The Impact of Organizational Culture Differences, Synergy Potential, and Autonomy Granted To The Acquired High-Tech Firms On The M&A Performance

703267
research-article2017
GOMXXX10.1177/1059601117703267Group & Organization ManagementTarba et al.
Article
Group & Organization Management
1–38
The Impact of © The Author(s) 2017
Reprints and permissions:
Organizational Culture sagepub.com/journalsPermissions.nav
DOI: 10.1177/1059601117703267
https://doi.org/10.1177/1059601117703267
Differences, Synergy journals.sagepub.com/home/gom
Potential, and Autonomy

Granted to the Acquired
High-Tech Firms on the
M&A Performance
Shlomo Y. Tarba1, Mohammad F. Ahammad2,

Paulina Junni3, Peter Stokes4, and Omri Morag5
Abstract
The aim of the article is to examine the factors influencing the overall
acquisition performance of the companies acquiring the high-tech firms.
The data were gathered during 2007-2009 via a cross-sectional survey using
a questionnaire on a sample of Israeli high-tech firms that were engaged
in acquisitions. Given its global leading role in the high-tech sector, Israel
constitutes an important site for the study of mergers in this industrial
domain. The findings indicate that synergy potential (similarities and
complementarities) between high-tech merging firms, effectiveness of post-
acquisition integration, and organizational cultural differences positively
influence the overall acquisition performance merging high-tech firms.
Moreover, our findings suggest that organizational cultural differences
1University
of Birmingham, UK and Tel Aviv University, Israel
2University
of Leeds, UK
3BI Norwegian Business School, Oslo, Norway
4De Montfort University, Leicester, UK
5The Open University, Israel
Corresponding Author:
Shlomo Y. Tarba, Birmingham Business School, University of Birmingham, UK, and Faculty of
Management, Recanati Business School, Tel Aviv University, Tel Aviv 44251, Israel.
Email: s.tarba@bham.ac.uk
2 Group & Organization Management 0(0)
moderate the relationship between effectiveness of post-acquisition

integration and overall acquisition performance as such that positive effect
of effectiveness of post-acquisition integration is higher when organizational
differences are higher. Our findings indicate that organizational cultural
differences also positively moderate the relationship between autonomy
granted and the overall acquisition performance. An important contribution
of the present article is the development of a conceptual framework
incorporating the direct and moderating effect of organizational cultural
differences and autonomy granted on the overall performance of acquisition.
Keywords
mergers and acquisitions, high-tech, post-acquisition integration,
organizational cultural differences, M&A performance
Introduction
The frequency and scale of global mergers and acquisitions (M&A) have
significantly increased during the past two decades despite recurrent reports
on their high failure rates (e.g., Gomes, Weber, Brown, & Tarba, 2011; Weber,
Tarba, & Öberg, 2014; Weber, Tarba, & Reichel, 2011). Yet the growth in
M&A activity, both in terms of the volume of capital involved and their popu-
larity, stand in stark contrast to their high rate of failure, and research studies
from various research strands have generally failed to step into each other’s
“turf,” hence missing potential opportunities from cross-fertilization (Gomes,
Angwin, Weber, & Tarba, 2013; Weber, Tarba, & Reichel, 2009).
Several studies which systematically explored the most frequently used
variables in research on M&A phenomenon have been unable to determine
clear predictors for M&A success or failure (Ahammad, Tarba, Liu, &
Glaister, 2016; Haleblian, Devers, McNamara, Carpenter, & Davidson, 2009;
Shimizu, Hitt, Vaidyanath, & Pisano, 2004; Stahl & Voigt, 2008). Moreover,
the meta-analysis conducted by King, Dalton, Daily, and Covin (2004) con-
cluded that none of the strategic and financial variables studied are signifi-
cant in explaining the variance in post-acquisition performance, and extending
this vein, Weber et al. (2009) recommended that future research pay more
attention to nonfinancial variables. Moreover, concerning the wider M&A
domain, prior research has also usefully investigated the performance of both
cross-border and domestic acquisitions by multinational firms (Liu & Deng,
2014; Weber, 1996; Weber, Shenkar, & Raveh, 1996; Weber & Tarba, 2010;
Weber et al., 2009). However, while the extant research has made progress in
certain regard, little research exists which investigates the performance of
Tarba et al. 3
cross-border or domestic acquisitions of high-tech firms, that is, companies

inventing and innovating technological products and services (see useful
exceptions in Puranam, Singh, & Zollo, 2003, 2006; Weber et al., 1996).
The aim of the article is to investigate the factors influencing the overall
acquisition performance of the companies acquiring high-tech firms.
Specifically, the article aims to examine the impact of synergy potential
between the acquiring and acquired high-tech firms, degree of autonomy
granted to the acquired high-tech firms, and effectiveness of the applied post-
acquisition integration on the overall performance of the acquiring firms. We
argue that organizational cultural differences between the acquiring and
acquired high-tech firms, synergy potential between the acquiring and
acquired high-tech firms, autonomy granted to the acquired high-tech firms,
and effectiveness of post-acquisition integration approach applied by the
buying firms toward the high-tech firms can make a significant contribution
in explaining the overall acquisition performance of the acquiring firms.
The concept of culture, be it corporate or national, is a rich and complex
set of domains and merits further elaboration within the context of the present
argument. A conventional characterization of culture is to view it as some-
thing which is tangible and possible to evidence and discern almost as a phys-
ical “object” with limits and presence, and this fits well with positivistic
representations (Clegg, Kornberger, & Pitsis, 2016; Knights & Willmott,
2012). In relation to organizational processes, positivistic presentations of
culture tend to focus on, for example, notions and preoccupations such as
efficiency, performativity, and resultant profitability—central concerns in
post-M&A contexts. Furthermore, positivistic approaches may also be prone
to presenting cultures as either “hard” or “soft” cultures. The “hard” aspects
of culture resonate with, inter alia, logos, signs, visible procedures, processes,
and organizational jargon. Alternatively, more “soft” appreciations of culture
attempt to understand culture through, for instance, behavior, attitudes, and
belief systems (Puranam & Swamy, 2016; Stokes, 2011; Stokes, Baker, &
Lichy, 2016). Moreover, “hard” and “soft” aspects of culture coalesce to
result in what may be termed “strong” and “weak” cultures. Strong cultures
are generally seen as those wherein employees are extrinsically aligned to the
“hard” aspects of the corporate environment and ethos. In rationalistic terms,
“weaker” corporate cultures are often characterized as problematic, in com-
parison with “strong” cultures with employees, mission, and values being
unsynchronized, and may impinge on firm performance (Deal & Kennedy,
1982; Rishi & Moghe, 2013). The present argument aims to develop empiri-
cal data in relation to the extant and affiliated M&A literatures to consider
cultural fusion of hard and soft dimensions together with notions of strong
and weak cultural aspects in Israeli high-tech M&A contexts and, in
particular, for example, focus on issues of perceived autonomy among

employees in companies. Herein, the recognition of the importance of issues
such as “autonomy” alludes to a softer cultural dimension within the “hard”
realities of the M&A event and is kindred with wider emergent concerns
across the organization and management spectrum including, for example,
emotion, well-being, and trust (Bachmann, Gillespie, & Priem, 2015;
Fineman, 2003; Giolito & Van Dierendonck, 2015).
Prior research has also investigated the performance of both cross-border
and domestic acquisitions by multinational firms. However, scant research
exists investigating the performance of cross-border and/or domestic acquisi-
tions of high-tech firms (Almor, Tarba, & Margalit, 2014; Weber & Tarba,
2011) and inter-organizational encounters involving entrepreneurs (Liu,
2017; Liu & Almor, 2016). Moreover, although the particular issue of cul-
ture–performance relationship has received a lot of attention in merger and
acquisition (M&A) research (Rottig, Reus, & Tarba, 2013), organizational
cultural differences have received relatively less attention compared with
studies of national cultural differences (Vaara, Junni, Sarala, Ehrnrooth, &
Koveshnikov, 2015). The notion of culture at a national level telescopes onto,
and symbiotically interacts with and infuses, the corporate cultures operating
at firm level. Attempts to define, categorize, and analyze national cultures
have produced a range of well-cited—in particular, for example, Hofstede
(1980) and Hofstede, Neuijen, Ohayv, and Sanders (1990)—even if, for
many commentators, these are conceptually and methodologically problem-
atic (McSweeney, 2002). Certain of these long-standing cross-cultural frame-
works approach the representation of national cultures by gauging particular
traits (see Trompenaars & Hampden-Turner’s, 2011). Moreover, many of the
extant cross-cultural models situate within a predominant positivistic frame
of reference which infers (again not unproblematically) that, broadly, “cul-
ture” at a national level is ongoing, stable, and purporting internal consis-
tency and homogeneity (Hewling, 2005). Set against this context, Israeli
national and organizational cultures may be typically viewed as informal,
action- and solution-orientated, and direct in terms of communication style.
In the specific context of an in-vogue and leading-edge arena such as the
high-tech industry which employs exceptionally talented individuals exhibit-
ing high intelligence, this implies that a potent set of discourses and dialogues
are likely to be a visible aspect of the hard/soft cultures of the M&A fusion.
More specifically, limited research exists investigating the impact of syn-
ergy potential on M&A performance and particularly so in high-tech settings.
Within these broad debates, culture constitutes a key factor. Although the
relationship of culture–performance has received considerable attention in
M&A research (Weber & Tarba, 2010), nevertheless, organizational cultural
Tarba et al. 5
differences with regard to the comparison between national cultural differ-

ences (Bonardo, Paleari, & Vismara, 2010) have received relatively less
attention. Indeed, there are only a few papers that have investigated the mod-
erating and mediating effects of synergy potential, effectiveness of post-
acquisition integration approach in the context of cross-border M&A (Weber
et al., 1996; Weber et al., 2009).
The article commences by reviewing the literature on M&A in high-tech
industry, followed by a review of literature on synergy potential, autonomy
granted, the effectiveness of post-acquisition integration, and organizational
(corporate) culture differences in M&A with the aim of developing our
hypotheses. Next, the argument explains the research design and methods
adopted for the study. Finally, the results of the study are presented and dis-
cussed and the argument concludes by indicating theoretical and managerial
implications.
Literature Review and Hypotheses

As an overview on the M&A field, Meglio (2009) provides a pertinent over-
view of the manner in which the literature on M&A activity in the high-tech
sector has addressed the issues of the assessment of post-acquisition perfor-
mance measurement. She establishes a valuable template which organizes
and delineates the domain as follows: the Temporal (i.e., measurement over
which particular period under measurement and consideration); Research
Focus (i.e., strategic decision making, integration process, acquisition perfor-
mance); Perspectives in Performance Measures (acquiring firm, target firm,
both companies); and, Operational Definitions of Performance (financial,
innovative, or subjective performance). Meglio’s explication of these dimen-
sions underscores that the very concept and understanding of “performance”
cannot be taken at face value and that many meanings and interpretations are
in operation in the literature. This modeling is important because it usefully
contextualizes discussions on post-acquisition contexts (especially for the
acquiring firm) in terms of relativities rather than absolutes. This, in turn, is
useful for contextualizing the points on post-acquisition performance which
are explored below.
Synergy Potential Between the Merging Firms and the Overall

