Executive perceptions in foreign and domestic acquisitions: an analysis of foreign ownership and its effect on executive fate

Abstract

Foreign acquisitions account for one in every six acquisitions in the United States and lead to a variety of positive and negative outcomes for executives in acquired U.S. companies. They often enhance career opportunities and enrich executives’ international experiences but increase the chances of being replaced. Despite an increasing number of foreign acquisitions in the U.S.A. during the last twenty years, we still know very little about the differing perceptions of executives involved in foreign versus domestic acquisitions. A better understanding of such perceptions is important in light of the tendency of the popular press to focus on the negative aspects of foreign acquisitions of U.S. companies and landmarks. We present a framework for understanding executives’ perceptions based on surveys and interviews with 284 executives and discuss five areas where executive perceptions differ: (1) cultural differences, (2) system changes in the acquired company, (3) acquisition negotiations, (4) executives’ reasons for staying or leaving after the acquisition, and (5) postacquisition outcomes for the organization. Executives’ perceptions differed significantly in each of these five areas depending on whether the executive was involved in a foreign or domestic acquisition.