Abstract

It is well known among executives that differences in organizational and national culture can have a significant influence on the success or failure of multinational mergers, acquisitions, or partnerships. Research shows that as many as 80% of multinational ventures fail to deliver expected results with differences in the business and national cultures cited as a major reason for the failure. The success of a business combination depends on many classical factors such as financial risk, legal liabilities, product capabilities, and other quantifiable or readily observed attributes. The purpose of this study was to investigate the shortcomings of partnership effectiveness by exploring the relationships and effects of business and national culture in partnerships and the efforts expended during due diligence to identify potential problems. The study results indicate many of the problems organizations face could have been discovered early in the relationship building process. Executives generally are aware of the influence that organizational and national cultures exert yet fail to establish effective programs to address cultural issues before they become organizational problems. Participants in this study demonstrated weak understanding of the differences between the two firms and that inability to understand translates into poor or ineffective programs to mitigate the negative effect.