Corporate rebranding in cross-border M&A deals: Survival of the fittest or the best of both?

(1)

Corporate rebranding in cross-border M&A deals:

Survival of the fittest or the best of both?

By Valentine Willeumier

s1408437

MASTER THESIS

International Business & Management Rijksuniversiteit Groningen First supervisor: Drs. R. W. de Vries

(2)

ABSTRACT

This thesis focuses on the possible relationship between certain variables and the type of corporate visual identity (CVI) choice made in cross-border M&A deals. Post-M&A, the corporate visual identity of the new entity can represent a total of 6 choices which are acquirer CVI, target CVI, hybrid CVI, new CVI, target CVI used as a brand or subsidiary and both CVIs used separately. The variables taken into consideration are culture, industry, deal size and acquisition stake. The focus of investigation is 183 M&A deals completed in 2007 with acquirers from either the Latin American culture, Asian culture or Anglo-Saxon culture.

Using chi-square analysis, the findings point out that culture, similarity in power distance scores, deal size and acquisition stake can be significantly related with type of CVI choice. The two variables that do not have a significant relationship with type of CVI choice are uncertainty avoidance similarity and industry.

(3)

LIST OF TABLES

1. The rebranding continuum

2. Differences between product brand and corporate brand 3. Examples of the four driving forces of corporate name change 4. The corporate identity construct

5. Total corporate communications

6. Comparing the 8P’s of marketing with CVI 7. Comparison of CVI choices in literature 8. Characteristics of the 6 types of CVI choice 9. Variables under investigation

10. Calculation of average Latin American cultural dimension scores 11. Scores on cultural dimensions

12. Example of acquirer CVI choice 13. Example of target CVI choice 14. Example of hybrid CVI choice 15. Example of new CVI choice

16. Example of target CVI used as brand or subsidiary choice 17. Example of both CVIs used separately choice

18. Frequency table of CVI choice per region 19. Descriptive statistics H1a

20. Cross-tabulation H1a 21. Chi-square test H1a 22. Descriptive statistics H1b

23. Chi-square test H1b with range 5 24. Chi-square test H1b with range 10 25. Chi-square test H1b with range 15 26. Chi-square test H1b with range 20

27. Chi-square values H1b before test correction

28. Chi-square test H1b excl. CVI choice 2 and 4 with range 5 29. Chi-square test H1b excl. CVI choice 2 and 4 with range 10 30. Chi-square test H1b excl. CVI choice 2 and 4 with range 15 31. Chi-square test H1b excl. CVI choice 2 and 4 with range 20 32. Chi-square values H1b after test correction

33. Cross-tabulation of H1b with range 10 excl. CVI choice 2 and 4 34. Descriptive statistics H1c

35. Chi-square test H1c with range 5 36. Chi-square test H1c with range 10 37. Chi-square test H1c with range 15 38. Chi-square test H1c with range 20

39. Chi-square values H1c before test correction

40. Chi-square test H1c excl. CVI choice 2 and 4 with range 5 41. Chi-square test H1c excl. CVI choice 2 and 4 with range 10 42. Chi-square test H1c excl. CVI choice 2 and 4 with range 15 43. Chi-square test H1c excl. CVI choice 2 and 4 with range 20 44. Chi-square values H1c after test correction

45. Descriptive statistics H2 46. Cross-tabulation H2 47. Chi-square test H2

48. Cross-tabulation H2 excl. CVI choice 2 and 4

(6)

49. Chi-square test H2 excl. CVI choice 2 and 4 50. Descriptive statistics H3

51. Cross-tabulation H3 52. Chi-square test H3

53. Cross-tabulation H3 excl. CVI choice 2 and 4 54. Chi-square test H3 excl. CVI choice 2 and 4 55. Descriptive statistics H4

56. Cross-tabulation H4 57. Chi-square test H4

58. Cross-tabulation H4 excl. CVI choice 2 and 4 59. Chi-square test H4 excl. CVI choice 2 and 4 60. Summary of accepted and rejected hypotheses

(7)

LIST OF FIGURES

1. The corporate rebranding mix 2. The new corporate identity mix

3. The new corporate identity management mix 4. Theories of merger motives

5. Conceptual model

(8)

(9)

1. INTRODUCTION

1.1. Research subject

Every product and service is represented by a brand name. A brand name is accompanied by a set of assets and liabilities that add to or subtract from the value provided by a product or service to a firm and/or that firm’s customers (Aaker, 1996). This means that the concept of branding is a very important aspect for every firm attempting to make a profit. In order to understand the complex aspect of branding, it is necessary to differentiate between product and corporate brands but also between branding and rebranding.

