Key Drivers of Value Creation Following Cross-Border Brand Changes

Brand-equity strategy is a key marketing decision for international firms that attempt to expand into foreign consumer markets. Those firms can achieve competitive advantage in their target markets, which in turn leads to superior financial performance, by developing and/or acquiring an effectiveness-enhancing portfolio of brands. Although firms often build their brand portfolios internally, international firms can efficiently and effectively invade foreign markets as well as enhance their product portfolios while lowering risk by acquiring cross-border brands. Despite the strategic importance of cross-border acquisitions, there has been little understanding of the determinants of successful cross-border brand acquisitions. Underpinning the belief that the stock return to a marketing strategy signifies the long-term financial performance, the present study attempts to find the drivers of value creation following cross-border brand changes. Using the resource-advantage theory of competition as an underlying framework, the current study develops an empirically testable model that can explain how firms should wisely undertake cross-border brand acquisitions. The model was tested with a comprehensive dataset drawn from the Securities Data Company Platinum Database and other secondary data sources. The findings of the study show that value creation following cross-border brand changes is based on the acquired brand’s equity, brand fit, acquirer’s diversification, and acquirer’s brand management capability.