National Cultural Distance and International Acquisition Performance

Abstract

Previous theoretical research has argued that national cultural distance hinders cross-border acquisition performance by increasing the costs of integration. This article tests the alternative hypothesis that national cultural distance en-hances cross-border acquisition performance by providing access to the target's and/or the ac-quirer's diverse set of routines and repertoires embedded in national culture. Using a multi-dimensional measure of na-tional cultural distance and controlling for other effects, we examine a sample of 52 cross-border acquisitions that took place between 1987 and 1992, and find a positive association between national cultural dis-tance and cross-border acquisi-tion performance. * Research Fellow at the Risk Management and Decision Processes Center of the Wharton School, University of Pennsylvania. His research interests focus on the performance effectiveness of cross-border mergers and acquisitions, joint ventures and alliances, as well as managerial execution in a global context. Dr. Morosini has formerly worked in institutions such as McKinsey & Company, JP Morgan and the Andean Pact, in several locations across Europe, the United States and Latin America.