An international telecom acquisition: lost in translation when Ya'alla met Boben Yang

Abstract

Purpose: This study aims to consider the transition that took place between two major telecom multinational companies (MNCs) during an acquisition in an emerging market, Laos. The differences in the orientation of top management, corporate culture and cultural distance led to the ineffective performance of the acquired telecom company. Design/methodology/approach: Content analysis is used to identify the key factors in the case. The sources of data are annual reports, past interviews, market reports, and participant observation. Findings: The ineffective performance of the acquisition was related to the lack of cultural compatibility of the new top management, a corporate culture that emphasized costs over customer satisfaction and the failure to close the cultural gap between the Middle Eastern cultural values and the Lao values. Research limitations/implications: The data are mostly secondary data with some interviews of key managers. The case study would benefit with more extensive primary data, but the company was reluctant to respond. Practical implications: The match between the top management leadership style, the complementarity of the new corporate culture with the existing one, and the reduction in the gap in national cultures are all critical in the continuing successful performance of an acquisition. A strategy of localization increasing the competencies of the local managers and professionals and the adaptation of the organization processes and practices to the local context are more effective in achieving positive performance. Social implications: The change in corporate cultures from the collaborative/customer satisfaction emphasis of Corporation A to a competitive/cost culture of Corporation B led to a significant conflict with other telecom providers in Laos. This had performance consequences for Corporation B and also the telecom sector. Originality/value: This study is a unique demonstration of what happens in an acquisition of a telecom company in an emerging market. It is an interesting interplay of two major telecom companies with similar strategic choices but very different corporate culture orientations.