A corporate brand is different from a product brand. A corporate brand features the organization more explicitly, has a brand essence which incorporates a major role for culture and structure, is likely to be more abstract (Merrilees & Miller, 2008) and is intangible (Ind, 1997). Therefore, the management of corporate brands is also different from managing product brands (Ind, 1997). While the concept of branding has been researched for many decades, corporate branding has emerged as a key concept in the late 1990’s (Burt & Sparks, 2002). Within the management of both types of brands, some aspects of brand management frameworks can act as useful tools. However, due to the differences between product and corporate brands and management of them, academics like Melewar & Jenkins (2002) have acknowledged the need to extend these frameworks for the management of corporate brands specifically.

(10)

corporate rebranding all units need to be moved from one mindset, and ultimately one culture, to another (Merrilees & Miller, 2008). Similar to the fact that rebranding should not be approached by using only brand management frameworks, corporate rebranding should also be guided by specific corporate rebranding frameworks.

Corporate rebranding is a phenomenon which is frequently reported in the business press but has received little academic attention. This fact is surprising, given the increasing number of high-profile companies engaging in corporate rebranding processes (Muzellec, Doogan & Lambkin, 2003). Furthermore, a rebranding is a very costly exercise and carries a high level of reputation risk so it would seem necessary that such decisions are informed by strong theory and research (Muzellec, Doogan & Lambkin, 2003).

Choosing to discard a long-held brand name and starting again from the beginning seems to contrast the marketing philosophy (Muzellec, Doogan & Lambkin, 2003) because it nullifies years of marketing effort in building the equity of a corporate brand (Dunham, 2002 and Stuart & Muzellec, 2004 in Gotsi & Andriopoulos, 2007). According to the research results by Muzellec, Doogan & Lambkin (2003), M&A were found to be the most frequent reasons for companies to rebrand. The ever increasing globalization leaves no reason to believe that the amount of M&A deals will decrease considerably in the future. Understandably, the current financial crisis has resulted in a slowdown of M&A activity however this should improve at the end of 2009 according to a report by KPMG (2009).

Branding is one variable among others in M&A, which is believed to affect the synergies achieved and the value created by the combination of firms (Lambkin & Muzellec, 2008). When a corporate rebranding process is initiated due to an M&A deal, one of the more important organizational and marketing questions is the choice of a new corporate identity. Van Riel & Balmer (1997) define corporate identity as being made up of three aspects. These aspects are graphic design (known as corporate visual identity), integrated corporate communications and behaviour of organization members. Corporate visual identity (CVI) and its’ management are both crucial parts of the identity of every organisation (van den Bosch, de Jong & Elving (2006b). The reason CVI is very important for companies is that due to the rate of technological change, consumers are increasingly relying upon the reputation communicated by the firm’s CVI to guide purchase decisions (van de Bosch, Elving & de Jong, 2006a).

(11)

Corporate rebranding should be viewed as a critical aspect for the success of an M&A deal, however facts show that a high amount of M&A deals have failed exactly due to the mismanagement of aspects in the rebranding process (Ettenson & Knowles, 2006). An example of a bad CVI choice during an M&A deal is the acquisition of Digital Equipment by Compaq in 1998. Following the acquisition, Compaq was slow and muddled in implementing change. For example, although the Digital name still had brand equity, all products and services were rebranded as “Compaq”. This resulted in employee and customer resistance, in the end harming performance (The Economist, 2000 in Rosson & Brooks, 2004). On the other hand, an example of an M&A deal with a correct CVI choice, considering the results of the deal, is the merger between Lloyds and TSB. Both organizations had contrasting personalities and served different customers. However, considerable effort went into the development of a new corporate identity. In the end, very few accounts or staff were lost and the new entity, Lloyds TSB tripled the combined company’s shareholder value (Minale, 2002 in Rosson & Brooks, 2004).

