Mergers and Acquisitions in Japan:

Lessons From a Dutch-Japanese

Case Study FRITS D. J. GROTENHUIS

This article deals with lessons learned from mergers sitions involved, and the mergers and acquisitions
and acquisitions in Japan. In general, such combina- were larger. This fourth cycle of mergers and ac-
tions are not success stories, since 50–80 percent of quisitions came to an end around spring 2000. The
them do not bring the benefits that were expected. value of deals then almost decreased in line with the
Several reasons for such failures have been brought economic decline, but then after about four years
up in the literature, but real-life cases of the “how” of recession, we witnessed another huge upcoming
and “why” are very limited or fragmented, espe- M&A cycle.
cially in a Japanese context. This study enhances
a more integral approach into Dutch-Japanese ac- Compared with the United States and Europe, where
quisitions. Based on an in-depth Dutch-Japanese similar waves have been discerned, Japan presents a
case study and a literature review, it can be con- different pattern. Only from the 1980s onward did
cluded that the preparation of mergers and acquisi- a large M&A cycle occur. Over the past decades, the
tions with Japanese organizations should be focused number of mergers and acquisitions has increased,
on (1) knowledge about the target company and its but the pattern is rather deviant from other indus-
context, (2) strategic issues, and (3) leadership and trialized countries. The next section discusses some
cultural issues, in order to prevent culture clashes possible reasons for the different pattern of M&A
and misunderstandings, and increase the chances of activity in Japan.
success. © 2009 Wiley Periodicals, Inc.

Mergers and Acquisitions in the Context of Japan

In Europe and the United States over the past cen- Until the beginning of the twenty-first century, most
tury, merger and acquisition (M&A) activity seems foreign companies who aimed at gaining access to
to have been strongly related to economic growth the Japanese market had to start an alliance or a
and development. Over the past century, four major joint venture. Because of restrictions and complex-
M&A waves occurred. According to McCann and ities, starting an acquisition or merger was hardly
Gilkey (1988), the first wave was characterized by possible. Main barriers are described as follows by
horizontal integration, the second wave by vertical Aoki and Kyle (1992):
integration, the third wave by conglomeration, and
the fourth wave that started in the beginning of the r Owing to the sheltered and relatively protected
1980s “has not only changed companies, but even nature of Japanese society and Japanese compa-
industries and entire sectors.” nies, most Japanese companies were reluctant to
accept foreign shareholders;
The M&A cycle that started in the 1980s was a far r Owing to the cross shareholder system, which
longer-lasting cycle of concentration compared with is firmly established in Japan, a majority of the
the earlier cycles in the twentieth century. At the shares of large companies were held by long-term
same time, there were far more mergers and acqui- stable shareholders;


c 2009 Wiley Periodicals, Inc.
Published online in Wiley InterScience (www.interscience.wiley.com)
Global Business and Organizational Excellence • DOI: 10.1002/joe.20258 • March/April 2009 45
 r Owing to high share prices and high price- the crisis of 1990. Also Inagami and Whittaker
earning ratios, Japanese companies were not (Ahmadjian, 2006) explain changes in Japanese
regarded as attractive investment targets for firms and their management practices since the
foreign companies; 1990s, although they conclude that Japan has not re-
r The legal framework surrounding acquisitions ally embraced a new model, but that Japanese firms
in Japan was not properly established and there are slowly “evolving toward a reformed model.”
were no set procedures that could be followed by
foreign companies wishing to acquire Japanese Despite the many changes having an influence on
companies. M&A deals, many transactions are not successful in
the long run. When success is measured in terms of
Several of these barriers still exist to some extent gaining access to markets or distribution channels,
in Japan today. At the same time, several changes foreign companies do succeed to some degree. How-
have occurred, gradually making it easier for for- ever, although changes for success will differ for spe-
eign companies to gain a foothold in Japan. Aoki cific countries, and for different types of combina-
and Kyle (1992) come up with three major reasons tions, statistics worldwide show that 50–80 percent
for the changes: the growing international presence of mergers and acquisitions are not successful.
of major Japanese companies, increased pressure
from foreign governments, and the continual shift
in Japanese corporate values.
The Literature About M&A Lessons in Japan
Further, Kester (1991) mentions two important de- Several authors group lessons learned around either
velopments of the 1980s that would explain the the preacquisition stage (deal-making), or around
changing attitudes toward mergers and acquisi- the postacquisition (integration) stage. Aoki and
tions in Japan: the increasing sense of urgency that Kyle (1992) mention the following key success el-
managers of large Japanese companies experience ements for foreign companies in Japan during the
to restructure their organizations and the gradual preacquisition stage:
changes in the Japanese government system. Foreign r Knowledge of Japanese corporate structure and
companies can nowadays enter the Japanese market environment;
much more easily. r Knowledge of the industry in which the acquisi-
tion is envisaged;
r Knowledge of, and access to, key people in
Kester (1991) mentions two important developments Japanese target companies;
r An ability to access key people in relevant min-
of the 1980s that would explain the changing atti- istries and regulatory authorities;
tudes toward mergers and acquisitions in Japan: r A demonstrative track record and execution
the increasing sense of urgency that managers of capability.

