Textile and Apparel Industries

Consumer Response to a Startup Acquisition: The Role of Consumer Lay Theory and Acquirer Reputation

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Abstract

In the fashion industry, digitally native startups are growing in number and popularity. These brands sell and market directly to consumers through digital channels, such as online stores and social media. Select successful brands have sold their businesses to big companies for further growth. For startup brands, the acquisition offers access to valuable resources needed for growth. However, consumers may perceive this decision as a departure from the brand’s initial identity and question whether the brand will remain true to its founding values and thus maintain brand authenticity. Drawing from the heuristic-systematic model and the extant literature on consumer lay theories, we propose two research models that examine 1) a consumer lay theory relevant to the M&A context (i.e., heuristic processing) and 2) its effect on brand authenticity, which is expected to affect purchase intentions, in addition to the moderating effect of acquirer reputation (i.e., systematic processing).

Keywords: acquisition, consumer lay theory, acquirer repuation, brand authenticity, acquirer reputation

How to Cite:

Shin, D. C. & Jin, B. E., (2022) “Consumer Response to a Startup Acquisition: The Role of Consumer Lay Theory and Acquirer Reputation”, International Textile and Apparel Association Annual Conference Proceedings 79(1). doi: https://doi.org/10.31274/itaa.15727