DP2020-09

Necessity to Integrate
Operational Business During
M&A: The Effect of Employeesʼ
Vision and Cultural Openness
Ralf BEBENROTH
Robert A. GOEHLICH

February 21, 2020

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Necessity to integrate operational business during M&A: Effects of employees’ vision and cultural openness

Ralf Bebenroth1
Kobe University, Japan
Robert A. Goehlich2
Embry-Riddle Aeronautical University, Worldwide

Abstract
This research investigates the impact of target- firm employees’ vision and cultural openness
on their perception of the need to integrate their operational business into a bidder firm.
The results show that, not vision but cultural openness positively correlates to target-firm employees’ perceived need to integrate their operational business into the bidder firm. However,culturally open employees with a clear, articulated vision perceive less need to integrate theiroperational business into the bidder firm.
This research contributes to understanding the behavior of the target-firm’s employees in particular. While the decision to undertake an M&A integration process is primarily driven by
economic issues, a successful result is influenced by social issues, such as the cultural opennessof the target-firm’s employees.
Keywords – Cultural openness, integration necessity, M&A, vision

1
Kobe University, Research Institute for Economics and Business Administration (RIEB), 2-1, Rokodai, Nada-ku, Shinkan 1307, Kobe 657-8501, Japan, mobile: +81-(0)78-803-7021, email: rbeben@rieb.kobe-u.ac.jp, website: www.bebenroth.eu
2
Embry-Riddle Aeronautical University, Worldwide, Berlin Campus, Kurfuerstenstrasse 56, 10785 Berlin, Germany, mobile: +49-(0)174-25-313-87, email: robert@goehlich.com, website: www.goehlich.com

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Introduction
Research on mergers and acquisitions (M&A) has received considerable attention since
the late 1980s (Chang-Howe, 2019). Andriuskevicius (2017) shows that such researchpredominantly focuses on the financial domain and largely neglects human capital. In
addition, most of the empirical M&A research is grounded in big data. While RozenBakher (2018) explains that performance outcomes depend on the type of M&A, Shinet al. (2017) reason that most failures result from a lack of attention to employees.
Further, Dorling (2017) notes that “M&A deals often fail due to unsuccessful [postmerger integration] implementation because leaders fail to consider the psychologicalimpacts when trying to overcome resistance” (p. 936).
Despite these research efforts, the literature does not yield satisfactory resultson the reasons for a successful M&A. The only thing known is that the success rate of
M&As remains relatively low (Cartwright, 1990; Haleblian et al., 2009). Ahammad etal. (2016) find that cultural similarity acts as a mediator in the relationship between
knowledge transfer and firm performance, and Savovic (2017) finds that employees’
attitudes mediate positively the relationship between organizational cultural differences
and post-acquisition performance. As the integration period is a dynamic one (Steigenberger, 2017), its main focus lies on change management. A positive acquisition outcome can be a source of improvement that leads to competitive advantages (Birkinshaw
et al., 2000; Child, 1999), but the bidder firm has to integrate the target-firm to someextent, or synergies cannot be achieved.
Even so, research tradition on synergies focuses heavily on the bidder side
(Haspeslagh and Jemison, 1991), as the target is seldom included in the strategic decisions made to achieve synergies. To the best knowledge of the authors, the literature
has not yet determined to what extent employees at the target-firm perceive the necessity to integrate their operational business into the bidder firm. Following this idea, we
propose that the degree to which such employees are open to change (cultural openness)and the degree to which they have a clear vision about the change (vision) influence
their perception of the necessity to integrate. Therefore, this research elaborates not on
performance or perceptions of success but on the question of the target-firm’s employees’ perception of the need to integrate their operational business into the bidder firm.
We refine our research question in three alternative hypotheses elaborated in a model.
The study proceeds as follows: After a discussion of theoretical background andhypotheses development, we introduce and discuss our model and survey results. The
concluding section contains a summary.

