence do you have about control over the pace at which you work?”).
Other independent variables measurements: organizational identification, cultural friction,
and global mindset
Post-merger organizational identification is measured using a three-item model based on Van
Knippenberg, Van Knippenberg, Monden and De Lima (2002). Respondents are asked to
portray themselves according to their degree of agreement or disagreement on a 5-point
Likert-scale from “1” (strongly disagree) to “5” (strongly agree) on items related to the
merged organization. For instance, the items include “When someone criticizes my (new)
organization, it feels like a personal insult to me.”
The measure of the perception of cultural friction is based on a previous scale
development and validation (see essay 3 of this dissertation). I created a friction index, which
captures and quantifies the relative differences of alternatives in situations of perceived
cultural friction using a grounded methodology and critical incident technique (Durand,
2016). The self-developed scale contains the following parts: 1) seven items (i.e. situations)
based on critical incidents; 2) for each situation, 2 sub-questions ask the respondent to
position himself on a 5-point Likert scale, according to the degree of agreement from “1”
(strongly disagree) to “5” (strongly agree) for each alternatives. I tested the structure of the
items that I proposed for the cultural friction index (21 items), one item is disregarded loading
to both factors (not discriminant between high versus low friction). After performing PCA
analysis, two factors are highlighted; both measure friction (derived from face concerns). One
is related to the positive attitude (representing lower culture friction: 12 items/b+c); the other
one to the negative attitude (representing higher culture friction: 6 items/a). Cronbach’s α =
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.605 was low but acceptable for purposes of exploratory research (Ford, MacCallum & Tait,
1986). The following text is an example of a critical incident question and alternatives:
You are sent to a country for shipping contracts negotiation. Your new
colleague (from the merged company) approaches the task very differently
than you have done in the past. He just rejected a first offer without even
trying to negotiate. As a result, other shippers lose interest in negotiating with
you and your new partner. Finally, one of the shippers offers to work with you,
but at a price that is 20% higher than the original offer.
a: You accept this offer, BUT make a point of not working with this shipper in the
future (Strongly disagree= 1; Strongly agree = 5)
b: You apologize for having offended the shipper and try to repair the relationship
(Strongly disagree= 1; Strongly agree = 5)
c: For the above question I would have behaved the same way if the person was from
my own country (Strongly disagree= 1; Strongly agree = 5)
The latent variable of cultural friction is constructed on the basis of two manifest
variables corresponding to the means of the two dimensions defining the concept.
Global mindset was measured using the scale developed by Govindarajan and Gupta
(2001) and, Gupta and Govindarajan (2002). It is composed of 6 items, and respondents have
to answer on a 5-point Likert scale, ranging from “1” (strongly disagree) to “5” (strongly
agree) (e.g., “In interacting with others, does national origin have an impact on whether or
not you assign equal status to them?”). The latent variable was built on the basis of the
belonging items.
Before proceeding PLS PM analysis, I checked the loading factors and scales’
reliability. Discriminant validity of the items and reliability of the scales have been tested
using SPPS software. Evidence for discriminant validity is observed, the factors obtained are
compatible with theoretical constructs (loading factor index ≥ 0.7) (see table 10 for detailed
results on reliability and discriminant validity).
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Estimation of PLS model
I used the XLSTAT version 2014.1.03 to estimate measurements and the structural model.
The first step in the PLS regression analysis focuses on the external or measurement model
between the latent constructs and their measures (Fernandes, 2012). It includes analyses of
three indicators: Cronbach’s alpha coefficient (α), composite reliability (CR), and average
variance extracted (AVE). Cronbach’s alpha coefficient scores and the composite reliability
scores were above 0.8, indicating good measurement reliability (except for cultural friction,
yet acceptable) (Ford, MacCallum & Tait, 1986). Discriminant validity was assessed
examining whether each latent variable shared more variance with its measures (manifest
variables) than with other constructs in the model (Chin, 1998) using AVE. All AVE scores
were above 0.5, which confirmed good discriminant validity between the variables in our
model, except for Satisfaction of the need for autonomy, but their value is relatively closed to
0.5.
