The Determinants of International Acquisition Performance in Korea : The Impact of Knowledge Transfer and Organizations' Cultural Differences and Strategic Fit

Existing understanding of how and when knowledge is best transferred for the benefit of foreign firm's acquisition is rather limited. This study explores to what extent foreign firms have benefited from the acquisition of Korean firms and what the conditions are for such benefits. More specifically, the focus of the study is to investigate the role of knowledge transfer and inter-organizational differences in organizational culture and strategic fit on the international acquisition performance. Drawing on the literature from a knowledge based perspective, this study conceptualized the variables of international acquisition performance, knowledge transfer, differences in national and corporate culture, and strategic fit―each of which are assumed to be critical to the research question at hand―as measurement items to test seven hypotheses. After establishing 104 appropriated cases of foreign firms acquiring Korean firms during 2008 and 2010, we distributed questionnaire survey to the sample firms to test our hypotheses test. A total of 84 firms replied to the questionnaire, on which the seven hypotheses were tested. The results of the analysis revealed that knowledge transfer and compatibility in organizational culture and strategy delivered positively influenced international acquisition performance. Additionally, the positive impact of knowledge transfer is found to be enhanced when the acquiring and acquired firms are more similar in organizational culture and stronger in strategic fit. Unlike previous studies, national differences between acquiring and acquired firms did not play any direct and moderating role in the international performance. The conclusion of this study was that foreign firms intending to acquiring Korean firms should put knowledge transfer at their strategic priority and create favorable inter-organizational conditions to increase the chance of acquisition success. This study also demonstrated that knowledge transfer activities increase with strategic and organizational fit are more important than national difference. If managers from recently developed countries want to facilitate positive outcomes for their future international collaborations, they should determine how they can narrow the gap in corporate and social differences. As a suggestion, a gradual experience with potential partners through contract agreements prior to choosing an acquisition opposition would be helpful. Finally, this study contributed to propose the integrated framework that comprehensively examines the interrelations of critical factors. Limitation and further steps of the study are also suggested.