Increasingly, international mergers and acquisitions (IM&As) are becoming the preferred method of foreign direct investment (FDI). As they occur into and from developing countries, they are "reshaping the world's economic boundaries" (Chapman, 2003). Existing research takes mostly a finance or economic perspective, measuring the outcomes of IM&As in the short term while ignoring their abnormal, long-term returns and nonfinancial factors (Andrad, Mitchell, & Stafford, 2001). The present research is designed in response to this shortcoming. This thesis examines the effects of culture on the outcome of IM&As and the variation of these effects during the different phases of an IM&A---from investment decision to implementation and sustainability. The research focuses on the international aspect of cultural differences---the differentiating factor between domestic mergers and acquisitions (M&As) and IM&As. It measures success from an organization's internal perspective, comparing what the IM&A, at inception, was expected to achieve and what it achieved several years later. This approach is different from the standard one for measuring success based on market reaction to the IM&A--an external measure. This qualitative research is based on an interpretive approach, cutting across economic, international business, and behavior theories. The main argument is that there is no single way of managing across borders. Cultural differences affect our view of business and management and, consequently, the outcome of IM&As. IM&As, by definition, bring together firms from various countries with different national cultures. When complementary to the objectives of an IM&A, cultural differences may be an asset. When in conflict, they will be a liability and a risk factor. Either way, national cultural differences should be accounted for and planned for so as to reduce the risk of failure and increase the chances of success. The significance of the study lies in emphasizing national culture as a construct separate from organizational culture, in measuring success or failure of an IM&A relative to its objectives, and in supporting reflexivity theory in economics.
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