Cultural differences and capability transfer in cross-border acquisitions:: the mediating roles of capability complementarity, absorptive capacity, and social integration

This paper presents an integrative model of the impact of cultural differences on capability transfer in cross-border acquisitions. We propose that cultural differences affect the post- acquisition capability transfer through their impact on social integration, potential absorptive capacity, and capability complementarity. Two dynamic variables - the use of social integration mechanisms, and the degree of operational integration of the acquired unit - are proposed to moderate the effects of cultural differences on social integration and potential absorptive capacity. The implications for acquisition research and practice are discussed.