Global Acquisitions - when different cultures collide

Aziz Mensah, Yaara Bercovici Malki, Ludvig Daver, Mattias Lindberg,

Stockholm University

Abstract

Acquisition is one of the most arduous challenges that an employee together with the

management of an organization may encounter. This is because; cross-border acquisition and

mergers can impose many challenges on the organization due to the cultural distance, cultural

clash, and the possibility of work alienation between the acquirer and the acquired company.

Even though there exist a lot of research in the field of mergers and acquisition, and also about

how culture influences and affects a company during acquisition. However, to the best of the

knowledge of the authors of this paper, there are only few researches that have studied both

culture and resistance together in an acquisition process. This has created a theoretical gap in the

field of the study, and therefore, our aim is to study how culture, together with resistance,

influences an organization after being acquired. Using a case study of an acquire company from

China and an acquired company from Israel, we observed that long-term vs short-term

orientation, collectivesm vs individualism, high uncertainty avoidance vs low uncertainty

avoidance, which are all paradoxical values of culture (yin yang) together with power and

resistance affects acquisition.

Keywords: acquisition, paradoxical, yin yang, globalization.

1 Introduction

Global mergers and acquisitions (M&A) have become a very important issue in recent

development, and are reining the world economy in this decade (Buckley & Ghauri, 2002).

According to the study conducted by Booz & co (2008), in some decades back, there were only

few companies with financial presence that were willing to go into cross country acquisition.

However, in recent times, there has been an increase in this phenomenon especially in the Asian

market. Companies who had a chance to develop domestically have emerged and began to think

strategically. An example of this could be found in the Chinese government, pushing for industry

consolidation and development of market leaders. Besides consolidation, Chinese players are

also becoming active in cross-border acquisitions (Morawietz and Herrmann, 2013). Tse (2010)

focuses on China, claiming that within a few decades, a shift will occur within the world

economy center of gravity. One that will rival the industrial revolution and that, in 2030 Asia

will produce more than half of the world’s GDP. China plays a vital role in global merger and

acquisition and in order to approach the Chinese economy efficiently the understanding of

Chinese culture is pivotal.

In our study we focus on an acquisition case between a Chinese company and a global company

with sixty subsidiaries. The acquired company is a western leading global manufacturer and

distributor of crop protection solutions, which we in this study will call ‘Tierra’. Tierra has 4500

employees with headquarters located in Israel. The company culture is influenced by western

values, since its prominent base of operations is in Israel, Europe and America. According to

Khan Academy (2015), Western culture currently dominates European nations as well as those

that have been heavily influenced by European immigration, such as the United States.

The Chinese company, which will be called ‘GNB’, will become the controlling shareholder of

the company. Tierra is due to complete a reverse acquisition from GNB of four Chinese

agriculture daughter companies. The acquisition is expected to raise Tierra's revenue to

approximately $4 billion annually and give the company a major foothold in the global market

(Globes, 2015).

1.2 Research problem and significance of the study

Acquisition is one of the most arduous challenges that an employee together with the

management of an organization may encounter. Globalization has helped China to use cross-

border acquisition as a strategy, skill, and technique to expand its scope and market across the

whole world (Chung et al, 2013). Cross-border acquisition and mergers can impose many

challenges on the organization due to the cultural distance (Hofstede, 1980), cultural clash

(Chakrabarti et al, 2009), and the possibility of work alienation (Brannen and Peterson, 2009)

between the acquirer and the acquired company. Employees and management will have to deal

with both national culture and organizational culture which are intertwined in many of such

situations. If this cross culture in the organization is not managed effectively, then the exercise of

resistance will influence the activities of both actors (Zueva and Ghauri, 2007).

1.3 Research gap

Even though there exists a lot of research in the field of mergers and acquisition, and also about

how culture influences and affects a company, see Weber and Camerer (2003), Fang et al (2004),

Vancea (2011), and Miles (2013). However, to the best of the knowledge of the authors of this

paper, there are only few researches that have studied both culture and resistance together in an

acquisition process. This has created a theoretical gap in the field of the study, and therefore, this

topic must be studied further to help prevent the many cultural resistances that have caused the

failure of many companies during mergers and acquisitions.