Findings from several studies (Bleeke & Ernst, 1993; Chatterjee, Lubatkin, Schweiger & Weber, 1992 in Rosson & Brooks, 2004) point to an overwhelming preoccupation by the acquirer on financial results (“hard” issues) and too little concern for integration of the two companies (Morosini, 1998 in Rosson & Brooks, 2004). In other words, little attention is paid to “soft” issues such as vision and leadership, stakeholder communication, employee moral and retention, corporate culture and integration speed (Balmer & Dinnie, 1999; Kay & Shelton, 2000; Melewar & Harold, 2000; DePamphilis, 2001 in Rosson & Brooks, 2004). The establishment of a strong and clear corporate identity can help mitigate these problems, communicating what the new company stands for to customers and employees (Rosson & Brooks, 2004). According to Hofstede & Hofstede (2005), effective intercultural negotiations (in other words, international M&A) demand an insight into the range of cultural values to be expected among partners from other countries, in comparison with the negotiator’s own culturally determined values.

(12)

Moeller, Schlingerman & Stulz, 2005; Kaplan, 2006 in Lambkin & Muzellec, 2008). Also, if any gains are made, it tends to occur on the cost efficiency side with no evidence of any increases in market power. This fact suggests that the anticipated synergies the acquirer and target brands are rarely realized (Lambkin & Muzellec, 2008).

(13)

mention that the Latin American, Asian, Middle Eastern and Anglo-American cultures are considerably different and therefore, these cultures form the starting point in creating my data sample.

1.2. Problem Statement

1.2.1. Research Question

In accordance with the reasons stated in my introduction, I attempt to answer the following research question in my thesis, “Do culture, deal size, industry and

acquisition stake have an influential relationship with CVI choice in cross-border M&A deals?”.

1.2.2. Structure

First, in chapter two I present a detailed literature review in which I focus on a range of literature, narrowing down from rebranding theory in general to theory on corporate visual identity specifically. From this theory I was able to design a conceptual model and formulate hypotheses which are both presented at the beginning of chapter three. In the other part of chapter three I explain the research method I used to collect my data and the motivations behind my choice of data sample. Then, in chapter four I present the results from my data analysis ultimately stating whether the hypotheses should be accepted or rejected. In chapter five I will discuss the findings and related them to theory. Finally, in chapter six I provide my conclusions, address the limitations of my study and put forth a number of future research suggestions.

1.3. Relevance

The role of marketing in M&A is very important and has many dimensions, few of which have been addressed by researchers. The issue of rebranding is one topic among these dimensions that has not been investigated much (Lambkin & Muzellec, 2008). Moreover, Brooks, Rosson & Gassmann (2005) mention that although some studies have highlighted the importance of the matter of managing corporate identity in M&A activity, in practice it is not given much attention. Combining the high rate of M&A activity, its low success rate due in part to mismanagement of corporate rebranding and

(14)

the fact that corporate identity is an important yet often neglected rebranding aspect in M&A deals, academic research attention in this area is absolutely necessary.

Concerning scientific relevance, whether my findings result in confirming or rejecting the hypotheses leading from my research question, in both cases they will add value. As Gotsi & Andriopoulos (2007) explicitly comment, the high incidence of corporate rebranding cases suggests that academics can make a valuable contribution to management practice by developing theories and frameworks to make this complex decision problem easier and by conducting research to find out what works best in practice. When any of the hypotheses can be confirmed, it will provide the empirical evidence needed to support the abstract ideas presented by researchers on this subject. If however the hypotheses are rejected, the findings provide useful information in order for me to formulate specific future research suggestions. In both cases, the list of possible influential variables will decrease. Furthermore, an important gap in the literature on this subject as claimed by Brooks, Rosson & Gassmann (2005) will be filled. Future research can then focus on different aspects believed to be of influence on CVI decision making in an M&A deal. This is in line with Bromley (2001), who believes the theoretical aim in a corporate marketing study is to construct useful, preferably quantifiable, variables for the description, analysis and explanation of corporate processes.

