Journal

Article
Journal 33

Cultural Fit and Post-Merger

Integration in Banking M&As

Journal
The Capco Institute Journal of Financial Transformation

Recipient of the Apex Awards for Publication Excellence 2002-2011

Technical Finance

#33

12.2011

Alessandro Carretta
Vincenzo Farina
Paola Schwizer

PART 2

Cultural Fit and PostMerger Integration in

Banking M&As
Alessandro Carretta Full Professor in Financial Markets and Institutions, University of Rome
Tor Vergata

Vincenzo Farina Lecturer, University of Rome Tor Vergata

Paola Schwizer Full Professor of Banking, University of Parma

Abstract

banking industry, this paper proposes a framework, applied

The intense concentration process taking place in the fi-

to a representative sample of cases (about 78.2percent of

nancial systems has attracted substantial attention from

market share, based on total assets), for assessing cultural

stakeholders and academics. The impact of M&A on the

similarities of actors involved in M&A transactions. Corpo-

value creation and efficiency/effectiveness improvements of

rate culture is measured using an ethnographic approach

banks involved appears, on the whole, disappointing and it

focused on language as its special artefact. The assessment

is still hard to create benefits for customers. Management

is based on the definition of some key concepts that are

literature points to the difficulties of governing a post-merger

relevant for the banking industry (i.e., competencies, com-

integration process and recognizes the importance of corpo-

petition, customer, disclosure, human resources, innovation,

rate culture for explaining success. In fact, cultural clashes

and risk) and on a text-analysis model applied to a corpus

could, on one hand, generate conflicts and have negative

of reference texts produced by the surveyed banks three

effects on the timing and effectiveness of the post-merger

years before the transaction. The elaboration of data uses

integration process and, on the other hand, could influence

Wordsmith 4, a text analysis software developed by Oxford

the motivation and turnover of individuals. Set in the Italian

University.

147

The underlying assumption of this work is that the failure of M&A transac-

In M&As, the topic of cultural compatibility between the different cor-

tions does not depend only on errors made before the deal, concerning

porate environments is considered to be of noteworthy importance for

strategic and organizational analysis, but rather on the procedures for the

the success of the transaction, seeing that the existence of cultural dis-

implementation of the various phases that follow the conclusion of the op-

sonance even creates problems when it comes to the integration of in-

eration, as well as the capacity of management in dealing with the com-

dividuals [Sales and Mirvis (1984); Shrivastava (1986); Nahavandi and

plexity of the operation and with the problems of integration [Shojai (2009)].

Malekzadeh (1988); Cartwright and Cooper (1993); Trompenaars and

An especially important problem is the presence of areas of conflict be-

Woolliams (2003); Irrman (2005); Kusstatscher and Cooper (2005); Car-

tween the cultures of the different firms, which can constitute one of the

retta and Schwizer (2008); Nyberg and Mueller (2009)].

main causes of failure. This work aims to create a model for assessment of
the cultural compatibility of the banks involved in M&A transactions, with

Cultural conflicts could significantly impact the timing and the effective-

subsequent application of the model to real case studies.

ness of the process of integration. They could impact the individual processes as well as influence the motivation of the personnel [Sales and

The role of corporate culture in the success of M&A

operations

Mirvis (1984); Buono et al. (1985)], the level of turnover [Hambrick and

When it comes to successful M&A transactions, the literature [Jemison

more general terms, financial performance [Datta (1991); Chatterjee et al.

and Sitkin (1986a, b); Datta (1991); Chatterje et al. (1992); Zollo and Singh

(1992); Schoenberg (2000); Stahl and Voigt (2003)].

Cannella (1993); Krug and Hegarty (1997); Lubatkin et al. (1998)] and, in

(2004)] highlights the need for the presence of strategic and organizational coherence (strategic fit and organizational fit) in order to reduce re-

Nyberg and Mueller (2009) suggest that non-participation or resistance

sistance to change. In particular, organizational, human, and procedural

to change initiatives are not necessarily ideological in nature, but are

coherence between firms may affect the needed change initiatives during

rather specific to the transaction and the local cultures of the organiza-

the post-merger phase.

tions involved. In particular, people react differently to change depending on their local discourses and this leads to different views of the

