The role of human resource management in
cross-border mergers and acquisitions
Ruth V. Aguilera and John C. Dencker
Abstract Cross-border mergers and acquisitions (M&As) have become the dominant
mode of growth for firms seeking competitive advantage in an increasingly complex and
global business economy. Although human resource management (HRM) can play a
value-adding role in the merger process, existing research and evidence does not clearly
demonstrate how it can do so. This paper addresses the neglected human side of M&As by
providing a strategic fit framework to assess the link between M&A strategy and HRM
strategy. Because cross-border M&As are of an order of magnitude more complex than
domestic mergers, we examine contingencies in national contexts that influence outcomes
in the merger process. We draw on recent empirical evidence to highlight HRM roles in
terms of resources, processes and values that reflect the influence of both strategic fit and
national context in the integration stage of cross-border M&A.
Keywords Human resource management; mergers and acquisitions; corporate
governance; international management; varieties of capitalism.
Introduction
Mergers and acquisitions (M&As) have become the dominant mode of growth for firms
seeking competitive advantage in an increasingly complex and global business economy
(Adler, 1997). Nevertheless, M&As are beset by numerous problems (Newburry and
Zeira, 1997), with 50 per cent of domestic acquisitions – and 70 per cent of cross-border
acquisitions – failing to produce intended results (Capron, 1999). Scholars have
examined these problems in terms of strategic market entry choice (Hennart and Park,
1993), market valuations (Jensen and Ruback, 1983), value creation (Haspeslagh and
Jemison, 1991) and firm performance (Galbraith and Stiles, 1984; Chatterjee, 1986;
Blackburn and Lang, 1989), finding that difficulties in M&As trace to a lack of a
compelling strategic rationale, unrealistic expectations of possible synergies and paying
too much for acquired firms. However, although financial and strategic studies have
significantly increased our knowledge of M&As, this research is incomplete, in large
measure due to a failure to account for personnel issues.
Frequent callswithin the human resourcemanagement fieldand international business, to
study the human side of international M&As, have generated studies exploring the role of
HRM in M&As, such as studies of personnel issues surrounding M&As that focus on top
management turnover following an acquisition (Walsh, 1988; Krug and Hegarty, 2001).
The International Journal of Human Resource Management
ISSN 0958-5192 print/ISSN 1466-4399 online q 2004 Taylor & Francis Ltd
http://www.tandf.co.uk/journals