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Theoretical framework and hypotheses
Theoretical framework
The theoretical framework of this paper relies on the knowledge-based view, whichargues that knowledge is a basic resource and a key to competitive advantage (Grant
1997; Savovic, 2007). A reduction in knowledge asymmetry between a target-firm anda bidder firm reduces uncertainty and increases the overall knowledge stock (Vermeulen and Barkema, 2001). In pursuing the stock of knowledge, target-firms haveeasier market access in their home countries and better networks with local suppliersand customers (Savovic, 2017) than foreign bidder firms do, so the former’s knowledge
is essential to the latter.
Transferring knowledge also has advantages over engaging in simple exchange
relationships with followers (Covin et al., 1997; Densten, 2008). Huang et al. (2010)
focus on key success factors in knowledge transfer during M&A and state that highly
motivated employees are more likely to transfer appropriate knowledge than less motivated employees are. Related to that study, Cho et al. (2017) suggest ways to increase
employees’ affective commitment in M&As (Le Floc’h and Scaringella, 2017). Trustis also an important element. As Bargeron et al. (2015) report, “trust within a firm is apotentially valuable asset that can reduce transaction costs, increase cooperation among
employees, and enhance the exchange of specialized knowledge” (p. 405).
Based on the knowledge-based view, our idea is that higher cultural openness
among the target-firm’s employees leads to a higher perception of the need to integrate
their operational business into the bidder firm, but that employees with a more vision
feel less of such necessity. In other words, a target-firm’s employees perceive a greater
necessity to integrate their operational business into a bidder firm when they easily
connect with the bidder firm’s employees, while if they have a clear vision instead,they tend to prefer remaining autonomous. These ideas should be especially relevant toour case study on a cross-border acquisition in which a Japanese firm acquired a German engineering firm.

Hypotheses development
The literature divides cultural openness into four constructs: meta-cognitive, cognitive,
behavioral, and motivational (Ang et al., 2004). While meta-cognitive cultural openness describes an individual’s cultural consciousness and awareness when people fromdifferent cultural backgrounds interact, cognitive cultural openness describes an individual’s knowledge about cultural settings other than her own (Bebenroth and Ismail,42018). When interacting with people from different cultural backgrounds, behavioral
cultural openness refers to an individual’s flexibility in verbal and nonverbal actions.
Our research interest is in the fourth construct, motivational cultural openness,
which fits best with individuals’ self-efficacy and covers the interest in adapting tocultural differences that is important in cross-border acquisitions. We apply this construct to refer to a person’s willingness and intention to interact with those from othercultures (Earley and Ang, 2003). Specifically, we want to shed light on how a targetfirm’s employees see the necessity to integrate their operative business into the bidderfirm. Motivational cultural openness (“cultural openness” hereafter) receives considerable attention in organizational psychology research (Bebenroth and Ismail, 2014;
Kaflehn et al., 2015; Van Dyne et al., 2008). Support for this idea is also found in
Porter et al. (2017), who state that cultural openness influences the people’s perceptions.
Other research shows that more open-minded people, such as expatriates, perform theirjobs better than less open-minded people (Huang et al., 2005; King et al., 2004). Feurer
et al. (2016) make a similar argument for consumers, stating that more open-mindedconsumers relate negatively to consumer ethnocentrism. In other words, open-mindedconsumers are open to buying foreign products, whereas culturally closed-minded consumers opt for domestic products.
In line with our arguments, we extend the idea of cultural similarity by applying
the construct of cultural openness to target-firm employees in an M&A context. We
extend studies like Bauer et al. (2015), who investigate the role of cultural similarity
as a moderator and find a positive effect of cultural similarity on innovation-driven
M&As. We argue that target-firms’ employees who have more cultural openness makefriends among the bidder’s employees more easily, are more receptive to foreign ideas,
and learn more easily from others (Very et al., 1997), including the bidder firm’s managers. In contrast, employees with a lower level of cultural openness face increased
problems (Li et al., 2016). Therefore, we hypothesize that culturally open employees
perceive a greater necessity to integrate their operational business into the bidder firm,such that:
H1. Target-firms’ employees with a more cultural openness perceive more necessity to integrate their operational business into bidder firms than thosewith less cultural openness do.
The vision of target-firms’ employees should also affect their perception of theneed to integrate their operational business into bidder firms. Information about thebidder firm’s intentions is not equally distributed among the target-firm’s employees.
Some have a clearer vision than others of what the bidder wants the target-firm to doin terms of, for example, how likely an integration is to occur or how likely the workplace is to be restructured. A vision is not something only top managers have, as every