The extent to which the two companies are related has a profound ef-

change programs and, therefore, has an impact of the success or failure

fect on the possibility for a successful integration and, therefore, should

of the M&A transaction. Berry (1983) identified four modes through which

be considered as a key factor, during the planning phase, when it comes

acculturation takes place: i) integration, if one group wants to preserve

to selecting the firm to be purchased or with which to merge. Seen in

its own culture and identity, thus remaining autonomous and indepen-

this light, the more the greater the degrees of similarities between the

dent from the other group; ii) assimilation, if one group willingly adopts

companies involved in the transaction the greater the probability that the

the identity and culture of the other group; iii) separation, if one group

operation will be a success. The degree of relatedness relates to the

wants to preserve its own culture by remaining separate and independent

market/product matrices within the individual companies or to the ex-

from the other (typically dominant) group; iv) deculturation, if a group

tent to which their procedural, organizational, managerial, and cultural

loses contact with both its previous culture and the culture of the other

characteristics prove complementary. However, empirical evidence con-

group. Moreover, the difficulties of the integration process are illustrated,

cerning banking organizations points to the need for caution in making

in terms of discrimination between groups, by the social identity theory

generalizations. For example, while positive results are observed when

[Tajfel and Turner (1979)]. The problems that arise from the close identi-

certain aspects of the processes of concentration of the banks involved

fication of the individuals who operate inside the new organization with

in the transactions are relatively similar, such as production functions

the previous context the former bank A versus the former bank B

and collection policies, there are also cases, and especially those involv-

can be explained by examining a number of mechanisms that stimulate

ing cross-border M&As, where differences in policies of investment and

increased identification with a group during moments of change. In simi-

management of credit risk result in better performances [Altumbas and

lar situations, individuals tend to self-classify themselves as belonging

Marques Ibanez (2004)].

to a given group. This is enough to give rise to attitudes of favoritism

towards the members of ones own group and of differentiation with re-

148

In general, the potential success of integration process depends less on

spect to those belonging to outside groups. What is needed, therefore,

the degree of similarity of the outputs produced than on the compatibility

is a preliminary evaluation of the impact of the three fundamental fac-

of the structures. It can be measured using the degree of ease with which

tors that determine social identity and intra-group favoritism [Tajfel and

the corporate culture and skills are transferred from the bidder to the

Turner (1979)]: the need to belong to a social-collective context and the

target, or the capacity of the new economic entity to pick up new skills or

resulting internalization of membership in a group as a central element in

a new corporate culture.

ones individual identity (self-concept); the degree to which the new context provides opportunities for direct comparisons between the cultures

The Capco Institute Journal of Financial Transformation

Cultural Fit and Post-Merger Integration in Banking M&As

of the different groups; and the importance attributed to the group with
which the contact occurs, itself the result of the status that the members

Culture

of the group attribute to their own association (the greater the importance
placed by each individual on his or her own group, depending on it for
much of their sense of self, the greater will be the tendency towards fa-

Language used inside

the organization

voritism or critical attitudes).

Consequently, Trompenaars and Woolliams (2003) state that diagnosing
the tensions between the current and the ideal corporate culture is very
Language
orientation in
category 1

important for understanding how seemingly opposing values can be integrated to achieve a win-win outcome.

Language
orientation in
category 2

Language
orientation in
category n

Management is required to carry out a preliminary evaluation of the level

of cultural compatibility between the organizational entities to be inte-

Meaning

grated and to create, following the operation, a common corporate culture/identity. Such actions can be successfully taken only if there is a
clear understanding, on the one hand, of the fundamental cultural values

Figure 1 The role of linguistic categories

from which the process starts (those present at the time of the M&A operation) and, on the other hand, of the values towards which the process
moves (because they play a role in the formulation of the strategies of the

is transformed into modes of organizational conduct shared within the

new corporate entity).

context to which they belong [Rosa and Porac (2002)]. The creation of
a shared vocabulary is an outcome of the culture that the members of a

Corporate culture and language

given organization develop over time [Levinson (2003)]. The frameworks

Culture can be defined as a set of meanings shared by a collective entity

for interpreting the meanings attributed to the concepts expressed by

and translating into underlying assumptions and points of view shared by

vocabularies are supplied by a process of categorization of language.

the member of an organization [Wilkins and Ouchi (1983); Schall (1983);

In this sense, the language used can be defined as a structured system

Schein (1983); Rousseau (1990)]. Within a given context, culture develops

of correlated categories, where the structure of the correlations moves

through shared experiences, generally over lengthy periods and through

in the direction of a well-defined meaning [Berger and Luckmann (1967)]

the endorsement of principles shared by all the members. One approach

(Figure 1).