large Japanese companies experience to restructure

their organizations and the gradual changes in the These recommendations are about preparation of
Japanese government system. the deal making, having knowledge about the con-
text of the acquisitions, and about knowing how
to find the right people. Further, Ishizumi (1988)
Lincoln and Gerlach (Parkhe, 2007) provide an discusses suggestions for American and European
interesting insight into the transformation of the acquirers with a focus on the deal-making process
Japanese network economy, before and after itself:

46 March/April 2009 DOI: 10.1002/joe Global Business and Organizational Excellence

 r Have much more patience and spend much more r Try not to shut down or sell any divisions of a
time and effort than in your own country; recently acquired Japanese company, at least not
r While at the negotiation table, do exercise the shortly after its acquisition.
utmost care to always pay their opponent or tar-
get company due respect and not to use any im-
proper or offensive terminology or phraseology, Some of the more general issues that are raised
such as “acquisition,” “control,” “buy-out,” or by Aoki and Kyle (1992) and by Ishizumi (1988)
“take-over” at an early stage; are valid for many cross-border mergers and ac-
r If you are accompanied by your legal coun- quisitions. However, other issues are very context-
sels at the early stage of the negotiation, your specific.
Japanese opponents would likely be frightened
or offended;
r Strategies and tactics need to be adapted and Concluding, only recently has the Japanese market
modified so that they can fit and work well in opened up for international mergers and acquisi-
Japan—strictness has often ended in miserable tions. Many of the former barriers still exist, al-
failure; though many regulations have changed. Several
r Retain the advisory services of reliable Japanese
lessons can be learned from M&A practices in
commercial banks and securities firms plus
Japanese lawyers. Japan; however, so far, only a few researchers have
come up with empirical evidence. In order to gain
a better insight into acquisition processes in Japan,
Both authors also recognize the importance of the we conducted a Dutch-Japanese case study.
post-acquisition stage. Aoki and Kyle (1992) es-
pecially focus on lessons concerning strategy and
structure: Only recently has the Japanese market opened up for
international mergers and acquisitions. Many of the
r Maintaining the existing business structure;
r former barriers still exist, although many regulations
Obtaining the support of the relevant institu-
tions; have changed.
r Interviewing the core members of the manage-
ment team;
r Reviewing the business strategy, constructing the
actual strategic plan and implementation of the Research Method
strategy.
In the framework of a broader study into different
cross-border acquisition processes, amongst others,
we investigated the acquisition of a Japanese organi-
Ishizumi (1988, p. TK) provides American and
zation by a Dutch multinational. From the literature
European companies with more general lessons dur-
and the case-study results, several lessons could be
ing the postacquisition stage. This advice is strongly
drawn about European-Japanese merger processes.
related to leadership and cultural issues:
In this section, the research approach and methods
r Retain members of the existing management for data collection are discussed.
team;
r Layoff is an uncommon labor practice in Japan; The research strategy adopted in this study can be
r Have long-range perspectives;
r characterized as the case-study approach. Accord-
Learn and follow Japanese cost-reduction
ing to Yin’s (1991) theory, a case study is “an
formulas;
r Making mistakes in personnel administration empirical enquiry that investigates a contemporary
may develop into fatal issues; phenomenon within its real life context; when the
r Learn how to recruit highly talented people; boundaries between phenomenon and context are