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employee has her own vision or at least an understanding about the future of the firm.
Naturally, leaders provide vision and inspire to create the atmosphere for successfully
integrating their firm’s operational business into the bidder firm (Nemanich and Keller,
2007; Vasilaki et al., 2016). Waldman and Javidan’s (2009) findings support the viewthat employee involvement in drafting vision statements and in decision-making leads
to better integration and organizational alignment in M&As. However, having a clear
vision of what the bidder wants the target to become may lead the target-firm’s employees to prefer to stay autonomous. Further, for top managers having an articulated
vision improves motivation, productivity (Edwards, 2005), and trust (Petrescu andSimmons, 2008). A poor integration outcome in the M&A process is often associatedwith an absence of leadership and poor knowledge flows (Haspeslagh and Jemison,1991), as evidenced by bidder-firm managers’ lack of vision (Vasilaki et al., 2016).
We break these ideas down to the employee level and propose that target-firm employees with a better-articulated vision see less need to integrate their operational business
into the bidder firm:
H2. Target-firm employees with a clearer vision are less likely to perceive thenecessity to integrate their operational business into the bidder firm.
In addition to these two direct effects, we investigate the moderating effect ofvision, suggesting that better-informed employees with a clearer vision will prefer autonomy when they are culturally more open. We argue that such employees typically
prefer to collect and analyze data independently and to make their own judgments andcontrol their operational business. A transfer of their operational business induces fear
and a sense of loss of control. This group of employees is proud of their (target) firmand culturally open, so they see little need to integrate their operational business into
the bidder firm. These considerations result in the following hypothesis:
H3. Vision moderates the relationship between cultural openness and integration necessity such that the positive effect of openness on integration necessity is weaker for employees with a higher vision.

Model
Our model describes how employees’ vision and cultural openness influence their perception of the necessity to integrate their operational business into the bidder firm (Figure 1).

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Employees’cultural openness

HA1

Employees’
visionHA2

Employees’cultural openness× vision

HA3

Perceived
necessity ofintegrating
operational
business

Figure 1. Research model

Methods
Case study
This research addresses participants on the target side of a medium-sized German engineering firm in the waste energy power plant industry (Bebenroth and Bartnik, 2018;
Bebenroth and Ismail, 2018). Before the takeover, the firm ran as an independent provider of solutions for power plants. When firm was acquired in 2014 by one of thelargest Japanese steelmakers, which had engineering units in the same field, the acquisition was a friendly and horizontal one. The Japanese steelmaker wanted the acquisition to increase its global reach, as the competition in the European market for engineering solutions at waste energy power plants is fierce, and prices are set low (Nicolli
and Vona, 2016). This highly competitive industry has also a positive push effect, as
the German firm became a standard-setter in the technological niche market of wasteenergy power plants. It is not uncommon for these firms to relinquish their independent
identities and exit through acquisition (Cefis and Triguero, 2016).
While the Japanese bidder firm did not intend to increase its market position inGermany or Europe, it was interested in the German target’s technical expertise so it
could compete with its Asian rivals. Since these rivals were especially prevalent in
China, the Japanese firm thought to enter the Chinese market using German technology.
For its part, the German engineering firm could not enter the Chinese market, as it had
no capacity to do so. For example, it would be difficult and expensive to send two or
three engineers to China for several days each week, and the cultural barriers for Germans in China are much higher than those for Japanese engineers. High costs also prevented the German firm from conducting business directly in the Asian region. Under
the acquisition arrangement, the German firm’s top management perceived the valueof German engineering technology’s being promoted in Asia by the Japanese partner.

