Post-acquisition integration: Managing cultural differences and employee resistance using integration controls

Abstract

The integration of acquisitions is often complicated by cultural differences between the acquiring and acquired firms. An important path through which cultural differences can impact acquisition performance is through employee resistance. We assemble detailed survey data to examine how acquiring firms' use of integration controls moderates the impact of employee resistance following from cultural differences on acquisition performance. Our findings confirm that cultural differences between acquirer and target are associated with initial employee resistance, which in turn depresses acquisition performance. Managers’ use of integration controls moderates the effects of employee resistance on acquisition performance. Specifically, while use of task integration controls is positively associated with performance, it also amplifies the detrimental effects of resistance. In contrast, use of sociocultural integration controls helps to reduce these effects. Our findings thus indicate that in the presence of cultural differences, sociocultural integration gains importance to reduce initial employee resistance, which can enhance the effectiveness of subsequent task integration efforts.