The findings in my research will be of practical relevance to the decision-making authority in firms engaging in cross-border M&A deals. Due to the fact that corporate branding is becoming increasingly important as a competitive factor, it is necessary for firms to understand which aspects influence this decision-making process. Then, the management teams can be better prepared while engaging in an M&A deal, at least concerning corporate rebranding. As Ettenson & Knowles (2006) point out, many executives realize the importance of dealing with corporate branding issues early in the M&A process but despite best intentions, they often encounter difficulties due to the lack of a comprehensive tool to guide their thinking. Ultimately, my investigation can provide useful information in this respect.

2. LITERATURE REVIEW

(15)

2.1. Structure of the literature review

The literature review provides a comprehensive overview of the theoretical base underlying my analysis of the problem statement. First the complex subject of rebranding is defined. Second, I present a more detailed theoretical analysis of corporate rebranding. Then, I focus on the aspect of corporate identity, specifically corporate visual identity (CVI), which is one of the elements greatly influenced by a corporate rebranding. Hereafter I present a short, general overview of M&A theory, followed by a more detailed section on corporate rebranding during an M&A deal. I also pay attention to the types of CVI choice and which aspects influence this choice. Finally, in my conclusion of the literature, I summarize the most important contributions made in the literature on this subject and I attempt to link the aspects of corporate rebranding, CVI choice and M&A.

2.2. Rebranding

2.2.1. Definition of rebranding

Muzellec & Lambkin (2006) claim that rebranding can be defined and categorized in different ways. One categorization is that rebranding can be described along a continuum ranging from evolutionary to revolutionary depending on the degree of change in market positioning and visual aesthetics of the brand. A detailed explanation of this continuum is provided by Daly & Moloney (2004), which I have summarized in Table 1.

Table 1. The rebranding continuum

Type of change Characteristics

Minor changes (Evolutionary) Face lift, restyling, revitalizing brand appearance or aesthetics which are dated or in need of change

Intermediate changes Repositioning an existing brand name to create a new image

Complete change (Revolutionary) Creating a new name

However, the use of the term rebranding to label any of these three events in isolation is incorrect (Muzellec, Doogan & Lambkin, 2003). The events are all part of the rebranding process or mix and none of them alone can provide a sufficient theoretical

(16)

definition for the term. Rebranding can also be categorized by the various levels in the brand hierarchy at which it occurs or the type of change it is triggered by. Both types of categorizations are explained in detail further on.

In a review of the rebranding literature, Muzellec, Doogan & Lambkin (2003) come to a general definition that incorporates all the events mentioned in Table 1. Their definition for rebranding, which I will use in this thesis is, “the practice of building a

new name representative of a differentiated position in the mind frame of stakeholders and having a distinctive identity from competitors”.

2.2.2. Levels of rebranding

Comparative to other strategic business decisions, rebranding involves identifying and maximizing the actual and perceived fit between the organization and its environment (Griffin, 2002 in Muzellec, Doogan & Lambkin, 2003). In order for a firm to create a unique position among competitors, it is no longer sufficient for a firm to position itself by tangible features such as the packaging of products. Instead, intangible and more emotional characteristics of the firm’s products or the whole corporation are being used more intensively (Merrilees & Miller, 2008). This is where corporate rebranding comes into the picture. However, in order to understand the unique field of corporate rebranding in comparison to rebranding in general, I will first explain the different levels at which rebranding can take place.

A rebranding can occur at three levels in the organization: the corporate level, business unit level and product level. Muzellec, Doogan & Lambkin (2003) explain the differences between these levels which are summarized below.

♦ Corporate rebranding: the renaming of the whole corporate entity, often

signifying a major strategic change or repositioning (e.g. Ago and Ennia became Aegon, Philip Morris became Altria, Eircell became Vodafone).

♦ Business unit rebranding: the situation in which a subsidiary or division

within a larger corporation is given a distinctive name to give it an identity separate from the parent (e.g. Mannesmann Mobilfunk DS became Vodafone Germany, Midland Bank became HSBC UK)

♦ Product level rebranding: the change of a product name usually meant as a

tactical move (e.g. Jif became Cif, Raider became Twix)

(17)

A corporate brand is different from a product brand. In contrast to the product brand, the corporate brand has access to organizational as well as product associations and the flexibility to play several roles within the brand portfolio (Aaker, 2004). Brooks & Rosson (2004) present the corporate brand as being made up of a few key dimensions which are image, identity and reputation. According to the authors, image is how a company is usually perceived by outsiders. Identity is how a company thinks about itself and how it would like to be viewed by others. Reputation is how outsiders judge a company’s actions and achievements. These three dimensions are tightly linked to each other.

