The Double-Edged Sword Effect of Brand Adaptation Strategy on Performance

Abstract

To improve our understanding of the bright side and the dark side of brand adaptation strategy and determine the processes linking brand adaptation strategy to brand performance, we investigate the underlying mechanism of adaptation brand strategy’ effects from the perspective of institutional theory and organizational learning theory. we posit that strengthened legitimacy and reduced synergy mediate the effect of brand adaptation on firm performance. In addition, to capture the nature of the relationship between brand adaptation strategy and firm performance, we adopt a contingency perspective in our examination of the moderating roles of cultural distance. Specifically, we suggest that cultural distance enhances the positive effect of brand adaptation strategy on firm legitimacy and synergy. Moreover, market uncertainty strengthens the positive effect of brand localization on legitimacy and synergies. We test our hypotheses using a survey with 202 respondents in China. In conclusion, our findings provide important insights into how brands effectively utilize brand adaptation strategy to improve their performance.