The second step in the PLS regression analysis focuses on the internal or structural
model between the latent constructs (Fernandes, 2012) to test the hypotheses. I tested the
global direct effects of the work antecedents (satisfaction of the need for feedback and need
for autonomy), post merger identification, cultural friction and global mindset on work
motivation.
Detailed results of the PLS regression model and the hypotheses tests are reported in
Table 11. The GOF coefficient that estimates overall validity of the PLS regression model
(Tenenhaus et al., 2005) is 0.597, which ensures a good quality of the model. The model has
been tested including control variables (age, gender, number of CBM&As, Speed of
integration, number of people supervised, number of people supervising) (see Tables 5 to 8).
No significant differences are found, thus I disregarded the control variables in the findings
and discussion part.
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FINDINGS AND DISCUSSION
Direct effects of latent variables on work motivation are analyzed. Analyses partially support
my hypotheses and highlight specific relationships between work antecedents, post merger
identification, cultural friction, global mindset and work motivation. I first hypothesized that
the satisfaction of the need for autonomy increases motivational work outcomes. This
hypothesis is not supported (b = -0.04, t = -0.69, p > 0.1).
The second hypothesis (H2) predicted that satisfaction of the need for feedback
increases motivational work outcomes. Results tend to support the first hypothesis (H1). The
satisfaction of the need for feedback has a positive impact on motivational work outcomes (b
= 0.1, t = 1.7, p ≤ 0.1).
The third hypothesis is supported, showing a greater positive impact of post-merger
identification on motivational work outcomes (b = 0.65, t = 8.75, p ≤ 0.001). The fourth
hypothesis is supported since cultural friction tends to underscore a positive effect on work
motivation (b = 0.22, t = 2.84, p ≤ 0.01). The fifth hypothesis is not supported; global mindset
has no direct effect on motivational work outcomes (b = -0.05, t = -0.88, p > 0.05).
INSERT FIGURE 3 HERE
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
The objective of this study was to study the impact of job characteristics (need for
autonomy and need for feedback), organizational identification, cultural friction and global
mindset on individual motivational work related outcomes during CBA settings. Hypotheses
are partly confirmed, as only 3 out 5 hypotheses are validated. The first significant result
related to the second hypothesis showed the positive impact of the need for the feedback on
the motivational work outcomes. This result is not fully consistent with the JCM model,
which showed that both the satisfaction of the needs for autonomy and feedback are
antecedents of motivational potential for individuals. In CBA settings, the question remains
why the motivational process is not affected by needs’ satisfaction as stipulated in Hackman
and Oldham’s model (1980).
In CBA, the level of need for autonomy may change across managers with different
cultural backgrounds. Maybe the Anglo-Saxon background of respondents contributed to the
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low level of satisfaction since individuals in those cultures may have a higher degree of
expectation regarding autonomy, and they are not satisfied even though objectively there is no
autonomy removal.
The second significant result of this study is related to the third hypothesis concerning
the impact of organizational identification and work motivation. This outcome is not new. As
stated before in the literature we have seen a positive impact of the organizational
identification on the job motivation. In organizational changes such as mergers, traditional
relationships between work antecedents, such as identification, and individual work outcomes
may change (Rouzies, 2011). Work affective commitment is high, but seems to be linked
exclusively to the high level of post-merger identification. Regarding motivational work
related outcomes, several empirical studies have found autonomy to be significantly related to
commitment (Agarwal & Ramaswami, 1993). Other studies have found affective commitment
to be the key sub-dimension of organizational commitment (Purba, Oostrom & Van Der
Mollen & Born, 2015; Rafferty & Restubog, 2009). Similar approaches have been observed
in research on affective commitment during mergers (e.g., Ambrose & Schminke, 2009). In
the organizational change context, Herscovitch and Meyer (2002) define affective
commitment as “a desire to provide support for a change based on a belief in its inherent
benefits” (p. 475). Based on the direct effect demonstrated above, the post-merger
identification variable may explain high work commitment, with implications for human
resources management in cross-border M&As. The significant findings of the strong positive
relationship between post merger organizational identification and motivational work
outcomes is a path to further explore.