M&A Performance
One of the aims of the post-acquisition integration process is to capitalize on
synergy potential through transfer of capabilities and resource sharing which
can result in cost savings and improved revenues (Almor, Tarba, &
Benjamini, 2009; Gomes et al., 2011; Liu & Woywode, 2013; Xing & Liu,
2016). Thus, the higher the level of synergy potential, the higher the expected
integration effectiveness is likely to be. The reason for the conflicting results
of previous studies may lie in the broad terms in which relatedness and syn-
ergy have been defined, often using similarity and complementarity syner-
gies interchangeably or, alternatively, ignoring complementarity altogether
(Makri, Hitt, & Lane, 2010). Whereas synergetic similarities may stem from
eliminating redundancies and overlapping activities, the process of amalga-
mation of complementary competences is also likely to take place and con-
tributes significantly to the enhanced overall M&A performance (Bauer &
Matzler, 2014; Björkman, Stahl, & Vaara, 2007; Kim & Finkelstein, 2009;
Larsson & Finkelstein, 1999; Zaheer, Castañer, & Souder, 2013). Therefore,
we posit the following:
Hypothesis 1 (H1): The higher the synergy potential between the com-
bined acquiring and high-tech firms, the higher will be the overall acquisi-
tion performance of the acquiring firm.
Autonomy Granted to the Acquired High-Tech Firm and the

Overall M&A Performance
Despite M&A popularity as a growth strategy, the conditions under which
they enhance or destroy firm value still remains vague. Post-acquisition inte-
gration plays important role in achieving synergy after M&A transactions
(Gomes et al., 2011; Weber, Tarba, & Bachar, 2011). Organizational integra-
tion, such as interaction and coordination between the two firms involved in
the acquisition, is considered as the most influential factors for achieving
synergies (Larsson & Finkelstein, 1999; Larsson & Lubatkin, 2001).
Among others factors, autonomy granted to acquired firms is important to
M&A performance. Autonomy refers to the strategic freedom to act, or the
latitude of action that managers have when they formulate strategic activities,
including implementation of organizational structure, determination of cor-
porate development strategy, and execution of technology transformations
(Takeuchi, Shay, & Jiatao, 2008; Weber & Drori, 2011). Managerial auton-
omy can influence the acquired firm’s intention to leave or stay. Prior research
has identified autonomy removal as a characteristic of relative standing
(Frank, 1985). This is a condition which contributes to the executives of the
acquired firm feeling inferior relative to the acquiring firm executives, or the
executives of the acquiring firm viewing them as superior. Thus maintaining
the relative standing of the executives of the acquired firm has impact on the
Tarba et al. 7
retention of the acquired firm’s executives (Hambrick & Cannella, 1993;

Schweiger & Goulet, 2000).
In the context of acquisitions, Cannella and Hambrick (1993) found that
removal of autonomy from individuals during the first 2 years after the acqui-
sition was associated with executive departure. Moreover, those “acquired
executives” who were given status were less likely to leave. The negative
impact of autonomy removal was also confirmed in a European study by
Very, Lubatkin, Calori, and Veiga (1997) who found that removal of auton-
omy from individuals accustomed to high levels of autonomy caused M&A
performance to deteriorate. Thus, we posit the following:
Hypothesis 2 (H2): The higher the autonomy granted to the acquired

high-tech firm, the higher will be the overall acquisition performance of
the acquiring firm.
The Effectiveness of the Post-Acquisition Integration and the

Overall M&A Performance
In high-tech settings, knowledge is often embedded in, or linked to, individu-
als or specific teams of people. Various studies indicate that performance for
the acquiring firm can be seriously undermined by the departure of important
employees from the acquired firm (Paruchuri, Nerkar, & Hambrick, 2006;
Puranam, Singh, & Chaudhuri, 2009; Ranft & Lord, 2000). Following
Meglio’s (2009) framework, the management of knowledge by the acquiring
firm is one of a range of contextual factors which has implications for post-
acquisition performance. Bonardo et al. (2010) highlighted the importance of
contextual factors in relation to various aspects and sectors of the high-tech
arena. They examined the acquisition of small-medium-sized enterprises
(SMEs) which are science-based entrepreneurial firms and noted that in the
instances where these firms were offshoots from or partners with universities,
this tended to be a favorable predictor of value enhancement and positive
performance. This finding points at the importance of identifying appropriate
partnerships as a means to enhancing later performance, and this is a recur-
rent theme in the high-tech M&A literature. The predetermining nature of
“types” of partner was equally alluded to in a seminal study conducted by
Cloodt, Hagedoorn, and Kranenburg (2006) in which they signaled the
importance of an acquiring firm not undertaking acquisitions of firms having
“too much” research and development/knowledge capital nor too similar
knowledge bases. In contrast, they pointed at the importance of complemen-
tary fits between the relative knowledge bases of the firms. Furthermore, in
relation to a wider contextual facet pertaining to “knowledge,” Drori,

Wrzesniewski, and Ellis (2013) extended the important discussion on knowl-
edge in M&A high-tech contexts through a consideration of boundary nego-
tiation and identity formation in post-merger settings. In contrast to the often
“fixed” view of a firm’s assets, they indicate that knowledge, identity, and
kindred “soft” dimensions of the firm tend to be negotiated and the boundar-
ies of these realigned between the members of the acquired and acquiring
firm. Alternatively expressed, rather than seeing an M&A as almost a “colli-
sion” of two firms’ sets of values, identities, and knowledge, it may be much
more propitious to envisage the merger as a fusion. Within such fusions, there
exists the possibility of achieving relative optimization of the emergent com-
bined culture. Herein, the acquiring firm needs to work with the acquired
company to ensure that a novel emergent culture is produced which can pro-
vide a space for the two entities to reside as equitably and harmoniously (and
indeed performatively) as possible. If this stance is adopted (rather than a
more dominant or belligerent approach), subsequent performance of the joint
entity (including the acquiring firm) has a strong probability of being
improved (Drori, Wrzesniewski, & Ellis, 2011).
Spatial and distance factors also play an important part as predeterminants
of post-acquisition performative success in the high-tech M&A sector. Elango,
Lahiri, and Kundu (2013) noted that the more geographically distant the
acquired firm is from the acquiring firm, the more likely it is that the acquiring
firm will acquire the entire, rather than part, of the company. They stated that
this is particularly the case in relation to high-tech acquisitions and knowledge
transfer–based deals where organizations seek to control the acquired intel-
lectual property and knowledge-based assets. Puranam et al. (2006) suggested
that such control-autonomy issues for the acquiring firm over its newly
acquired entity might be more successfully resolved (with an eye to perfor-
mance enhancement) through judicious choice of shared structural forms and
reporting lines. In consequence, they recommend an exploitative-exploratory
ambidextrous approach to fusion rather than the conventional “quick” and
“slow” stance on corporate integration and absorption. They postulate that this
allows space for ongoing innovation in the acquired firm with commensurate
performance benefits for the acquiring firm.
In consequence, in relation to issues linked to performance of the acquir-
ing high-tech firm, we argue that an amalgam of factors including organiza-
tional cultural differences between the acquiring and acquired high-tech
firms, knowledge synergy potential between the acquiring and acquired high-
tech firms, autonomy granted to the acquired high-tech firms, and effective-
ness of post-acquisition integration approaches (applied by the buying firms
toward the high-tech firm) can have significant contribution in explaining the
Tarba et al. 9
overall acquisition performance of the acquiring firms. Thus, we posit that

the following:
Hypothesis 3 (H3): The higher the effectiveness of the post-acquisition

integration applied by the acquiring firm toward the acquired high-tech
firm, the higher will be the overall performance of the acquiring firm (+).
The Organizational Cultural Differences and the Overall M&A

Performance
While corporate and national cultures have frequently been used to explain
the poor performance of domestic and international M&A, there are contra-
dictory findings about the role of cultural difference in the success of interna-
tional and domestic M&A. Several studies have provided support for the idea
that corporate cultural differences are detrimental to M&A performance
(Chatterjee, Lubatkin, Schweiger, & Weber, 1992; Datta, 1991; Weber, 1996).
In addition, Vaara, Sarala, Stahl, and Björkman (2012) concluded that corpo-
rate culture differences at the organizational level are positively associated
with social conflict. Moreover, the authors also found that both organiza-
tional and national cultural differences are positively associated with knowl-
edge transfer. However, rather strikingly, Appelbaum and Gandell (2003)
underlined the fact that actively managing cultural differences during all
stages of a merger reduces cultural clash in M&A. Weber et al. (1996) found
that in the context of international M&As, national culture differentials are
better predictors of stress and negative attitudes toward the merger than orga-
nizational (corporate) culture differentials.
Thus, we posit the following:
Hypothesis 4 (H4): The higher the organizational cultural differences

between acquiring and acquired high-tech firms, the higher will be the
overall acquisition performance of the acquiring firm (+).
The Moderating Effect of Autonomy Granted

While integration effectiveness is important for realizing synergies in the post-
acquisition phase, it also introduces the risk of disrupting the knowledge
bases, routines, and processes that reside in the acquired firm (Haspeslagh &
Jemison, 1991). This is particularly problematic when the main aim of the
acquisition is to gain access to the acquired firm’s valuable knowledge and
resources, which is common in acquisitions of knowledge-intensive firms
such as high-tech companies (Graebner, 2004; Graebner & Eisenhardt, 2004;
Ranft & Lord, 2000, 2002). To mitigate potential disruptions to the acquired
firm caused by the integration process, the acquirer can grant the acquired firm
some degree of autonomy (Graebner, 2004; Graebner, Heimeriks, Huy, &
Vaara, 2017; Haspeslagh & Jemison, 1991; Ranft & Lord, 2000, 2002; Xing,
Liu, Tarba, & Cooper, 2016) by negotiating and agreeing collectively about
the changes needed in the acquired firm instead of imposing changes. We
expect that granting the acquired firm such decision-making autonomy will
enhance the positive effect of integration effectiveness on overall acquisition
performance. First, acquirers often struggle to understand where valuable
knowledge and capabilities reside in acquired high-tech firms, because such
knowledge tends to be tacit and embedded in the routines, relationships, and
processes in the acquired firm (Chaudhuri & Tabrizi, 1999; Ranft & Lord,
2000, 2002). Involving the acquired firm in post-acquisition decision making
may help the acquirer uncover which areas of the acquired firm need to be
shielded from potential disruptions, and which ones are likely to generate syn-
ergies by combining the firms’ activities. Second, valuable knowledge-based
assets tend to reside in the human capital of acquired knowledge-intensive
firms (Chaudhuri & Tabrizi, 1999; Ranft & Lord, 2000, 2002). Therefore,
retaining key acquired firm employees becomes vital in acquisitions of high-
tech firms. Impositions and demands on the part of the acquiring firm may
alienate the employees of the acquired firm, and even drive them to seek jobs
elsewhere (Fried, Tiegs, Naughton, & Ashforth, 1996). In contrast, granting
the acquired firm some decision-making autonomy is likely to create goodwill
among acquired employees and create an atmosphere that is more conducive
for collaboration during post-acquisition integration (Birkinshaw, Bresman, &
Håkanson, 2000; Datta & Grant, 1990). Therefore, we expect that the auton-
omy granted to acquired high-tech firms will enhance the positive effect of
integration effectiveness on overall acquisition performance:
Hypothesis 5 (H5): Autonomy granted to acquired high-tech companies

moderates the relationship between effectiveness of the post-acquisition
approach and the overall acquisition performance of the acquiring firm,
such that the positive effect of effectiveness of post-acquisition approach
is higher when higher autonomy is granted to acquired high-tech firms (+).
The Moderating Effect of Organizational Cultural Differences

