Chapter 21 Cultural Distance, Reputation Transferability and Cross-Border Acquisitions: A Consumer Perspective

The aim of the study is to investigate the effect of cultural distance on the reputation transferability from a made in Italy target firm to a foreign acquirer by analyzing local country consumers. The work compares two foreign acquiring firms a Chinese firm (large cultural distance to Italy) and a Spanish firm (small cultural distance to Italy). The findings show that Italian consumers have more negative attitudes toward the acquired firm and lower intentions to repurchase its products if the acquirer has large cultural distance rather than it has small cultural distance. Furthermore, the study aims at verifying that the case of small cultural distance fosters the reputation transferability more than the opposite case of large cultural distance. The work may be of value and interest because little has been studied dealing with the acquisition process in relation to market-based performance, particularly analyzing the consumer behavior toward a post-acquisition target.