Cultural Change Following International Acquisitions: Cohabiting the Tension Between Espoused and Practiced Cultures

Abstract

This paper explores post-acquisition cultural change following international acquisitions. Despite the acknowledged complexity of the cultural encounter in acquisitions, less is known about cultural change following acquisitions by global organizations where a tension between espoused vs. practiced cultures co-exists. Our study leads us to identify the drivers, outcomes and directions of post-acquisition cultural change amid such contexts. In contrast to a seemingly singular, monolithical perspective, we present post-acquisition cultural change as a dyadic, bipolar process, whereby acquired firms cohabit the space between espoused and practiced values. Reflecting the acquirer’s cultural regime, targets align with either the acquirer’s espoused or practiced culture. Further, whereas previous research parallels cultural change with explicit initiatives, we find that cultural change results from all post-acquisition integration activity. Given the power of practiced over espoused culture, the findings call for recognition that in global organizations leveraging culture goes beyond leveraging values only. The findings are based on a large-scale qualitative research program, wherein eight international acquisitions conducted by four Finnish, globally-operating industrial acquirers were studied, totalling 166 interviews.