Global Business and Organizational Excellence DOI: 10.1002/joe March/April 2009 47

 not clearly evident; and in which multiple sources of Interviews were, however, the main source of
evidence are used.” information. During a period of four months, from
March until June 2000, 11 in-depth interviews were
On one hand, there are some disadvantages to case- conducted with both Dutch and Japanese respon-
study research, such as the limited number of cases, dents. The interviews were held with management
resulting in a lack of statistical evidence. On the team members, people working in the different
other hand, the case study is the only way to pro- departments, and expatriates. Many interviews
vide an in-depth insight, especially into the processes took more than one hour and some of them even
going on within mergers and acquisitions. Case stud- more than two hours. Most of the interaction
ies make it possible to find answers to questions of between Dutch and Japanese takes place at higher
“how” and “why.” That makes this approach very levels, so most respondents were found high in the
applicable, as it provides a unique insight into the organization.
complexity and dynamics of M&A processes, espe-
cially in a Dutch-Japanese context. The descriptions of the interviews were analyzed
and coded so the different lessons could be struc-
Other reasons to choose the case-study approach tured around the preacquisition and postacquisition
were that the return rate from a survey was expected stage. For the postacquisition, a distinction could be
to be very low, as this research dealt with highly con- made into strategic issues, and leadership and cul-
fidential information and many respondents were tural issues. Finally, the results were compared with
placed high in the hierarchy of the company. More- the literature.
over, most mergers and acquisitions have a very
different history and background, and so it would In the next section, the background of the acquisi-
be difficult to prepare one universally valid ques- tion of a Japanese company by a Dutch company
tionnaire. The disadvantage of statistical evidence is is explained. In order to ensure confidentiality, the
compensated by a substantial number of interviews Dutch acquiring company is indicated as Dutco,
and data triangulation. whereas the Japanese acquired company is indi-
cated as Japco. Further, different lessons learned
are described and illustrated with quotes from
The disadvantage of statistical evidence is compen- respondents.
sated by a substantial number of interviews and
data triangulation. The Acquisition of a Japanese Firm by
a Dutch Company
Dutco is a Dutch multinational company that was
A combination of different sources was used in the looking for opportunities to gain access to the
data-collection phase. Important data sources were Japanese market and to new technologies. Japco is a
contracts, archival records, reports, documents, the Japanese organization that was in financial difficul-
Internet, intranet sites, newspaper articles, annual ties and had to look for a partner in order to survive.
reports, brochures, and notes on the (planned) In the beginning of the 1980s, Dutco acquired 51
merger. These data sources were obtained from in- percent of the shares of Japco with the intention to
terviews with respondents, secretaries, and other in- gain access to the Japanese market and distribution
formants from the involved entities (primary data channels via their partner. Further, this acquisition
sources), and by conducting desk research (collect- already promised to be financially attractive in the
ing secondary data). short run.

48 March/April 2009 DOI: 10.1002/joe Global Business and Organizational Excellence

During the first years, Japco could remain very au- had planned to enter the Japanese high-end market
tonomous, especially at an operational level. Dutco by acquiring a Japanese organization, but due to a
sent a Dutch director to Japco but allowed a combination of factors, both external and internal,
Japanese manager as the president of the operations Dutco was not able to realize its objectives. When
in Japan. However, on a strategic level, Dutco was this conclusion was drawn, Dutco did not invest
very much involved in the decision-making process. anymore in Japco, and slowly withdrew.
This sometimes resulted in miscommunications and
culture clashes with the Japanese managers, who
sometimes felt too restricted, and, for example, did Next to external factors, such as an economic de-
not understand why a Dutch manager was replaced cline and fierce competition, a combination of more
within just a few years. The Japanese managers were
internal factors, such as strategy, culture, and
used to long-term relationships, between companies
and also between an organization and its employees.
leadership, had a strong negative impact on the
results.
Over time, the companies had integrated at a man-
agerial level. While the systems were integrated in or-
der to enable a comparison of financial information Lessons Learned From Dutco’s Experience
flows, at the lower levels, most employees of Japco Based on 11 interviews with respondents from
were not really aware of a Dutch majority share- Dutco and Japco and different documents, several
holder, or of an acquisition. The identity of Japco lessons can be drawn from this acquisition process.
visually remained the same; no symbols on buildings The different lessons, summarized in Exhibit 1 on
or rituals really changed for the Japanese employees page 50, are illustrated with quotes from both Dutch
who did not feel or often were even not aware of and Japanese respondents. Distinctions are made be-
being part of a Dutch-Japanese combination. tween lessons during the preacquisition stage and
the postacquisition stage, and between strategic is-
However, despite all efforts, the intended objectives sues and leadership and cultural issues.
proved to be hard to realize for Dutco, and in the be-
ginning of 2002, the majority share was reduced to
Preacquisition Stage
less than 50 percent, and the involvement of Dutco
Learn About the Other Company. Not only the Japanese
slowly decreased. In the beginning, most financial
culture, but the Japanese business structure in which
objectives were realized. However, other important
organizations operate is very different from the
objectives such as gaining access to the Japanese
Dutch. Different kind of regulations or other kinds
high-end market did not succeed. Further, after some
of restrictions may cost a lot of money when not
profitable years, the financial objectives came under
taken properly into account. A Dutch respondent
severe pressure, and finally it was even decided to
said, “Learn all about the other company before the
reduce the Dutch share in Japco.
deal is closed; very often issues emerge which are
not foreseen. Dutco had no good insight into the
Next to external factors, such as an economic de-
Japanese business environment.”
cline and fierce competition, a combination of more
internal factors, such as strategy, culture, and lead-
ership, had a strong negative impact on the results. Gain a Good Understanding of the MITI Regulations. Part
The next section discusses different lessons learned of the business environment is the Japanese Ministry
from this case study that played a role concern- of International Trade and Industry, renamed the
ing strategy, culture, and leadership. In sum, Dutco Ministry of Economy, Trade and Industry (METI)