1.4 Research question

Our aim is to study how culture, together with resistance, influences an organization after being

acquired. In order to achieve the aim of this paper, we have chosen the following research

question:

How did culture and resistance influence Tierra after its acquisition by GNB?

This question will be answered by looking at the acquisition case between GNB and Tierra.

1.5 Structure of the paper

In the second chapter, we will use existing literature to build our theoretical framework. We will

then determine the appropriate empirical settings and methods to use in order to analyze the

interview. In the analysis part, we will use the thematic analysis to generate the interview data

and build a model using the theoretical framework. Since this research is about a theory-driven

case study, we intend to extend an existing theory. We will use the model together with the

interview responses and collective sources to analyze the data. Finally, based on the findings

from the analysis we draw a conclusion and recommendation for future use.

2. Theoretical framework

2.1 Culture

Culture is a widely discussed and complex concept. According to Boyacigiller et al (2003), there

are two separate assumptions of culture. Some researchers support the cross-national approach.

They are of the opinion that, culture is a set of values that are acted upon by members of the

nation-state. On the other hand, other researchers see culture as a shared understanding between

members which are actively created, learned, and passed on to new members. According to this

view culture is dynamic and can change over time. (ibidem: 100–101).

One central viewpoint on static culture is that of Hofstede's. Hofstede claims that national

cultures can be measured and distinguished from one another in relation of five cultural

dimensions. (Hofstede, 1980; see also his studies 1991, 1994, and 1997, and revised and

extended study of 2005)

Power Distance (PDI): the relationship between superior and subordinate is defined on a

scale of dependence vs. interdependence, and clearly defines the social differences

between the two. Decisions are made by hierarchy or consultatively. Accordingly, in

cultures with low power distance, people strive to equalise the distribution of power

(Ibidem).

Individualism/Collectivism (IDV): the extent to which an individual is self-reliant vs.

leans on the organization for support in his or her work. This can also be identified when

questioning whether people’s self-image is defined in terms of “I” or “we.” (Ibidem).

Uncertainty-Avoidance (UAI): the importance of stability and formal rules, whether

deviance is tolerated (Hofstede, 1980: 46). Strong UAI societies maintain rigid codes of

beliefs and behaviours. They are more intolerant to unorthodox behaviours and ideas.

Weak UAI societies maintain a more relaxed attitude in which practice counts more than

principles (Hofstede and Hofstede, 2005). This could also relate to innovation and level

of openness towards new ideas.

Masculinity versus Femininity (MAS): the extent to which a culture is assertive vs. social

(Ibidem). The masculinity side represents a preference for achievement, assertiveness,

competitiveness and material rewards for success. Its opposite, femininity, stands for a

preference for cooperation, modesty, caring (Hofstede et al, 2010)

Long-term versus short-term orientation (LTO): concerns the importance of the future,

thriftiness, respect for tradition and face-keeping (Hofstede and Hofstede, 2005). Low

LTO societies uphold traditions and norms, high LTO are more pragmatic; they

encourage thrift and invest in education as a way to prepare for the future. In a business

context this dimension is related to as "(short term) normative versus (long term)

pragmatic" (Hofstede et al, 2010).

Addressing issues of cultural static description does not fit with today's globalization and cross-

cultural realities. Fang (2006) offers a dynamic view on culture. Drawing from the yin and yang

philosophy, Fang claims culture has a life of its own, dynamic and paradoxical. Culture is not

“either/or”, it is “both/and”, much like yin and yang, and there is no absolute black or absolute

white.

Figure 2. Yin and yang is arguably one of the best known symbols in East Asia. The image is a

circle equally divided by a curved line. It represents two opposite energies in the universe, one

female (yin) and one male (yang). It implies that they coexist in everything. They complement

each other, give birth to each other, succeed each other in different points in time, depend on

each other, exist in each other and cannot exist without each other.

Fang (2006) went on to explain that cultural values shift according to the “moment” in time.

