A Review of IT Systems Development and Deployment in M&A Post Implementation: The Challenge between Eastern and Western Organizational Cultures

Introduction

In his 2013 article titled “IT Systems Development and Deployment in M&A Post Implementation: The Challenge between Eastern and Western Organizational Cultures,” Shore (2013) studies the implementation and harmonization of information technology (IT) systems cross-culturally. This is done through a case study of large organizations acquiring subsidiaries in different regions (Shore, 2013). Shore (2013) notes that the implementation of these systems might not be that challenging from a technical perspective; however, he hypothesizes that social differences may be a larger obstacle than the technical considerations. Much of the prior literature is focused on the nuances of a Western company acquiring an Asian company (Shore, 2013). This article seeks to explore the alternative, that is, what cultural nuances need to be considered when an Asian company acquires a Western one, and how does that affect technology transfer between the two entities (Shore, 2013)?

A Review of IT Systems Development and Deployment in M&A Post Implementation: The Challenge between Eastern and Western Organizational Cultures

The author argues that Asian companies acquiring Western companies is a growing phenomenon that may continue to trend upward (Shore, 2013). This argument is supported by the statistic that “China’s total foreign holdings acquired through mergers and acquisitions (M&A), basically nonexistent 20 years ago, reached over $87 billion by the end of 2008” (Alan et al., 2010, para. 1) among other statistics about various Asian countries’ investment behaviors. Shore (2013) claims that it is important to understand how the management culture of Asian companies will affect their acquisition targets.

The case study involves one Asian company that has been making various acquisitions abroad (Shore, 2013). More specifically, the case study is concerned with the acquisition of two European companies (Shore, 2013). Sometime after these two companies were acquired, it was announced all information systems would be replaced by centralized corporate systems (Shore, 2013).

The implementation of these systems led to frustration being expressed by European IT managers towards headquarters (Shore, 2013). Differences in governance and culture led to the implementation project falling behind deadlines (Shore, 2013). The headquarters group was noted to have a culture defined by “hierarchy, control, risk avoidance, and speed” (Shore, 2013, IT M&A Project section). This culture contrasted with the European culture, which was characterized by “lower power distance, need for collaboration, discussion, flexibility, appreciation, and greater involvement in the decision process” (Shore, 2013, IT M&A Project section).

Conclusion

The author concludes that “while technical IT challenges can be overcome, it is the social systems mediated by national and organizational culture that may be a project’s biggest hurdle” (Shore, 2013, Some Conclusions section). Shore recommends three courses of action: “determine if the described asymmetry of [technology] transfer expressed in this case study does exist in other East-to-West transfers” (Shore, 2013, Some Conclusions section), “develop strategies to deal with these cultural differences” (Shore, 2013, Some Conclusions section), and develop “a better understanding of how long technology transfers will take” (Shore, 2013, Some Conclusions section). Shore (2013) also states that a consultant interviewed for the case study claims that acquiring companies may be leaving as much as half of their potential value on the table by choosing not to address these issues as they arise.

References

Shore, B. (2013). IT Systems Development and Deployment in M&A Post Implementation: The Challenge between Eastern and Western Organizational Cultures. Journal of Global Information Technology Management, 16(1), 1-5. https://www.proquest.com/scholarly-journals/systems-development-deployment-m-amp-post/docview/1351879704/se-2

Alan, T., Hale, G., & Santos, J. (2010, March 22). What Is China's Capital Seeking in a Global Environment? - San Francisco Fed. SF Fed. Retrieved June 2, 2024, from https://www.frbsf.org/research-and-insights/publications/economic-letter/2010/03/china-capital-seeking-global-environment/