When and Why Consumers React Negatively to Brand Acquisitions: A Values Authenticity Account

Brand acquisitions are a popular growth strategy. However, both anecdotal evidence and initial empirical evidence suggest that acquisitions can harm the acquired brand. This paper proposes and tests a theoretical framework that seeks to explain when and why consumers react negatively toward acquired brands. Across ten studies using different methods, research designs, product categories, and brands, we demonstrate that these negative brand reactions can be explained by the perceived loss of a brand’s unique values. Building on this values authenticity account, we document that the negative effect of acquisitions depends on the acquired brand’s values, brand age, leadership continuity, and the alignment between acquiring and acquired brands. Our findings offer important theoretical and managerial implications, helping managers predict and mitigate the negative effects of acquisitions for brands.