Values promoted a decade ago, are fundamentally different from those promoted today. To

Fang, culture is an ocean, with visible values and behaviors seen on the surface. However,

the ocean embraces “hibernating” streams underneath its surface. “Invisible [..] values and

behaviors (ebbs and flows) beneath the water surface can be stimulated, activated, promoted,

and legitimized to come up to the ocean’s surface to become the visible and guiding value

patterns at the next historical moment“ (Ibidem). Fang credits changes in culture at some

points to cross-cultural interaction and the learning and adaptation that stems from

globalization.

Gesteland (2012) discussed cross cultural business behaviours according to patterns of Deal

vs. Relationship focus, High/Low context, Informal vs. Formal, and Emotionality. According

to Gesteland , China, compared with most western countries, is:

Relationship-focused, where personal connections matter.

High context, since an outsider would need to understand the nuances of the situation

to interpret the meaning. Due to the need to keep the harmony/face communication is

often indirect.

Formal, and hierarchical, respect is of uppermost value.

Reserved, non-emotional, soft-spoken, much meaning to silence, indirect eye-contact.

2.2 Power and resistance

According to Fleming and Spicer (2007), power manifests when people organize in an

undertaking. The coercive force of power is mostly recognized in a boss-employee

relationship. A superior issue a request and the subordinate could acquiesce or resist by

refusing. The power of manipulation implicitly sets the proper course of conduct in an

organization. This power manifests in organizations by preventing changes that do not fit

with norms. Voice is resistance to manipulation in bringing other views to the front and

breaching previously set boundaries. The power of domination shapes the perception of what

is beneficial. Escaping these forms of power is by resisting the inevitability. This could be

done mentally, by displaying cynicism, or physically extricating oneself from that

environment.

Fleming and Spicer (2007) describe power and resistance as interdependent, reacting to each

other much like the Newtonian notion that every action deems a reaction. This omnipotent

universal truth could be assumed about human nature and interaction as well. Power is not

always apparent, and resistance can shape the power balance. Furthermore, Fleming and

Spicer indicate that the interplay is complex and blurry, and summarize it as a ‘struggle’

(2007: 48), and that even non-reaction could be a form of conflict.

One example in the literature to illustrate the importance of understanding the dynamics of

culture and resistance is Fang’s research of Telia and Telenor (2004), illustrating how similar

cultures did not succeed in merging, due to power struggle and ego manifestation.

3. Empirical Methods

Here we discussed the methods that were used to collect, generate, and analyse the data.

In this research, a qualitative research design was used to conduct the study. According to

Flick, qualitative research is of specific relevance to the study of social relations (2009: 30),

which is what we are studying while researching the cultures and resistance within

organizations.

3.1 Methodology

The ontological position of this paper is that of relativism since culture and power are

defined and experienced differently by different persons according to context and situation.

The research is affected by human behavior, opinions, business politics, and time, etc. This

leads to many ‘truths’ and facts that are being constructed according to viewpoints.

The epistemological inquiry of this paper focuses on social constructionism since, as

previously mentioned, ‘reality’ is constructed by people rather than objectives (Easterby-

Smith et al., 2012: 23). We aim to analyze the meanings that are placed upon the experiences

of our subjects. We are interested in change that could be attributed to aspects of culture and

power struggle, and the way in which those are coped with within the organization.

3.2 Case Study

Case studies are mostly used in organisational research studies in the field of sociology and

anthropology (Thorpe and Holt, 2008). This kind of study comprise of thorough investigation

into an organisations in order to study the context and process of a phenomenon that exist

within the organisation. This study is also to develop a new theory, which by so doing will

expand the existing theory which has created a gap in the paradigm. Unlike many research

strategies, a case study does not follow any specific guiding requirement (Meyer, 2011). We

use the case study in this research because we wanted to modify the research methods (data

collection and data design) to the research questions we intend to answer, and also to study

and address any recent events in present time. Hence, we can obtain a holistic investigation

of the phenomenon we are confronted with and understand issues in a real-world case

(Meyer, 2011). The researchers used a retrospective case study approach to enable them to

collect information, and account for every historical event, data, and issues that have

occurred over the years since the acquisition of the acquired company for a more controlled

and thorough case selection. Again, we use the single case with embedded unit approach

where two respondents are interviewed. The first respondent is from the Operation Division

(HRBP) who resides in Israel, and the second respondent is from the Human Resources

Division (SVP) and resides in Beijing. Hence, we have respondents from two subunits. This

enabled us to analyse the data between, within, and across subunits (Baxter and Jack, 2008).

