A comparison of cultural impact on Asian MNC's merge with western MNC.

Author:Chen, I. Chun Lisa
 
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  1. INTRODUCTION

    In related literature, there have been many studies on issues associated with international business in developing countries; especially Western MNCs transfer their management in the Chinese context, such as China (Fan, 2004). However, research in the field of Chinese MNC's merger and acquisitions with Western MNCs is still few. Although the internationalization of such organizations is rapidly growing, such as Chinese MNC's merger and acquisition of IBM personal computers, RCA television and Dornier aircraft (www.bbc.co.uk, 2005). This paper will start with the meaning of merger and acquisitions and then cross-border merger and acquisitions and finally get into cultural-value-based theory, which will be applied to examine the effects on the merged Asian and Western MNC organizations in the US as well as Asian and Asian MNC organizations in Taiwan. The mixed research method was adopted to collect data by using both qualitative and quantitative ways. The findings show that at first, societal culture is a vital factor influence on merged MNCs in US and Taiwan. Secondly, the statistics significances between Taiwanese merged MNCs in Taiwan and Taiwanese merged with US MNC in US show that Asian culture does not have apparent effect on management style after Asian MNC merged with Western MNC in US. Finally, cultural theory is unlikely to study in cross-border MNCs within a country, which is unable to demonstrate the cultural differences.

  2. LITERATURE REVIEW

    2.1 Issues in International Merger and Acquisition (M&A)

    A merger happens when two firms agree to become a single new company rather than remain separately owned and operated over, the purchase is called. For example, when Daimler-Benz merged with Chrysler, and a new company, DaimlerChrysler, was established (www. en.wikipedia.org, 2008). In this research, the terms, merger and acquisition will be utilized because they are alike, especially in Asian MNCs merged with Western MNCs, such as Sonny merged Ericsson mobile communications, and a new company, Sony Ericsson Mobile Communications was created in 2001 (www.wiki.mediaculture.org.au/index.php/Sony Ericsson Mobile Communication, 2008).

    Although international merger and acquisitions gain more knowledge and capabilities, which is not available within their home country and they are sharing costs, entering new markets, supplying their capabilities, seeking more radical innovations by integrating knowledge from different areas of science and technology, and creating common platforms for products and services (Sirmon and Lane, 2004)

    However, there are many problems in a merging process, but a major factor appears to be a poor national cultural fit between the cross-border merging organizations (Bruhn, 2001).

    2.2 National Culture in Cross-Cultural M&A

    Maurice et al (1980) generated the "societal analysis" for studying organizations is a systemic analysis of social action which emphasizes the reciprocal interaction of people at work, work characters of jobs, systems of HRM practices, industrial relations, which can only be explored by considering historical, economical and political factors (Maurice et al 1980, P.61). The interactive relationship between system and actors is synchronicity (Maurice, 2000, P.22). The property of the system tends to load the individual choices from which actors can choose a specific way. The actor develops a specific program of mind and the interdependence between system and actor links to the culture (Sorge, 2004, P.131-133). Thus, this research hypotheses Taiwanese MNCs merged with US MNCs in US has greater influence from the society, American culture, than Taiwanese culture.

    Hypothesis: There is impact of local culture on the merged firm in US greater than home Asian culture after merged with home country MNC in US.

    Hofstede's work in 1980 has great impact on studying international organizations and later writers such as Trompenaars (1997) and House et al (2004) have all been based on the idea that the values which are embedded in different national cultures can be measured along a number of suggested dimensions. These dimensions (four in Hofstede's, seven in Trompenaars' and nine in House's model) are held to represent how societies perceive and respond to some universal problems according to deeply held values. Similar distinctions have been made by Romani (2004), the orientations based on relationship with people, time and nature. I will attempt to extract elements from these cultural theorists' categories to illustrate the degree to which the dimensions of culture can directly affect management and organizational practice in different social contexts.

    2.3 Relationship with People

    2.3.1 Differentiation Between Social Groups

    A major culture difference is that between high and low contexts, a distinction analyzed by Hall (1976, 1990). Context is defined in this case in terms of how individuals and their society seek information and knowledge. People from high context cultures obtain information from personal information networks. Low-context cultures occur where people are typically distant from each other so that information needs to be very explicit (Hall and Hall, 1990).

    Hofstede's (1991) concept of power distance informs us about social inequality, including the relationships with...

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