Target reputation transferability, consumer animosity, and cross-border acquisition success: A comparison between China and Taiwan

Abstract

This study examines the effects of consumer animosity and reputation transferability of local targets on cross-border acquisitions by analyzing host country consumer responses toward the acquisitions of local firms by foreign multinational corporations (MNCs). This work compares two host country markets: the responses of Chinese (high animosity against Japan) and Taiwanese consumers (low animosity against Japan) toward acquisition of a local firm by a Japanese MNC. The findings show that Chinese consumers demonstrate attitudes that are more negative toward the post-acquisition target, and lower intentions to repurchase products of the post-acquisition target than Taiwanese consumers. This work further observes that in a host-country market with low animosity, reputation transfer of a local target is pronounced, whereas, in a host country market with high animosity, consumer animosity will restrain or even exceed reputation transferability. Experiment results reveal consistent support for these hypotheses. Implications and limitations of the findings are also discussed.