3.3 Research approach

In order to determine and investigate the empirical gap in this study, we develop the

theoretical framework through the data generation process. This was done through iterative

interaction between the empirical findings, data analysis and

the known theorems that affects the study. We then made an effective conclusion based on

the findings from the data analysis for any possible recommendations.

3.4 Method of data generation

The process of sampling is always very important for any study. The way of choosing the

people to participate in the study could have a direct effect on the outcome of the study

(Patton in Flick, 2009: 122). The acquired company has been chosen through a convenience

sampling. We chose this company because we already had access to it, and to people that

may be able to help us answer our research question. Instead of trying to find another

company in which we did not know how we would be able to gain access to their employees,

we chose a company we already had knowledge about.

The respondents within the acquired company, however, were not chosen due to

convenience. They were chosen through purposive sampling, meaning that they were hand-

picked from a strategic point of view to best answer our research question. The purposive

sampling is often used because the researcher wants to interview respondents that are

relevant to his/her research question, and not respondents that are being chosen randomly

(Bryman, 2008: 392). The respondents were chosen because of their knowledge and

experience related to the research question. We decided to use two interviews in order to

make the study as nuanced as possible.

We chose to conduct interviews in this study because we wanted information that was not

available somewhere else. This information is not possible to find in any books or articles,

and is only known by a few people. We then had to interview some of those people in order

to formulate an answer to our research question.

We decided that two interviews were enough because of the extensive knowledge our two

respondents have. We are primarily interested in how the culture and resistance have

influenced this particular case, and not so focused on drawing a general conclusion that could

be applied to all other acquisition cases.

3.5 Semi-structured interviews

Interviews are often used for the researcher to obtain information that otherwise could be

hard to find. It could be that the information is only known to a few people. Interviews could

be made in several different ways and for this study we have decided to conduct qualitative

semi-structured interviews (Flick, 2009: 212). The reason for choosing semi-structured

interviews is because we want to have an open interview where the respondent has the

possibility and freedom to give personal answers to our questions. Another reason is that our

questions might be under informed due to our external position and semi structure might lead

to better discovery. However, we still want answers that are related to our questions so the

interview cannot be completely unstructured. Hence, we decided that semi-structured

interviews will be the best method to answer our research question. During the interviews,

we had an interview guide that we followed with the questions we want to get answered, but

the respondent still had the possibility to construct the answers on his/her own (Bryman,

2008: 415). It is also important to note that when using semi-structured interviews, it is

common to deviate from the order of the interview guide to get a more fruitful conversation

(Flick, 2009: 171). Therefore we crossed checked all the items on the interview guide to

make sure they are fully completed by the respondents.

3.6 Method of data analysis

Thematic analysis is the method used in this paper to analyze, identify and report themes, or

patterns, within the collected data. It is used to interpret various aspects of the research topic

presented in the paper. We use this method because of its theoretical flexible nature in

answering our research question and also by obtaining a deeper appreciation of the content,

and looking for broader patterns in order to get a more fine grained analysis. This helps us to

narrow down the analysis from a broader reading by categorizing the data into patterns and

developing themes.

The thematic analysis process starts by noticing patterns of meaning and/or issues with

potential interests to the data, this may be occurring as early as during the data collection. It

ends by reporting the content and the meaning of these themes in the data. The analysis

involves a continuous move back and forth in the entire data set, the analysis of data you are

producing as well as the coded extracts of data that are being analyzed.

A six-phased process is used to analyze the data. These six phases are familiarizing yourself

with your data, generating initial codes, searching for themes, reviewing themes, defining

and naming themes, and producing the report. These phases shall be looked at as guidelines

and are more of a recursive process, whereas you can jump back and forth through the

different phases (Braun and Clarke, 2006).

3.7 Ethical consideration

Ethics in research is considered as a norm for conduct that helps differentiate between what

is acceptable and unacceptable behavior in conducting a research (Bryman, 2008). There are

four principle of ethical considerations in any social research; harm to participant, informed

consent, privacy invasion, and deception (Long in Johnson and Long, 2007). Harm could be

in terms of physical harm, emotional harm, stress, pain, etc. (Crandall and Diener, 1978: 19).

