Possible effect of Merger and Acquisition on Brand Equity: A case study of IT industry

Abstract

This study focuses on how mergers and acquisitions (M&A) affect the consumer's buying behavior, specifically the consumer's perception, of both the parent and acquired brand in the IT industry. The empirical test of the theoretical model was conducted using data collected through a 5-point Likert-scaled survey administered to a sample of 512 university students in South Korea. The students were selected as respondents in order to increase the homogeneity of the sample and to minimize random error caused by selecting the general public. The survey was designed using real examples. Specifically, the first version of the survey used the "Facebook & WhatsApp" case, and the second version used the "Microsoft & Skype" case. Quantitative methodology was employed, using multi-group path analyses for testing the hypotheses developed. The results confirm that brand awareness and perceived brand value are important sources of brand equity and that the effects of these two components on brand equity after M&A are significantly larger than before M&A. The study provides insights into important issues regarding brand equity and how to strengthen the evaluation of M&A of online companies, which could also be useful for brand managers.