The DaimlerChrysler takeover failure revisited from a varieties-of-capitalism perspective

Abstract

PurposeThe purpose of this paper is to revisit the disastrous DaimlerChrysler AG takeover episode from 1998 to 2007 in order to arrive at a more comprehensive explanation of this and other merger and takeover failures based on institutional theory.Design/methodology/approachThe case study is based on various secondary sources of information and on the insights that one of the authors gained from working for 14 years in various positions for Daimler-Benz and DaimlerChrysler.FindingsDaimlerChrysler failed because top management made mistakes in trying to globalize the company. They were unable to realize possible synergies between the two companies, which brought complementary resources into the merger. Furthermore, they did not account for the institutional embeddedness of strategies when they adopted lean production globally, diffused the production system developed in Germany to other parts of the world and tried to implement a global stock enlisted in New York and Frankfurt. The underlying theoretical framework is relevant for other merger and acquisition cases. It features institutional embeddedness, path dependency and institutional arbitrage.Originality/valueThe paper develops an institutional perspective on DaimlerChrysler and on cross-border merger and acquisition failure more generally. The perspective is organized around the varieties-of-capitalism approach. This contribution is important because there is increasing dissatisfaction with the dominant explanation of cross-border merger and acquisition failure, which is based on the allegedly failed management of culture “clashes.”

The Impact of Cultural Differences on Mergers and Acquisitions: A Comparative Analysis through Case Studies

“…Mergers and acquisitions under different types of capitalism could yield significant benefits based on complementary assets [8]. Chrysler's expertise in sports utility vehicles and marketing innovation could make synergies with Daimler's high-quality strategic assets rooted in German vocational training and engineering systems [9]. However, the management of Daimler and Chrysler failed to achieve any form of synergies.…”