Reconceptualizing cultural distance: The role of cultural experience reserve in cross-border acquisitions

Manish Popli, Mohammad Akbar, Vikas Kumar and Ajai Gaur

Journal of World Business, 2016, vol. 51, issue 3, 404-412

Abstract: Cultural distance is one of the most widely used distance construct in international business. However, scholars have long questioned the notion that cultural distance has a homogenous impact on organizational actions and performance. We redress this by examining how the relationship between cultural differences and deal abandonment in cross-border acquisitions is contingent on firm-level cultural experience reserve and industry affiliation. Drawing on the organizational learning theory and cultural friction perspective, we first propose that the cultural experience reserve of a focal firm mitigates the positive impact of cultural differences on cross-border deal abandonment. We then hypothesize that the firm's industry context affects the uncertainties associated with cultural differences. Our findings based on a sample of 197 Indian services sector firms support our theoretical predictions.

Keywords: Organizational learning; Cross-border M&A; Cultural friction; Cultural experience reserve; Deal abandonment (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (43)

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DOI: 10.1016/j.jwb.2015.11.003

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