In Table 2, the contrasts between a product brand and a corporate brand are shown as mentioned by Balmer (2001).

Table 2. Differences between product brand and corporate brand

Source: Balmer (2001) p. 281

Due to these differences, the management of corporate brands is also different from managing product brands (Ind, 1997 in Burt & Sparks, 2002). Corporate brand management requires more inner, strategic focus, is controlled by higher-level management (Merrilees & Miller, 2008; Balmer, 2001) and is more complex due to the involvement of multiple stakeholders (Lomax & Mador, 2006; Balmer, 2002; Balmer, 2001; Merrilees & Miller, 2008) and its interdisciplinary nature (Gotsi & Andriopoulos, 2007; Balmer, 2001). The combination of external and internal focus of corporate brands compared with a customer focus for product brands is a very important difference according to Balmer (2001).

A rebranding at the corporate level seems to be the most frequent and strategically important type, according to academics. Moreover, there is much to be explored in this

(18)

relatively young field of theory. Therefore my thesis will focus on rebranding at the corporate level.

2.3. Corporate Rebranding

2.3.1 The necessity of research on corporate rebranding

At the dawn of the 21st_{century corporate rebranding campaigns are being executed on a}

scale never seen before (Gotsi, Andriopoulos & Wilson, 2008). Estimates of the cost of developing a new CVI are anywhere between €4 million and €40 million, with consumer products companies spending the most (Fellman, 1998 in Brooks & Rosson, 2004). The high costs involved in corporate rebranding call for detailed research. However, the academic literature on corporate rebranding is relatively young and small. Most of the writing on this topic is in the business press with little appearing in academic journals (Muzellec, Doogan & Lambkin, 2003). Within the rebranding research the focus has been mostly on the product brand level of analysis and not on the corporate level (Gotsi & Andriopoulos, 2007). Moreover, the subject of CVI specifically has received little attention in management and communication literature (van de Bosch, de Jong & Elving, 2006a). According to Merrilees & Miller (2008), the paper on revitalizing brands by Berry (1988) is one of the first to focus on this subject, meaning that academics have researched corporate rebranding for only two decades.

2.3.2. Defining corporate rebranding

A corporate rebranding is a means of communicating to stakeholders that something about the organization has changed. A corporate rebranding can affect the name, logo and/or slogan (Stuart & Muzellec, 2004). Changing one aspect does not necessarily mean that the other two aspects will change.

The current corporate rebranding literature can be summarized based on four prominent cases, which are the Mazda case by Ewing, Fowlds & Shepherd (1995), the LEGO Group case by Schultz & Hatch (2003), the Vodafone case by Daly & Moloney (2004) and the Canadian Tire case by Merrilees (2005). Remarkably, only the Vodafone case considers an M&A deal while the other cases all focus on the corporate rebranding of a single organization. These case studies have all made major contributions to understanding corporate rebranding and have led to the formation of three different

(19)

corporate rebranding themes (Merrilees & Miller, 2008). Theme one is revision of the brand based on a solid understanding of the consumer, to meet both existing and anticipated needs. Theme two is the use of internal marketing to ensure commitment of all stakeholders. Theme three is the use of advertising and other marketing mix elements in the implementation phase of the rebranding.

2.3.3. Reasons for corporate rebranding

A corporate rebranding strategy is complex and presents both advantages and disadvantages. The advantages are quite straightforward such as new and improved brand associations, new approach for the existing target group, reaching new target groups and building one (multi)national brand in order to lower costs. The disadvantages are equally important which are the large financial investment, the uncertain market acceptance, abandonment by a part of the target group and internal resistance or chaos (van Sister & Dijkstra Taurel, 2006). Why then are firms so keen on corporate rebranding? In other words, what are some of the drivers of corporate rebranding? The following Table (3) summarizes the drivers in four different categories, introduced by Muzellec & Lambkin (2006).

