Not All Differences Are the Same: Dual Roles of Status and Cultural Distance in Sociocultural Integration in Cross-border M&As

Despite, or perhaps due to, its central role in international business research, cultural distance is a widely debated and criticized construct. In this paper, I will examine the conditions under which two specific assumptions regarding the cultural distance construct (viz., symmetry and discordance) can get illusionary and misleading. Understanding the reasons behind the (in)admissibility of these assumptions is especially important to guide future cross-cultural research to take necessary steps towards conceptual and methodological adjustments and remedies. Towards that end, I introduce the idea of status heterogeneities between social actors who interact in a multicultural context, and how these heterogeneities can mold the mutual perceptions and attitudes between individuals. As the primary means with which firms internationalize, cross-border mergers and acquisitions are used as the context within which dual roles and implications of status and cultural distance are theorized. Auxiliary insights provided by status theories can explain why and when assumptions of symmetry and discordance could be wrong and misleading. Furthermore, incorporating status into the extant literature can reconcile inconsistent empirical results and help future research avoid under-specified models that do not account for systematic biases in their sample sets.