EMB
AT A GLANCE
More than half of cross-border M&A deals are said to have
failed, and with headline grabbing demises including the
2014 collapse of the Omnicom-Publicis merger, there is little
argument to the contrary. According to Richard D. Lewis, one of
the root causes of cross-border M&A failure is a lack of cultural
understanding, exacerbated by Anglo-Saxon-centric narratives
on the topic, that are largely irrelevant to other cultures.
exceptions, the models of organizational culture described or
proposed in ninety percent of books on the subject bear little
relevance to the countries I have worked in.
Literature aside, the reality is, in order for two companies to
achieve long-term international M&A success, they must come
to understand what makes each other tick and truly consider
the cultural differences that dictate how business gets done.
The examples that follow are drawn from the advanced
economies of the US, Japan and Germany, but are applicable
and relevant to companies worldwide. Whether developed,
emerging or frontier market firms, in the merger and
acquisition context, the need for cultural awareness remains
the same. Moreover, as emerging market firms look outward
to satisfy their own growth ambitions, understanding how
business is done in these three nations could serve them well.
AS EMERGING MARKET FIRMS
LOOK OUTWARD TO SATISFY
THEIR OWN GROWTH AMBITIONS,
UNDERSTANDING HOW BUSINESS
IS DONE IN THESE THREE NATIONS
COULD SERVE THEM WELL.
Hierarchy is adhered to in most American firms, but officers
would describe themselves as 'democratic.' Layers of authority
would be restricted in number—the pyramid flat and wide
rather than tall and narrow. Command and control sounds
alright, but empowerment is okay too. American managers
leading a subsidiary abroad are expected to make decisions
'standing on their own two feet', but are, in fact, controlled by
a strict three-month rolling forecast to HQ.
US leaders in general are expected to make firm decisions
without unnecessary delay. They are not too concerned about
consensus among colleagues, but they will 'take the rap' if
they err. Expectations of work rate are high for employees and
incentives and punishments are often effected through bonus
systems. Inefficient employees are 'let go' (which means fired).
Appraisals are common and promotion is on the line. A certain
amount of loyalty is expected, but American individualism and
career ambitions are taken into account. The communication
style between leaders and colleagues is essentially direct. In
the US, you 'tell it how it is'. This may involve challenging a
decision made by a senior colleague, and is certainly applicable
to error detection, irrespective of whether someone loses
face or not. In such cases, Americans usually acknowledge
mistakes readily, so loss of face is infrequent.
The American Way
Disagreement in US firms is also direct, often expressed without
rancour. Brainstorming is popular and common, innovative ideas
are welcomed. Whistle blowers can be admired, rather than
demonized. Dress varies according to the company code, but
office employees must be scrupulously clean and considered
smart. Americans are used to working in ample personal space—
offices are generally li ght and airy. Crowded conditions frustrate.
Without imposing a personal interpretation on how writers
on organizational culture treat the issues commonly referred
to—hierarchy, empowerment and leadership amongst them—
find that their descriptions do not stray far from the routines
I was subjected to during my employment with two sizeable US
corporations. It went a little like this:
As for the use of time, Americans are very punctual, work
hard and will stay late at work in times of crisis in the firm.
Sub‑cultures are tolerated equally and human rights, in
accordance with the Constitution, are a given. It is worthy of note,
however, that Americans willingly accept that duties come in
tandem with rights, which is not the case in some other countries.
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