Acquirer’s corporate reputation in cross-border acquisitions: the moderating effect of country image
| Date | 19 November 2018 |
| DOI | https://doi.org/10.1108/JPBM-10-2017-1640 |
| Published date | 19 November 2018 |
| Pages | 858-870 |
| Author | Michela Matarazzo,Giulia Lanzilli,Riccardo Resciniti |
| Subject Matter | Marketing,Product management,Brand management/equity |
Acquirer’s corporate reputation in
cross-border acquisitions: the moderating
effect of country image
Michela Matarazzo
Department of Economic and Business Sciences, Marconi University, Roma, Italy, and
Giulia Lanzilli and Riccardo Resciniti
Department of Law, Economy, Management and Quantitative Methods, University of Sannio, Benevento, Italy
Abstract
Purpose –The purpose of this paper is to investigate whether, in the context of a cross-border acquisition, the acquirer’s country image (CI) could
moderate the relationship between the acquirer’s corporate reputation (CR) and consumers’repurchase intentions towards the products of the post-
acquisition target.
Design/methodology/approach –The authors examined the roles played by the acquirer’s CR and the acquirer’s CI on consumer behaviour by
considering an Italian target firm with a high reputation and comparing four foreign acquiring firms with different combinations of CR (poo r/good)
and CI (high/low).
Findings –It was found that both CR and CI have a significant impact on Italian consumers’intention to repurchase the products of the post-
acquisition target. Furthermore, the results show a greater increase in consumers’repurchase intentions when a good reputation of the acquirer is
paired with a high CI for the acquirer, but a high CI cannot compensate for a poor CR.
Originality/value –The research investigates, in the context of cross-border acquisitions (CBAs), the impact of the acquirer’s CR and the acquirer’s
CI on the host country consumers’repurchase intentions after the CBA, which has not previously been thoroughly examined. It can help managers to
understand the conditions under which CBAs will be favourably evaluated.
Keywords Italy, Corporate reputation, Country image, Cross-border acquisitions, Repurchase intentions, Product origin
Paper type Research paper
1. Introduction
Multinational firms expand abroad for several reasons and
have different options, from exporting to greenfield start
ups,onhowtogoaboutit(
Papadopoulos and Heslop,
2002). Many scholars have focused on the significant impact
of a cross-border acquisition (CBA) on a firm’sperformance
(Bandick, 2011), and suggest various practices that are
aimed at reducing the risk of failure of a CBA (Teerikangas
and Very, 2006). Estimated failure rates are high, and
therefore studies of the factors that influence the success of
CBAs are important for managers. There is no solid
literature investigating the consumer perspective for CBAs,
and consumer attitudes may be a contributing factor to the
failure of CBAs (Heinberg et al., 2016;McLelland et al.,
2014;Thorbjørnsen and Dahlén, 2011). This variable could
shed more light on the prospects of a CBA (Heinberg et al.,
2016) because it represents a critical factor affecting its
success (Fong et al., 2013). CBAs increase consumers’
uncertainty regarding the acquiring firm’s ability to
maintain product attributes, intangible assets, consumer
benefits and even brand personality (Lee et al., 2011),
especially if the acquiring firm has a poor corporate
reputation (CR).
The Italian historic luxury lingerie house La Perla, after
being acquired by an American fund of private equity, and
acquired again by an Italian entrepreneur in 2013, has been
sold to the Dutch Sapinda company held by a German
financier. After several problems, the acquirer reformed his
business around the holding company, as reported by the
Financial Times. Under such circumstances, customers may
have concerns regarding the acquirer’s ability to maintain
the quality or image of the target’s products/brands after the
CBA. La Perla has not reached the breakeven point yet, and
every year loses 80-100 million euros.
Another case, that of the French luxury goods
conglomerate LVMH, differs in that, among other many
Italian luxury fashion firms, it purchased the family-owned
Milanese Cova pastry-shop, located in the historical and
geographical heart of Milan, with the commitment to
preserve the Cova brand and look to develop its name across
the globe. In this case, LVMH’s good reputation can be
The current issue and full text archive of this journal is available on
Emerald Insight at: www.emeraldinsight.com/1061-0421.htm
Journal of Product & brand Management
27/7 (2018) 858–870
© Emerald Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/JPBM-10-2017-1640]
The authors are deeply grateful to the anonymous reviewers and the Guest
Co-Editors of this special issue for their insightful comments on earlier
versions of this paper. They are particularly grateful to Professor Nicolas
Papadopoulos for the helpful comments we received at the XXXV AIDEA
conference (Rome, 2017).
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