Cultural differences in the cross-border M&A between Japanese and Swedish companies - A qualitative research on the influence of cultural differences and how the differences are addressed in cross-border M&A between Japanese and Swedish companies

Abstract

Cross–border M&As are one of the most widespread entry modes for organizations to enter new markets, and the number of cross–border M&As is expected to increase in the future. Considering the process involves companies from different countries, the cultural aspect is crucial. This study focuses on the cultural differences arising in the cross–border M&As and how the challenges are addressed. Based on the qualitative data obtained from the semistructured interviews, we inductively developed a theoretical proposition covering the influence of cultural differences in cross–border M&As and how companies address them. The interviews were conducted with representatives working at the Swedish companies acquired by the Japanese companies and with the Japanese expatriates relocated to Sweden after the cross–border M&A. Our findings show that cultural differences have an impact the level of integration, employees’ attitudes and behaviors, cultural fit, and communication between acquiring and target companies. In the meantime, all of these factors could lead to increased stress, concern, resistance, curiosity, anxiety, lack of synergy creation, and lack of communication. Besides, several solutions have been addressed to overcome mentioned adverse outcomes by the companies: social activities, expatriates, internal communication, and previous experience in managing cross–border M&As or working in an international environment. This research suggests that companies could avoid mentioned challenges arising due to the cultural differences by establishing a sufficient level of integration and conducting a pre-assessment of culture in advance. Nevertheless, the influence of cultural differences may not be underestimated in cross-border M&A.