Impact of culture on organizational readiness to change: context of bank M&A

Abstract

Purpose

The purpose of this paper is to examine the influence of culture on organizational readiness to change (ORC) within the context of merger and acquisition (M&A) in the banking sector in India.

Design/methodology/approach

A multisource approach is used to collect data from a public-sector bank in India for testing our hypothesis. A hierarchical approach based on higher-order modelling has been deployed for confirming the path model. The foundation of the study is based on power distance (PD) and uncertainty avoidance (UA) cultural dimensions of Hofstede (1984).

Findings

Employees in organizations with large PD and high UA index exhibit low readiness to change. Findings support a negative relationship of culture (large PD and high UA) with organizational readiness to change at the individual level.

Research limitations/implications

The study has three major implications. First, measures and importance of change readiness at the individual level during corporate events such as M&A is elucidated in the study. Second, a paradigm for assessing higher-order models grounded in theoretical and methodological rigour for testing our hypothesis is presented in the paper. Last, the role of culture in M&A processes is highlighted vis-à-vis factors related to PD and UA on ORC.

Practical implications

The findings of the research answer to the call for a study on factors that help in creating a synergy for successful M&A across all sectors especially in the banking sector. People representing high UA and large PD often look forward to direction and guidelines for guiding employee actions. Leaders therefore need to set clear agenda and effectively communicate the appropriateness of change to their employees for developing positive behaviour towards desirable organizational outcomes. This study touches upon this important perspective for its practical utilization.

Originality/value

The study adds to the limited literature on change which addresses the need for studying socio-cultural factors in the M&A process, especially in an emerging economies context.

Citation

Samal, A., Patra, S. and Chatterjee, D. (2021), "Impact of culture on organizational readiness to change: context of bank M&A", Benchmarking: An International Journal, Vol. 28 No. 5, pp. 1503-1523. https://doi.org/10.1108/BIJ-10-2019-0454