My third significant result concerns the fourth hypothesis and it shows a positive
impact of the cultural friction perceived in CBA on individual work outcomes. As stated by
Shenkar et al. (2008), Stahl and Tung (2015), cultural friction can have positive effects and
create synergy. This study tends to confirm this statement, showing evidence that cultural
friction can be an asset in multicultural teams resulting from CBA. To my knowledge so far,
this variable related to culture friction was not tested before in the literature in relationship
with work motivation outcomes. Our study reveals some new insights regarding the impact
of this variable in the context of CBA.
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My last result is linked to the fifth hypothesis concerning global mindset; it shows
unexpectedly no causal relationship with individual work outcomes. A more refined analysis
of the effect of global mindset only on affective commitment might have given different
results as suggested in the theoretical framework (Story & Barbuto, 2011). Beside global
mindset might be more influential on individual performance (in role behavior for example)
than individual work outcomes using work affective commitment, job stress and intention to
quit. Furthermore, the need for autonomy is relatively low, and since this work antecedent is
not fulfilled, it may have induced this non-significant outcome. The JCM stipulates that the
two work antecedents have to be fulfilled to influence work motivation.
My results show that work motivation and related outcomes are complex variables
needing careful treatment. If we look at the variables composing the latent variable of
individual work outcomes, there is no surprise that job stress and turnover intention are
correlated. Rouzies (2011) shows that employees who are committed to their job are less
likely to leave the organization. In terms of job related outcomes, mergers can be threatening
to some employees and lead to absenteeism, poor performance, and high turnover. Davy et al.
(1988) blamed employees for 1/3 to one half of merger underperformance. In Walsh’s (1988)
study on turnover, departure of key employees and demotivation are amongst the more
frequently cited factors. Cartwright and Cooper (1992) stress that when employees leave they
often take with them competent staff members and clients, which could severely hamper the
new organization’s financial profile. Adequate HR management is then highlighted to
contribute to the success of M&A (Weber & Tarba, 2010; Weber, Tarba & Reichel, 2011),
decreasing turnover and competent employee departures.
Limitations
Even though JCM offers a window for exploring job changes and work motivation outcomes
at the individual level, some criticisms and limitations have to be addressed. JCM design is
culturally biased since it doesn’t take into account culture challenges. Hackman and Oldham
(2010) themselves admit cultural variables have been neglected. Hackman and Oldham
(2010) suggest incorporating cultural variables in their model. Consequently in the context of
cross-border M&As, I focus on cultural difference. I integrate this factor into the general
theoretical framework since the relative salience of particular job characteristics will depend
on the context. For Hackman and Oldham, these differences in work context offers
209
opportunities for new directions on work motivational potential. “The phenomenon has
changed but the issues have not” (Hackman & Oldham, 2010).
The contradictory, yet interesting, results probably stem from the research context and
the characteristics of the sample that might have induced biases. First, I did not check
acquired vs. acquiring background of the middle managers. Yet, this could have been
important a posteriori as a control variable to include in the online survey.
Second, since identification to the new organization is influenced by individual
interaction intensity (Rouzies, 2011), I could have measured the frequency of contacts
between members of both firms to make sure the post merger organizational identification
questions were appropriate.
Third, I should have checked the level of satisfaction regarding the need for autonomy
and need for feedback for those two independent variables. Results supported only the need
for feedback as a motivational factor. Despite the fact that respondents show a high level of
affective commitment to their work, no causal relationship could be established between the
the need for autonomy and individual work related outcomes. This is a counter intuitive and
so far I couldn’t find any support in the literature for this finding.
Fourth, in addition to measuring the needs for autonomy and feedback, I could have
studied the transition magnitude variable before and after the merger. West and colleagues
(1987) asked how a similar new job was compared with the previous one (1 = almost
identical, 3 = almost completely different) in relation to (a) the tasks or job content.
Finally, the central proposition of JCM is that optimal functioning in terms of work
motivational potential depends on the joint satisfaction of the three psychological needs. In
my study I only use two job antecedents, need for autonomy and need for feedback (not task
variety, task identity and task significance). This might have biased the model, or the model
might not be relevant to post-merger integration in CBAs.
