Cultural Integration and Workforce Retention in Malaysian Mergers and Acquisitions: Exploring the Influence of Cross-Cultural Adjustment, Communication, And Dissatisfaction on Turnover Intention

Cultural Integration and Workforce Retention in Malaysian Mergers and Acquisitions: Exploring the Influence of Cross-Cultural Adjustment, Communication, And Dissatisfaction on Turnover Intention

Othman Mohd Said¹, Rasheed Mohamad Kutty²

¹PhD Candidate, Faculty of Management, University Technology Malaysia, Johor Baharu.

²Senior Lecturer, Department of Policy Studies, Faculty of Social Science, University Technology Malaysia, Kuala Lumpur.

DOI: https://dx.doi.org/10.47772/IJRISS.2025.914MG00136

Received: 16 August 2025; Accepted: 21 August 2025; Published: 05 September 2025

ABSTRACT

As Malaysia experiences continued economic globalization, mergers and acquisitions (M&A) involving international stakeholders have become increasingly prevalent. While these ventures aim to create value through synergy, cultural misalignment, communication breakdowns, and dissatisfaction among employees often derail such outcomes. This study investigates the socio-cultural dimensions influencing workforce behaviour during Mergers and Acquisitions (M&A) in Malaysia, particularly focusing on Cross-Cultural Adjustment (CCA), communication breakdowns, and job dissatisfaction as predictors of Turnover Intention (TI). Employing a mixed-methods approach comprising structured interviews and quantitative surveys, this study reveals a moderate but significant correlation between cultural misalignment and TI, especially in post-merger integration stages. Findings underscore that the failure of M&As often stems not from negotiation stages but from post-integration frictions, where corporate cultures collide. The study contributes to the global business literature by highlighting the need for structured cultural integration strategies, emphasizing the centrality of human capital retention, and proposing a framework for mitigating cultural discord through effective leadership, clear communication, and early adjustment protocols.

Keywords: Mergers And Acquisitions, Malaysia, Cross-Cultural Adjustment, Communication, Dissatisfaction, Turnover Intention, Integration, Human Resources, Cultural Alignment

INTRODUCTION

In today’s era of globalization, mergers and acquisitions (M&A) have become a strategic tool for corporate growth, market expansion, and economic advancement in Malaysia. While M&As offer potential benefits such as access to new markets, enhanced human capital, and operational synergies, their success hinges not only on financial negotiations but also on the post-merger integration process, especially in aligning diverse corporate cultures. Malaysia’s experience with M&As has been mixed, with limited evidence of value creation for shareholders and significant challenges in workforce integration. Cross-cultural adjustment, communication barriers, and job dissatisfaction have emerged as critical factors influencing employee turnover during post-M&A transitions.

Studies reveal that failure often occurs after the merger, during the integration of systems, structures, and people particularly when employees struggle to adapt to new work environments and cultural expectations. Expatriates and local employees alike must navigate differing communication styles, organizational hierarchies, and national values, often without sufficient cross-cultural training or strategic communication. The lack of alignment between organizational cultures can lead to distrust, disengagement, and voluntary exits, especially among high-ranking executives from the acquired firm thus affecting long-term performance.

In Malaysia’s multi-ethnic, multicultural workforce, this cultural dimension is even more pronounced. This study investigates the perceptions and experiences of Malaysian employees across different ethnic backgrounds involved in M&A, with a focus on how cross-cultural adjustment, communication effectiveness, and job dissatisfaction contribute to turnover intention in the post-merger context.

Emerging Challenges in Malaysian M&A Integration

Mergers and acquisitions (M&A) are increasingly used as strategic tools for corporate growth in Malaysia, yet many integration efforts underperform due to poor cross-cultural adaptation, communication breakdowns, and management inefficiencies particularly in multicultural workforces. A critical issue lies in the absence of effective cultural training for both local staff and foreign expatriates involved in domestic M&A activities. When cultural and organizational differences are overlooked during the pre-merger, transitional, and post-merger phases, they often result in dissatisfaction, diminished morale, resistance to new placements, and heightened turnover intention.

