Do Leaders Bridge Cultural Codes? Evidence from an Organizational Merger

Strategy & Business Policy

Speaker: Anjali Bhatt

Professor - HBS

Conference  Jouy-en-Josas T017

Abstract: 

Cultural differences between organizational groups are often viewed as barriers to coordination, collaboration, and performance. A common remedy is to reconfigure structural boundaries – via mergers, reorganizations, or integrative initiatives – with the aim of reducing intergroup distance and fostering cultural integration. These interventions rest on an implicit behavioral assumption: that individuals will engage in “code bridging,” learning and adopting cultural codes from other groups. Yet, little is known about how individuals’ positions within their group influence their propensity to bridge cultural divides. In this study, I theorize that status within a preexisting group shapes individuals’ responses to cultural differences between groups under new structural conditions. High-status individuals are motivated to preserve the status quo that legitimized their standing and are therefore less likely to engage in code bridging. In contrast, lower-status individuals have more to gain from cultural flexibility and are more likely to adopt alternative codes as a pathway to mobility. I test these ideas using personnel data and over 500,000 internal emails from a merger of two financial services firms. I develop a measure of code bridging using a random forest classifier applied to linguistic patterns in communication. Consistent with the theory, individuals with higher hierarchical rank and stronger performance evaluations prior to the merger were less likely to bridge codes in the six months following integration. However, code bridging – despite its role in enabling cultural integration at the organizational level – was negatively associated with individual performance evaluations post-merger. These findings have implications for our understanding of how cultural differences between groups are overcome.