We further propose that integration effectiveness is particularly valuable
when there is a high level of organizational cultural differences between the
acquiring firm and the acquired high-tech firm. While post-acquisition inte-
gration is vital for realizing potential synergies (Haspeslagh & Jemison,
Tarba et al. 11
1991), the total value created from post-acquisition integration depends on

the amount and type of potential synergies identified in the first place.
Acquisition synergy potential is determined by similarities and complemen-
tarities between the merging firms (Björkman et al., 2007; Larsson &
Finkelstein, 1999). Here “similarity” refers to the extent to which the firm’s
technologies, products, operations, resources, and capabilities overlap,
whereas complementarity concerns to what extent they enhance one another
(Björkman et al., 2007; Zaheer, Castañer, & Souder, 2013). Synergy potential
is likely to be greater in acquisitions where the merging firms share comple-
mentarities instead of similarities (Bauer & Matzler, 2014; Björkman et al.,
2007; Makri et al., 2010). We contend that organization cultural differences
represent an important source of complementarities between the acquiring
and target firms. Although organizational cultural differences have been
associated with post-acquisition implementation problems (Sarala, 2010;
Stahl & Voigt, 2008; Vaara et al., 2012), and lower acquisition performance
(Chatterjee et al., 1992; Datta, 1991), recent studies have shed light on their
potential positive effects (Björkman et al., 2007; Sarala, Junni, Cooper, &
Tarba, 2016; Vaara et al., 2012). These studies put forward that organizational
cultural differences represent synergy potential in the form of complementary
skills and capabilities (Björkman et al., 2007; Sarala et al., 2016), and show
that organizational cultural differences lead to greater acquisition perfor-
mance (Krishnan, Miller, & Judge, 1997; Vaara et al., 2012). Post-acquisition
integration is needed to realize potential synergies. Because the synergy
potential is likely to be greater in acquisitions involving complementarities
that stem from organizational cultural differences, we expect that organiza-
tional cultural differences will enhance the positive effects of post-acquisi-
tion integration effectiveness on acquisition performance:
Hypothesis 6 (H6): Organizational cultural differences moderate the rela-

tionship between the effectiveness of the post-acquisition approach and
the overall organizational performance, such that the positive impact of
effectiveness of post-acquisition approach is higher when organizational
cultural differences between the amalgamating entities are higher (+).
We also propose that the autonomy granted to the acquired firm is likely to
be especially beneficial in acquisitions characterized by large organizational
cultural differences. As discussed in the previous hypothesis, organizational
cultural differences represent synergy potential in the form of complementari-
ties in firm resources, skills, and competences (Björkman et al., 2007; Sarala
et al., 2016). In acquisitions characterized by synergy potential based on com-
plementarities, acquirers are less likely to have sufficient knowledge about the
acquired firm’s skills, competences, and practices to make appropriate strate-

gic decisions for it (Chaudhuri & Tabrizi, 1999; Zaheer et al., 2013). Removing
the acquired firm’s autonomy may therefore lead to suboptimal decisions that
disrupt the acquired firm’s knowledge, skills, and capabilities (Haspeslagh &
Jemison, 1991; Ranft & Lord, 2002), reducing the acquisition’s value creation
potential. Autonomy granted to the acquired firm helps preserve the acquired
firm’s knowledge base (Puranam & Srikanth, 2007; Ranft & Lord, 2002).
Furthermore, valuable knowledge is likely to reside in key acquired firm
employees (Chaudhuri & Tabrizi, 1999), making employee retention impor-
tant for acquisition value creation (Ranft & Lord, 2000, 2002). Acquired firm
autonomy can increase the retention (Ranft & Lord, 2000, 2002) and the pro-
ductivity of key employees (Paruchuri et al., 2006). It can also help create a
positive atmosphere that is conducive for collaboration (Birkinshaw et al.,
2000), which is needed to realize complementary synergies. Therefore, we
expect that autonomy granted to the acquired firm is likely to be particularly
valuable in acquisitions characterized by complementarities that stem from
large organizational cultural differences:
Hypothesis 7 (H7): Organizational cultural differences between the

acquiring and acquired high-tech firms moderate the relationship between
autonomy granted and the overall acquisition performance of the acquir-
ing firm such that the positive impact of autonomy granted is higher when
organizational cultural differences between the amalgamating entities are
higher (+).
Building on a model that includes organizational culture differences, and

the synergy potential between the amalgamating companies, Gomes et al.
(2011) and Weber et al. (Weber et al., 2009; Weber et al., 2011) postulated
that the cause for the dismal performance track record of the acquiring firms
stems from their unwillingness or inability to implement the tailor-made
post-acquisition integration approach actually required in each specific M&A
case. Makri et al. (2010) suggested that both complementary scientific knowl-
edge and complementary technological knowledge can contribute to post-
merger performance by stimulating higher quality and novel inventions.
Moreover, as noted by Capron (1999), Larsson and Finkelstein (1999), and
Weber et al. (2009), the post-acquisition integration and resource reconfigu-
ration are vital to exploit potential synergies between the acquired and acquir-
ing firms. However, the loss of autonomy during high-level integration that
generally is necessary to reap the synergistic benefits can have an adverse
impact on M&A performance (Chatterjee et al., 1992; Haspeslagh & Jemison,
1991; Puranam et al., 2006). Appelbaum and Gandell (2003) found that
Tarba et al. 13
actively managing cultural differences during all stages of a merger mini-

mizes cultural clash in M&A. Weber et al. (2011) showed on their part that
the positive effect of synergy potential and negative effect of cultural differ-
ences are moderated through the appropriate integration approach (symbio-
sis) to create high integration effectiveness. Vaara et al. (2012) concluded that
both organizational and national cultural differences are positively associated
with knowledge transfer. Interestingly, in the same vein, Weber et al. (1996)
found that in the context of international M&As, national culture differentials
better predict stress and negative attitudes toward the merger than organiza-
tional (corporate) culture differentials do so. The studies by Weber and Tarba
(2011) and Weber, Tarba, & Bachar (2012) explicitly pointed to the fact that
if national culture differences and corporate culture differences are not prop-
erly handled during both pre- and post-acquisition integration process
between amalgamating entities in the high-tech industry, it can preclude the
synergy realization and thus have a detrimental impact on the overall success
of the M&A deal.
Thus, we posit the following:
Hypothesis 8 (H8): Organizational cultural differences between the

acquiring and acquired high-tech firms moderate the relationship between
synergy potential and the overall acquisition performance of the acquiring
firm such that the positive impact of synergy potential is higher when
organizational cultural differences between the amalgamating entities are
higher (+).
In Figure 1, we draw the relationships of the eight hypotheses derived

from literature review.
Research Method
Sample
The sample of firms was drawn from an exhaustive list of M&As that took
place during 1992-2007 obtained from the archive of the Israel Antitrust
Authority. The decision to situate the study in the Israeli context was taken
for a number of reasons. First, the Israeli high-tech industry has been one of
the fastest growing, innovative, and impactful in recent decades and is there-
fore a highly suitable setting for conducting the current study (Almor, Tarba,
& Margalit, 2014; Chorev & Anderson, 2006; Kenney, Breznitz, & Murphree,
2013). Second, the rate of growth has been intensive and challenging across
a range of social, cultural, and technical regard, and as one consequence of
Figure 1. Factors influencing the M&A performance of acquired high-tech firms.
Note. M&A = mergers and acquisitions.
that growth, M&A activity has been heightened (Blumen, 2016; Malach-
Pines, & Zaidman, 2013). Third, the research team has knowledge of the
Israeli context and access to data and contacts which facilitate the research in
a domain which conventionally prizes confidentiality and to which it can be
difficult to gain entry. These developments have led to a strong development
of human capital in Israeli society and, in turn, mean that key people emerge
as an important aspect of the probable success of any M&A activity (Ranft &
Lord, 2000).
A sample of M&As was selected based on the following criteria: the
acquiring company gained a controlling interest in the acquired firm, the
mergers were related (i.e., from the same industry), and the names and
addresses of the top managers affiliated with the acquiring companies imme-
diately before the merger were available. The research population is all the
transactions (i.e., 800 M&A deals) of M&A performed in Israel during the
years 1992-2007.
Data were collected during 2007-2009. The top incumbent managers who
were involved in the M&A deal before and during the time of the acquisition,
Tarba et al. 15
were accessible in Israel, and expressed their willingness to provide informa-

tion on the relevant specific deals were interviewed in a personal meeting. A
structured questionnaire was either sent by email or administered directly to
each top manager (CEO through senior vice-president level), and all respon-
dents were guaranteed anonymity. Finally, we collected data on 112 M&As
by interviewing the top executives of the incumbent firms of which four
M&A deals were excluded from the sample due to incomplete data. Thus, we
have 108 questionnaires which were fully completed and usable, effectively
a response rate of 13.5% (108/800).
Given the well-documented difficulties of obtaining questionnaire
responses from executives (Harzing, 1997) and the decreasing rate of
response from executives (Cycyota & Harrison, 2006), the study’s response
rate of 13.5% can be considered reasonable. This response rate is similar to
that reported in other academic studies of executives. For instance, Graham
and Harvey (2001) achieved a response rate of nearly 9% from CFOs, and
Mukherjee, Kiymaz, and Baker (2005) obtained an 11.8% response rate in a
survey mailed to 636 CFOs who were involved in acquisitions management.
In the next stage, the following data were obtained for each M&A transac-
tion: Standard Industry Code (SIC) code was given to the variable of related-
ness of every M&A transaction according to the SIC codes taken from the
website www.osha.gov. The industry breakdown of acquiring firm is pre-
sented in Table 1.
Potential nonrespondent biases were checked by comparing respondent
and nonrespondent firms with respect to the time that had elapsed since the
date of the merger. This variable may affect the emotions and objectivity of the
managers, and therefore their perceptions (Chatterjee et al., 1992; Lubatkin,
Schweiger, & Weber, 1999).
Operationalization of the Constructs

Independent variables
Organizational cultural differences between acquiring and the acquired
high-tech firms. The instrument used by Chatterjee et al. (1992), Lubatkin,
Schweiger, and Weber (1999), Weber et al. (1996), and Weber (1996) to
measure corporate culture differentials was employed. Respondents were
asked to indicate the degree of premerger similarity between the acquired
and acquiring top management on each item. Items were constructed to
elicit responses about cultural differences on a 5-point scale, ranging from
“very similar” to “very different.” Following a test for interrater reliabil-
ity, described below, a cultural difference index was computed across
seven dimensions, each consisting of three to five items, with a total of
Table 1. Industry Breakdown of Acquirer.
Industry sector Number of acquirer %

