Knowledge transfer and cross-border acquisition performance: The impact of cultural distance and employee retention

Abstract

The current understanding of when and how knowledge transfer leads to cross-border acquisition (CBA) success is still limited. The aims of the paper are to provide new insights into the factors that facilitate or impede knowledge transfer, and to examine the impact of knowledge transfer on CBA performance. The data were gathered via a cross-sectional survey using a questionnaire on a sample of UK firms that had acquired North American and European firms. The findings indicate that knowledge transfer and employee retention have positive influence on CBA performance. In addition, organizational culture differences have a negative influence on CBA performance, but also mediate the relationship between knowledge transfer and CBA performance. No direct or mediating effect of national cultural distance has been found on knowledge transfer and CBA performance. One of the important contributions of the present paper is the development of a conceptual framework incorporating the mediating effect of national cultural distance, organizational culture differences, and employee retention on knowledge transfer and acquisition performance. Moreover, we have tested the two distinct types of knowledge transfer namely knowledge transfer in the functional area and knowledge transfer in the general management area, thus making a contribution to the existing literature on knowledge transfer in CBAs.