210
Managerial implications
Results regarding the crucial roles of need for feedback, organizational identification and
cultural friction perceived give practitioners some perspectives to consider during the
integration stage in CBM&As.
Post-merger identification might be anticipated ahead to make sure that during the
integration stage, managers are encouraged to identify strongly with the newborn organization
in order to insure high affective commitment and performance. The SIT thus provides an
especially powerful lens through which to describe, explain and ultimately intervene in
organizational life (Hodkingson, 2013). Managers should ease post merger identification
through communities of practices to enhance performance and long-term sustainability.
Managers could change their way of managing social identities and mistrust existing in post
merger integration (Spoor & Chu, 2017).
Future research orientation
The research method pursued for this particular study was appropriate. In future research this
method might be complemented by semi-structured interviews with male and female
respondents in order to delve deeper into managers’ perceptions around the appropriateness of
implementation strategies. Research might extend across varying contexts using a
triangulation methodology. Further study should be conducted to explore the effect of global
mindset and cultural friction on individual work performance (in role behavior instead of
motivation) in CBA.
CONCLUSION
This study offers some insights into the human side of cross-border mergers and acquisitions.
Researchers can learn from this research, especially regarding the extreme importance of
organizational identification, and the positive effectof cultural friction perceived amongst
managers. The importance of post merger identification has already been highlighted (Mirc,
2014), yet in this study post-merger identification appears in the foreground. It emphasizess
that consideration of the level of managers’ post-merger identification is crucial for successful
post-acquisition integration and managers should not neglect or downgrade organizational
identification to second place.
211
Despite the importance of the Job Characteristics Model in other contexts, it might not
be adequate to explain the effects of job changes in the context of cross-border M&As.
The global mindset variable needs to be further explored. It definitively remains a
promising path for future research on managerial job changes and work related outcomes in
CBM&As. As suggested by Morgeson and Campion (2003) and Oldham & Hackman (2010),
the nature of work has dramatically changed. Integrating global mindset in former job
characteristics model deals with the ability for the managers to scan the world within the
context of work changes, work composition diversity, implying more cognitively demanding
work, and increased global competition. ` Last but not least, cultural friction related to face concerns tends to underline a direct
positive effect on work motivational outcomes. This result seems counter intuitive at first
sight. However this result highlights the positive effect of friction when dealing with foreign
counterparts to enhance motivational potential. This is a major contribution since the main
stream of cultural perspective in CBM&As in post merger integration stage often emphasizes
the negative effects of cultural issues on M&A performance, and especially from the human
side (Stahl & Tung, 2015).
In conclusion, this empirical study makes several contributions to the M&A field.
First, the counter intuitive findings related to positive effect of cultural friction perceived on
work motivation related outcomes. Second, by focusing on the impact of organizational
identification on work motivation outcomes, I approach job transitions in a more nuanced
fashion than former JCM did. Third, by applying the SIT and the JCM I illustrate that these
theoretical models are useful to better understand the impact of the process of organizational
change and cultural challenges, such as in the case of implementation of cross border M&As.
Integration is not a static process but rather a highly dynamic one with events that are not
planable like resistance and clashes (Megli & Risberg, 2010).
As claimed by authors (Mudambi & Swift, 2009; Stahl & Tung, 2015) these results
involve that cultural differences are not necessary disruptive, but rather necessary to increase
post merger identification of middle managers, and managerial work commitment. These
findings offer a new lens to cultural friction and effects of perceptions of cultural differences,
in a positivist perspective. It is definitely time to revisit the cultural challenges experienced
212
from the individual level of analysis, and to approach friction not as a threat for CBM&As
performance and individual motivation with new and fresh eyes, avoiding to focus on the
negative side of cultural challenges for managers experiencing CBM&As, in post merger
integration stage.
Acknowledgements
Many thanks to Mikael Sondergaard for his support, reviews and comments, and Liu Yipeng for his insights during EDEN seminar on M&As. I want to thank also the researchers who reviewed this paper at different points in time and gave me feedback on method and analysis: René Diaz Picardo and Simona Grama.