to analyzing corporate culture addresses the importance of language in

the form of codes, symbols, anecdotes, etc. as a means of registering a

The different weight, in terms of importance, of the categories found

significant portion of the shared vision of the members of an organization

within the text is expressed in terms of the orientations that character-

[Schall (1983); Schein (1983)].

ize the individual concepts. This means that the comparison of cultures
can draw on the differences (as well as the similarities) found within the

The idea that language, meaning the sum total of terms used to define

corpuses of texts that the organizations produce.

concepts, can explain how the real world is perceived is drawn from
Whorf (1956), who holds that language determines how observed phe-

In operating terms, the study of the cultural characteristics of language

nomena are interpreted, thus different modes of perceiving phenomena

is based on the methodology of text analysis, which falls within the field

can be traced to different linguistic vocabularies developed inside of dif-

of ethnography (being the study of human conduct through an analysis

ferent cultures and structure and composition of a linguistic vocabulary

of the symbols expressed). Stone et al. (1966) define text analysis as

influence the way in which phenomena are perceived.

any technique used to examine, in a systematic and objective manner,

the specific characteristics of a text. In a similar manner, Roberts (1997)

The vocabularies inside the organizations are dynamic systems of lin-

defines text analysis as any systematic reduction of a flow of texts into a

guistic expression employed to identify the set of organizational prac-

set of standardized symbols that provide an idea of the presence, inten-

tices, as well as the set of key concepts used to articulate and implement

sity, and frequency of certain noteworthy characteristics. The use of text

those practices [Meyer and Rowan (1977)]. When the members of a given

analysis is based on the assumption that distinctive characteristics of

organization use a linguistic expression from their vocabulary, they are

organizations are reflected in the documentation that they produce, and

actually making reference to an individual cognitive representation that

that the language used provides the key to their interpretation.

149

The text analysis was carried out on the financial-statement reports for
the three years preceding the one in which the M&A transactions went
into effect. Texts containing a total of 2,412,326 words were analyzed,

Vocabularies

Key
concept
Key
Keyconcept
concept

Cultural orientation

464,350; Banco Popolare di Verona e Novara 309,040; Capitalia

Context

Corpuses

subdivided as follows: Banca Intesa 402,794; Banca Popolare Italiana

237,630; San Paolo 495,701; Unicredit 502,811.

List of terms in
the context
Phase 1
Selection of corpuses
+
Phase 2
Definition of key concepts
and linguistic categories

Phase 3
Analysis of the context
occurrences, in respect
of the key concepts

Phase 4
Comparison of the
context occurrences and
the language
categories extracted

Phase 5
Determination of
cultural orientation

Figure 2 Methodology

Phase 2 Definition of linguistic categories and key concepts

Another step to be taken into consideration is the definition of the language-analysis categories, as well as the key concepts for evaluating the
research hypotheses [Carretta et al. (2008)]. In fact, an assessment of a
firms culture by means of text analysis is based on the definition of two
key dimensions:

Methodology

Categories of language analysis these can be drawn from a

The preliminary formulation of a model that uses text analysis to inves-

variety of sources, or they can be created from scratch for the case

tigate corporate culture entails a series of different phases that focus

at hand (the first approach guarantees standardized results, making

on a number of key moments, such as the identification of the sample

possible a comparison with other studies):

group of subjects on which to conduct the evaluation, together with the

Harvard IV Psycho-Social Dictionary [Kelly and Stone 1975)].

documentation, plus the full-fledged analysis and definition of a mode of

Lasswell Value Dictionary [Lasswell and Namenwirth (1969)].

Created from scratch.

measurement for representing and assessing cultural orientations.

Key concepts around which the corporate culture is constructed

In strictly methodological terms, therefore, the analysis of cultural gaps

these constitute the elements on which the research question is

through language can be broken down into different phases [Krippendorff

based, and they can refer to fundamental aspects of the sample

(1980); Weber (1990)] meant to lead to a determination of cultural orienta-

under examination. This guarantees that the concepts in question are

tion. Specifically, identification can be made of at least the five following

addressed with a high level of intensity and frequency in the docu-

phases, which are generally valid for use in text analysis (Figure 2).

ments being analyzed.

