The success of cross border acquisitions: does cultural distance matter for consumers?

The aim of this research is to investigate the effect of cultural distance on the reputation transferability from a local target firm to a foreign acquirer by analyzing local country consumers. The work compares two foreign acquiring companies: 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 and lower repurchase intentions toward the post-acquisition target 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 research could be of value and interest because little has been written dealing with the acquisition process in relation to market-based performance, particularly analyzing the consumer behavior toward a post-acquisition target