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The Japanese partner would provide knowledgeable and competent staff, especiallyexperienced, Chinese-speaking Japanese managers, to conquer the Chinese market inregard to engineering solutions for waste energy power plants. Further synergy in thisJapanese-German joint venture would be achieved by combining German technology
leadership with the solid financial backup of the Japanese steelmaker.
After the acquisition of the German firm, the Japanese firm sent several managers on short-term visits to the engineering firm in Germany (Bebenroth and Bartnik,
2018) so the Japanese managers could familiarize themselves with the target-firm insuch a way that they could benefit from the German firm’s technological expertise. One
Japanese expatriate was appointed as vice president of the German target-firm, and twoother Japanese managers were sent to the target-firm for three years to introduce theJapanese way of thinking to the German engineers and to facilitate communication(Bebenroth and Bartnik, 2018).

Data collection and sample
To obtain the target-firm’s employees’ views regarding the necessity of integrating
their business operations into the bidder firm, data was collected at the German firm in
2015, a year after the takeover. The CEO was also interviewed several times before
allowing a questionnaire study to be fielded at the firm. After that unofficial approval,
a first draft of the questionnaire was sent to the CEO and his team to serve as a prestudy that would facilitate discussion on more detailed questions. Several months later,a link to the final, fully developed questionnaire was sent out to all of 240 the German
firm’s employees (Bebenroth and Ismail, 2018). A cover letter ensured all participantsof anonymity and assured them that their company’s top management had approved
the questionnaire and actively encouraged employees to participate. This strong support was also communicated in a meeting of all employees, leading to a high response
rate. After the second reminder, 176 usable questionnaires were received, a 73.3 percent response rate. As shown in Table 1, the average age of the participants was highat 48 years (SD = 10.6), and average tenure at the firm was around 16 years (SD = 13.5).
The participants belonged to various divisions, with 28.4 percent from the “energy fromwaste” division, 22.2 percent from the gas cleaning division, and 12.3 percent from the
project management division. Divisions with lower participation rates were finance(2.5%), human resources (2.5%), and purchasing (4.9%). Most of the participants weresenior employees with significant company tenure who worked in technical divisions.
Therefore, the sample can be considered comparatively homogeneous and adequate to
fit to the statistical analysis.

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Table 1. Sample characteristics
Variables
Firm tenure in years
less than 10

Frequency% of total

79
53

44.6
29.9

45

25.4

30–40

15
17

9.7
11.0

41–50

46

29.7

51–60
over 61

62
15

40.0
9.7

Division
Energy from Waste
Finance/Controlling/Accounting
Gas Cleaning
Human Resources
Project Management (Technical/Commercial)
Project Service
Purchasing
Sales & Proposals

46
4
36
4
20
25
8
15

28.4
2.5
22.2
2.5
12.3
15.4
4.9
9.3

10–24
more than 25

Ageunder 30

Measures
All of the questionnaire’s items were measured using a five-point Likert scale, withresponse options ranging from 1 (= strongly disagree) to 5 (= strongly agree). The questionnaire was written in German (translated from English) and the usual back translation method was applied (Douglas and Craig, 2007). As the construct for the dependent
variable, we borrowed two items from Gerpott and Neubauer (2016) that addressed
how employees perceived integration attempts in their firm: “In my view the integration of operational business is necessary for us as a German affiliate for a successful
handling of projects” and “(i)n my view the integration of operational business is necessary for our firm’s survival.”
The vision construct came from Rafferty and Griffin (2004), but we did not
apply all of the variables, as our rotated component matrix indicated that we use only
three items for this construct. A sample question was “I have a clear vision of wherethe (bidder) wants to have our company in five years.” We measured cultural openness
with four items derived from the cultural openness construct developed by Van Dyne

