4. Organizational culture and m&a

4.1 Culture differences

An organizational culture can be compared to an organism that lives inside the body- company. If this organism functioning wrong, then the body is not healthy anymore, it suffer from pain and may die. So, an organizational culture plays a vital role in M&As. Such as merger or acquisition means a combination of two different companies, it also means a combination of two cultures. When the result of the combination is positive, that means that there is a "culture fit", when negative - "culture clash" (Straub, p.34). If the degree of culture fit is high then the probability of success of M&A is high. According to Cartwright and Cooper, culture is a "social glue". It makes individuals to have a feeling of unity ( Cooper,1993, p.60) and react to the changes of environment (Nguyen, 2003, p.448). While an organizational culture defined as symbols, norms, taboos, values, that operate in a company in an unconscious way and provide the members with the rules of behavior in their organization (Weber, Tarba, 2012,p.292). According to Pikula, small organizations tends to have strong organizational culture, because people interact frequently than in the large one. However, strong culture can be a barrier for changes when they are needed. (Pikula, p.1). Changes may lead to positive and negative result of M&A performance. According to Marks and Mirvis, it depends on three factors such as the nature and extent of those differences, the interventions used to manage them, and the integration approach taken (MArks&Mirvis, p.861). Nguyen and Kleiner argues, that changes lead to a loss of control over the employees, because when a person feel stress it leads to sense of helplessness, lower productivity and hence job dissatisfaction (Nguyen & Kleiner, p.450). Also found that cultural distance implies negatively on shareholder wealth of the acquiring firm, whereas Slangen says, that it is not that cultural distance negatively impact on M&A performance, but a level of integration (Slangen, 2006, 163).

Differences between the cultures make M&A process more complicated. Marks and Mirvis says, that the success of M&A depends on ability to manage culture even more than on financial or strategic factors (MArks &Mirvis, p.863). To measure the culture is very difficult and almost impossible. But if the acquiring company want to succeed it is important to overcome cultural problems that companies usually face. In order to evaluate the culture it is necessary to collect the information directly from the target company or by using the outside sources (Weber, 296). According to Sarala, Junni and Cooper, organizational cultural differences can be associated with differences in employee behavior. It becomes more difficult to predict the behavior of employees in the partner firm, that leads to misunderstandings and difficulties in communication among the employees of merged firms (Sarala, Cooper, p.12). In the real world the aspect of culture is still poorly understood, and often skipped during the M&A, because it takes time and may result in additional costs, from which acquiring company usually want to escape. The lack of consideration of the human factor during the process of the planning and realization of merger cause of failure. It is necessary for acquiring company to learn the behavior of the employees and to predict their actions in the of organizational changes during M&A.