Individual phases are described in greater depth below, together with the

For this work, the following language-analysis categories were used,

criteria followed in applying them to M&A transactions involving Italian

having been taken from the dictionaries: i) Harvard IV PsychoSocial and

banks:

ii) Lasswell Value:

Phase 1 Selection of the corpuses of texts to be analyzed

Power orientation represents the level of preference for manage-

The selection of the corpuses included all the documents produced by

ment styles characterized by authority rather than cooperation, as

the organization (Bowman, 1984; DAveni and MacMillan, 1990; Kabanoff

demonstrated by the relative weight of terms that express power and

et al. 1995), including reports on financial statements, presentations, and

authority within the texts being analyzed.

speeches. A more detailed distinction is made between documents avail-

Result orientation represents the extent to which attention is

able publicly, such as reports on financial statements, business plans,

focused on results within the organization, as demonstrated by the

and presentations, and firm-specific documents, such as memorandums,

relative weight of terms corresponding to the definition and achieve-

service orders, and internal regulations.

ment of objectives within the texts being analyzed.

HR orientation represents the importance placed on people within

The analysis of cultural compatibility was carried out for the following Ital-

the organization, as demonstrated by the relative weight of terms

ian banks involved in M&A transactions between 2004 and 2006: Banca

regarding the human factor within the texts being analyzed.

Popolare Italiana, Banca Intesa, Banco Popolare di Verona e Novara,

Capitalia, San Paolo, and Unicredit.1 Based on total balance-sheet assets, these banks, taken as a whole, account for approximately 78.2percent of the Italian banking assets. The sample, therefore, is a more than
150

meaningful representation of the reality of the Italian financial system.

Banca Intesa and San Paolo: announcement date 24 August 2006; effective from 1 January
2007. Banca Popolare Italiana and Banco Popolare di Verona e Novara: announcement
date 16 October 2006; effective from 1 July 2007. Capitalia and Unicredit: announcement
date 20 May 2007; effective from 1 October 2007.

The Capco Institute Journal of Financial Transformation

Cultural Fit and Post-Merger Integration in Banking M&As

In addition to these three orientations, calculations were made of the

at an index with which the intensity of the orientation can be gauged.

semantic differential, an index that illustrates existing differences in the

attribution of meanings to key concepts by the banks involved in M&A

The intensity of the cultural orientation is determined by measuring the

operations.

relative importance of the individual categories within the text corpuses

to be analyzed. In this work, all the orientations (with the lone exception

In this work, it is assumed that the different intensities of the language

of the semantic representation, whose representation is based on a scale

can be judged according to the following scales [Osgood et al. (1957)]:

of 1 to 1) for each of the subjects analyzed are expressed as percent-

i) evaluation (positive-negative); ii) power (strong-weak); and iii) activity

ages of the total terms in the context. Measurement of both the cultural

(active-passive). The scales constitute modes for approaching a given

gap and the semantic differential have been standardized for values fall-

concept. Evaluation manifests a judgment of value, making it possible to

ing between a minimum of 0 and a maximum of 1, in order to facilitate

express the concepts level of acceptance. Power is the force expressed

comparison during the discussion of the results. In the first case, the

by the concept. Finally, activity indicates the level of activation triggered

standardization is based on the following formula:

by the perception of the concept. The methodology for calculating the

semantic differential can be compared to that for the calculation of the

CULTURAL GAP a,b = (Ca Cb)/(Ca + Cb)

Euclidean distance between two points (both the bidder bank and the
target bank can be depicted as a point in a space whose dimensions are

where a and b represent the two banks that are involved in the M&A

equal to the number of the scales of judgment). The following key con-

transaction and Ca and Cb the different orientations within each of the

cepts were utilized in analyzing the culture of the banks: i) customer; ii)

years considered.

competence; iii) competition; iv) innovation; v) human resources; vi) risk;

and vii) transparency.

In the second case, on the other hand, the spatial distance between the
banks is calculated with respect to the higher theoretical value, which is

Phase 3 Analysis of occurrences for the context of key

concepts

equal to 1.73 (meaning the distance between a point with coordinates of

x=0, y=0, z=0 and a point with coordinates of x=1, y=1, z=1).

The analysis of occurrences generates a list of the words that make up

the text, accompanied by the number of times they recur, and possibly by

Results

the percentage of their presence compared to the total number of words.

The text-analysis methodology brings to light a number of points of dif-

The definition of the context utilized for this operation considers all the

ferentiation between the cultures of the banks analyzed, though it also

terms in the five positions that precede and follow the key concepts re-

points to noteworthy similarities. The precise values of the items regis-

ferred to above and have a minimum frequency of five occurrences. For

tered are shown in Table 1.

the actual textual analysis, the Wordsmith 4 software [Scott (1999)] produced by Oxford University was used.

