The last decades have seen tremendous change in a multitude of aspects affecting the way we live and work. The ‘global village’ is moving closer and closer together. Organisations are no longer restricted by national borders in their operations. New opportunities for international business operations arise constantly and are enforced by the ever-improving information technology sector.
Cross-cultural mergers and acquisitions are common and often used to acquire more efficient access to resources and human capital, to expand markets and to create new ones. Due to promising predictions, as well as a considerable amount of time and money spent on legal and administrative issues, potential difficulties deriving from cross-cultural differences and hidden cultural rules are often neglected. These can have a tremendous impact on the international workforce and global business operations if not addressed in the early stages.
It is estimated that between 60% and 80% of cross-cultural mergers fail (Industrial Management, 2000) and in fact, cultural factors and the lack of preparation for them are often listed as key reasons for international M&A failures.
Obstacles for international M&As in the cultural field include differing values, attitudes and behaviour between the home and the host culture which can cause misunderstandings, client and employee dissatisfaction, increasing opportunity costs, direct financial losses and potential business failure. Intercultural competence developed through cross-cultural training programmes is therefore an essential success factor in today’s business world.
All of the parties involved, including management, employees and contractors on all levels, need to recognise the significance and impact of underlying cross-cultural values and attitudes in different cultures. This involves the understanding of different cross-cultural decision-making styles, perceptions of hierarchy, attitudes to polychronic or monochronic time as well as different communication styles such as high and low context.
Cross-cultural training programmes such as Communicaid’s Managing International Mergers and Acquisitions programme is essential to ensure that cross-cultural difference does not attribute to what is already very challenging.