Mars–Venus marriages: Culture and cross-border M&A

Rajesh Chakrabarti, Swasti Gupta-Mukherjee and Narayanan Jayaraman
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Rajesh Chakrabarti: Indian School of Business, Hyderabad, India
Swasti Gupta-Mukherjee: School of Business Administration, Loyola University Chicago, Chicago, USA
Narayanan Jayaraman: College of Management, Georgia Institute of Technology, Atlanta, USA

Journal of International Business Studies, 2009, vol. 40, issue 2, 216-236

Abstract: Using a sample of over 800 cross-border acquisitions during 1991–2004, we find that, contrary to general perception, cross-border acquisitions perform better in the long run if the acquirer and the target come from countries that are culturally more disparate. We use mainly the Hofstede measure of cultural dimensions to measure cultural distance, but also examine alternative proxies. The positive relationship of performance to cultural distance persists after controlling for several deal-specific variables and country-level fixed effects, and is robust to alternative specifications of long-term performance. Cash and friendly acquisitions tend to perform better in the long run. There is also some evidence of synergies when acquirers are from stronger economies relative to the targets. Journal of International Business Studies (2009) 40, 216–236; doi:10.1057/jibs.2008.58

Date: 2009
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