9et al. (2008). Statements in the questionnaire included “I enjoy interacting with people
from different cultures.” Only four items were selected from the original five-item scale,as the fifth item—seen in the Varimax rotation analysis—was not relevant to thisstudy’s context. Overall, our construct is systematically conceptualized and developed
within this category (Brown and Treviño, 2006). Our argument is that the target-firm’s
employees have high cultural openness; even though they had no contact with Asians
before the takeover, many of them had extensive international experience in the industry.

Managing common method variance and bias
To minimize the risk of common method variance, we followed Podsakoff et al. (2003).
The cover letter emphasized that the questionnaire was anonymous and that there wereno right or wrong answers. We also reduced the risk of common method variance by
careful construction of the items. In addition, a pilot study was conducted with the CEO
and several managers to ensure that the questions were understandable.
We employed Harman’s one-factor test as an ex-post statistical method to determine whether common method variance was a problem. All of the items (constructs)that were evaluated (perceived necessity of integration, cultural openness, and vision)
were entered into an exploratory factor analysis. We employed an unrotated principal
components factor analysis to see if only one factor accounted for most of the covariance between the measures and found that three factors had eigenvalue higher than 1,with one accounting for 32.7 percent of the total variance and the second and third
accounting for 25.8 percent and 17.9 percent, respectively (Table 2). The results ofHarman’s one-factor test indicated that the first factor did not account for the majority
of covariance (above 50%) and that common method bias was not a concern for the
study.

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Table 2. Principal component analysis
Total Variance Explained
Initial Eigenvalues
Component

Total

Extraction Sums of Squared Loadings% of Variance

Cumulative %Total% of Variance

Cumulative %

1

2.943

32.70532.7052.943

32.70532.7052

2.324

25.82758.531

2.324

25.82758.5313

1.607

17.85276.3831.607

17.85276.383

4

0.589

6.548

82.932

5

0.367

4.079

87.011

6

0.343

3.816

90.827

7

0.311

3.452

94.279

8

0.293

3.252

97.532

9

0.222

2.468

100.000

We undertook a rotated component matrix to ensure that the items loaded on
the expected constructs. The first principal component fits strongly with both items on
the perceived necessity of integration. To achieve this fit, we eliminated two questions
that were asked in the original questionnaire. The second principal factor was correlatedwith four items on culture when we eliminated one of the questions from the original
construct. The third principal component (vision) was originally measured with four
items, but we took one item out that did not fit.
Table 3 shows the questions (back-translated from English and asked in German), constructs, indicators, and the rotated component matrix results. Not shown in
the table but calculated are the items used to measure the constructs’ internal consistency. Cronbach’s alpha coefficients are greater than 0.7 (Nunnally, 1978); while thefirst construct (perceived necessity of integration) loaded at 0.86, the second construct(cultural openness) loaded at 0.84, and the third construct (vision) loaded at 0.87. The
components also loaded on each of the factors nicely.

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Table 3. Questions, constructs, indicators, rotated component matrix
Questions

Construct

In my view:…integration of operational business is necessary Necessity offor us as a German affiliate for the successful han- integrationdling of projects.
In my view:
Necessity of…integration of operational business is necessary
integrationfor our survival.
I enjoy living in cultures that are unfamiliar to me. Culture Q. 1
I am confident that I can socialize with locals in a
Culture Q. 2
culture that is unfamiliar to me.
I often associate with people from other cultures.
Culture Q. 3
I am sure I can become accustomed to a culture
Culture Q. 4
that is different from mine.
I have a clear vision of where (the bidder) wants
Vision 1
our company to be in five years.
I have a clear vision of future changes.
Vision 2
I have a clear vision of what (the bidder) has done
Vision 3
so far during the integration period.
Note. Extraction method: Principal Component Analysis.
Rotation method: Varimax with Kaiser Normalization.
a. Rotation converged in four iterations.