IT and Software 38 35
Media 12 11
Telecom 18 17
Chemical 5 5
Pharmaceutical 4 4
Electronics 14 13
Extractive industry 6 6
Agricultural equipment 5 5
Other high-tech 6 6
Total 108 100
29 items. The seven dimensions (and the number of items used to measure
each) were innovation and action orientation (five items), risk-taking (five
items), lateral integration (four items), top management contact (three
items), autonomy and decision making (five items), performance orien-
tation (three items), and reward orientation (four items). Following the
preliminary analysis described below, we collapsed the data into a single
cultural difference index (Cronbach’s α = .97) by summing the scores for
all 29 items and taking their average.
Synergy potential between acquiring and the acquired high-tech firms. Based

on the concept of “economy of sameness” (the synergy that can be achieved
from accumulating similar operations) and its measurement (Larsson & Fin-
kelstein, 1999), synergy from similarities was measured by 11 items about
the similarity of various operational functions such as marketing operations
(geographic markets, customer groups, and industries) and production opera-
tions (types of input, process, and product).
In addition, based on the concept of “economy of fitness” (synergies that
can be achieved by combining different but complementary operations;
Larsson & Finkelstein, 1999), synergy from complementarities was mea-
sured by 11 items about the complementarity of various operational functions
such as marketing operations (possible transfer of marketing capabilities to
new markets and products) and complementarity of production operations
(possible transfer of production capabilities).
Autonomy granted to the acquired high-tech firm. We administered the ques-

tionnaire assessing whether the integration approach actually implemented
Tarba et al. 17
was conducted fully or partially with the top managers of participating

firms. Managers were asked to report on a 5-point scale the extent to which
their goals and decisions (both strategic and operational) were imposed
on them by the acquiring company. An instrument derived from Vancil &
Buddrus (1979), Goehle (1980), and Cray (1984) solicited answers from
the acquired firm’s top managers about the extent to which a variety of
(a) goals and (b) strategic and operational decisions were determined by the
acquiring team. Answers were provided on a Likert-type scale ranging from
“full autonomy” (1), through “consensus with the acquiring management”
(3), to “full imposition” (5).
Effectiveness of the post-acquisition integration. The instrument used by

Weber (1996) to measure integration effectiveness was employed. The
effectiveness of the integration process measure was based on 12 question-
naire items that addressed effectiveness along organizational dimensions,
such as operations, production, marketing, research and development, and
personnel. The use of key informants to assess effectiveness is common in
organizational research, and the self-report measures provide respondents
with an opportunity to incorporate implicitly economic and noneconomic
considerations (e.g., Dess, 1987). A 5-point scale, ranging from “very inef-
fective” (1) to “very effective” (5), was used. Integration effectiveness is
essential to the success of the entire course of the M&A. The integration
effectiveness is measured in the research by asking the managers who
completed the research questionnaire about their opinion on the integra-
tion effectiveness in 12 subjects: operating facilities, purchasing, research
and development, accounting/finance, legal department, government rela-
tions, human resources, distribution channels, customer service, promotion
and advertising, strategic planning, information systems. Top managers
of participating firms were asked to report on a 5-point Likert-type scale
the extent to which the adopted post-acquisition integration approach was
effective. Answers ranged from “not effective” (1), through “moderately
effective” (3), to “highly effective” (5).
Dependent variables
Overall M&A performance of the acquiring firm. The M&A success is mea-
sured in the research in a procedure that was adopted from previous researches
(Capron, 1999; Datta, 1991). We opted to measure improvement in financial
performance later rather than earlier for several reasons. The post-acquisi-
tion integration processes usually continue for many months and even years.
Often, the integration process itself is very costly in the first 2 years, and
therefore, it may take 2 to 3 years or even more for the merger to bear fruit
(Porter, 1985; Pritchett, 1985). Therefore, the study avoided assessment of

financial performance immediately after a merger. Instead, the overall M&A
performance was calculated by examining the perceptions of incumbent
executives in the following areas: return on investment (ROI), earnings per
share (EPS), stock price, cash flow, and sales growth 2 years after comple-
tion of the merger or acquisition growth. We used a Likert-type scale ranging
from “insignificant contribution of the acquired firm” (1), through “moderate
contribution” (3), to “a rather high contribution” (5) to the performance mea-
sures of the acquiring firm. In addition, every manager was asked to rank the
importance of each one of the five performance criteria according to its rela-
tive importance by giving a weight in percentage to every criterion (the total
sum of the weights reaches 100%). The success of the acquisition/merger was
calculated by multiplying every criterion by the evaluation of the improve-
ment in the performances by every criterion. For example, if a respondent
rates ROI as 4 and gives a weighing of 20%, we multiply 4 × 20% = 0.8.
Then, if a respondent rates EPS as 5 and gives a weighting of 10%, we mul-
tiply 5 × 10% = 0.5. Similarly, we can get a value for stock price, cash flow,
and sales growth. Finally, we add all multiplied values to obtain an overall
M&A performance.
Control variables
Acquisition relatedness. Merger type can affect the performance of the
combined entity because mergers have a higher potential for synergy in the
presence of similar departments and functions. But as Nahavandi and Male-
kzadeh (1988) pointed out, the strategy underlying a merger determines the
extent to which the cultures of two firms come into contact. In related merg-
ers, contact between the members of the two cultures is usually higher than
in unrelated mergers, and the more intensive contact elicits conflict (Naha-
vandi and Malekzadeh, 1988). We constructed a relatively homogeneous
sample from the point of view of merger type, and each merger in our sample
involved firms that were tangibly related.
Relative size (by number of employees). The measurement of the relative size
is important as the measurement of the combined size alone does not provide a
sufficiently good picture of the size compositions in the M&A. The measure-
ment of the relative size between the acquirer and the acquired was performed
by dividing the number of employees in the acquirer company at the end of
the year preceding the M&A by the number of employees in the acquired com-
pany at the end of this year in units of percentage in a 5-point scale.
M&A experience. The responses received are presented in Table 2.

Tarba et al. 19
Table 2. Acquirer Previous M&A Experience.
No. of M&As Code No. %

0 1 27 0.20
1 2 12 0.09
2-4 3 41 0.30
5-10 4 36 0.26
11 and more 5 22 0.16
Results and Discussions

The survey data were screened to check for outliers, out-of-range values, and
missing data. The correlations for each of the variables used in the analyses
are presented in Table 3.
The quantitative data in this study were analyzed using the Partial Least
Square (PLS) approach. SmartPLS 2.0 is one of the widely used software
applications for Partial Least Square Structural Equation Modeling (PLS-
SEM; Ringle, Wende, & Will, 2005). The primary goal of PLS-SEM, as
opposed to covariance-based structural equation modeling, is to maximize
the variance explained in latent and endogenous variables. PLS-SEM is
widely used in analyzing data for the estimation of complex relationship
between constructs in business and management (Gudergan, Ringle, Wende,
& Will, 2008). PLS-SEM is used in M&A research (e.g., Cording, Christmann,
& King, 2008; Homburg & Bucerius, 2005; Junni, Sarala, Tarba, & Weber,
2015) and international marketing (e.g., Hair, Ringle, & Sarstedt, 2012; Hair,
Sarstedt, Pieper, & Ringle, 2012; Henseler, Ringle, & Sinkovics, 2009).
We believe that PLS is a suitable analytic technique for our study for three
reasons. First, PLS does not require assumptions about multivariate normal-
ity (Fornell & Bookstein, 1982). Second, many of our variables had multiple
indicators, and PLS weights indicator loadings on constructs in the context of
the theoretical model rather than in isolation (Hulland, 1999). Finally, cova-
riance-based structural equation models require very large samples to achieve
good estimates of model parameters. PLS is most appropriate for studies that
have relatively small samples or a large number of indicators per latent vari-
able because power in the analysis is maximized (Birkinshaw, Morrison, &
Hulland, 1995). Given our sample size (n = 108), use of an analytical tech-
nique that maximized power while permitting simultaneous estimation of
path coefficients (Hulland, 1999) seemed prudent.
The nonparametric bootstrap (Davison & Hinkley, 2003; Efron &
Tibshirani, 1993) procedure can be used in PLS path modeling to provide
confidence intervals for all parameter estimates, building the basis
20
Table 3. Correlation Matrix (N = 108).
1 2 3 4 5 6 7 8 9 10 11 12
Autonomy granted .28
Autonomy Granted × Organizational Culture .22 NA
Effectiveness of Post-acquisition integration .14 −.04 .25
Effectiveness of Post-acquisition Integration × .27 .14 −.07 NA
Autonomy Granted
Effectiveness of Post-acquisition Integration × −.14 .08 −.08 .020 NA
Organizational Culture
Organizational culture −.00 .06 .17 −.03 .00 .32
Performance .19 .24 .31 .36 −.28 .19 .32
Relatedness .00 .08 −.04 −.08 .06 −.10 −.18 NA
Relative size .07 −.01 .19 .00 −.09 .04 .29 −.17 NA
M&A experience .13 .12 .08 .11 .04 .17 .06 .10 .01 NA
Synergy potential .21 .02 .10 .03 −.27 −.14 .26 −.04 .26 .13 .30
Synergy Potential × Organizational Culture −.17 −.06 −.05 −.16 .06 −.03 −.31 .21 −.14 .17 −.16 NA
Note. For multiple-item constructs, figures on the diagonal represent the square root of the AVE. M&A = mergers and acquisitions; AVE = average
variance extracted.
Tarba et al. 21
Table 4. The Measurement Model—Quality Criteria.
Composite Cronbach’s
Variables AVE reliability alpha
Autonomy granted 0.5303 .9473 .9438
Autonomy Granted × Organizational Culture NA .9794 .9815
Effectiveness of Post-acquisition Integration 0.5031 .8577 .8050
Effectiveness of Post-acquisition Integration × NA .8869 .9759
Autonomy Granted
Effectiveness of Post-acquisition Integration × NA .8990 .9233
Organizational Culture
Organizational Culture 0.5694 .8843 .8524
Synergy potential 0.5531 .8594 .8236
Performance 0.5676 .8345 .8180
Relatedness NA 1.0000 1.0000
Relative size NA 1.0000 1.0000
M&A experience NA 1.0000 1.0000
Synergy Potential × Organizational Culture NA .8479 .9428
Note. The AVE is not available for single-item constructs; hence, the missing values as
indicated “NA.” AVE = average variance extracted; M&A = mergers and acquisitions.
for statistical inference. In general, the bootstrap technique provides an

estimate of the shape, spread, and bias of the sampling distribution of a
specific statistic. Bootstrapping treats the observed sample as if it repre-
sents the population. The procedure creates a large, prespecified number of
bootstrap samples. Each bootstrap sample should have the same number of
cases as the original sample.
We checked the reliability and validity of the measures used in our PLS-
SEM path model. Table 4 reports the Cronbach’s alpha, composite reliability,
and average variance extracted (AVE). The traditional criterion for internal
consistency is Cronbach’s alpha which provides an estimate for the reliability
based on the indicator intercorrelations. Cronbach’s alpha for all indicators
are greater than .70. As Cronbach’s alpha tends to provide a major underesti-
mation of the internal consistency reliability of latent variables in PLS-SEM
path model, the “composite reliability” is more appropriate measure of inter-
nal consistency (Henseler et al., 2009, p. 299). Using the measure suggested
by Fornell and Larcker (1981), we found that all composite reliability values
exceeded the minimum threshold of .70 (Nunnally & Bernstein, 1994).
Fornell and Larcker (1981) recommended using the AVE as a criterion of
convergent validity. An AVE value of at least 0.50 suggests adequate conver-
gent validity, meaning that a latent variable is able to explain more than half of
the variance of its indicators on average (Gotz, Liehr-Gobbers, & Krafft, 2010).
Table 3 indicates that the AVE values for latent variables are greater than 0.50.
Table 5. PLS Path Model (N = 108).
t value p value Hypothesis