Past cases reveal that employees can remain stagnant for years post-acquisition due to entrenched workplace norms, reflecting how cultural rigidity impedes integration and productivity. This is further intensified by the lack of robust theoretical frameworks for domestic cultural adjustment, poorly designed training interventions, and limited appreciation of how national culture influences organizational behaviour. Structural uncertainty, union involvement, and job redundancies also heighten employee anxiety and disrupt operations. These persistent challenges call for a closer examination of how cross-cultural adjustment, communication effectiveness, and job dissatisfaction drive workforce turnover intention and affect operational stability within Malaysian M&A contexts

LITERATURE REVIEW

Previous research (King et al., 2004; Ivancevich et al., 1987; Buono & Bowditch, 1989) underscores the complexity of cross-border M&As, particularly in harmonizing organizational cultures, management styles, and workforce expectations. Studies by Tung (1987) and Black (1988) highlight the high failure rate of M&As due to poor cultural fit and inadequate cross-cultural training. Dissatisfaction, often triggered by unclear communication, job insecurity, or cultural clashes, is a strong predictor of turnover intention (Gastner, 1986; Walsh, 1989).

This study synthesizes findings from previous empirical studies, organizational behaviour theories, and cross-cultural management literature. It emphasizes the Malaysian context by drawing from case studies and integration outcomes observed in local M&A events. The framework explores three major constructs: cross-cultural adjustment, communication efficacy, and workforce dissatisfaction, as they relate to turnover intention.

1. Cross-Cultural Adjustment in Malaysian M&As Malaysia’s unique multi-ethnic workforce presents both opportunities and complexities in M&A integration. The presence of varying value systems, religious practices, and workplace norms demands adaptive leadership and cultural intelligence. Cultural adjustment is influenced by organizational support systems, acculturation processes, and employees’ perceived fairness during transitions. Failure to acknowledge cultural identities or provide adequate orientation may lead to alienation and reduced commitment.
2. The Role of Communication in Integration Success Effective two-way communication plays a pivotal role in building trust and reducing uncertainty. M&A-related anxiety can be mitigated by transparent messaging, inclusive dialogue, and consistent information flows. Miscommunication, especially across linguistic or hierarchical lines, often fuels misunderstandings, amplifies dissatisfaction, and erodes organizational loyalty. Communication systems must be tailored to accommodate diverse employee backgrounds and cultural sensitivities.
3. Dissatisfaction and Its Mediation of Turnover Intention Dissatisfaction acts as both a symptom and catalyst for workforce disengagement. Common triggers include perceived inequality in promotion opportunities, mismatched job roles, and abrupt policy changes post-merger. Employees facing ambiguity or reduced autonomy may experience psychological contract violations, further accelerating their intent to leave. The Voluntary Separation Scheme (VSS), while aimed at managing redundancies, can inadvertently reinforce perceptions of disposability and loss of agency.

METHODOLOGY

This study employed a convergent parallel mixed-methods design. Quantitative data were collected through structured surveys distributed to employees across five Malaysian companies that underwent M&A in the past five years. The sample included 230 respondents from diverse ethnic backgrounds. Qualitative data were obtained via semi-structured interviews with 15 executives and HR managers involved in M&A activities. Data triangulation enabled the exploration of both breadth and depth of cultural issues faced during integration. Statistical analyses included correlation, regression, and ANOVA to test the relationships among CCA, communication, job dissatisfaction, and TI.

Objectives And Significance of the Study

The main objective of this study is to examine the influence of cross-cultural adjustment, dissatisfaction, and communication processes within the context of mergers and acquisitions (M&A), particularly in relation to workforce adaptation in the host organization. Specifically, the study seeks to explore how cultural integration efforts, operational system alignment, and the creation of a trust-based environment can reduce dissatisfaction and turnover intention among employees. By identifying the key factors affecting adjustment such as communication practices, cultural alignment, and system streamlining this research aims to support the development of effective cross-cultural training and management strategies in post-M&A scenarios.

The significance of this study lies in its contribution to the limited empirical literature on domestic and multinational M&A practices in Malaysia. Its findings offer practical implications for corporate leaders, human resource practitioners, and government regulators by providing insights into workforce integration challenges, cultural risks, and VSS strategies. Ultimately, this study enhances understanding of how to manage cultural diversity and workforce restructuring during organizational transformation, thereby strengthening the success rate of M&A activities in Malaysia.