Moving on to a more in-depth analysis, the orientations of the banks are

expressed, for the purposes of this work, as the average value for the

Phase 4 Comparison between the occurrences of context

and the linguistic categories

period being considered (2004, 2005, and 2006).

A further step in the analysis involves undertaking a comparison between

The results for the cultural orientations (power, result, and people) are

the occurrences of the contexts of the key concepts and the terms found

summarized in Figure 3. The results for the semantic orientations (pos-

in the vocabularies of the linguistic categories. This is done in order to

itive-negative, strong-weak, and active-passive) are presented in Fig-

bring to the fore both the differences and the similarities, making possible

ure4.

different approaches to the analysis. For the purposes of the analysis, it

was necessary to establish an association between the list of context oc-

As a rule, the relative weights of the cultural orientations (power, result,

currences and the previously defined linguistic categories.

and people) for all the banks considered appear constant within the period of analysis. Also worthy of note, in the case of all the banks, is the

Phase 5 Determination of the prevalent cultural orientation

and the related intensity

people component, which generally proves higher than the other orien-

Finally, the intensity of the cultural orientation was measured by plotting

tion either, with the individual components (evaluation, power, and activ-

the importance of the individual categories within the text corpuses being

ity) seeming to take on a well-defined structure for all the banks.

tations. There are no noteworthy discrepancies for the semantic orienta-

analyzed. The underlying idea is to compare the weight of the occurrences of each context within the linguistic vocabularies, in order to arrive

Looking at the analyses of the cultural gaps between all the possible

151

Bank

Year

Cultural orientations (% of context occurrences)

Power

Result

HR

Semantic orientations (evaluation-power-activity) (min 0, max 1)

Positive-negative

Strong-weak

Active-passive

BPI

2004

4.00%

4.00%

5.30%

0.30

0.60

0.40

BPI

2005

1.80%

3.40%

3.10%

0.40

0.50

0.80

BPI

2006

2.40%

3.40%

3.40%

0.60

0.60

0.80

BPI

2004-06

2.73%

3.60%

3.93%

0.43

0.57

0.67
0.70

BPVN

2004

5.00%

5.00%

11.20%

0.50

0.90

BPVN

2005

3.40%

5.40%

5.40%

0.30

0.80

0.90

BPVN

2006

3.40%

4.70%

6.00%

0.40

0.80

0.90

BPVN

2004-06

3.93%

5.03%

7.53%

0.40

0.83

0.83

2004

3.90%

2.90%

8.80%

0.30

1.00

1.00

CAPITALIA
CAPITALIA

2005

4.50%

4.50%

9.00%

0.50

0.80

0.80

CAPITALIA

2006

3.20%

2.40%

6.10%

0.50

0.80

0.80

CAPITALIA

2004-06

3.87%

3.27%

7.97%

0.43

0.87

0.87

2004

4.90%

5.30%

8.20%

0.00

0.70

0.60

INTESA
INTESA

2005

0.80%

1.70%

2.80%

0.60

0.80

0.60

INTESA

2006

1.10%

1.10%

3.70%

0.40

0.80

0.80

INTESA

2004-06

2.27%

2.70%

4.90%

0.33

0.77

0.67

2004

9.20%

6.20%

10.80%

0.50

0.80

1.00

SANPAOLO
SANPAOLO

2005

3.30%

3.30%

4.60%

0.40

0.90

0.80

SANPAOLO

2006

1.30%

3.00%

3.00%

0.40

0.60

0.70

SANPAOLO

2004-06

4.60%

4.17%

6.13%

0.43

0.77

0.83
0.80

UNICREDIT

2004

2.20%

2.90%

6.20%

0.10

0.70

UNICREDIT

2005

3.40%

4.50%

6.00%

0.20

0.80

0.90

UNICREDIT

2006

3.00%

2.70%

5.40%

0.50

0.80

0.70

UNICREDIT

2004-06

2.87%

3.37%

5.87%

0.27

0.77

0.80

Table 1 Summary of the cultural orientations and of the semantic analysis

pairings of banks in greater detail (Figure 5), it can be seen that the closer

meaning attributed to the concepts for which cultural orientations were

cultural fit is not necessarily presented by the banks actually involved in

recorded is virtually identical.

the M&A transactions.