Control variables
Relatedness → Performance 1.019 .310
Relative size → Performance 3.559*** .000
M&A experience → Performance 1.186 .239
Explanatory variables
Synergy potential → Performance 2.044** .043 H1: Supported
Autonomy granted → Performance 1.199 .233 H2: Not Supported
Effectiveness of Post-acquisition 3.275*** .000 H3: Supported
Integration → Performance
Organizational culture → 2.278** .024 H4: Supported
Performance
Moderating variables
Effectiveness of Post-Acquisition 1.187 .237 H5: Not supported
Integration × Autonomy Granted
→ Performance
Effectiveness of Post-Acquisition 2.568*** .011 H6: Supported
Integration × Organizational
Culture → Performance
Autonomy Granted × 1.984** .049 H7: Supported
Organizational Culture →
Performance
Synergy potential × Organizational 1.271 .206 H8: Not supported
Culture → Performance
Note. R2 = .501. PLS = Partial Least Square; M&A = mergers and acquisitions.
*p < .10. **p < .05. ***p < .01 (p values for two-tailed test).
The construct validity refers to the extent to which the variation in the
endogenous latent variables is accounted for by the constructs. An indicator
for the construct validity is the R2. The R2 on performance is .499, meaning
that our model explains approximately 50% of the variance in overall acqui-
sition performance. See Table 4 for R2 of the path model.
To test the hypotheses, a structural model was built using the SmartPLS
program. The path coefficients are produced using a bootstrapping proce-
dure. SmartPLS calculated the path coefficient estimates. Each path corre-
sponds to one hypothesis. Table 5 shows the coefficient and p values for each
of path. The following section reports the findings for each path.
H1 predicted that synergy potential would positively influence overall
acquisition performance. The t value of synergy potential is positive and sta-
tistically significant (t = 2.044, p < .05). The findings tend to indicate that
synergy potential positively influence the performance of the acquiring firms.
Therefore, H1 is supported.
Tarba et al. 23
H2 proposed that the higher the autonomy granted to the acquired high-
tech firm, the higher would be the overall acquisition performance of the
acquiring firm. The t value of autonomy granted is positive but not statisti-
cally significant (t = 1.199, p > .10). Therefore, H2 is not supported.
The t value of effectiveness of post-acquisition integration approach is
positive and statistically significant (t = 3.275, p < .01). The findings suggest
that the more effective the post-acquisition integration, the better the overall
acquisition performance of the acquiring firm. Thus, H3 is supported.
The t value of organizational cultural differences is positive and statisti-
cally significant (t = 2.278, p < .05). The finding tends to indicate that orga-
nizational cultural differences positively influence the overall acquisition
performance of the acquiring firm. Consequently, H4 is supported.
The t value for the interaction variable (Effectiveness of Post-Acquisition
Integration × Autonomy Granted) is positive but statistically insignificant (t
= 1.187, p > .10). Therefore, H5 is not supported.
H6 predicted that organizational cultural differences moderated the rela-
tionship between the effectiveness of the post-acquisition integration and
the overall organizational performance. The t value for the interaction vari-
able (Effectiveness of Post-Acquisition Approach × Organizational Culture)
is positive and statistically significant (t = 2.568, p < .01). Thus, H6 is
supported.
H7 proposed that organizational cultural differences between the acquir-
ing and acquired high-tech firms moderated the relationship between
autonomy granted and the overall acquisition performance of the acquiring
firm. The t value for the interaction variable (Autonomy Granted ×
Organizational Culture) is positive and statistically significant (t = 1.984, p
< .05). As a result, H7 is supported.
The t value for the interaction variable (Synergy Potential ×
Organizational Culture) is positive but statistically insignificant (t = 1.271,
p > .10). Therefore, H 8 is not supported.
With regard to control variable, relatedness and M&A experience have
positive but statistically insignificant impacts on overall acquisition perfor-
mance. However, relative size of the firm has statistically significant positive
impact on the overall acquisition performance (t = 3.559, p < .01).
Discussion
In the context of high-tech firms, scant research exists investigating
the impact of synergy potential, autonomy granted, effectiveness of post-
acquisition integration, and organizational cultural differences on the overall
performance of M&As. Our article contributes by examining the impact of
synergy potential between acquiring and acquired high-tech firms on the

overall performance of M&A. The findings suggest that cultural synergy
potential (similarities and complementarities) between high-tech merging
firms could lead to overall M&A performance echoing Harrison, Hitt,
Hoskisson, and Ireland (1991) who stress that synergy is an essential ingredi-
ent for value creation. Nevertheless, Larsson and Finkelstein (1999) proposed
that the extent to which this synergy is realized depends on the similarity and
complementarity of the acquiring and acquired firms. The dominant logic in
prior work is that similarity between merging firms is the primary source of
strategic fit (Palich, Cardinal, & Miller, 2000; Robins & Wiersema, 1995),
but this is not necessarily the only way to assess an acquisition’s potential to
create value. Complementary cultural differences can also offer opportunities
for value-enhancing resource redeployment. Taking the resource-based view
of the firm, some scholars have argued that the complementarity of acquirer
and target is one of the most significant factors in acquisition success (Bauer
& Matzler, 2014; Kim & Finkelstein, 2009; Larsson & Finkelstein, 1999;
Makri et al., 2010; Zaheer et al., 2013). Strategic complementarity poses less
of a threat to employees and managers in merging Israeli firms, so they are
more likely to be supportive of integration efforts, increasing the odds that
hoped-for synergies will be realized, which, in turn, can enhance M&A suc-
cess. Hence, the study concludes that synergy potential (in form of similarity
and complementarity) between merging Israeli high-tech firms leads to over-
all M&A success (H1).
Our article also contributes by investigating the impact of effectiveness
of post-acquisition cultural integration on overall M&A performance of
high-tech firms. Growing recognition that “all value creation takes place
after the acquisition” (Haspeslagh & Jemison, 1991, p. 129) means that the
topic of post-acquisition integration is rightly receiving increasing attention
from researchers (e.g., Birkinshaw et al., 2000; Capron, Dussauge, &
Mitchell, 1998; Capron & Hulland, 1999; Datta, 1991; Larsson & Finkelstein,
1999). A key issue in M&A research adopting the resource-based perspec-
tive (Barney, 1986) is the extent to which merging firms integrate certain
resources to achieve a stronger competitive position and thus superior finan-
cial performance. The present study extends this argument by suggesting,
based on its examination of the Israeli high-tech sector, a positive associa-
tion between integration effectiveness and M&A success. The findings of
the study support the hypothesis (H3) that the greater the integration effec-
tiveness, the more successful the M&A in the high-tech industry. The find-
ings of the present study also indicate that ineffective post-acquisition
integration on factors such as autonomy and independent thinking—reified
concepts and principles in the Israeli (and especially the potent and
Tarba et al. 25
fast-paced high-tech sector)—may prevent a merger from achieving the

intended objectives and expected outcomes.
Our findings tend to indicate that the organizational cultural differences
positively influence overall M&A performance merging high-tech firms
(H4). This finding is consistent with the view of Very et al. (1996); Morosini,
Shane, and Singh (1998); Anand, Capron, and Mitchell (2005); and
Chakrabarti, Gupta-Mukherjee, and Jayaraman (2009). Although it seems
obvious that cultural similarity (aligned with the concept of “strong cultures”;
Stokes, 2011) fosters integration and success, there is empirical evidence to
suggest that cultural differences can have a positive impact on synergy and
potential realization and, therefore, on value creation (Cartwright & Cooper,
2001; Schraeder & Self, 2003; Teerikangas & Very, 2006). Our findings indi-
cate that cultural distance provides opportunities for high-tech firms to learn
and tap into valuable resources in culturally diverse target organizations
thereby enhancing their competitive advantage (Morosini et al., 1998) and
capabilities (Papadakis, 2005). The results also support the notion that cul-
tural differences may lead to cultural attraction (Very et al., 1996) and increase
in M&A performance of high-tech firms which have hard/soft differences in
organizational cultures.
Our article also contributes by examining the moderating effect of organi-
zational cultural differences between effectiveness of post-acquisition inte-
gration and overall M&A performance. Although organizational cultural
differences have been associated with post-acquisition implementation prob-
lems (Sarala, 2010; Stahl & Voigt, 2008; Vaara et al., 2012), and lower acqui-
sition performance (Chatterjee et al., 1992; Datta, 1991), recent studies have
shed light on their potential positive effects (Sarala et al., 2016; Vaara et al.,
2012). Because the synergy potential is likely to be greater in acquisitions
involving complementarities that stem from organizational cultural differ-
ences, we predicted that organizational cultural differences will enhance the
positive effects of post-acquisition integration effectiveness on acquisition
performance. We found support for our hypothesis (H6), suggesting that inte-
gration effectiveness is particularly valuable when there is a high level of
organizational cultural differences between the acquiring firm and the
acquired high-tech firm. This means that the positive impact of effectiveness
of post-acquisition integration on overall M&A performance will be higher
when the organizational cultural differences are higher.
Finally, our findings indicate that organizational cultural differences also
positively moderate the relationship between autonomy granted to the
acquired firm and the overall acquisition performance as such that the posi-
tive effect of autonomy granted is higher when organizational cultural differ-
ences between the merging high-tech firms are higher (H7). In the presence
of high organizational cultural differences, synergy potential exists in the

form of complementarities in organization resources, skills, and competen-
cies (Björkman et al., 2007; Sarala et al., 2016). To extract synergy from
complementarities, acquiring high-tech firms may lack adequate knowledge
about the acquired high-tech firm’s skills, competences, and practices. In this
case, acquiring high-tech firm could grant autonomy to the acquired high-
tech firm with the intention of preserving the knowledge base in acquired
high-tech firm (Puranam & Srikanth, 2007; Ranft & Lord, 2002). Acquired
firm autonomy is expected to enhance the retention (Ranft & Lord, 2000,
2002) and assist building a positive environment that is favorable for coop-
eration (Birkinshaw et al., 2000), which is needed to realize complementary
synergies. Thus, autonomy granted to the acquired firm is likely to be particu-
larly valuable in acquisitions characterized by complementarities that stem
from large organizational cultural differences.
Although we found positive relationship between overall M&A per-
formance and autonomy granted, that particular finding is not statisti-
cally significant. Similarly, the moderating effect of autonomy granted
on the effectiveness of post-acquisition integration is positive; the result
is not statistically significant. Finally, the moderating effect of organiza-
tional cultural differences is positive on synergy potential; we could not
find any statistically significant relationship. Instead our findings tend to
indicate that synergy potential, effectiveness of post-acquisition integra-
tion, and organizational cultural differences have direct and positive
impact on M&A performance. Moreover, organizational cultural differ-
ences moderate the relationship between effectiveness of integration and
M&A performance, and the relationship between autonomy granted and
M&A performance.
Conclusion
Our article provides an empirical investigation of the impact of synergy
potential, autonomy granted, effectiveness of post-acquisition integration,
and organizational cultural differences on the overall performance of M&A
in high-tech industry. While synergy potential and culture have received
attention in international business and organizational behavior research, our
current understanding of how and when synergy potential, autonomy granted,
effectiveness of post-acquisition integration, and organizational cultural dif-
ferences influence M&A performance is limited. Hence, an important contri-
bution of the article is the examination of synergy potential, autonomy
granted, effectiveness of integration, and organizational cultural differences
on overall performance of M&A in high-tech industry.
Tarba et al. 27
In addition, prior researchers have identified a number of factors influenc-

