Cultural distance and post-acquisition performance: the role of absorptive capacity
International Journal of Emerging Markets
ISSN: 1746-8809
Article publication date: 7 June 2022
Issue publication date: 12 December 2023
Abstract
Purpose
Cultural distance can be a challenge for internationalization. However, in some instances, it is possible that different cultures could represent a benefit for multinational enterprises (MNEs) from emerging contexts. Drawing on the knowledge-based view (KBV), the authors propose that greater cultural distances lead to benefits for multinationals seeking to absorb new knowledge overseas.
Design/methodology/approach
The authors performed ordinary least squares regressions with moderation tests over a database containing 101 cross-border acquisitions to test the study’s hypotheses. The acquisitions were performed by Brazilian firms between 1995 and 2015, targeting 24 host countries.
Findings
The study’s results indicate that cultural distance positively affects the firm's post-acquisition performance and that absorptive capacity moderates these results, improving the positive effect. The study suggests that cultural diversity is an asset for the multinationals in question.
Practical implications
When deciding to invest in a foreign country, managers should consider this cultural diversity as one more value creation driver, especially if the firm has well-developed innovation capabilities.
Originality/value
The study’s findings contribute to the international business literature providing further evidence that emerging markets multinationals can create value in acquisitions through the firm's abilities to exploit cultural asymmetries. Thus, the authors also emphasize that absorptive capacity plays a strategic role in multinational's international strategies.
Keywords
Citation
Moura, S.T.G., Falaster, C. and Silva-Rêgo, B. (2023), "Cultural distance and post-acquisition performance: the role of absorptive capacity", International Journal of Emerging Markets, Vol. 18 No. 12, pp. 6322-6342. https://doi.org/10.1108/IJOEM-08-2021-1251
Publisher
:Emerald Publishing Limited
Copyright © 2022, Emerald Publishing Limited