ABSTRACT
In an effort to become more competitive in an increasingly complex corpo-rate environment (Dunphy & Stace, 1990; Nahavandi & Malekzadeh,1988), mergers and acquisitions are rapidly becoming one of the most common means by which organizations seek to achieve corporate growth through a diversification of their activity base. Cartwright and Cooper (1993a) referred to the sharp increases in mergers and acquisitions that have been observed in recent years as an “unprecedented wave” of such activity (see also Holson, 1999; Shrivastava, 1986). Contrary to the assumption that mergers are a potentially beneficial business practice, they typically engender negative reactions in employees (e.g., Ivancevich, Schweiger, & Power, 1987) and more than half of them fail to meet their financial expectations (Cartwright & Cooper, 1993; Marks & Mirvis, 1986; Shrivastava, 1986). Indeed, divestments have been found to be nearly as common as mergers and acquisitions (Cartwright & Cooper, 1993). Commentators have acknowledged that merger failures cannot readily be explained in terms of a lack of financial or strategic fit. Instead, it has been suggested that the extent of “cultural fit” or, more specifically, the extent to which the merger partners can be integrated into the new organization, is a critical factor in determining the success of a merger (Cartwright & Cooper, 1993).
