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The Art of Capital Restructuring: Creating Shareholder Value through Mergers and Acquisitions by H. Kent Baker, Halil Kiymaz

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CHAPTER 13

Cultural Due Diligence

RONALD F. PICCOLO

Associate Professor of Management, Rollins College

MARY BARDES

Assistant Professor of Management, Drexel University

INTRODUCTION

According to Robbins and Judge (2010, p. 231), organizational culture refers to a “system of shared meaning held by members that distinguishes the organization” from others. In many diverse organizations across numerous industries, culture influences employee behavior, the decision-making process, the way members interact, and how particular behaviors are nurtured, rewarded, or discouraged. Values serve as guiding principles for individuals; likewise, values act as guiding principles in organizations. An organization's culture, which is deeply informed by both expressed and implicit expectations for interactions among stakeholders, is the foundation upon which members rely when making decisions about how to deal with clients, products, competitors, and services. Culture can be a strategic competitive advantage for firms (Barney, 1986) and ultimately affects an organization's performance over time (Latham, 2007).

Although culture reveals itself in a firm's regular day-to-day operations, the impact of culture is particularly salient in times of uncertainty and change. That is, when ambiguity and uncertainty characterize the operating environment surrounding a particular firm, the stability of an organization's culture is challenged and culture's impact on operations, employee motivation, and organizational ...

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