In conforming to this ethical principle, we safeguard the interest of our respondents, and any

consequence that their involvement might have on their work. In adhering to the second

principle, we gave the respondent the opportunity to decide whether to participate in the

research. With adhering to respect for privacy, we assured the respondents and the

organization of anonymity and confidentiality. We also sought permission to record the

interviews. Finally, we adhered to the deception ethical principle by using the responses for

the purpose of which it was conducted.

3.8 Weaknesses and limitations

In this paper we have used a purposive sampling to choose the respondents of the interviews.

The two respondents who we interviewed were chosen due to their knowledge of our

research topic. However, it is difficult to know in advance what their knowledge consist of

and if sufficient to answer our research question. Therefore it is a potential limitation of the

paper.

Another limitation of this research is time. This is because; the condition of elements, and

factors which may occur in the time within which this study was conducted could be

dependent on the time of events (Flick 2009, 152). This problem was solved by interviewing

two respondents from the organization who have experience and have thorough knowledge

in acquisition to capture the different factors and element that may occur in the results.

We have only used two interviews as primary data for this study. The interviews were,

however, very long and detailed with two specially selected managers within the acquired

company Tierra, but could also be a limitation due to the low number of interviews made.

Therefore, it could be hard to make any generalisations. Our study will, hence, show how

culture and resistance influenced this particular acquisition.

4. Findings and analysis

In the following section, we will answer the research question of this study based on the

interviews conducted. A thematic analysis was used to determine the predominating themes

we found in the responses. The ensuing model explains how culture, power and resistance

affect the new culture of the acquired company.

According to Fang (2006), culture is learned and dynamic, and can be seen as a shared

understanding which can be created by people from different location. He criticize the

Hofstede (1981) paper for looking at culture in a more static and bipolar paradigm. Due to

globalisation, the dominant paradigm where culture is seen as static is no more realistic.

Many people have moved to other countries which has created a mix of cultural values

(Fang, 2006). There is now cultural negotiation which can be seen in many organisation, and

this can be created as a result of acquisition. In our study, two different cultural values were

created in the acquisition process. The acquiring company which has chinese culture

embedded in them and the acquired company culture which was more of Western culture.

This has created a situation of dialectical and paradoxical values in the acquisition process

(ibid). This paradoxical value (yin yang) that has been created is intrinsically both and the

employees must now embrace both values. The yin yan that has been created due to the

acquisition process cannot survive without having each other and therefore, must now

coexist with each other. At a particular point in time, situation and context a yin is used or a

yang is used and vice versa. The model below shows how these paradoxical values coexist

with each other in the acquisition process.

Model: 4.0 The white and black together represent the paradoxical values of both companies

(acquired and acquiring). The internal yin and yang, depict the power and resistance struggle

within each colour (the white of the black, black of the white), representing the struggle that

occurs within different values collision. On the white side are the themes that influence the

Chinese culture (long term, collectivity, high uncertainty avoidance and level of power and

resistance), and on the black side are the themes that already existed within the company before

the acquisition (short term, individualism, low uncertainty avoidance, and low level of power and

resistance).

4.1 Long-term vs. short-term orientation

The acquiring company influences the acquired company in their long-term dimension.

According to Hofstede (1991), Gesteland (2012) and Fang (2003), the Chinese national culture

which is embedded in GNB’s culture is known for its long term orientation (ibidem). However,

the acquired company which exhibits western culture (headquarters in Israel), is more short term

oriented (Hofstede, 1991). They are led by short-term business plans - from a quarter to five

years maximum, with yearly measured profits, setting short term goals and targets:

According to manager 1, “the Chinese company relationship with time is long term.

Beforehand, everything was urgent, the Chinese think differently. For us we thought in

terms of a quarter or a year, or even a “five year plan”, but they think fifty years ahead.

The Chinese really think past their own lifetimes when setting goals. This has an effect on

planning, especially when they own the majority of the company's' shares. The way you

measure success or the outcome of a project changes when you think so much time into

the future ahead. We had to adjust to that. “

Manager 2 also commented that, “the Chinese company has long term plan, about ten

years to 100 years. And they understand the need to produce a long term partnership.