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FIGURES AND TABLES
Figure 1: Hackman & Oldham’s model (1980)
Figure 2: Integrated model: effects of Organizational Identification,
Perceived Culture Friction and Global Mindset on Individual Work Outcomes in CBM&A settings
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Figure 3: Graph for PLS path modeling
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Demographic data: 1-3
Table 1: Age distribution AGE Freq. Percent Cum.
25-34 73 51,41 51,41 35-44 52 36,62 88,03 45-54 14 9,86 97,89 55-64 3 2,11 100
Total 142 100
Table 2: Gender distribution GENDER Freq. Percent Cum.
Male 89 62,68 62,68
Female 53 37,32 100
Total 142 100
Table 3: Educational level EDUCATION
LEVEL Freq. Percent Cum.
Bachelor 45 31,69 31,69 Master 45 31,69 63,38 MBA 26 18,31 81,69 PhD 17 11,97 93,66
Other 9 6,34 100
Total 142 100 Tables for control variables: 4 to 8
Table 4: Number of languages spoken
Variable Obs Mean Std. Dev. Min Max
OTHERLANGU~N 142 3,753521 2,004203 1 7
Table 5: Number of people supervised
Variable Obs Mean Std. Dev. Min Max
INYOURTEAM~A 128 94,91406 256,7369 0 2000
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Table 6: Number of people who supervise
Variable Obs Mean Std. Dev. Min Max
H 133 47,42857 435,0943 0 5000
Table 7: Experiences of CBM&As In my work
life I experienced Freq. Percent Cum.
Only one 68 47,88 47,88
1 to 4 52 36,62 84,5 5 to 8 13 9,15 93,65
More than 8 9 6,34 100
Total 142 100
Table 8: Speed of integration INTEGRAITON
SPEED Freq Percent Cum
more than 24 months 28 19,72 19,72
19 to 24 months 44 30,99 50,7 13 to 18 months 31 21,83 72,54 7 to 12 months 25 17,61 90,14 6 months or less 14 9,86 100
Total 142 100
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Table 9: The three latent variables of work motivation
This organization has a great deal of personal meaning for me Work affective commitment
I really feel a sense of ‘‘belonging’’ to my organization I am proud to belong to this organization I really feel as if my organization's problems are my own My job tends to directly affect my health Job Stress I work under a great deal of tensions I have felt fidgety or nervous as a result of my job If I had a different job, my health would probably improve Problems associated with my job have kept me awake at night
As soon as I can find a better job I will leave this company Intention to quit
I am actively looking for a better job at another company I am seriously thinking about quitting my job
Table 10. Reliability and validity of latent variables
Composite reliability
Latent Variable Dimensions
Cronbach Alpha
Rho. (ACP) (AVE)
Need feedback 3 0,82 0,893 0,723 Need Autonomy 3 0,858 0,914 0,455 Global Mindset 5 0,834 0,884 0,596 Organizational Identification 3 0,927 0,954 0,873
Cultural friction 2 0,616 0,839 0,716 Work
Motivation 3 0,443
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Table 11. Cross loading factors (PLSPM)
Cross-loadings (Manifest
variables mono factors)
Need
feedback Need
Autonomy Global
Mindset Organizational Identification
Cultural friction
High Work
Motivation FB 1 0,831 0,465 -0,016 -0,054 0,111 0,048 FB 2 0,854 0,282 -0,144 -0,016 0,123 0,114 FB 3 0,866 0,417 -0,043 0,034 0,197 0,118 A 1 0,517 0,961 -0,133 -0,190 -0,035 -0,101 A 2 0,460 0,543 -0,215 -0,158 -0,033 -0,007 A 3 0,510 0,382 -0,152 -0,096 0,033 0,034
GM-2 -0,003 -0,054 0,806 0,431 0,456 0,331 GM-3 -0,058 -0,024 0,590 0,214 0,275 0,144 GM-4 -0,154 -0,112 0,756 0,281 0,317 0,167 GM-5 -0,156 -0,134 0,790 0,292 0,327 0,187 GM-6 -0,065 -0,112 0,887 0,367 0,416 0,340 OI-1 0,016 -0,204 0,453 0,949 0,740 0,779 OI-2 -0,013 -0,195 0,384 0,903 0,609 0,678 OI-3 -0,009 -0,145 0,370 0,950 0,695 0,778
CF/X1 0,071 -0,003 0,405 0,515 0,778 0,456 CF/X2 0,207 -0,077 0,417 0,702 0,909 0,686
