Organizational
CULTURE
– OFTEN INVALID?
BY RICHARD D. LEWIS
S
ince the turn of the century, mergers and acquisitions (M&As) have grown apace, with bigger and bigger companies
demonstrating appetite for growth. Even names like Jaguar, Nokia and Alcatel have been swallowed up. Survival of
the fittest (or biggest) seems to be the order of the day. In the midst of such transformation, the organization or reorganization of the companies involved is a subject of great importance, which becomes apparent in the face of a striking
reality: according to multiple research studies, more than 50% of international M&As are said to have failed, with lack of
cultural understanding one of the root causes.
BEWARE
THE ANGLO-SAXON BIAS
In this era of vigorous globalization of business, it is not
surprising that organizational culture has become a buzz word,
enkindling a vast amount of literature that attempts to describe
and define it. In the references section of his admirable book,
Organisational Culture and Leadership, Edgar H. Schein lists 237
books and papers written between the years 1950 and 2010, of
which 107 were published in the 1990s and the 21st century.
Almost all of these works are of Anglo-Saxon authorship,
reflecting the wider reality of literature on the topic.
Schein and others have confronted and analyzed a plethora
of issues that affect a company in transition, and much of the
resulting literature offers a series of possible solutions and not
infrequent recommendations surrounding such issues.
The issues presented are ones that normally arise (though not
only) in an Anglo-Saxon environment and consequently are
discussed, usually in the English language, from an Anglo-Saxon
perspective. In the opinion of this writer, such a perspective is
invalid when a strong non-Anglo culture is involved, particularly
in an M&A situation, where transformative measures encounter
reluctant or negative acceptance.
Given the current and future economic preponderance of
China, India, Japan, Germany and possibly South America,
one has to take into consideration that existing organizational
culture precepts are often non-applicable, even meaningless, in
cultures comprising four-fifths of humanity.
78 Emerging Markets Business Summer 2016 • Issue No. 1
The case of Daimler-Chrysler has perhaps been the most
spectacular amongst these failures, rivaled by Walmart’s
misfortunes in East Asia and Germany. Then there are deals
that don’t even get off the starting blocks. The unsuccessful
US$35 billion merger between US and French marketing and
communications powerhouses, Omnicom and Publicis, has
been one of the highest profile cases in recent years, but the
list is long.
Of course, many different factors led to the demise of these
cross-border deals, but decades of experience have taught
me that companies overlook culture at their peril. For
international M&As to succeed where others have failed,
companies must understand that organizational culture
procedure is, by necessity, a two-phase operation. Phase one
is the analysis and (attempted) alignment of both companies’
national characteristics, while phase two is the organization
of this alignment. It is during the latter phase that the seeds
of failure take root.
Thinkers in the field have not failed to take into account the
influence of national characteristics in multinational business.
In fact, literature on the topic is extensive. However, they
tend to adopt a distinctly Anglo-Saxon perspective, and the
often cursory manner in which national traits are mentioned
suggests they are grossly underestimated by writers with only
second-hand experience of cultures other than their own.
In my case, over the course of many years, I have worked
in American, French, Finnish, Portuguese, and German
companies, along with a dozen more dealing with major
firms in Sweden, Spain, Italy, Brazil, Denmark and the
United Arab Emirates. With the US counting amongst the few