Reconceptualizing cultural distance: The role of cultural experience reserve in cross-border acquisitions

Manish Popli, Mohammad Akbar, Vikas Kumar, Ajai Gaur

Research output: Contribution to journalArticlepeer-review

82 Scopus citations

Abstract

Cultural distance is one of the most widely used distance construct in international business. However, scholars have long questioned the notion that cultural distance has a homogenous impact on organizational actions and performance. We redress this by examining how the relationship between cultural differences and deal abandonment in cross-border acquisitions is contingent on firm-level cultural experience reserve and industry affiliation. Drawing on the organizational learning theory and cultural friction perspective, we first propose that the cultural experience reserve of a focal firm mitigates the positive impact of cultural differences on cross-border deal abandonment. We then hypothesize that the firm's industry context affects the uncertainties associated with cultural differences. Our findings based on a sample of 197 Indian services sector firms support our theoretical predictions.

Original languageEnglish (US)
Pages (from-to)404-412
Number of pages9
JournalJournal of World Business
Volume51
Issue number3
DOIs
StatePublished - Apr 1 2016

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Finance
  • Marketing

Keywords

  • Cross-border M&A
  • Cultural experience reserve
  • Cultural friction
  • Deal abandonment
  • Organizational learning

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