M&A and post merger integration in banking industry: the missing link of corporate culture
The intense concentration process taking place in the financial systems of the major countries has attracted substantial attention from stakeholders and academics. The impact of M&A on value creation and efficiency / effectiveness improvements of banks involved appears, on the whole, disappointing and still hard to create benefits for customers. The reason seems to lie in the difficulty of governing a post-merger integration process, which generally requires good governance and management practices, significant experience and attention to cultural profiles and individuals’ behavior. More in detail, management literature recognizes the importance of corporate culture, considered as the set of values and decisions that drive individuals’ behaviors within organizations, for explaining alliance success in M&A operations. In fact cultural clashes could determine conflicts and negative effects, on one hand, on the timing and the effectiveness of the post-merger integration process and, on the other hand, on motivation and turnover of individuals. Set in Italian banking industry, this paper proposes a framework, applied to a representative sample of cases (about 78,2% of market share, based on total assets), for assessing cultural similarity of actors involved in M&A operations. Corporate culture is measured using an ethnographic approach focusing on language as its special artifact. The assessment is based on the definition of some key concepts that are relevant for the banking industry (e.g., competencies, competition, customer, disclosure, human resources, innovation, risk) and on a text-analysis model applied to a corpus of reference texts produced by the surveyed banks three years before M&A. The elaboration of data uses Wordsmith 4, a text analysis software developed by Oxford University. The paper is organized as follows: at first, we analyze and explain how low levels of cultural compatibility before M&A could limit the success of post-merger integration processes of banks. After, we propose and describe the measurement procedure of the cultural fit among bidder and target banks, based on text analysis. Lastly, we conclude with the discussion of the results obtained for each couple of banks involved in M&A and with suggestions for future applications of our framework.
|Date of creation:||2007|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Altunbas, Yener & Marqués, David, 2008.
"Mergers and acquisitions and bank performance in Europe: The role of strategic similarities,"
Journal of Economics and Business,
Elsevier, vol. 60(3), pages 204-222.
- Altunbas, Yener & Marqués-Ibáñez, David, 2004. "Mergers and acquisitions and bank performance in Europe: the role of strategic similarities," Working Paper Series 0398, European Central Bank.
- L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
- Jay B. Barney, 1986. "Strategic Factor Markets: Expectations, Luck, and Business Strategy," Management Science, INFORMS, vol. 32(10), pages 1231-1241, October.
- Carretta, Alessandro & Farina, Vincenzo & Schwizer, Paola, 2005. "Banking regulation towards advisory: the “culture compliance” of banks and supervisory authorities," MPRA Paper 8302, University Library of Munich, Germany.
- Alessandro Carretta & Vincenzo Farina & Paola Schwizer, 2007. "Banche, cultura dei fidi e capitale sociale: si può finanziare la fiducia nel territorio?," ECONOMIA E DIRITTO DEL TERZIARIO, FrancoAngeli Editore, vol. 2007(1), pages 153-161.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:8300. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.