Table 3. Examples of the four driving forces of corporate name change

Source: Muzellec & Lambkin (2006) p. 810

Apparent from Table 3, the main drivers of corporate rebranding are decisions, events or processes causing a change in a company’s structure, strategy or performance (Muzellec, Doogan & Lambkin, 2003). In an empirical study conducted by Muzellec, Doogan & Lambkin (2003) a sample of 166 companies was chosen to determine, among other things, the reason for their corporate rebranding. In 33 percent of the cases, M&As was found to be the reason, followed by spin-offs (20 percent) and

(20)

discarding of poor image or change in strategic position (17,5 percent). However, a change in ownership structure (M&A) was the dominant driver.

2.3.4. The process of corporate rebranding

The corporate rebranding process, otherwise known as the corporate rebranding mix, is composed of four stages as is shown in Figure 1 below.

Figure 1. The corporate rebranding mix

Source: Muzellec, Doogan & Lambkin (2003)

Stage one is the repositioning stage in which a decision is taken to try to create a radically new position for the company in the minds of its customers, competitors and other stakeholders (Ries & Trout, 2001 in Muzellec, Doogan & Lambkin, 2003). The next stage is the renaming stage in which a new name is created for the company. It sends a strong signal to stakeholders that the company is shifting its strategy, refocusing its activity or changing ownership (Kapferer, 2002 in Muzellec, Doogan & Lambkin, 2003). The third stage is the redesign stage in which the visible design elements, such as name, slogan, logo and stationary, of a firm are changed. The final stage is the relaunch stage in which the new brand is publicized internally and to the outside world. Evident from this four stage rebranding process, is its multidisciplinary perspective and the necessity to incorporate all relevant stakeholders. According to Balmer & Greyser (2003 in Gotsi, Andriopoulos & Wilson, 2008) managers often fail to realize this fact. Concerning the aforementioned internal and external drivers, it is of relevance for the process of corporate rebranding whether the organization operates nationally or

(21)

internationally and if it has a centralized or decentralized management structure (van Sister & Dijkstra, 2006). These factors can all have different effects on the corporate rebranding process.

The level of success of a rebranding depends on commitment and focus from both the management team and marketing department. In reality, a corporate rebranding is mainly managed by the marketing department even though it might be driven by corporate strategy. However, in order to ensure staff commitment and behavior in accordance with the new brand values, internal branding should be actively and constantly carried out (van Sister & Dijkstra Taurel, 2006). Corporate rebranding frameworks have therefore shifted away from the traditional focus on external stakeholders, to an internally driven approach that also places emphasis on encouraging employees to exhibit behaviors that are consistent with external branding efforts (Schultz & Hatch, 2001; Ind, 1997; 2001; LePla & Parker, 1999; Mitchell, 2002 in Gotsi, Andriopoulos & Wilson, 2008).

2.4 Corporate Identity

2.4.1 Defining corporate identity

A corporate rebranding focuses on changing the corporate identity (CI) of a firm. In theory, corporate identity is presented as one element of business identity. Business identity is viewed as encompassing institutions in the public, not-for-profit and private sectors as well as supra and sub-organizational identities such as industries, alliances, trade associations, business units and subsidiaries (Balmer, 2001). The concept is made up of four elements: corporate identity, organization’s identity, organizational identity and visual identity. The differences between these four elements lie in the terms of the identity’s conceptualization, locus of analysis and key research issues. In the following part, I focus first on corporate identity and then I give a detailed explanation of visual identity. I will define the other two concepts here in short because gaining a general impression of these two elements is sufficient to understand them in the greater context. The focus in my thesis is on corporate identity and visual identity.

Organization’s identity is the defining characteristics of an organization as perceived by employees. It can either be a claimed identity or an internally perceived identity.

(22)

Important to understand is that it refers to a collectively perceived identity, meaning that all employees share the same ideas about the specific characteristics that identify what their organization is and stands for. Organizational identity on the other hand, refers to the specific characteristics that are portrayed by the organization’s employees. The concept is similar to corporate personality and corporate culture. In other words, organizational identity relates to certain behavioral traits common in all employees of the organization. An important distinction between organization’s identity and organizational identity is that the former refers to the identity of the organization while the latter refers to the identity of the people within the organization (He & Balmer, 2007).