Indicator

Component
1
2
3

Suc 1

.919

Suc 2

.932

Cult 1.730

Cult 2.846

Cult 3.869

Cult 4

.852

Vis 1

.883

Vis 2

.893

Vis 3

.870

Results
Pearson correlation
The Pearson correlation (Table 4) shows that the construct of perceived necessity ofintegration is positively correlated to the construct of cultural openness. However, thevision construct is negatively but not significantly related to perceived necessity of integration.

Table 4. Pearson correlations
Pearson correlations
Mean
Cultural openness

Vision3.35782.6169

SD
0.94

0.96

Culture1-0.032

Vision-0.0320.176*

0.68

0.021

1

-0.0690.68
Integration necessity

Company tenure
Note. N = 174

3.5948

15.9

0.95

12.5

Integr. nec.

0.37

.176*

-0.069

0.021

0.37

1

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Multiple regression analysis
We calculated several multiple-linear regression models to predict the impact of the
respondents’ perceived necessity of integration on “cultural openness,” “vision,” andthe moderating variable of vison on cultural openness, as shown in Table 5. Employees’
tenure with the company served as a control variable and was grouped into three categories: up to 10 years (79 observations), between 10 and 24 years (53 observations),
and more than 25 years (45 observations).
A significant regression equation (F(3, 174) = 2.929, p < .05, with an R2 of .034)
on cultural openness predicts employees’ perceived necessity to integrate into the bidder firm (model 1). In model 2, we do not find evidence that vision predicts the perceived necessity to integrate (F(3, 174) = 0.588, p > .10, with an R2 of .007). However,
the interaction term of vision on cultural openness predicts perceived necessity of integration weakly (F(3, 174) = 2.583, p < .10, with an R2 of .059) (model 4). Thus, hypothesis H1 is strongly supported, while hypothesis H3 is weakly supported.

Table 5. Multiple-Linear Regression
Model 1Model 2

Coef.
SE
Coef.
SE
Constant
2.867 0.341 ***3.679 0.258 ***Company ten0.057 0.088
0.055 0.089
ure
Cultural open0.187 0.077 **ness
Vision-0.071 0.076
Vision*Cult.
Openness
Model statistics
R2
0.034
0.007
Adjusted R2
0.022-0.005
F
2.929
*
0.588
Note. * for p < .1, ** for p < .05, and *** for p < .01

Model 3Model 4

Coef.
3.065

SE
0.394 ***

Coef.
1.799

SE
0.783 **

0.076

0.088

0.080

0.088

0.179

0.078 **

0.547

0.212 **

-0.08

0.074

0.411

0.273

-0.1440.077 *

0.039
0.022
2.249

*

0.059
0.036
2.583 **

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Employees’cultural openness

H1 (2.509**)

Employees’
visionH2 (-1.496)

Employees’cultural openness ×
visionH3 (-1.843*)

Perceived
necessity ofintegrating
operational
business

Note. * 10% significance; ** 5% significanceFigure 2. Significant paths for the model

Figure 3 shows a two-way interaction effect with “cultural openness” as theindependent variable, “vision” as the moderator, and “perceived necessity of integration” as the dependent variable. The interaction effect is significant and disordinal.

Figure 3. Two-way linear interaction effects of cultural openness, vision, and perceived necessity of integration

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Discussion
Several of our findings grounded on the knowledge-based view are intriguing. First,
we corroborate the theory that culturally more open target-firm employees have greater
perception of the need to integrate their operational business into the bidder firm (Bebenroth and Ismail, 2014; Kaflehn et al., 2015; Van Dyne et al., 2008). We also findthat the small group of employees with more cultural openness and a clearer vision (ourmoderator) perceive less need to integrate their operational business into the bidder
firm.
Second, we extend previous research that focuses primarily on performance andsuccess by shedding light on the issue of target-firm`s employees’ perceived necessity
to integrate their operational business into the bidder firm. Yildiz (2016) proposes that
cultural similarity between the buyer firm and the target-firm promotes benevolencebased trust and increases the acquiring firm’s status. We show that the target-firm’s
employees’ perception of the necessity of integrating their operational business into theacquiring firm depends on their cultural openness.
Third, in contrast to research like that of Vasilaki et al. (2016), we find no statistically significant evidence that employees with clearer vision are more negative
about the necessity to integrate their operational business into the bidder firm.