Global Business and Organizational Excellence DOI: 10.1002/joe March/April 2009 49

 Exhibit 1. Lessons Learned From M&As in Japan
Stage Issue Lessons
Preacquisition stage Knowledge about the target company and its context Learn about the other company
Gain a good understanding of the MITI regulations
Postacquisition stage Strategic issues Set a clear strategy and vision
Ensure your Japanese network
Make use of the existing infrastructure
Conduct a company scan
Catch up with the Japanese market
Postacquisition stage Leadership and cultural issues Keep your key people
Ensure consistency and continuity in business
Make clear choices and take responsibility
Ensure the right balance in control and freedom
Ensure leadership acceptance from the beginning
Beware of arrogance as Europeans
Work together on joint projects
Exchange people
Manage cultural differences
Communicate

in 2001. A Dutch respondent said, “MITI is not used a Japanese manager as controller of the local
a problem anymore these days. No import duties organization. If not, it would have failed, I think. . . .
are required. However, make sure you understand The key is that the management style remained
the different regulations, in order to prevent costly 100 percent Japanese.”
surprises.”
Make Use of the Existing Infrastructure. When acquir-
Postacquisition Stage: Strategic Issues ing a Japanese organization, it is important to con-
Set a Clear Strategy and Vision. When planning an ac- tinue existing relations, instead of trying to start
quisition, there should be a clear company vision building a new network, or finding your own way. A
behind it, or else you will just float with the current. Japanese respondent said, “They failed to make use
A Dutch respondent noted, “Hardly any investments of Japan as an infrastructure for the development
were made, and before you know, you are behind of new products. They thought they could do ev-
your competitors; there was no worldwide vision erything by themselves; they could have used third
yet.” And another respondent added, “Clearly set parties of Japco, but they did not.” And a Dutch
the ambition; for almost ten years Dutco had no respondent added, “Dutco should have used the
clear ambition.” infrastructure of Japan to expand, and to market
Dutch products in Japan.”
Ensure Your Japanese Network. Until recently, foreign
managers were hardly accepted in Japan, neither Conduct a Company Scan. By conducting a company
by the employees nor by related organizations in scan, the knowledge of the current situation can be
the same sector. A Dutch respondent commented, used to build further on the strengths, and to pre-
“Keep Japco as a Japanese company with a Japanese vent disasters. Gaining a thorough understanding
president. Ensure a good relation with the president, is crucial to make the acquisition work. In 1997
or else you won’t have any influence in the opera- a company scan of Japco was conducted to eval-
tions.” A Japanese respondent remarked, “Dutco uate the merger. Strengths and weaknesses were