ing the overall M&A performance such as organizational cultural differences
and synergy potential. These factors have not been considered in a single
study, but have arisen from a number of studies that have examined different
factors. Our article is novel in that we consider all the identified factors
simultaneously and examine their direct and moderating effect on the overall
M&A performance.
Our article has research implications. First, the conceptual frameworks
and findings of this study emphasize the relevance of an integrative perspec-
tive on M&A. In this research, factors related with preacquisition phase such
as synergy potential and factors related with post-acquisition phase such as
effectiveness of post-acquisition integration are examined in an integrated
conceptual framework. There is clear empirical evidence that shows that it is
not one single success factor that makes M&A work, but rather the interde-
pendencies of several constructs that determine M&A performance. Prior
work clearly shows, M&A performance depends on premerger issues as well
as on post-merger issues (Barkema & Schijven, 2008; Bower, 2001; Stahl &
Voigt, 2008). Therefore, this study is in line with other integrative research
(Bauer & Matzler, 2014). Second, another research implication of this study
is the use of multiple theoretical approaches in understanding the relationship
between M&A process and M&A performance. The performance of acquisi-
tions has been examined using the lenses of the strategic management theory
(e.g., synergy potential), organizational behavior theory (e.g., organizational
cultural differences), and process theory (pre-and post-M&A phase) simulta-
neously. This study attempts to bridge and integrate different theoretical
approaches to the highly visible phenomenon of corporate acquisitions. From
the viewpoint of academic researchers, the findings highlight the importance
of taking a broad perspective in studying acquisition performance.
Furthermore, our study has managerial implications. First, synergy poten-
tial has a significant positive influence on acquisition success. Therefore,
managers should select target firms with strategic similarities and comple-
mentarity which are essential factors enhancing the chances of acquisition
success. Second, our findings indicate that organizational culture differences
have a positive impact on acquisition performance. The findings indicate that
cultural distance provides opportunities for high-tech firms to learn and tap
into valuable resources in culturally diverse target organizations thereby
enhancing their competitive advantage (Morosini et al., 1998) and capabili-
ties (Papadakis, 2005). Therefore, managers should encourage and support
the opportunity to learn and extract benefits from valuable resources from
culturally different acquired firm to create competitive advantage. Third,
both pre-and post-M&A integration are perceived as complex phenomena
representing a very difficult organizational change process where leadership

and proper management of this change belong to crucial factors which help
to reduce the risk of ineffective post-acquisition integration. Mergers fail
mainly because of incompetent or incorrect execution of integration pro-
cesses, proving that post-acquisition integration effectiveness is the most
critical stage of any merger deal, and it may be the most important cause of
failure among mergers. Thus, managers should pay special attention to the
effectiveness of post-acquisition integration approach. Fourth, managerial
implication arises from the holistic perspective of our research. Managers
should focus on pre-acquisition phase issues such as synergy potential
appraisal as well as on post-acquisition phase-related issues such as effective-
ness of post-acquisition integration approach. Even though the integration
phase is cited to be most decisive for M&A performance, managers should
consider the characteristics of the whole M&A process. Finally, the findings
indicate that there is a positive relationship between autonomy granted and
acquisition performance through the moderating effect of organizational cul-
ture differences. Thus, managers of the acquiring firm should take advantage
of organizational culture differences of combined firm by supporting the for-
mation of a richer bundle of knowledge-based resources from two distinct
cultures order to create a competitive advantage which, in turn, can produce
superior acquisition performance. The formation of knowledge-based
resources could be achieved if the managers of the acquiring firm grant
autonomy to acquired firm’s employees.
As with any research, this study has limitations. The study relies on data
provided by managers in 108 Israeli firms, so the generalization of the find-
ings may be limited. However, selecting acquiring firms from one country
was a purposeful way of dealing with the otherwise high variability in the
studied firms’ backgrounds. Moreover, it is possible that the research is influ-
enced by the geographic and cultural factor typical of Israeli companies and
does not indicate similar results for M&A in other places. Finally, it is pos-
sible that the relations that characterize M&A in the high-tech industry differ
from those in other industries, such as the banking industry, the pharmaceuti-
cal industry, the food industry, and the chemical industry.
It is recommended to validate the research results using a larger sample
and another cultural environment. For instance, the research results should be
validated using a sample that includes M&A that were conducted in Europe
or in the United States. In addition, it is recommended to examine whether
the speed of integration and its impact on integration effectiveness and M&A
success are different between companies in the high-tech industry and
companies in other industries. Moreover, the variable of M&A success is
based in the present research on the attitudes of the senior managers who
Tarba et al. 29
were interviewed in the research and who were involved in the M&A included
in the research sample. This is only one way to measure the M&A success. It
is recommended to examine in a future research the impact of the variable of
autonomy granted and effectiveness of post-acquisition integration by using
additional and more objective parameters to determine the M&A success,
such as analysis of the change in profitability or price of the stock of the
acquirer as a result of the M&A, and so on.
Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research,
authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publi-
cation of this article.
References
Ahammad, M., & Glaister, K. W. (2013). The pre-acquisition evaluation of target
firms and cross border acquisition performance. International Business Review,
22, 894-904.
Ahammad, M., Tarba, S. Y., Liu, Y., & Glaister, K. W. (2016). Knowledge transfer
and cross-border acquisition performance: The impact of cultural distance and
employee retention. International Business Review, 25, 66-75.
Almor, T., Tarba, S. Y., & Benjamini, H. (2009). Unmasking integration challenges:
The case of Biogal’s acquisition by Teva pharmaceutical industries. International
Studies of Management & Organization, 39, 33-53.
Almor, T., Tarba, S. Y., & Margalit, A. (2014). Maturing, technology-based, born-
global companies: Surviving through mergers and acquisitions. Management
International Review, 54, 421-444.
Anand, J., Capron, L., & Mitchell, W. (2005). Using acquisitions to access multina-
tional diversity: Thinking beyond the domestic versus cross-border M&A com-
parison. Industrial and Corporate Change, 14, 191-224.
Appelbaum, S. H., & Gandell, J. (2003). A cross method analysis of the impact of
culture and communications upon a health care merger: Prescriptions for human
resources management. Journal of Management Development, 22(5), 370-409.
Bachmann, R., Gillespie, N., & Priem, R. (2015). Repairing trust in organizations and
institutions: Toward a conceptual framework. Organization Studies, 36, 1123-1142.
Barkema, H. G., & Schijven, M. (2008). How do firms learn to make acquisitions?
A review of past research and an agenda for the future. Journal of Management,
34(3), 594-634.
Barney, J. B. (1986). Organizational culture: can it be a source of sustained competi-
tive advantage? Academy of Management Review, 11(3), 656-665.
Bauer, F., & Matzler, K. (2014). Antecedents of M&A success: The role of strate-
gic complementarity, cultural fit, and degree and speed of integration. Strategic
Management Journal, 35, 269-291.
Birkinshaw, J., Bresman, H., & Håkanson, L. (2000). Managing the post-acquisition
integration process: How the human iintegration and task integration processes
interact to foster value creation. Journal of Management Studies, 37(3), 395-425.
Birkinshaw, J., Morrison, A., & Hulland, J. (1995). Structural and competitive dynam-
ics of a global integration strategy. Strategic Management Journal, 16, 637-655.
Björkman, I., Stahl, G. K., & Vaara, E. (2007). Cultural differences and capability
transfer in cross-border acquisitions: The mediating roles of capability comple-
mentarity, absorptive capacity, and social integration. Journal of International
Business Studies, 38, 658-672.
Blumen, O. (2016). Fathers’ work and children’s distinctive lifestyle: Children of
Israeli high-tech men. Geography Research Forum, 24, 77-99.
Bonardo, D., Paleari, S., & Vismara, S. (2010). The M&A dynamics of European sci-
ence-based entrepreneurial firms. Journal of Technology Transfer, 35, 141-180.
Bower, J. L. (2001). Not all M&As are alike – and that matters. Harvard Business
Review, 79(3), 92-101.
Cannella, A. A., & Hambrick, D. C. (1993). Effects of executive departures on the
performance of acquired firms. Strategic Management Journal, 14(S1), 137-152.
Capron, L. (1999). The long-term performance of horizontal acquisitions. Strategic
Capron, L., Dussauge, P., & Mitchell, W. (1998). Resource redeployment follow-
ing horizontal acquisitions in Europe and North America, 1988-1992. Strategic
Capron, L., & Hulland, J. (1999). Redeployment of brands, sales forces, and market-
ing expertise following horizontal acquisitions: A resource-based view. Journal
of Marketing, 63, 41-54.
Cartwright, S., & Cooper, C. L. (2001). HR know-how in mergers and acquisitions.
London, England: Chartered Institute of Personnel and Development.
Chakrabarti, R., Gupta-Mukherjee, S., & Jayaraman, N. (2009). Mars and Venus
marriages: Culture and cross-border M&A. Journal of International Business
Studies, 40, 216-236.
Chatterjee, S., Lubatkin, M. H., Schweiger, D. M., & Weber, Y. (1992). Cultural dif-
ferences and shareholders value: Explaining the variability in the performance of
related mergers. Strategic Management Journal, 13, 319-334.
Chaudhuri, S., & Tabrizi, B. (1999). Capturing the real value in high-tech acquisi-
tions. Harvard Business Review, 77, 123-130.
Chorev, S., & Anderson, A. R. (2006). Success in Israeli high-tech start-ups: Critical
factors and process. Technovation, 26, 162-174.
Clegg, S., Kornberger, M., & Pitsis, T. (2016). Managing and organizations: An
introduction to theory and practice. London, England: SAGE.
Cloodt, M., Hagedoorn, J., & Kranenburg, H. V. (2006). Mergers and acquisitions:
Their effect on the innovative performance of companies in high-tech industries.
Research Policy, 35, 642-654.
Tarba et al. 31
Cording, M., Christmann, P., & King, D. R. (2008). Reducing causal ambiguity in
acquisition integration: Intermediate goals as mediators of integration decisions
and acquisition performance. Academy of Management Journal, 51, 744-767.
Cray, D. (1984). Control and coordination in multinational corporations. Journal of
International Business Studies, 15(2), 85-98.
Cycyota, C. S., & Harrison, D. A. (2006). What (not) to expect when surveying exec-
utives: A meta-analysis of top manager response rates and techniques over time.
Organizational Research Methods, 9(2), 133-160.
Datta, D. K. (1991). Organizational fit and acquisition performance: Effects of post-
acquisition integration. Strategic Management Journal, 12, 281-297.
Datta, D. K., & Grant, J. H. (1990). Relationships between type of acquisition, the
autonomy given to the acquired firm, and acquisition success: An empirical anal-
ysis. Journal of Management, 16, 29-44.
Davison, A. C., & Hinkley, D. V. (2003). Bootstrap methods and their application.
New York, NY: Cambridge University Press.
Deal, T., & Kennedy, A. (1982). Corporate cultures: The rites and rituals of organi-
zational life. Reading, MA: Addison-Wesley.
Dess, G. G. (1987). Consensus on strategy formulation and organizational perfor-
mance: Competitors in a fragmented industry. Strategic management journal,
8(3), 259-277.
Drori, I., Wrzesniewski, A., & Ellis, S. (2011). Cultural clashes in a “merger of
equals”: The case of high-tech start-ups. Human Resource Management, 50,
625-649.
Drori, I., Wrzesniewski, A., & Ellis, S. (2013). One out of many? Boundary negotia-
tion and identity formation in postmerger integration. Organization Science, 24,
1717-1741.
Efron, B., & Tibshirani, R. J. (1993). An introduction to the bootstrap. New York,
NY: Chapman Hall.
Elango, B., Lahiri, S., & Kundu, S. (2013). How does firm experience and institu-
tional distance impact ownership choice in high-technology acquisitions? R&D
Management, 43, 501-506.
Fineman, S. (2003). Understanding emotion at work. London, England: SAGE.
Fornell, C., & Bookstein, F. (1982). A comparative analysis of two structural equa-
tion models: LISREL and PLS applied to market data. In C. Fornell (Ed.), A
second generation of multivariate analysis (Vol. 1, pp. 289-323). New York, NY:
Praeger.
Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with
unobservable variables and measurement error. Journal of Marketing Research,
18, 39-50.
Fried, Y., Tiegs, R., Naughton, T. J., & Ashforth, B. E. (1996). Managers’ reactions to
a corporate acquisition: A test of an integrative model. Journal of Organizational
Behavior, 17, 401-427.
Frank, R. H. (1985). Choosing the right pond: Human behaviour and the quest for
status. New York, NY: Oxford University Press.
Giolito, V., & Van Dierendonck, D. (2015). Servant leadership: Influence on finan-
cial business-unit performance and employee’s well-being. In Academy of
Management Proceedings, 1, 18378-18378.
Goehle, D. G. (1980). Decision making in multinational corporations (No. 18). Ann
Arbor, MI: UMI Research Press.
Gomes, E., Angwin, D., Weber, Y., & Tarba, S. Y. (2013). Critical success factors
through the mergers and acquisitions process: Revealing pre- and post- M&A
connections for improved performance. Thunderbird International Business
Review, 55, 13-35.
Gomes, E., Weber, Y., Brown, C., & Tarba, S. (2011). Managing mergers, acqui-
sitions and strategic alliances: Understanding the process. Basingstoke, UK:
Palgrave MacMillan.
Gotz, O., Liehr-Gobbers, K., & Krafft, M. (2010). Evaluation of structural equation
models using the partial least squares (PLS) approach. In E. V. Vinzi et al. (Eds.),
Springer Handbooks of Computational Statistics: Handbook of partial least
squares (pp. 691-711).
Graebner, M. (2004). Momentum and serendipity: How acquired leaders create
value in the integration of technology firms. Strategic Management Journal, 25,
751-777.
Graebner, M., & Eisenhardt, K. (2004). The seller’s side of the story: Acquisition as
courtship and governance as syndicate in entrepreneurial firms. Administrative
Science Quarterly, 49, 366-403.
Graebner, M., Heimeriks, K., Huy, Q., & Vaara, E. (2017). The process of post-merger
integration: A review and agenda for future research. Academy of Management
Annals, 11 (1), 1-32.
Graham, J. R., & Harvey, C. R. (2001). The theory and practice of corporate finance:
Evidence from the field. Journal of Financial Economics, 60(2), 187-243.
Gudergan, S. P., Ringle, C. M., Wende, S., & Will, A. (2008). Confirmatory tetrad
analysis for evaluating the mode of measurement models in PLS path modeling.
Journal of Business Research, 61, 1238-1249.
Hair, J. F., Jr., Ringle, C. M., Jr., & Sarstedt, M. (2012). Partial least squares: The bet-
ter approach to structural equation modeling? Long Range Planning, 45, 312-319.
Hair, J. F., Sarstedt, M., Pieper, T. M., & Ringle, C. M. (2012). The use of partial
least squares structural equation modeling in strategic management research:
A review of past practices and recommendations for future applications. Long
Range Planning, 45, 320-340.
Haleblian, J., Devers, C. E., McNamara, G., Carpenter, M. A., & Davidson, R. B.
(2009). Taking stock of what we know about mergers and acquisitions: A review
and research agenda. Journal of Management, 35, 469-502.
Hambrick, D. C., & Cannella, A. A. (1993). Relative standing: A framework for
understanding departures of acquired executives. Academy of Management
Journal, 36(4), 733-762.
Harrison, J. S., Hitt, M. A., Hoskisson, R. E., & Ireland, R. D. (1991). Synergies and
post-acquisition performance: Differences versus similarities in resource alloca-
tions. Long Range Planning, 17, 173-190.
Tarba et al. 33
Harzing, A. W. (1997). Response rates in international mail surveys: Results of a

