Maintaining brand authenticity after an acquisition: the role of acquirer’s reputation and operational independence

Purpose For a digital fashion startup, being acquired by a large company can be a viable growth strategy, but consumers may view it as a departure from the startup’s original identity and question its commitment to core values, its perceived brand authenticity. Despite the potential risks to perceived brand authenticity, little is known about its key predictors in the context of startup acquisitions. Drawing from the heuristic–systematic model and cue diagnosticity theory, this study aims to examine the effects of two systematic factors (acquirer reputation and the startup’s operational independence) and a heuristic factor (company size linked to a consumer lay theory about greed) on brand authenticity. Design/methodology/approach Via two online experimental studies, data were collected from 401 US consumers (Study 1: 101, Study 2: 300). Data were analyzed through SPSS PROCESS macro mediation and moderation analyses and ANCOVA. Findings In Study 1, the authors established a consumer lay theory that larger companies are perceived as greedier, which in turn increases perceived mercenary intent. In Study 2, acquirer reputation significantly predicted perceived brand authenticity, whereas operational independence did not. Notably, the lay theory did not influence perceived brand authenticity in the mergers and acquisitions context. Originality/value For startups and prospective acquirers, the findings offer practical suggestions that can help ensure the long-term viability of the acquisition.