50 March/April 2009 DOI: 10.1002/joe Global Business and Organizational Excellence

summarized as follows: “Strengths: (1) Speed/Flexi- to changes in their working environment than Dutch
bility of a small organization, (2) Miniaturiza- employees, although this is changing. A Japanese re-
tion, (3) Contacts, Japanese supplier infrastructure, spondent said, “These are the keys for success of
(4) Access to Japanese market (professional/niche); your business in Japan; this is not the case in Eu-
Weaknesses: (1) Lack of external transparency of ropean countries—even though they say so, they do
organization (re-organization in progress), (2) Lack not work like that. Replacing managers of Dutco
of mass-market experience, (3) Weak but improving had a direct influence on our business; if a new man-
infrastructural ties with Dutco, (4) No pro-active ager had a different idea, then he just changed the
marketing on mid/long term.” business or closed down a factory.”

Catch Up With the Japanese Market. The saying “When Further, in order to build a strong brand in the
in Rome, act as the Romans do” also appears to be Japanese market, one should not go through too
true for Japan. The competitive arena can be very many changes: “Dutco changed their management
different from the same sector in your own coun- every five years. However, to get a brand established,
try; you need to adjust in order to be successful. A consistency is needed instead of 3–4 years [of] short-
Dutch respondent said, “Dutco was never success- term profits that a manager should realize before
ful in Japan, because most of the competitors live in changing to another job or company again.”
Japan; it is their home ground. There is too much
competition. The product life cycle is very short, and Make Clear Choices and Take Responsibility. Within the
they know quick price erosion. You need to catch Dutch organization, there was no strong consensus
up with the speed of the Japanese market. Ensure a about this acquisition, resulting in managers with-
faster achievement of milestones; Dutco is ALWAYS drawing their hands at some point. A Dutch respon-
behind in markets and infrastructure.” dent noted, “Not many people within Dutco are
prepared to take responsibility for Japco now. From
Postacquisition Stage: Leadership and Cultural Issues the beginning, Dutco bought something that not ev-
Keep Your Key People. An organization consists of eryone backed; what do we want now in Japan? We
many individuals with different kinds of knowledge. bought something we did not really want to buy,
In an acquisition, it is important to take care that apart from one part we were interested in.”
good people do not leave the new combination. They
need to be motivated for the changed situation. A Ensure the Right Balance Between Control and Freedom.
Dutch respondent remarked, “The challenge is to Several Japanese respondents indicate that they were
make sure to keep your key people, and to get rid of limited in their way of working by Dutch standards,
others.” Identify the key people of the target com- and that resulted in less productivity sometimes:
pany, and commit them to the new combination. “Once they became owner, Dutco controlled every-
thing just based on their own culture. However, to
make the asset valuable, you need to give more free-
dom. We can get much more out of it without the
In an acquisition, it is important to take care that
restrictions of Dutco.”
good people do not leave the new combination. They
need to be motivated for the changed situation. Ensure Leadership Acceptance From the Beginning. The
Dutch acquiring organization retained the previ-
ous Japanese president for the new combination.
Ensure Consistency and Continuity in Business. Gener- Looking back, respondents say they should have re-
ally speaking, Japanese employees are more sensitive tained a Japanese as president, but they should have

Global Business and Organizational Excellence DOI: 10.1002/joe March/April 2009 51

 chosen another manager with more credits: “We are person-oriented; they do not know a ‘corpo-
should sooner have made another Japanese (who rate consciousness.’ With a different (Dutch) man-
would be accepted by all Japanese) president of the ager, anything can change again . . . bad luck for old
organization in Japan, instead of retaining the pre- agreements.”
vious president, who was not widely accepted.”