22-country study. International Business Review, 6(6), 641-665.
Haspeslagh, P., & Jemison, D. B. (1991). Managing acquisitions: Creating value
through corporate renewal. New York, NY: The Free Press.
Henseler, J., Ringle, C. M., & Sinkovics, R. R. (2009). The use of partial least squares
path modeling in international marketing. Advances in International Marketing,
20, 277-319.
Hewling, A. (2005). Culture in the online class: Using message analysis to look
beyond nationality-based frames of reference. Journal of Computer Mediated
Communication, 11, 337-356.
Hofstede, G. (1980). Culture’s consequences: International differences in work
related values. Newbury Park, CA: SAGE.
Hofstede, G., Neuijen, B., Ohayv, D. D., & Sanders, G. (1990). Measuring orga-
nizational cultures: A qualitative and quantitative study across twenty cases.
Administrative Science Quarterly, 35, 286-316.
Homburg, C., & Bucerius, M. (2005). A marketing perspective on mergers and acqui-
sitions: How marketing integration affects post-merger performance. Journal of
Marketing, 69, 95-113.
Hulland, J. (1999). Use of partial least squares (PLS) in strategic management
research: A review of four recent studies. Strategic Management Journal, 20,
195-204.
Junni, P., Sarala, R., Tarba, S. Y., & Weber, Y. (2015). Strategic agility in acquisi-
tions. British Journal of Management, 26, 596-616.
Kenney, M., Breznitz, D., & Murphree, M. (2013). Coming back home after the
sun rises: Returnee entrepreneurs and growth of high tech industries. Research
Policy, 42, 391-407.
Kim, J., & Finkelstein, S. (2009). The effects of strategic and market complementarity
on acquisition performance: Evidence from the U.S. commercial banking indus-
try, 1989-2001. Strategic Management Journal, 30, 616-646.
King, D. R., Dalton, D. R., Daily, C. M., & Covin, J. G. (2004). Meta-analyses of
post-acquisition performance: Indications of unidentified moderators. Strategic
Knights, D., & Willmott, H. (2012). Introducing organisational behaviour and man-
agement. MA: Cengage Learning.
Krishnan, H. A., Miller, A., & Judge, W. Q. (1997). Diversification and top manage-
ment team complementarity: Is performance improved by merging similar or dis-
similar teams?. Strategic Management Journal, 361-374.
Larsson, R., & Finkelstein, S. (1999). Integrating strategic, organizational, and human
resource perspectives on mergers and acquisitions: A case survey of synergy real-
ization. Organization Science, 10, 1-26.
Larsson, R., & Lubatkin, M. (2001). Achieving acculturation in mergers and
acquisitions: An international case survey. Human Relations, 54(12), 1573-
1607.
Liu, Y. (2017). Born global firms’ growth and collaborative entry mode: The role of
transnational entrepreneurs. International Marketing Review, 34, 46-67.
Liu, Y., & Almor, T. (2016). How culture influences the way entrepreneurs deal with
uncertainty in inter-organizational relationships: The case of returnee versus
local entrepreneurs in China. International Business Review, 25, 4-14.
Liu, Y., & Deng, P. (2014). Chinese cross-border M&A: Past achievement, contempo-
rary debates and future direction. In C. L. Cooper & S. Finkelstein (Eds.), Advances
in mergers and acquisitions (Vol. 13, pp. 85-107). Bingley, UK: Emerald Group.
Liu, Y., & Woywode, M. (2013). Light-touch integration of Chinese cross-
border M&A: The influences of culture and absorptive capacity. Thunderbird
International Business Review, 55, 469-483.
Lubatkin, M., Schweiger, D., & Weber, Y. (1999). Top management turnover in
related M&A’s: An additional test of the theory of relative standing. Journal of
Management, 25(1), 55-73.
Makri, M., Hitt, M., & Lane, P. (2010). Complementary technologies, knowledge
relatedness and intervention outcomes in high technology mergers and acquisi-
tions. Strategic Management Journal, 31, 602-628.
Malach-Pines, A., & Zaidman, N. (2013). The mark of recession in the high-tech
industry: High stress and low burnout. In The psychology of the recession on the
workplace (pp. 89-100). C. L. Cooper & A. S. G Antoniou (Eds.), Cheltenham,
UK: Edward Elgar Publishing.
McSweeney, B. (2002). Hofstede’s model of national cultural differences and their
consequences: A triumph of faith-a failure of analysis. Human Relations, 55,
89-118.
Meglio, O. (2009). Measuring performance in technology-driven M&As: Insights
from a literature review. Advances in Mergers & Acquisitions, 8, 103-118.
Morosini, P., Shane, S., & Singh, H. (1998). National cultural distance and cross-
border acquisition performance. Journal of International Business Studies, 29,
137-158.
Mukherjee, T. K., Kiymaz, H., & Baker, H. K. (2005). Merger motives and target
valuation: A survey of evidence from CFOs. Journal of Applied Finance, 14 (2),
7-24.
Nahavandi, A., & Malekzadeh, A. R. (1988). Acculturation in mergers and acquisi-
tions. Academy of Management Review, 13, 79-90.
Nunnally, J. C., & Bernstein, I. H. (1994).The assessment of reliability. New York,
NY: McGraw-Hill.
Palich, L., Cardinal, L., & Miller, C. (2000). Curvilinearity in the diversification–per-
formance linkage: An examination of over three decades of research. Strategic
Papadakis, V. M. (2005). The role of broader context and the communication program
in merger and acquisition implementation success. Management Decision, 43,
236-255.
Paruchuri, S., Nerkar, A., & Hambrick, D. (2006). Acquisition integration and pro-
ductivity losses in the technical core: Disruption of inventors in acquired compa-
nies. Organization Science, 17, 545-562.
Porter, M. E. (1985). Competitive analysis. New York, NY: Free Press.
Tarba et al. 35
Pritchett, P. (1985). After the merger: Managing the shockwaves. New York, NY:
Dow Jones-Irwin.
Puranam, P., Singh, H., & Chaudhuri, S. (2009). Integrating acquired capabilities:
When structural integration is (un)necessary. Organization Science, 20, 313-328.
Puranam, P., Singh, H., & Zollo, M. (2003). A bird in the hand or two in the bush?
Integration trade-offs in technology-grafting acquisitions. European Management
Journal, 21, 179-184.
Puranam, P., Singh, H., & Zollo, M. (2006). Organizing for innovation: Managing
the coordination-autonomy dilemma in technology acquisitions. Academy of
Puranam, P., & Srikanth, K. (2007). What they know vs. what they do: How acquir-
ers leverage technology acquisitions. Strategic Management Journal, 28(8), 805-
825.
Puranam, P., & Swamy, M. (2016). How initial representations shape coupled learn-
ing processes. Organization Science, 27, 323-335.
Ranft, A., & Lord, M. D. (2000). Acquiring new knowledge: The role of retaining
human capital of retaining human capital in acquisitions of high-tech firms.
Journal of High Technology Management Research, 11, 295-319.
Ranft, A., & Lord, M. D. (2002). Acquiring new technologies and capabilities: A
grounded model of acquisition implementation. Organization Science, 13, 420-441.
Ringle, C. M., Wende, S., & Will, A. (2005). SmartPLS Version 2.0 (beta). Hamburg,
Germany: University of Hamburg.
Rishi, P., & Moghe, S. (2013). Integrating corporate social responsibility and cul-
ture as a strategy for holistic corporate success in India. Journal of Corporate
Citizenship, 51, 17-37.
Robins, J., & Wiersema, M. F. (1995). Resource based approach to the multibusiness
firm: Empirical analysis of portfolio interrelationships and corporate financial
performance. Strategic Management Journal, 16, 277-299.
Rottig, D., Reus, T., & Tarba, S. Y. (2013). The impact of culture on mergers
and acquisitions: A third of a century of research. Advances in Mergers and
Acquisitions, 12, 135-172.
Sarala, R. M. (2010). The impact of cultural differences and acculturation factors on
post-acquisition conflict. Scandinavian Journal of Management, 26, 38-56.
Sarala, R. M., Junni, P., Cooper, C. L., & Tarba, S. Y. (2016). A sociocultural perspec-
tive on knowledge transfer in mergers and acquisitions. Journal of Management,
42(5), 1230-1249.
Schraeder, M., & Self, D. S. (2003). Enhancing the success of mergers and acqui-
sitions: An organizational culture perspective. Management Decision, 41,
511-522.
Schweiger, M. D., & Goulet, P. K. (2000). Integrating mergers and acquisitions: An
international research review. Advances in Mergers and Acquisitions, 2, 61-91.
Shimizu, K., Hitt, M., Vaidyanath, D., & Pisano, V. (2004). Theoretical founda-
tions of cross-border mergers and acquisitions: A review of current research
and recommendations for the future. Journal of International Management,
10, 307-353.
Stahl, G. K., & Voigt, A. (2008). Do cultural differences matter in mergers and acqui-
sitions? A tentative model and examination. Organization Science, 19, 160-176.
Stokes, P. (2011). Critical concepts management and organization studies.
Basingstoke, UK: Palgrave Macmillan.
Stokes, P., Baker, C., & Lichy, J. (2016). The role of embedded individual values,
belief and attitudes and spiritual capital in shaping everyday postsecular organi-
zational culture. European Management Review, 13, 37-51.
Takeuchi, R., Shay, J. P., & Jiatao, L. (2008). When does decision autonomy increase
expatriate managers’ adjustment? An empirical test. Academy of Management
Journal, 51(1), 45-60.
Teerikangas, S., & Very, P. (2006). The culture-performance relationship in M&A:
From yes/no to how. British Journal of Management, 17(Suppl. 1), S31-S48.
Trompenaars, F., & Hampden-Turner, C. (2011). Riding the waves of culture:
Understanding diversity in global business. London, England: Nicholas Brealey.
Vaara, E., Junni, P., Sarala, R. M., Ehrnrooth, M., & Koveshnikov, A. (2015).
Attributional tendencies in cultural explanations of M&A performance. Strategic
Vaara, E., Sarala, R., Stahl, G., & Björkman, I. (2012). The impact of organizational
and national cultural differences on social conflict and knowledge transfer in
international acquisitions. Journal of Management Studies, 49, 1-27.
Vancil, R. F., & Buddrus, L. E. (1979). Decentralization: Managerial ambiguity by
design. Dow Jones-Irwin.
Very, P., Lubatkin, M., & Calori, R. (1996). A cross-national assessment of accultura-
tive stress in recent European mergers. International Studies of Management &
Organization, 26(1), 59-86.
Very, P., Lubatkin, M., Calori, R., & Veiga, J. (1997). Relative standing and the per-
formance of recently acquired European firms. Strategic Management Journal,
18 (8), 593-614.
Weber, Y. (1996). Corporate culture fit and performance in mergers and acquisitions.
Human Relations, 49, 1181-1202.
Weber, Y., & Drori, I. (2011). Integrating organizational and human behavior perspec-
tives on mergers and acquisitions: Looking inside the black box. International
Studies of Management & Organization, 41(3), 76-95.
Weber, Y., Rachman-Moore, D., & Tarba, S. Y. (2012). HR practices during post-
merger conflict and merger performance. International Journal of Cross Cultural
Management, 12, 73-99.
Weber, Y., Shenkar, O., & Raveh, A. (1996). National and corporate cultural fit in
mergers/acquisitions: An exploratory study. Management Science, 42, 1215-1227.
Weber, Y., & Tarba, S. Y. (2010). Human resource practices and performance of
mergers and acquisitions in Israel. Human Resource Management Review, 20,
203-211.
Weber, Y., & Tarba, S. Y. (2011). Exploring culture clash in related merger:
Post-merger integration in the high-tech industry. International Journal of
Organizational Analysis, 19, 202-221.
Tarba et al. 37
Weber, Y., Tarba, S. Y., & Bachar, Z. R. (2011). Mergers and acquisitions perfor-
mance paradox: The mediating role of integration approach. European Journal
of International Management, 5, 373-393.
Weber, Y., Tarba, S. Y., & Öberg, C. (2014). A comprehensive guide to mergers &
acquisitions: Managing the critical success factors across every stage of the M&A
process. Upper Saddle River, New Jersey: Pearson & Financial Times Press.
Weber, Y., Tarba, S. Y., & Reichel, A. (2009). International mergers and acquisi-
tions performance revisited—The role of cultural distance and post. Advances in
Mergers and Acquisitions, 8, 1-17.
Weber, Y., Tarba, S. Y., & Reichel, A. (2011). A model of the influence of culture on
integration approaches and international mergers and acquisitions performance.
International Studies of Management & Organization, 41(3), 10-28.
Weber, Y., Tarba, S. Y., & Bachar, Z. R. (2012). The Effects of culture clash on inter-
national mergers in the high-tech industry. World Review of Entrepreneurship,
Management and Sustainable Development, 8, 103-118.
Xing, Y., & Liu, Y. (2016). Linking leaders’ identity work and human resource man-
agement involvement: The case of sociocultural integration in Chinese mergers
and acquisitions. The International Journal of Human Resource Management,
27, 2550-2577.
Xing, Y., Liu, Y., Tarba, S., & Cooper, C. L. (2016). Servitization in mergers and
acquisitions: Manufacturing firms venturing from emerging markets into
advanced Economies. International Journal of Production Economics. Advance
online publication. Retrieved from http://doi.org/10.1016/j.ijpe.2016.12.010
Zaheer, A., Castañer, X., & Souder, D. (2013). Synergy sources, target autonomy, and
integration in acquisitions. Journal of Management, 39, 604-632.
Author Biographies
Shlomo Y. Tarba is an associate professor (reader) and head of the department of
Strategy & International Business at the University of Birmingham, UK, and a visit-
ing professor at Recanati Business School, Tel-Aviv University, Israel. He received
his PhD from Ben-Gurion University and Master’s in Biotechnology from the Hebrew
University of Jerusalem, Israel. His research interests include ambidexterity, strategic
agility, and mergers and acquisitions. Dr. Tarba’s research papers are published/forth-
coming in journals such as Journal of Management (SAGE), Journal of Organizational
Behavior, Human Relations, Academy of Management Perspectives, California
Management Review, Management International Review, International Journal of
Human Resource Management, and others. One of his paper was published in Best
Paper Proceedings of the Academy of Management (USA) in 2006. He serves on a
number of editorial boards including British Journal of Management, Human
Resource Management (US, Wiley), and Management International Review.
Mohammad F. Ahammad is an associate professor in International Business at
Leeds University Business School, University of Leeds, UK. He is an active
researcher in the field of international business, in particular in the area cross
border mergers and acquisitions. His work has appeared in the British Journal of
Management, Journal of Organizational Behavior, International Business Review,

