A psychological lens on the acquisition process

The application of psychological theories to understand the world of business can be a fascinating exercise. Some might argue that an artificial legal entity and its administrative processes cannot be examined in the same way as humans and their behaviour can be. However, empirical observations through the lenses of psychological theory suggest findings can be revelatory and provide rich insights for smart strategic thinking

CEO extraversion and M&A behaviour

In the past, through laudatory articles in the business press and scores of books dedicated to the accomplishments and “wisdom” of CEOs, the image of them having nearly full power over the actions and results of their companies began to emerge – and much of the attention was focused specifically on the CEO’s personality: how they behaved and communicated

An emotion-based view of acquisition integration capability

We propose an emotion-based view of acquisition integration capability by developing an inter-firm model that focuses on dealing constructively with emotions during various organizational identification processes following mergers and acquisitions. The model describes diverse types of organizational actions that elicit or express emotions-called emotional dynamics-that facilitate stabilization, destabilization, and re-identification of acquired employees' organizational identity. Emotional dynamics that elicit emotions among acquired employees or express acquirer's emotions toward acquired employees constitute what we call emotional pairing. This emotion-based view of integration capability complements extant process research that has emphasized cognition and structure

Effects of Culture on Preferred Individual Learning Systems: Consequences for Knowledge Management System Use

Global enterprises increasingly deploy Knowledge Management Systems (KMSs) to raise productivity and remain competitive. KMSs, by prescribing ways of capturing and disseminating information, mediate the learning processes in organizations. Because of this mediating effect, individuals from distinct national cultures may react differently to KMSs. This research examines how cultural characteristics (e.g., those identified by Hofstede, Trompenaars, and Hall and Hall) may be related to the individual use of KMSs for learning. The first phase of the study examines individual cultural characteristics and learning preferences (degree of structure and extent of direct social interactions). The second phase examines the relationships between cultural measures and actual KMS use

An Interpretive Systems View of Knowledge Investments

Viewing organizations as open, knowledge-dependent interpretation systems and building on the knowledge-based view, we develop a theoretical model of knowledge investments and value creation. By emphasizing the interpretive nature of organizations and examining knowledge requirements, capabilities, and investments, our contribution provides a more complete understanding of why some organizations make certain types of knowledge investments more than others and why these investments may have positive or negative effects on value creation.

The Acquisitive Nature of Extraverted CEOs

This study examines how extraversion, a personality trait that signifies more or less positive affect, assertive behavior, decisive thinking, and desires for social engagement, influences chief executive officers’ (CEOs’) decisions and the ensuing strategic behavior of firms. Using a novel linguistic technique to assess personality from unscripted text spoken by 2,381 CEOs of S&P 1500 firms over ten years, we show that CEOs’ extraversion influences the merger and acquisition (M&A) behavior of firms above and beyond other well-established personality traits. We find that extraverted CEOs are more likely to engage in acquisitions, and to conduct larger ones, than other CEOs and that these effects are partially explained by their higher representation on boards of other firms. Moreover, we find that the acquisitive nature of extraverted CEOs reveals itself particularly in so-called “weaker” situations, in which CEOs enjoy considerable discretion to behave in ways akin to their personality traits. Subsequent analyses show that extraverted CEOs are also more likely than other CEOs to succeed in M&As, as reflected by stronger abnormal returns following acquisition announcements

The double-edged sword of cultural distance in international acquisitions

This study aims to bring together seemingly contradicting arguments in the literature about the role of cultural distance in international acquisitions. We offer a model that postulates that cultural distance relates negatively to international acquisition performance because it taxes integration capabilities during international acquisitions, but that cultural distance also elevates the positive association of integration capabilities and international acquisition performance because it provides more learning opportunities that can only be exploited with strong integration capabilities. Empirical tests with a sample of international acquisitions by 118 US multinational companies provide support for the proposed model. On one hand, we find that cultural distance impedes understandability of key capabilities that need to be transferred, and constrains communication between acquirers and their acquired units, bringing about a negative indirect effect on acquisition performance. On the other hand, we find that cultural distance enriches acquisitions by enhancing the positive effects of understandability and communication on acquisition performance. Acquirers that can overcome the impeding effects of cultural distance on understanding key capabilities and effective communication appear to reap significant performance gains. Our study provides initial support for a double-edged sword effect of cultural differences on acquisition performance, and illustrates the importance of integration capabilities

Culture's consequences for emotional attending during cross-border acquisition implementation

Building on psychology research about culture's influences on emotional expressions and experiences, I considered culture's consequences for acquirers¿ emotional attending during post-merger integration. Analyses of cross-border acquisitions by multinational companies from the United States showed support for a subtle role of culture ¿ on the one hand, cultural differences constrain emotional attending during post-merger integration; on the other hand, when acquisitions are made in cultures that are characterized by more humane orientation, U.S. acquirers seem to adapt to this local context and showed more emotional attending than in less humane-oriented cultures. The findings further suggest that these effects depend on an acquirer's multiculturalism