Beware of Arrogance as Europeans. Cultural differences Cultural differences should be investigated in ad-
and a lack of trust and communication sometimes re- vance, in order to prepare people on different ways
sulted in misunderstandings. A Japanese respondent of working and different expectations.
remarked (about the Dutch): “They really think they
speak better English, that they are better. . . . A for-
mer director of Dutco made huge investments here, Other Japanese respondents mention: “Dutch are
but the customer did not care for these products. short-term oriented, and individualistic; Japanese,
They did not think about that; they’re too arrogant instead, are working as a group. Japanese companies
to accept other people’s ideas.” are long-term profit oriented”; “Sometimes we have
a clash; we cannot change entirely to their culture.
Work Together on Joint Projects. The Dutch acquiring
Respect one’s culture, that is the key to success”;
company waited long before mingling technicians and “In Japan, people do not only move by money;
on joint projects. Looking back, especially Japanese a feeling of satisfaction is very important.”
respondents missed this kind of collaboration, in
which way relationships can be built and specific Communicate. Next to cultural differences, language
knowledge can be exchanged: “Put technicians to- problems appeared to be a real challenge in the
gether on concrete projects, in order to create under- Dutch-Japanese combination, where none of the
standing and respect, besides new products only.” partners spoke their native language. A Dutch re-
spondent noted, “It was very hard for Japco to get
Exchange People. In order to make cultures blend, a
their message through at Dutco headquarters. This
two-way exchange is necessary. Further, a Dutch re- had to do with language and culture.” Further, sev-
spondent mentioned the relevance of a joint period eral respondents mentioned that a Dutch expatri-
for liaisons to exchange experiences: “We had liai- ate always joined the Japanese partners at Japco in
son managers in Japan, and we sent some Japanese videoconferences with the Dutch partners to prevent
to Europe, and some to the U.S. An overlapping misunderstandings.
period for liaison managers is very important to ex-
change experiences and lessons learned.” A Japanese
respondent said, “Dutco sent some people to Japan, Discussion and Suggestions for Further Research
at an executive management level, but this was in In the literature, so far, several researchers have
fact a one-way exchange.” come up with best practices for mergers. However,
most studies lack an integral approach, or don’t in-
Manage Cultural Differences. Cultural differences vestigate the “how” and “why” of a specific com-
should be investigated in advance, in order to pre- bination, such as Dutch-Japanese acquisitions. This
pare people on different ways of working and dif- article took a case-study approach in investigating a
ferent expectations. When managed in a proper Dutch-Japanese acquisition process. When the case-
way, the changes for an acquisition’s success will study results are compared with the lessons dis-
increase substantially. A Japanese respondent com- cussed in the literature, other similarities can be
mented, “The European and the American culture found.

52 March/April 2009 DOI: 10.1002/joe Global Business and Organizational Excellence

Several of the key elements mentioned by Aoki and international mergers and acquisitions. Culture
Kyle (1992) (such as knowledge of the Japanese con- is strongly related to identity. Ulrich, Wieseke,
text in terms of corporate structure, the target indus- and Van Dick (2005) illustrate how the newly
try, and access to key people both within the target merged company structure as well as the integration
company as well as with authorities) correspond process may erode what they call “organizational
with the following research findings: learn about identification,” resulting in serious tensions.
the other company, ensure your Japanese network,
make use of the infrastructure, conduct a company The debate around culture, and its impact on in-
scan, catch up with the Japanese market, gain a thor- ternational business has recently intensified again.
ough understanding of the MITI regulations, and For instance, Tihanyi, Griffith, and Russell (2005)
keep (commit) your key people. See also Grotenhuis have investigated the relation between cultural dis-
and Weggeman (2002) for knowledge management tance, choice of entry mode, international diversi-
issues in mergers. fication, and multinational enterprise performance,
and come to the conclusion that “substantial addi-
Furthermore, the advices of Ishizumi (1988) (such as tional research is needed before the role of cultural
retaining previous managers, long-term approach, distance is fully understood.”
and retaining a recently acquired Japanese company
intact at least shortly after the acquisition) are com- Leung, Bhagat, Buchan, Erez, and Gibson (2005)
parable with the research findings: set a clear strat- discuss the nature of culture and “traditional” ways
egy and vision, ensure consistency and continuity in of studying culture. They conclude that most re-
business, make clear choices and take responsibil- searchers took a “simplistic” view of culture in their
ity, ensure the right balance in control and freedom, research, only studying “the static influence of a few
and ensure leadership acceptance from the begin- cultural elements in isolation from other cultural
ning. In the literature, several motives have been elements and other contextual variables.” Leung
listed to decide about expatriates to manage a firm’s et al. (2005) suggest multimethod approaches in or-
foreign affiliate; this case study provides a clear ex- der to gain better insights on the impact of culture
ample of successfully retaining a Japanese manager on international business.
as president, at least during the first period after the
acquisition. Based on the comparison between the literature
about M&A in Japan and the in-depth case study,
Dutch (and other foreign) managers are advised
Cultural differences can play a major role in the to better prepare mergers and acquisitions with
Japanese organizations in order to increase chances
success or failure of international mergers and
for success. The preparation should be centered
acquisitions. around (1) knowledge about the target company
and its context, (2) strategic issues, and (3) leader-
ship and cultural issues, in order to prevent culture
Finally, some other empirical findings are more clashes and misunderstandings.
difficult to recognize in the literature: beware of
arrogance as Dutch, manage cultural differences, Evaluating Dutco’s major acquisition objectives,
communicate, exchange people, and work together gaining access via the Japanese partner to the
on joint projects. However, all of these aspects are Japanese market and distribution channels, the ac-
culture-related to some extent. Cultural differences quisition was no real success. From the start, the
can play a major role in the success or failure of acquisition was financially attractive, although later