One thing that becomes apparent when reviewing the corporate identity literature is that there is not one clear way in which to define the subject. As Bromley (2001) describes, problems are raised by words and phrases used differently in the various areas of research. Balmer (2001) agrees with this fact, adding that this muddled use of terminology is an indication of the complex nature of this subject. For this reason, I have summarized the most important, alternating views of various authors on the construct of corporate identity (see Table 4).

(23)

Table 4. The corporate identity construct

Author(s) Terminology of corporate identity

Balmer & Soenen (1999) Soul (Core values, cultures, internal images, employee’s affinities,

history)

Voice (Controlled/non-controlled communication, symbolism,

personnel/corporate behavior, indirect communication)

Mind (Vision, philosophy, strategy, products/services performance,

brand architecture, corporate ownership)

Balmer & Soenen (1999), Balmer & Greyser (2002) 5 types of identity: actual, communicated, ideal, desired, conceived

Van Riel & Balmer (1997) Behavior, communication, symbolism

Olins (1995) Areas that stakeholders see: products, services, environments,

communications, behavior

Markwick & Fill (1997) Variety of cues and planned communications, unintentional or emergent messages

Melewar & Jenkins (2002) Communication (corporate communication, uncontrollable

communication, architecture and location) visual identity, behavior (corporate, management, employee), corporate culture (goals, philosophies and principles, nationality, organizational imagery and history), market conditions (nature of industry, corporate/marketing strategies)

Birkigt & Stadler (1986) Organization’s behavior, communication, symbolism

Schmidt (1995) Culture, organizational behavior, strategic vision, products and services,

communication, symbolism

(24)

There is a slight difference in interpretation of CI between practitioners and academics. The former focus on the more tangible aspects of identity (e.g. visual identity), specifically easy to manage aspects. The latter focus more on the combination or pattern of the independent characteristics of an organization that give it stability, coherence and specificity, which make the organization identifiable. This difference in interpretation exemplifies the lack of consensus in the research field on the relationship between corporate identity and visual identity. Some researchers use the terms interchangeably (e.g. Olins, 1989) while others view visual identity as being a part of corporate identity (e.g. van Riel & Balmer, 1997, Melewar, Saunders & Balmer, 2001). In practice, Schmidt (1995) found that significant numbers of managers in the UK and Europe equate corporate identity with graphic design. In my thesis, I view visual identity as being one element of CI.

In order to provide a clear frame of reference in which my research can be placed, I have chosen to follow Balmer’s (2002) definition and operationalization of corporate identity (see Figure 2 and Figure 3). His work is quite recent and incorporates many ideas of researchers studying corporate identity. In the following section I discuss the corporate identity mix and the corporate identity management mix designed by Balmer (2002).

2.4.2. The corporate identity mix

(25)

Figure 2. The new corporate identity mix

The culture element in Balmer’s new design has been an omitted element in many other corporate identity mix research papers. However, Baker & Balmer (1997) mention that while there are differing views as to what elements constitute the corporate identity mix, there is increasing consensus that culture is the most important part (Melewar & Jenkins, 2002). New research performed by Gotsi, Andriopoulos & Wilson (2008) emphasizes the great importance of staff in the successful implementation of a new corporate identity. If staff is not able to identify with the new brand then this will affect customers as well, logically having a negative effect on brand equity. It is therefore necessary to incorporate culture in the corporate identity mix.

Unfortunately, culture is difficult to observe and explain because it can be professional, national or corporate (Balmer & Wilson, 1998) as well as representing past, present or future leadership styles and philosophies. Hence, subcultures present many different layers on which they can be measured. According to Hofstede (1994), attributing a distinct culture to a company or organization has become extremely popular. Besides creating national culture dimensions, Hofstede also introduced 6 dimensions for organizational cultures. The author based these dimensions on a single study and therefore considers his findings too narrow for generalization. However, the study did point out that organizational cultures can also reflect national culture differences leading to the belief that national cultural dimensions can be used to represent organizational cultures. Hofstede (1994) mentions explicitly that corporate culture is usually heavily affected by the nationality of origin of the corporation.