Practical recommendations
As we study target-firm employees’ perceived necessity to integrate their operational
business into a bidder firm, we recommend that bidder managers bring in not only new
employees but culturally open ones during the integration period. M&A integration
could be an easier task when heterogeneous teams increase the variations in approaches
to finding solutions.
In addition, culture- and vision-related issues during M&A integration can provide top managers clear signs about where the new organization should go in the near
future. In particular, they should communicate a transparent vision through all levelsof (target) employees’ hierarchy. For example, without knowing or understanding thebidder firm’s vision, target-firm employees will perceive that they have no control overtheir future, leaving frustrating and demotivating visionaries. Knowing the bidder
firm’s vision helps to define a common vision and induce cooperation among the target
and bidder firms’ employees. That is an important issue in this research as the Japanese
firm was interested in the German target’s technical expertise so it could compete
against its Asian rivals.

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Limitations of the study
Several limitations of this study should be taken into account. First, this research focuses on cultural openness or, more precisely, on the cultural openness of employees,
as what we suggest is the most appropriate construct to measure perceptions of the needfor integration. However, other confounding factors may influence the results, including dimensions like emotional intelligence. Harrison-Walker (2008) finds that targetfirm employees’ emotional intelligence and spirituality have strong influences on their
psychological well-being in the post-M&A integration period. The same applies to ourconstruct of vision. In addition, we did not take all items from the traditional constructs,
as our Varimax rotation analysis suggested that we leave out items with lower loadings.
Second, by relying on constructs, we naturally have a risk bias. Our questions
might have stimulated risk-neutral employees and provoked risk-averse employees to
respond differently. For example, the questions related to cultural openness could beanswered in a more positive way by risk-neutral employees, for whom “the unknown”
is not a burden but a welcome change and an opportunity to explore something new,than by risk-averse employees. In contrast, risk-averse employee, who may be uncomfortable with situations that are not transparent and predictable, could respond to questions about vision in a negative way.
Third, this research is likely not free from errors that arise from misinterpretations of questions. For example, differing definitions of cultural openness and of vision
may have distorted respondents’ views. In addition, the moderator of vision was at only
10% significance, so it only weakly supports our hypothesis.
Fourth, the target-firm’s country and, even more, the bidder’s country (here,
Japan) may influence the results. For example, Japanese managers tend hesitant about
integrating cross-border target-firms. The type of industry also matters, as thesteelmaking and engineering industries are more international in their settings thansome other industries are (Lee and Ki, 2017; Ahmed et al., 2020). This internationality
is an advantage for our study because it leads to more heterogeneity in the sample.
However, because employees in other industries may not behave in the same way, generalization and extension to other industries must be undertaken with care.

Conclusion
This paper extends M&A integration research by showing how target-firm employees’cultural openness and vision relates to their perceptions of the need to integrate theiroperational business into a bidder firm. Grounded in the knowledge-based view, ourfindings demonstrate that culturally more open employees feel more need to integrate16
their operational business into the bidder firm. However, target employees with clearer
vision and more cultural openness perceive less need to integrate.

Acknowledgement
This joint research originated in the Alexander von Humboldt Foundation (AvH Foundation) network and began in 2003. The authors gratefully acknowledge support fromthe AvH Foundation for meetings in Kobe in 2018 and 2019. The views reported inthis paper are those of the authors alone and not those of any institution. All errors andomissions that remain are the authors’ sole responsibility.

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