The impact of psychic distance on acquirer's corporate reputation in cross-border acquisition: a consumer perspective

This research focuses on consumer reactions to cross-border acquisition by exploring the role of consumer perceptions of the acquirer's corporate reputation in presence of large psychic distance. Specifically, the aim of the study is to investigate how psychic distance between an acquirer firm and a local target impacts the effect of acquirer’s corporate reputation on consumers. A 2×2 experimental design which manipulated acquirer's corporate reputation and psychic distance was conducted in Italy. The study considers an Italian target firm and compares four foreign acquiring firms showing a different combination of corporate reputation (poor/good) and psychic distance from Italy (small/large). We found corporate reputation as the primary route to consumer repurchase intentions and its effect is unaffected by the psychic distance between Italy and the country of the acquirer. The results show that psychic distance does not affects the relationship between corporate reputation and consumers’ repurchase intentions. The influence of country familiarity and country typicality as control variables on this relationship was also explored. Implications of the study and suggestions for further research are also discussed. The research could be of value and interest because little has been written dealing with consumers’ behaviour toward a post-acquisition target considering corporate reputation and psychic distance.