success that a M&A can achieve, the management of the post-combination
integration process will probably determine the degree to which that potential
is realized (Pablo et al., 1996). The research evidence presented in this chapter
indicates that, if adequately managed, the inherent cultural differences in
cross-border M&A can be an asset rather than a liability.
What constitutes ‘adequate’ management in a particular M&A depends on
the strategic logic behind the deal and the integration approach taken. Each of
the various integration approaches discussed in this chapter has different man-
agerial implications. For example, in absorption acquisitions, one of the key
managerial challenges is to ease the transition from separate to joint operations
and to allay target firm members’ fears through clear communication, whereas
preservation acquisitions require arm’s-length status and managers must be
willing to protect the target’s autonomy and learn from the target firm. In gen-
eral, attention to cultural and people issues is most critical to M&A which
require high degrees of integration (Haspeslagh and Jemison, 1991; Stahl and
Sitkin, 2001).
Although most M&A failures are linked to problems in post-combination
integration, our discussion of the key HRM challenges in M&A suggests that
cultural and people issues have to be considered at an early stage in the M&A
process – as early as during the evaluation and selection of a suitable target and
the planning of the post-combination integration phase. In the due diligence
process, the assessment of the organization structure, corporate culture, and
HR system in the company to be acquired is just as important as financial
analysis and strategic fit considerations. Undertaking a human capital audit to
ensure that the target company has the talent necessary to execute the acqui-
sition strategy, identifying which individuals are key to sustaining the value of
the deal, and assessing any potential weaknesses in the management cadre are
essential to the long-term success of the acquisition (Evans et al., 2002).
No matter how well the M&A has been prepared, one can neither antici-
pate nor avoid all problems in the post-combination integration phase. In this
chapter, we have identified various paths for executives to follow in their
efforts to better manage the challenges of post-merger integration. Most of the
critical management tasks are in the area of human resource management and
organization development, including various aspects such as enhancing the
quality and quantity of communication, choosing the right management
team, retaining key executives and leadership talent, facilitating the cultural
integration process, and managing the transition process. The interventions
suggested to deal with these key HRM challenges can go a long way toward
reducing dysfunctional culture clashes in cross-border M&A, and increasing
the chances for successful integration.
The cultural and human resource management implications of M&A dis-
cussed in this chapter provide a rich field for further research. Although the
psychological, social, and cultural issues involved in integrating merging or
108 International Human Resource Management