Global Journal of Commerce & Management Perspective
Open Access

Abstract

Cultural Combination and International Acquisition Performance of Multinational Corporations in Nigeria

Awolusi, Olawumi Dele and Akinruwa

International acquisitions constitute the most frequently used means through which multinational corporations undertake foreign direct investment, however, majority of these transactions are not successful. The purpose of this study was to investigate the effects of the Critical Factors (CFs) of successful cultural combination and international acquisition performance (IAP) of Multinational Corporations (MNCs) in Nigeria, that have implemented international acquisition as a strategic imperative in the past one decade. 516 senior and management staff of 13 multinational corporations operating in Nigerian were randomly selected from a business-to-business database maintained by a national list provider. Using Rottig (2007) Five-C’s Framework of successful international acquisition management, factors manifesting International Acquisition Performance were regressed on the critical factors, manifesting successful cultural combinations. Findings based on the survey revealed that successful cultural combinations positively affected international acquisition performance. The results suggests the positive effects of the CFs of successful cultural combinations (Cultural due diligence-β=0.34, p=0.043; Cross-cultural communication-β=0.29, p=0.041; Connection-β=0.31, p=0.028; and Control- β=0.36, p=0.038) on successful cultural combinations in MNCs operating in Nigeria. In addition, Cultural due diligence, Cross-cultural communication, Connection, and control contributed 38%, 30%, 17% and 17% respectively, towards positive variations in international acquisition performance of MNCs operating in Nigeria during the study period. The model contrived provides predictive implications on improved international acquisition performance, given the activities of CFs manifesting successful cultural combinations. This paper suggests that it is not cultural distance per se, but ineffective management of cultural differences that may be the main reason for the high failure rates of international acquisitions. Keywords—Successful