The time is evident. If we thought that two years will be the time frame to achieve full

integration, we were mistaken, now four years and counting and still Tierra have not

realized a tenth of the anticipated target“

This situation becomes paradoxical (yin and yang) in the acquisition process and a new

organisation culture is produced where both paradoxes must coexist with each other to find a

balance. The usage of both paradoxes are dependent on the time, situation and context for which

it will be applicable, like oceans streams, utilized accordingly (Fang, 2006). This struggle that

has been created because of the acquisition generated a new organizational culture with new

values shaped in the acquisition process. The more prevailing values in this case are those of

GNB:

Manager 2: ”We hope to get them to become a bit faster. But we realize that we will not

be able to reach "full speed". If we are at ten percent now we might go to 30% but not

more, speed wise.”

However, Tierra does realise the benefits of long-term orientation and “slow” decision-making,

and a balance is struck:

Manager 2: “The Chinese are not slow, I wouldn’t call them slow. You start to get to

know the people and realize a decision could take a year, or two. But, once the decision

is made the execution is faster than usual since everyone agreed, they are all on the same

page, working together to make it happen.”

4.2 Uncertainty Avoidance

China is governed by communism, deviance is un-tolerated, and the Chinese realize that this

creates an undesirable side effect - inflexibility does not allow for innovation.

According to manager 2, “due to education and governance reasons, there's a problem

in this field [innovation] and the Chinese government realize that as part of their

transformation into the leading country in the world they have to address this issue”

However, Tierra, based in Israel “had to become innovative” in agriculture according to manager

2, due to its limitation in size and tough terrain. They are more comfortable with unknown and

unpredictable situations, even called a startup nation (Senor and Singer, 2009). Hence, they do

not have much rules in their operations. They believe that practice count more than principles

and this has helped to be more innovative in developing their technology. Manager 2 explains

that China transformed itself to accommodate lacking values, and now promote those missing

values, one direct action is Tierra’s acquisition.

Manager 2: “China is an enlightened communism that encourages entrepreneurship...

They aim to acquire companies not only from an economic point of view but also from an

attribute point of view. They buy the attributes they want to learn and incorporate in their

own culture”

This view correlates with Fang’s ocean theory (2006), claiming that culture adapts depending on

situation, context, and time. GNB diffuses struggle by adapting to the other culture, their initial

stance is un-confrontational.

4.3 Individuality and collectivity

The Chinese are collective in their culture (Hofstede, 1991), Hierarchical and formal (Gesteland,

2012). Their decision making is also collective, believing they do not have complete control over

situations. Hence, they will need the opinion, understanding and agreement of all members

before a final decision is made. The collective nature of task, and goals helps individuals in the

group to exhibit unquestionable loyalty (Khairullah and Khairullah, 2013). However, Tierra is

embedded with western values in its believes, decision making, tasks and operations. According

to Gesteland (2012) and (Hofstede, 1991), most western culture are more individualistic, more

independent and competitive in their operations.

According to manager 1, “before the acquisition, top management could single handedly

make a decision. Now it is very rare that the decision is made by one person. With them

[GNB] the entire board needs to be in agreement and even if one person disagrees, then

the decision is not made. The decision is further discussed and takes shape and re-

discussed until it is unanimous. This helps also in building trust and a relationship with

each other. “

Manager 2 also commented that, the Chinese companies have complex decision process

since they need to decide in a consensus. It is a Chinese phenomenon that you cannot go

to the boss and tell him "let's make a decision". Since decision is collective it could take

months and years to consider and persuade team, group, division, departments, etc.

This shows a paradoxical value in the acquisition process, where we have collective GNB and

Tierra`s culture of self-determination. This paradoxical situation create the avenue for a new

cultural creation in the organisation (Fang, 2006). Since culture is dynamic and learned through

social interaction (ibidem), these two opposite dimensions are able to be reconciled. The Chinese

organisations handle this paradoxical value through their “confucian gentleman” nature (Fang

2006). They seek to provide cooperation, trust and friendship, in order to create harmony.

