When culture makes or breaks a merger: the example of DaimlerChrysler

In 1998, Daimler-Benz and Chrysler announced their merger to create a global automotive giant. Synergies, economies of scale, complementarity — everything seemed perfectly aligned. Yet less than ten years later, the alliance collapsed. Why? Because the merger of the balance sheets was never followed by a true merger of cultures.

The German engineers valued rigor and process. The American teams prized speed and pragmatic innovation. The result: mistrust, misunderstandings, and a loss of efficiency.

Translating cultural differences into concrete behaviors

Culture reveals itself through everyday practices, not slogans.

  • How are decisions made in the organization?
  • What role does individual initiative play?
  • How is hierarchy experienced in day-to-day interactions?

In a merger, these micro-behaviors carry more weight than organizational charts.

Training teams to “navigate” between two cultures

A merger is a meeting of worlds. Leaders often forget that teams must learn to decode the other culture.

  • Understand implicit codes (hierarchy, communication, decision pace).
  • Practice temporarily adopting the other organization’s ways of working.

Without this learning process, everyone keeps playing by their own rules — and cooperation remains superficial.

Formalizing a shared target culture and supporting its adoption

A successful merger is not about imposing one culture over the other — it’s about co-creating a shared identity.

  • Identify the strengths of each culture (e.g., German rigor, American agility).
  • Define a target culture that draws on these complementary assets.
  • Support teams in adopting this new culture through rituals, training, and exemplary leadership.

Culture thus becomes a collective project, not a compromise.

What leaders can learn

The DaimlerChrysler failure illustrates a key point: in any merger, culture is either the main catalyst or the main obstacle.

Three practical takeaways for any executive team involved in M&A:

  • Map cultural differences in terms of observable behaviors.
  • Help teams navigate between both systems, instead of leaving them to improvise.
  • Build a shared target culture, leveraging each organization’s strengths and actively guiding its adoption.

In M&A, culture is not a “nice-to-have.” It is the foundation of post-merger resilience and performance.