Once again, however, it should be noted that the differences are not alThis is especially true in the case of Banca Intesa San Paolo, where the

ways lower for banks involved in M&A Transactions (Figure 6).

orientations towards power and result present noteworthy divergences

(0.34 and 0.21 respectively), as well as with Banca Popolare Italiana

Indeed, the lowest values of all were recorded for the following pairings:

Banco Popolare di Verona e Novara, where there is a certain difference in

Popolare di Verona e Novara Capitalia (0.03), Popolare di Verona e No-

the orientation towards people (0.31). In contrast, the pairing of Capitalia

vara San Paolo (0.04) and, as a result, Capitalia San Paolo (0.06).

Unicredit presents a good fit for all the orientations, and especially with

Looking at the differences in the language used, on the other hand, the

regard to result (0.02). Of all the pairings considered, good cultural fits

results were: 0.18 in the case of Banca Popolare Italiana Banco Popo-

were present in the cases of Banca Popolare di Verona e Novara San

lare di Verona e Novara; 0.12 for Capitalia Unicredit; and 0.11 for Banca

Paolo (power 0.08; result 0.09; people 0.10), Unicredit Intesa (power

Intesa San Paolo. How should these results be interpreted?

0.12; result 0.11; people 0.09) and Capitalia San Paolo (power 0.09;
result 0.12; people 0.13).

First of all, if corporate culture represents a set of shared meanings developed over time within a certain organization, then the identification of

152

An analysis of the semantic differential does not point to noteworthy dif-

the cultural orientations that play the greatest role in the success of an

ferences in the language used by the various pairings. It follows that the

M&A transaction, and for which a proper fit should be sought, depends

Result

0%

HR
SANPAOLO

CAPITALIA

The Capco Institute Journal of Financial Transformation

8%

Cultural Fit and Post-Merger Integration in Banking M&As

6% INTESA
UNICREDIT

BPI

BPVN

4%
2%

BPI

Power
Result

0%0,8

0,6
0,4
0,2
0

UNICREDIT
SANPAOLO

HR

BPVN

Positive-negative

CAPITALIA

Strong-weak
Active-passive

INTESA

SANPAOLO

CAPITALIA
BPI
1
0,8
0,6 INTESA
0,4
0,2
0

UNICREDIT

0,4
0,35
0,3
0,25
SANPAOLO
0,2
0,15
0,1
0,05
0

6%
BPVN

Result

Figure
5 Cultural gaps (min 0, max 1)
0,2 0,18
0,1
0,05

0,250

0,04

0,11

0,08 0,09

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AN

I-U

0,11

Active-passive

Power
Result

Figure 6 Semantic differential (min 0 max 1)

HR

Power
Result
HR

necessarily be left to the

Obviously, before any generalizations are made, more in-depth study is

necessary, potentially through examination of the different business sec-

0,21

tors.

0,17

0,15
0,14
It might
just be, for 0,13
example,
that a basic similarity in management
styles
0,15
0,12
0,11

0,11

0,08
0,08
proves
0,1 to be less important, in certain contexts and for certain
0,06 situations
0,04

0,04

0,05

Strong-weak

BP BP
BP BP
I-C I-B
I-C I-B
P
AP V
AP PV
N
N
BP ITA
B IT
BP I- L
BP PI- AL
I
I
I
I
A
I-S NT
I-S NT A
BP AN ES
BP AN ES
A
P
P A
BP I-U AO
BP I-U AO
VN NIC LO
VN NIC LO
-C RE
-C RE
B AP DI
B AP DI
BP PV ITA T
BP PV ITA T
VN N- LI
VN N- LI
BP -S INT A
BP -S INT A
VN AN ES
VN AN ES
P A
P A
C
C
C AP -UN AO C AP -UN AO
AP IT I
LO AP IT IC LO
C
A
A
I
I
C TAL LIA RED C TAL LIA RED
AP I
A
I
IT A-S INT IT PIT A-S INT IT
AL A
AL A
E
E
IN IA- NP SA IN IA- NP SA
TE U AO
TE U AO
N
N
S
S
L
I
A IC
A IC LO
O I
SA NTE -S RE SA NTE -S RE
N SA AN DI N SA AN DI
PA - P T PA - P T
O UN AO
O UN AO
LO IC L
LO IC L
-U RE O
-U RE O
N
N
IC DIT
IC DIT
RE
RE
DI
DI
T
T
0,18