FINDINGS AND DISCUSSION

This study reveals critical patterns on how cross-cultural adjustment (CCA), communication effectiveness, and job dissatisfaction influence turnover intention (TI) among Malaysian employees during mergers and acquisitions (M&A). Drawing from both quantitative and qualitative data, the findings highlight the psychological and behavioural shifts that occur when diverse workforces are required to navigate post-merger integration. Effective CCA, clear communication, and knowledge management were shown to be essential to M&A success.

Cultural misalignment and poor communication emerged as key factors driving job dissatisfaction, which in turn significantly correlated with higher TI. These challenges were particularly pronounced in mergers involving foreign acquirers, where cultural differences such as hierarchical leadership clashing with local collectivist values led to increased stress and disengagement. Notably, approximately 75% of respondents experienced moderate to high levels of cross-cultural friction, with the sharpest contrast observed in Western-Malaysian corporate integrations.

Poor cross-cultural adjustment was frequently linked to vague role expectations, inconsistent leadership styles, and conflicting corporate values. Employees in such environments reported elevated stress and reduced organizational commitment. In contrast, employees who experienced higher levels of cultural alignment demonstrated lower TI, greater adaptability, and stronger team cohesion.

Communication breakdowns also played a pivotal role in driving dissatisfaction. Respondents cited a lack of transparency, one-way messaging, and emotional detachment from new leadership as sources of mistrust. These issues exacerbated uncertainty and reinforced group divisions, leading to organizational silence and further alienation of acquired employees.

High dissatisfaction was linked to unclear job roles, diminished decision-making autonomy, and a perceived loss of career progression. These variables were significantly correlated with increased TI (p < 0.01). The implementation of VSS became a coping mechanism rather than a strategic workforce planning tool.

Importantly, the presence of integration leaders’ individuals designated to manage cultural transition and serve as intermediaries was associated with more successful outcomes. These leaders helped mitigate uncertainty, aligned expectations, and softened cultural collisions, resulting in improved retention and smoother adaptation.

Overall, the findings underscore the importance of proactive cultural integration, empathetic leadership, and transparent communication in minimizing workforce disruption and maximizing organizational effectiveness in in a Malaysian context post M&A environment.

Contribution To Knowledge

This study advances the discourse on M&A in the Southeast Asian context by contextualizing cultural integration within Malaysia’s plural society. It offers a theoretical model linking cross-cultural adjustment, communication, and dissatisfaction to turnover intention, emphasizing their interdependent roles. The findings reinforce the necessity of embedding human centric values into M&A strategies.

IMPLICATIONS AND RECOMMENDATIONS

This research holds several implications for practitioners and policymakers. First, organizations must embed cross-cultural diagnostics in their due diligence phase. Second, Post Merger Integration (PMI) strategies should prioritize cultural integration alongside systems and operations. This are comprehensive process of combining and rearranging the operations, cultures, systems, and workforces of merging organizations after a merger or acquisition is completed with the aims to realize the expected synergies, minimize disruptions and align both organizations into a efficient entity. Third, transparent and inclusive communication should be customized to cultural expectations. Lastly, organizations must institutionalize mechanisms like cultural champions, conflict resolution protocols and psychological support services.

For policy-level considerations, regulatory bodies like Bank Negara Malaysia should develop M&A integration guidelines that include cultural compatibility assessments and workforce retention metrics.

To ensure M&A success, management must adopt culturally informed integration strategies. These include:

1. Pre-merger cultural audits to identify potential friction points.
2. Cross-cultural training programs to align behaviours and expectations.
3. Targeted communication strategies emphasizing empathy, clarity and inclusivity.
4. Participatory decision making to foster psychological safety and workforce ownership.

CONCLUSION

M&As are as much about integrating people as they are about combining financial and operational systems. In Malaysia, where cultural diversity is a defining national trait, successful integration hinges on respecting and leveraging that diversity. Addressing turnover intention through strategic communication, cultural alignment, and satisfaction enhancement is not optional, it is essential for sustainable organizational transformation. This study reaffirms that CCA, communication quality, and job dissatisfaction significantly impact turnover intention, particularly in post-merger contexts. Companies that embrace cultural empathy and adaptive leadership are more likely to realize the full potential of M&A synergies, sustaining both performance and people in the long run.Top of Form

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