Global Business and Organizational Excellence DOI: 10.1002/joe March/April 2009 53

 on, the combination turned out to be less prof- Grotenhuis, F. D. J., & Weggeman, M. C. D. P. (2002).
itable than expected. These acquisition objectives for Knowledge management in international mergers. Journal of
Japco could not be realized due to both external fac- Knowledge and Process Management, 9(2), 83–89.
tors, such as an economic decline and fierce compe- Hinterhuber, A. (2004). When two companies become one.
tition, and internal factors. Internal factors strongly In C. Stuart (Ed.), Financial Times handbook of management
relate to merger preparation during the preacquisi- (3rd ed.). Harlow, UK: Financial Times/Prentice Hall.
tion stage (knowledge about the target company), Ishizumi, K. (1988). Acquiring Japanese companies. Tokyo:
and strategic, leadership, and cultural issues during The Japan Times Ltd.
the postacquisition stage. Finally, in the beginning of Kester, W. C. (1991). Japanese takeovers: The global contest
2002, it was decided to reduce the majority share of for corporate control. Boston: Harvard Business School Press.
Dutco to less than 50 percent, and the involvement Leung, K., Bhagat, R. S., Buchan, N. R., Erez, M., & Gibson,
slowly decreased. C. B. (2005). Culture and international business: Recent ad-
vances and their implications for future research. Journal of
Future studies could discern among American, International Business Studies, 36, 357–378.
Dutch, and other European companies doing busi- McCann, J. E., & Gilkey, R. (1988). Joining forces: Creating
ness in Japan. It can be hypothesized that different & managing successful mergers & acquisitions. Englewood
cultural combinations need different approaches. In Cliffs, NJ: Prentice Hall.
this context, Hinterhuber (2004) also suggests inter- Parkhe, A. (2007). Book review of ‘Japan’s network econ-
esting research hypotheses regarding M&A integra- omy: Structure, persistence, and change,’ by J. R. Lincoln
tion. Case-study research can help to explain specific and M. L. Gerlach. Academy of Management Review, 32,
differences in (successful) approaches for different 303–307.
types of partnerships, such as mergers and acqui- Tihanyi, L., Griffith, D. A., & Russell, C. J. (2005). The effect
sitions, joint ventures, or alliances. Furthermore, it of cultural distance on entry mode choice, international diver-
would be interesting to study the differences between sification, and MNE performance: A meta analysis. Journal
traditional Japanese firms and modern Japanese or- of International Business Studies, 36, 270–283.
ganizations in international M&A situations, where Ulrich, J., Wieseke, J., & Van Dick, R. (2005). Continuity
it would be important to approach the concept of and change in mergers and acquisitions: A social identity case
culture from different angles. study of a German industrial merger. Journal of Management
Studies, 42, 1549–1569.
Yin, R. K. (1991). Case study research, design and methods.
References Beverly Hills, CA: Sage.
Ahmadjian, C. (2006). Book review of ‘The new community
Frits D. J. Grotenhuis obtained a PhD about patterns of
firm: Employment, governance, and management reform in
acculturation in technology acquisitions at the University
Japan’, by Takeshi Inagami and D. Hugh Whittaker. Admin-
of Groningen (The Netherlands), in cooperation with
istrative Science Quarterly, 51(1), 146–148.
Eindhoven University of Technology (The Netherlands), and
Aoki, K., & Kyle, J. (1992). Corporate investment in Japan: A Waseda University (Japan). From April to June 2000, he was
foreign investor’s guide to making strategic alliances. London: a visiting researcher at Waseda University.
Woodhead-Faulkner.

54 March/April 2009 DOI: 10.1002/joe Global Business and Organizational Excellence