BP

BP

Positive-negative

0,17

0,15

BP

0,1

0,13

I-S

CAPITALIA
BPVN

discretion of management.
0,2

IT

I-B

BP

0,15

0,12
0,06

0,21

TE

0,18

0,2

I-I

Active-passive

BP

Strong-weak

0,14

0,08

0,04

VN

Positive-negative

SANPAOLO
CAPITALIA
0,4
0,35
0,3
0,25
INTESA
0,2
0,15
0,1
0,4
0,05
Figure
4 Semantic orientations (min -1, max 1)
0,35
0
0,3
0,25
0,2
0,15
0,1
0,05
0
on external
and contingent factors and must
0,25

0,11

BP

BPVN

0,17

0,15

0,13

0,15

I-B

SANPAOLO
UNICREDIT

0,21

PV

UNICREDIT

HR

0,25

Figure 3 Cultural orientations

(% of terms)
1
0,8
0,6
INTESA
0,4
0,2
BPI
0
1
0,8
0,6
0,4
0,2
0
INTESA

Result

DI

CAPITALIA

BPI

Power

AN

HR

-S

Result

HR

IN

Power

0%
INTESA

Result

BP BP
I-C I-B
AP PV
N
B IT
BP PI- AL
I-S INT IA
BP AN ES
P A
BP I-U AO
VN NIC LO
-C RE
B AP DI
BP PV ITA T
VN N- LI
BP -S INT A
V AN ES
C N- PA A
C AP UN O
AP IT I
LO
A C
I
C TAL LIA RED
AP I
IT A-S INT IT
AL A
E
IN IA- NP SA
TE U AO
N
IN SA IC LO
SA TE -S RE
N SA AN DI
PA - P T
O UN AO
LO IC L
-U RE O
N
IC DIT
RE
DI
T

SANPAOLO

2%

Power

0,4
0,35
0,3
0,25
0,2
0,15
0,1
0,05
0

BPVN
CAPITALIA

4%

Active-passive

INTESA

UNICREDIT
SANPAOLO

Strong-weak

BP BP
I-C I-B
AP PV
N
B IT
BP PI- AL
I-S INT IA
BP AN ES
P A
BP I-U AO
VN NIC LO
-C RE
B AP DI
BP PV ITA T
VN N- LI
BP -S INT A
VN AN ES
P A
C
C AP -UN AO
AP IT I
L
IT AL CR O
C AL IA ED
AP I
IT A-S INT IT
AL A
E
IN IA- NP SA
TE U AO
N
I SA IC LO
SA NTE -S RE
N SA AN DI
PA - P T
O UN AO
LO IC L
-U RE O
N
IC DIT
RE
DI
T

HR

6%

Positive-negative

BP

BPI

BPVN

CAPITALIA

PV

8%
0%

Power

AP

2%

BP

4%

I-C

UNICREDIT

AP

8%

BPI

Conclusion

0,09

0,05
in the
0,25lives of the banks being merged, than a fit in terms of the results

The extensive literature on the topic of mergers and acquisitions has fa-

0 0,18
being0,2pursued.

vored consideration of the key elements leading to the strategic deci-

0,21

0,14

BP
BP
I-B
I-B
BP
BP
PV
PV
I-C
I-C
N
N
AP
AP
IT
IT
AL
AL
BP
BP
IA
IA
I-I
I-I
N
N
BP
BP
TE
TE
I-S
I
-S
SA
SA
AN
AN
PA
PA
BP
BP
O
O
I-U
I-U
LO
LO
N
N
BP
BP
IC
IC
RE
RE
VN
VN
DI
DI
-C
-C
T
T
AP
AP
IT
IT
BP
BP
AL
AL
VN
V
IA
IA
N
BP
BP
-IN
-IN
VN
VN
TE
TE
-S
-S
SA
SA
AN
AN
BP
BP
PA
PA
VN
VN
O
O
-U
-U
LO
LO
C
C
N
N
AP
A
IC
IC
P
RE C
RE
IT
IT
C
AL
AL
AP
DI AP
DI
IA
IA
T
T
IT
IT
-IN
-IN
AL
AL
IA
IA
TE C
TE
C
AP
A
-S
SA P
SA
SA
AN
IT
IT
N
AL
AL
PA
PA
IA
IA
O
O
-U
-U
LO IN
LO
IN
N
N
TE
TE
IC
IC
SA
SA
RE
RE
-S
-S
DI
DI
IN
T INT
T
AN
AN
TE
ES
PA S
PA
SA
SA
AA
O
O
N
LO NP
LO
U
U
PA
N
N
AO
IC
IC
O
RE
RE
LO
LO
DI
DI
-U
-U
T
T
N
N
IC
IC
RE
RE
DI
DI
T
T