According to Fang (2006), if there exist collectivity in culture then there must also coexist

individuality behaviour depending on the time of event, content, and situation. Both paradoxes

must embrace each other. Where we have low ebbs and high ebbs being used in the same

organisation.

According to manager 2, “They try to reach a balance where there is consensus. This

means making decisions from the center, where there are no extremes; Yin and yang. The

Chinese culture is focused on creating harmony, agreement, balance, mid-way. They are

incorporated in each other and create the mid-line. This is usually how the the Chinese

want to make decisions. “

4.4 Power and resistance

Due to that fact one could argue that the Chinese are power-hungry (Hofstede, 1981 and

Hofstede, 1991). Fleming and Spicer indicate that "resistance may involve forms of power that

facilitate domination at other points in power/resistance relations" (2007: 50). A similar

reasoning could be seen in this case, the Chinese power aspiration is not egocentric but allows

for a sustainability outlook (future generations).

Manager 1 said, “they do not come to oversee or show force or change things, they

mostly come to learn. They want to know about the technology and the processes. They

realize they do not have the specialty and knowledge ... they could have sent half the

company home, but they ... trust us and our experience.”

The patience and need to learn could indicate giving away power in order to gain it at a later

point in time. This is further supported by Kale et al, in their discussion of a new type of M&A

that resembles a strategic partnership rather than a takeover. In doing so the acquirer will “reduce

the unintended consequences of integration, and create an environment in which companies can

easily share knowledge and best practices” (Kale et al., 2009: 1)

Manager 2 further re-enforces this method of acquisition indicating that reverse acquisition was

instituted in this case since the Chinese wanted to internalize values of innovation in the field.

The power granted to the acquired company is meant to allow for a partnership and prevent

resistance. The Chinese company objective are harmony rather than control, even in the long run.

In the case of Telia-Telenor, power struggles hindered the merger (Fang, 2004). In the case of

this acquisition, the power asspiration and ego appear to be used in a way to quiet those struggles

and cultural differences in order to reduce any form of resistance, and allow for a “smoother”

process. The similarities in culture did not facilitate the merger of Telia-Telenor, for that reason

we can identify the importance of looking into the different actors’ aspirations for power.

According to manager 2, “the Chinese company did not come to show power, it is the

other way around, they have given most of the power to the acquired company. They have

been completely egoless here. Not only are they not wanting to force change on us, but

are willing to change themselves”.

Contrarily to the Telia-Telenor case the Chinese not only relinquish their power but also take it

further by submerging themselves in the other culture and trying to assimilate to it.

Manager 2: “They realize that in order to gain …. and incorporate [desired values] into

their culture they will have to be patient, things like that take time, through education. It

is clear to them that they cannot transform the people overnight.”

The initial acquisition agreement itself already dictated the aspiration of an M&A that resembles

a strategic partnership, with the acquired company having to buy four companies from the

acquiring companies and become the owner of the Chinese companies, solidifying a partnership

in management.

5. Conclusion

In this study, we have found that culture and resistance have influenced Tierra after the

acquisition by GNB to different extent. Culture has been discovered to be highly influential in

comparison to resistance which we found to have less influence on Tierra.

We find out that there was little resistance in the acquisition. One reason for that may be because

of the fact that the Chinese have not applied much power on the Israelis as of now. And if no

power has been used, the reasons for resistance are not many. It is not implausible however, that

the power attributed to the acquired company will increase in the future.

The study also found that Chinese culture matter a lot in an organizational aspect when a Chinese

company acquires a company from another country. We found that the Chinese company culture

influenced the acquiring company culture. This can be seen from the paradoxical value that was

created after the acquisition. In the same organizational culture, there now exist two different

views that coexist with one another. On one hand, we have the acquired company’s short time

horizon, and on the other hand, we have the acquiring companies with a horizon of fifty to one-

hundred years. Again we found out that, the acquiring company collective nature of doing things

influenced the acquired company’s individualistic nature. The paradox of forces existing within

the one entity is an example of how two opposites exist and survive as part of an evolution

process when cultures collide.

The cultural differences between China and Israel may be very different in many aspects, and

things are done in different ways. But when it comes to working together within the company

after the acquisition took place, our study shows that the work has continued without any major

frictions.

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