Case Study of a Failed M&A—The Role of Communication in Microsoft’s Acquisition of Nokia

Updated: Mar 26, 2021

Language differences impede communication. But communication issues arise from much more than just having employees who speak different languages. Microsoft discovered that not spending enough time to understand and adapt to differences in communication styles, mannerisms, and culture made bringing Nokia under its corporate umbrella difficult.

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Before being acquired by Microsoft, Nokia struggled to maintain open communication. According to several accounts, Nokia rarely communicated openly with employees, which led to distrust between staff members and management. Additionally, the company failed to articulate a set of core values and an overall vision to its employees. The lack of direction and communication further contributed to the culture of opacity among Nokia’s employees as the employees felt unable to truly communicate with management. The disconnect affected operations on a deep level: “Fearing the reactions of top managers, middle managers remained silent or provided optimistic, filtered information.”

Microsoft’s acquisition of Nokia’s mobile line only contributed to the culture of unreliable communication. As stated in the press, “neither party was legally allowed to discuss details about the acquisition in public.” The prohibition on openly discussing the merger undercut morale and deepened the level of employee frustration with the lack of communication within the company.

Differences in American and Finnish Culture

Culturally, Finns are not open communicators, but rather maintain quietude and distrust verbosity. In contrast, Americans tend to be more open and forthright. Microsoft Mobile’s CEO provides an example of Nokia’s culture of blurring bad news in his letter to employees. In the letter, Elop communicates that corporate restructuring will result in “an estimated reduction of 12,500 factory direct and professional employees over the next year.” While the figure representing the reduction is clear, it is buried in the latter half of an email more than 1,100 words long.

The clashing styles of communication between American and Finnish employees of Microsoft Mobile likely caused frustration among employees and hindered their ability to collaborate across cultures.

Language Barriers

Since Nokia was an established multi-national entity, English was already a language widely used within the company. Still, many Microsoft Mobile employees noted that “not being able to speak Finnish makes you somewhat of an outsider.” With Microsoft Mobile’s headquarters in Finland, management from other countries encountered challenges speaking directly with top executives. In many cases, for management to communicate with top executives, they had to travel to Finland. Thus, differences in language caused barriers to arise between those who were and weren’t Finnish.

Communication Style

High-Context vs. Low-Context

Both Finns and Americans communicate in a low-context style, which means that communication in both cultures is clear and direct with no implied messages. Many American employees working for Nokia noticed the cultural similarity and noted: “Working with Finns [is] good. They speak straight forward and honestly.” Though similar in communication styles, differences do remain between the cultures. Finnish employees tend to be more reserved, and Americans are more aggressive and talkative. The differences in communication styles can lead to Finns perceiving the Americans as arrogant and domineering and for Americans to perceive the Finnish employees as distant and uninterested.

Principles-Based vs. Application-Based

The United States and Finland both exhibit an inclination towards application-based reasoning. This indicates that “individuals are trained to begin with a fact, statement, or opinion and later add concepts to back up or explain the conclusion as necessary.” However, as pointed out by Erin Meyer in her book The Culture Map, the U.S. exhibits stronger tendencies toward application-based reasoning than Finland. Though both cultures appear to be application-based, Americans will view Finns as more “principles-based.” This means that Finns, generally, learn more by theory than application in comparison with Americans. Although Finland and the U.S. exhibit strong predilections toward application-based learning, the fact that Finns are relatively more principles-based than their American counterparts can lead to misunderstandings. The misunderstandings can arise during inter-company communication, especially when discussing rationale behind decision making. Companies faced with similar situations would do well to remain cognizant of such differences and address them as needed.

Direct vs. Indirect Negative Feedback

Finnish people are typically perceived as being direct and honest. This style of communication may appear offensive or rude (especially to Americans). However, in Finland, direct communication is viewed as a sign of honesty and respect. Additionally, Finnish employees do not like to be “monitored, followed around, interfered with, or even praised when they are on the job.” Praise is viewed as insincere within Finnish culture. This view is founded on the understanding that Finns rarely alter or change an already formed opinion. Thus, with any sort of feedback, it is highly unlikely for Finns to change their minds about something. Without an understanding of Finns’ resistance to feedback, Americans may mistakenly view their Finnish counterpart as obstinate.

The U.S. culture is on the opposite end of this spectrum. Americans tend to wrap negative criticism with positive feedback, which outsiders can interpret as “false and confusing.” For example, if an American manager were giving feedback about a business proposal, the manager would first list the positive aspects about the writing before launching into the negative aspects. On the other hand, if a Finnish manager were providing feedback about the same business proposal, the manager would state each negative critique without any positive add-ins.

The stark differences in feedback preferences can cause deep divides between Finnish and American employees. Finnish employees will tend to view feedback from Americans as insincere and unhelpful. On the other hand, Americans will view critiques from Finnish managers as overly harsh and, perhaps, rude.


Finns hold that, unless one has something pertinent to say, they should remain silent. In fact, silence is highly valued within Finnish culture as a time to think, ponder, and reflect. Many Finns take to the forests (often by themselves) to think clearly in silence. Because of their view on silence and direct communication, Finns tend to recoil when talking to more verbose people:

Finns are reticent, often silent, and trained not to force their opinion on others. If they disagree, they will often remain silent. Americans cannot stand silence during meetings, so they often take the Finn’s turn to speak. Finns, who distrust verbosity, may then go into their shell. Americans, used to open debate and give-and-take argument, will often interrupt a Finn when the latter finally decides to speak. This breaks a sacred rule for a Finn, who is taught from infancy not to interrupt.

Another mannerism that separates Finns and Americans is smiling. As natural introverts, Finns try to keep to themselves and engage as little as possible with strangers. They find Americans’ mannerism of smiling in business meetings and towards unfamiliar individuals as insincere. In fact, typical Finns will only smile at people they know personally.

American companies engaging in M&A with Finnish companies need to understand and display respect for Finnish mannerisms. As Americans understand that Finns are quiet because they value silence, they will cease to view Finns as uncaring, but will instead begin to view their counterparts as insightful and respectful people.

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