0,15

0,17

0,15

0,13

0,11

0,1

0,08

Secondly, the existence of a certain

fit is a
0,04
0,04 cultural
0,05

0,06
favorable

0,12

0,11

condition,

sion and, from a wider-ranging perspective, the repercussions at both the

0,08 0,09

macroeconomic and microeconomic levels. Scarce attention has been

but not one sufficient unto itself, for the success of the transaction. It

paid to the fact that the success, as well as the failure, of M&A transac-

means that, although more positive conditions exist for handling the inte-

tions depends not only on preliminary errors made in the course of the

gration, the management remains responsible for formulating and taking

strategic and organizational analysis, but also on the manner in which the

the necessary actions. In certain cases, awareness of the existence of

various phases that follow the conclusion of the operation are carried out,

cultural gaps could actually heighten the attention paid to the need for

as well as the capacity of management to handle the complexity and the

the actions, rendering them more effective.

problems that can arise during the integration phase.

Lastly, the evidence brought to light in this work regarding the cultural

The specific perspective proposed about such transactions in this pa-

and semantic profiles could be interpreted, from a dynamic perspec-

per is that a certain degree of compatibility between the cultural models

tive, as the result of a characteristic structuring/configuration of both

of the subjects involved is an important variable to be considered with

the cultural orientations and the language of the financial intermediaries.

regard to the chances for success of mergers and acquisitions. In fact,

153

there can be no mistaking the importance of studying corporate cultures

(through examination of the variables that constitute the artifacts or symbols underpinning those cultures) both during the phases prior to and
following the transaction.
The creation of a model for assessment of the cultural compatibility of
the banks involved in M&A transactions, together with subsequent ap-

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154

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155

Individual Selected Article from Journal 33

Editor
Shahin Shojai, Global Head of Strategic Research, Capco

Advisory Editors
Cornel Bender, Partner, Capco
Christopher Hamilton, Partner, Capco
Nick Jackson, Partner, Capco

Editorial Board
Franklin Allen, Nippon Life Professor of Finance, The Wharton School,
University of Pennsylvania
Joe Anastasio, Partner, Capco
Philippe dArvisenet, Group Chief Economist, BNP Paribas
Rudi Bogni, former Chief Executive Officer, UBS Private Banking
Bruno Bonati, Strategic Consultant, Bruno Bonati Consulting
David Clark, NED on the board of financial institutions and a former senior
advisor to the FSA
Gry Daeninck, former CEO, Robeco
Stephen C. Daffron, Global Head, Operations, Institutional Trading & Investment
Banking, Morgan Stanley
Douglas W. Diamond, Merton H. Miller Distinguished Service Professor of Finance,
Graduate School of Business, University of Chicago
Elroy Dimson, BGI Professor of Investment Management, London Business School
Nicholas Economides, Professor of Economics, Leonard N. Stern School of
Business, New York University
Michael Enthoven, Former Chief Executive Officer, NIBC Bank N.V.
Jos Luis Escriv, Group Chief Economist, Grupo BBVA
George Feiger, Executive Vice President and Head of Wealth Management,
Zions Bancorporation
Gregorio de Felice, Group Chief Economist, Banca Intesa
Hans Geiger, Professor of Banking, Swiss Banking Institute, University of Zurich
Peter Gomber, Full Professor, Chair of e-Finance, Goethe University Frankfurt
Wilfried Hauck, Chief Executive Officer, Allianz Dresdner Asset Management
International GmbH
Michael D. Hayford, Corporate Executive Vice President, Chief Financial Officer, FIS
Pierre Hillion, de Picciotto Chaired Professor of Alternative Investments and
Shell Professor of Finance, INSEAD
Thomas Kloet, Chief Executive Officer, TMX Group Inc.
Mitchel Lenson, former Group Head of IT and Operations, Deutsche Bank Group
Donald A. Marchand, Professor of Strategy and Information Management,
IMD and Chairman and President of enterpriseIQ
Colin Mayer, Peter Moores Dean, Sad Business School, Oxford University
John Owen, Chief Operating Officer, Matrix Group
Steve Perry, Executive Vice President, Visa Europe
Derek Sach, Managing Director, Specialized Lending Services, The Royal Bank
of Scotland
ManMohan S. Sodhi, Professor in Operations & Supply Chain Management,
Cass Business School, City University London
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