Drucker (1999) argues that organisational change is unavoidable. In economics, finance and strategic management merger, defined as that aspect of organisational strategy having to do with the integration of two or more related entities, is a well-known means by which organisations change (Drees, 2014; King et al., 2004). Extant literature documents that most mergers fail to produce value for stakeholders (Agrawal and Jaffe, 2000). For example, using a laboratory experiment, Weber and Camerer (2003, p. 400) show that “Participants express disappointment in the mergers’ results”. In a quest to uncover antecedent variables that can predict post-merger failures many recent studies have given ample consideration to organisational culture (Cartwright and Schoenberg, 2006; Chakrabarti et al., 2009; Denison et al., 2011; Drori et al., 2011; Marks and Mirvis, 2011; Stahl and Voigt, 2008; Teerikangas and Very, 2006; Vaara, 2000; Vaara et al., 2013; Weber and Camerer, 2003). These studies suggest that culture matters because it “affects how the everyday business of the firm gets done…how priorities are set and whether they are uniformly recognised, whether promises that get made are carried out, whether the merger partners agree on how time should be spent, and so forth” (Drori et al., 2011, p. 627; Weber and Camerer, 2003, p. 401). Cartwright and Cooper (1993) building on Harrison’s (1979) seminal work shed some more light on this culture-centric view by documenting that whereas some orgnisations possess a role-oriented culture that is highly bureaucratic and places emphases on job description and task specialisation, others tend to possess task-oriented culture that emphasises team work, values flexibility and worker autonomy. Yet, continue Cartwright and Cooper (1993), other organsiational cultures are power-oriented with strong emphases on centralisation, rule orientation and respect for authority, or are support-oriented with strong emphases on equality and personal growth and development of workers. Thus, because every organisation has its distinctive culture, the culture-centric view implies a need to focus on cultural differences to explain the consequences of bringing together organisations with different values, beliefs and practices (Cartwright and Schoenberg, 2006; Drori et al., 2011; Stahl and Voigt, 2008). But while the cultural discourse has offered a convenient theoretical framework that has shifted attention from “hard” to “soft” issues (Vaara, 2000, p. 84), the plausibility of this perspective is lingered by seemingly “contradictory findings” reported in previous studies. On one hand, some studies blame the failure of a merger to achieve its financial or strategic objectives on a clash of cultures between the combining entities (Cartwright and Price, 2003; Vlasic and Stertz, 2000). They find that cultural differences can give rise to ethnocentrism, stereotyping and the belittling of counterparts between members of combining top management teams (Marks and Mirvis, 2011). Conversely, other studies find that differences in style and practices can enhance post-combination performance (Chakrabarti et al., 2009; Vermeulen, 2005). Based on their empirical evidence, scholars working at this end of the dichotomy suggest that cultural differences can augment synergies, reduce employee resistance and stimulate cross-company dialogue, creative problem solving and innovation (Marks and Mirvis, 2011). This paper argues that the mixed findings undermine the value of the culture-centric explanation, and thus additional research is needed in order to validate its central tenet. In support, Teerikangas and Very’s (2006) review concludes that the study of culture in mergers is still in its infancy and that current research is too inconsistent to support clear conclusions about the positive or negative role that culture can play during mergers. Echoing this view, Denison et al. (2011) enthusiastically call for more research to be conducted to understand the effect of cultural integration on subsequent performance. Using the Ghana Revenue Authority (GRA) merger as the research setting, the present study presents new evidence on cultural differences’ effects on post-merger performance. Following a desire to increase domestic revenue mobilisation and reduce dependence on foreign aid (Ohemeng and Owusu, 2013), the Ghana Government adopted in 2009 a revenue authority model. This model established a modernised tax administrator – GRA – by combining three existing revenue collecting agencies: Internal Revenue Service (henceforth IRS), Customs, Excise and Preventive Services (henceforth CEPS) and Value Added Tax Services (henceforth VAT). In the GRA three divisions have been created as Domestic Tax Revenue Division (DTRD), Customs Division (CD) and Support Services Division (SSD) with operation units of IRS and VAT subsumed into DTRD and those of CEPS subsumed into CD. Then, all management support functions which used to be performed under the erstwhile agencies (e.g., finance, human resource, research planning and monitoring) integrated into SSD. Drawing on an analytical framework proposed by Cartwright and Cooper (1993), the concern of this study will be to examine which type of merger encompasses the integration of the three agencies, cultural differences (similarities) between them and impact of cultural differences (similarities) on post-integration performance. The GRA merger is an interesting setting because the evidence which extant studies have offered so far for the research question at hand are based mainly on data collected on listed companies in private sectors that operated in advanced Western countries. More specifically, there is a relative dearth of studies of a sort focused on state agencies, especially in sub-Sahara Africa where states are following the lead of OECD countries to reform their public sectors (Ayee, 2005; Marobela, 2008; Owusu, 2012). This case study sheds light on how organisational actors manage problems created by discreteness in organisational cultures. Based on this insight, this paper modestly contributes to the literature by proposing that the impact of cultural difference on post-merger performance depends on the type of merger and the acculturation strategy adopted. This contribution is expected to help practitioners a great deal because it delineates precisely a way of integrating discrete cultures in planned mergers. The rest of this document is organised as follows. The next section reviews literature and describes the study’s conceptual framework. Next the study’s methodology is described in more detail by elaborating on case study design, data collection and data analysis. Thereafter, the case study findings are presented and discussed, recommendations suggested and limitations noted.
Posted on: Fri, 28 Nov 2014 09:44:59 +0000
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