X1 0,210 -0,027 0,067 0,181 0,277 0,542 X2 0,011 0,016 0,045 -0,252 -0,068 -0,331 X3 0,074 -0,143 0,379 0,859 0,723 0,961
Table 12: Correlations and descriptive statistics Variables Mean St dev WM NA NFB OI CF GM WORK MOTIVATION ( JM) 2,76 0,68 1,00 NEED FOR AUTONOMY ( NA) 1,80 0,82 0,01 1,00 NEED FOR FEEDBACK (NFB) 2,17 0,76 0,15 ,559** 1,00 ORGANIZATIONAL IDENTIFICATION (OI)
3,43 1,25 ,306** -,185* -0,01 1,00
CULTURE FRICTION (CF) 3,19 0,82 ,460** -0,02 ,159* ,706** 1,00 GLOBAL MINDSET (GM) 3,43 0,83 ,266** -0,11 -0,12 ,346** ,435** 1,00 **. Correlation is significant to 0,01
*. Correlation is significant to 0,05
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Table 13: Path coefficients
Path coefficients (Job Motivation/ 1)
Latent Variable Value(Reg) t Pr > |t| Need feedback 0,096 1,685 0,094
Need Autonomy -0,039 -0,695 0,488 Global Mindset -0,050 -0,877 0,382
Post Merger Identification 0,651 8,745 0,000
Cultural friction High 0,222 2,843 0,005
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OVERALL CONCLUSION
This PhD dissertation exploring effects of managerial perceptions of cultural challenges and
job changes on motivational work related outcomes in post merger integration stage of cross
border mergers and acquisitions focuses on cultural friction. It makes several contributions to
the M&A literature to increase our understanding of explanatory processes.
Firstly, by explaining why the concept of culture distance doesn’t fully explain the
complexity of PMI stage, the first essay argues to switch at the individual level, from distance
to friction lenses.
Secondly, studying managerial insights from a grounded approach highlighted the
relevance of the use of critical incident technique for enhancing our knowledge of what is at
stake for managers in CBM&As.
Thirdly, it offers an alternative measure of perceptions of cultural differences for
middle managers in PMI stage, revealing face concerns as one component of friction for
managers in a non-Asian setting. This answer is not a claim to abandon country-level cultural
values research, but to re-think approaches, and find ways to incorporate for more fine-
grained and complementary culture approaches. Focusing on managers on the frontlines in
PMI seeks to make a distinct contribution beyond the existing cultural distance study using
the friction metaphore. However, face might not always be the most relevant issue when
studying friction. There may be broader issues that are not appropriate in the sample targeted
in this research. Future research in CBM&As could benefit from the explicit steps described
to uncover other components of cultural friction for managers in the PMI stage. This is a
major contribution since the main stream of cultural perspective in CBM&As during PMI
stage often emphasizes the negative effects of cultural issues on M&A performance, and
especially from the human side (Stahl & Tung, 2014).
Examining how middle manager’s perceptions of culture friction from the field, with
experts of CBM&As, I offer an index of CF as one instrumental alternative to measure
cultural challenges at the individual level. Even though face concerns might not be the only
component of friction perceived amongst managers in PMI stage, this instrument could be
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replicated in further studies in similar contexts. In the field survey, by studying how cultural
friction and job changes (related to work autonomy and feedback) could influence managerial
work related attitudes, I offer a way to reconcile the human side of M&As looking at micro
level variables. Hardly any earlier studies on PMI work related outcomes focused on this
motivational process.
To paraphrase Zaheer, Schomaker and Nachum (2012), international management is
not only management of distance, but also the management of friction.