International Marketing Review, Human Resource Management, International
Journal of HRM, and others.
Paulina Junni is an associate professor at the Department of Strategy and Logistics
in BI Norwegian Business School, Oslo, Norway. Her research interests relate to
strategic and sociocultural aspects of mergers and acquisitions, knowledge transfer,
absorptive capacity, organizational ambidexterity, and strategic agility. Her research
papers appeared in such journals as Journal of Management, Strategic Management
Journal, Academy of Management Perspectives, British Journal of Management,
Thunderbird International Business Review, Scandinavian Journal of Management,
European Journal of International Management, and others. She serves as a guest
editor for the special issues at International Journal of Human Resource Management
and Human Resource Management Review.
Peter Stokes is a professor at Leicester Castle Business School, De Montfort
University, UK. He has published widely in world class journals and applied his
work in successful consultancy projects. He holds positions on international bodies
including vice-president - EuroMed Research Business Institute and UK ambassa-
dor - Association de Gestion des Ressources Humaines (Francophone Academic
HR Association).
Omri Morag is a lecturer and academic coordinator of Business Strategy course
in the Department of Economics & Management, The Open University of Israel,
Raanana.

The Impact of Organizational Culture Differences, Synergy Potential, and Autonomy Granted To The Acquired High-Tech Firms On The M&A Performance

Uploaded by

Copyright:

Available Formats

You might also like

The Impact of Organizational Culture Differences, Synergy Potential, and Autonomy Granted To The Acquired High-Tech Firms On The M&A Performance

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

The Impact of Organizational Culture Differences, Synergy Potential, and Autonomy Granted To The Acquired High-Tech Firms On The M&A Performance

Uploaded by

Copyright:

Available Formats

703267

Potential, and Autonomy

Shlomo Y. Tarba1, Mohammad F. Ahammad2,

moderate the relationship between effectiveness of post-acquisition

cross-border or domestic acquisitions of high-tech firms, that is, companies

particular, for example, focus on issues of perceived autonomy among

differences with regard to the comparison between national cultural differ-

Literature Review and Hypotheses

Synergy Potential Between the Merging Firms and the Overall

Autonomy Granted to the Acquired High-Tech Firm and the

retention of the acquired firm’s executives (Hambrick & Cannella, 1993;

Hypothesis 2 (H2): The higher the autonomy granted to the acquired

The Effectiveness of the Post-Acquisition Integration and the

relation to a wider contextual facet pertaining to “knowledge,” Drori,

overall acquisition performance of the acquiring firms. Thus, we posit that

Hypothesis 3 (H3): The higher the effectiveness of the post-acquisition

The Organizational Cultural Differences and the Overall M&A

Hypothesis 4 (H4): The higher the organizational cultural differences

The Moderating Effect of Autonomy Granted

Hypothesis 5 (H5): Autonomy granted to acquired high-tech companies

The Moderating Effect of Organizational Cultural Differences

1991), the total value created from post-acquisition integration depends on

Hypothesis 6 (H6): Organizational cultural differences moderate the rela-

acquired firm’s skills, competences, and practices to make appropriate strate-

Hypothesis 7 (H7): Organizational cultural differences between the

Building on a model that includes organizational culture differences, and

actively managing cultural differences during all stages of a merger mini-

Hypothesis 8 (H8): Organizational cultural differences between the

In Figure 1, we draw the relationships of the eight hypotheses derived

were accessible in Israel, and expressed their willingness to provide informa-

Operationalization of the Constructs

Table 1. Industry Breakdown of Acquirer.

Industry sector Number of acquirer %

Synergy potential between acquiring and the acquired high-tech firms. Based

Autonomy granted to the acquired high-tech firm. We administered the ques-

was conducted fully or partially with the top managers of participating

Effectiveness of the post-acquisition integration. The instrument used by

(Porter, 1985; Pritchett, 1985). Therefore, the study avoided assessment of

M&A experience. The responses received are presented in Table 2.

Table 2. Acquirer Previous M&A Experience.

No. of M&As Code No. %

Results and Discussions

Table 4. The Measurement Model—Quality Criteria.

for statistical inference. In general, the bootstrap technique provides an

Table 5. PLS Path Model (N = 108).

t value p value Hypothesis

synergy potential between acquiring and acquired high-tech firms on the

fast-paced high-tech sector)—may prevent a merger from achieving the

of high organizational cultural differences, synergy potential exists in the

In addition, prior researchers have identified a number of factors influenc-

representing a very difficult organizational change process where leadership

Declaration of Conflicting Interests

Harzing, A. W. (1997). Response rates in international mail surveys: Results of a

Management, Journal of Organizational Behavior, International Business Review,

You might also like