(26)

♦ Power distance

♦ Individualism – collectivism

♦ Masculinity-femininity

♦ Uncertainty avoidance

♦ Long-term orientation – short-term orientation

Power distance refers to the extent to which the less powerful members of organizations and institutions accept and expect that power is distributed unequally. The dimension individualism/collectivism depends on the degree to which individuals are integrated into groups. Whether a culture is high in masculinity or femininity depends on the presence of assertiveness in contrast to caring. Uncertainty avoidance means a society’s tolerance for uncertainty and ambiguity. Finally the last dimension, long-term versus short-term orientation, is quite straightforward and refers to the extent to which society is future-oriented (Hofstede, 1994).

Two other elements of Balmer’s (2002) CI mix are quite simple to define. The strategy element consists of management vision and corporate philosophy, corporate strategy, the performance of products and services as well as corporate performance, the corporate brand values, corporate architecture and finally the nature of corporate ownership (Balmer, 2002). The structure element encompasses the nature of relationships between the parent company and its subsidiaries or alliance partners (Balmer, 2002).

Confusingly, the total corporate communication element is commonly referred to as being synonymous with the corporate identity of a firm (Birkigt & Stadler, 1986; van Riel & Balmer, 1997 and Cloosterman & Bolhuis, 2008). However, in his new CI mix, Balmer (2002) distinguishes between the two. According to him, the total corporate communication element is made up of primary, secondary and tertiary communication (see Table 5).

(27)

Type of communication Characteristics

Primary communication Behavior, communication effects of the organization’s products and services, pricing, distribution policies

Secondary communication Formal corporate communications, advertising, PR, symbolism

Tertiary communication Word-of-mouth communication (media and computer communications)

Secondary communication incorporates the visual identity element (symbolism). This element is the focus of my empirical investigation and therefore will be elaborated on in section 2.4.4.

2.4.3. The corporate identity management mix

Balmer (2002) also designed a management construct for the CI mix. According to the author, this was necessary because his research had pointed out that there was a lack of distinction between the elements of a CI and the mix of elements required for its management. The integrated concepts are shown in Figure 3 below.

Figure 3. The new corporate identity management mix

(28)

and meeting their expectations. The environment element includes political, economic, ethical, social and technological developments, competition and the threat of entrants. Finally, the reputations element considers the organizational reputation but also the reputation of the CEO, key members of the management board and the industry in which the organization is active (Balmer, 2002).

2.4.4 Corporate visual identity

In the literature, CVI has been defined as including anything that can be related to graphic design (van den Bosch, Elving & de Jong, 2006a, He & Balmer, 2007). This definition is too vague for usage of the term. Therefore, I will follow the definition presented by Melewar, Saunders & Balmer (2001), “corporate visual identity (CVI)

consists of the corporate name, logo, color palette, font type and corporate slogan”.

A CVI has several functions, it symbolizes the organization, it provides visibility and recognizability, it expresses structure and internally it may enhance the extent to which employees identify with the organization (Bromley, 2001; Dutton, Dukerich & Harquail, 1994; Kiriakidou & Millward, 2000 and Olins, 1989 in Van den Bosch, de Jong & Elving, 2006b). Concerning the matter of CVI, van den Bosch, de Jong & Elving (2006a,b) believe that a consistent CVI is obligatory for a clear perception of the organization and therefore its image. Too many different visual cues will create an unfocused impression. As Bernstein (1986), Dowling (1986) and Melewar, Saunders & Balmer (2000) (in Melewar & Jenkins, 2002) put it, “it is not the symbol itself but what the symbol represents that has value. It is this representation that marks the importance of visual identity to the overall corporate identity”. Most authors agree on certain functions of visual identity which are to signal change in corporate strategy, culture and communication (Balmer, 2001).

To gain a clear understanding of corporate visual identity and its usage within a firm, Melewar & Saunders (2000) have compared it with the 8Ps of marketing and point out that CVI is used in different ways for each P (see Table 6). This shows that it is very important for a company to pay much attention to CVI when rebranding.

(29)

Source: Melewar & Saunders (2000) p. 543

2.5. Mergers and Acquisitions

2.5.1 What is M&A?

(30)

Whether a deal is considered to be either a merger or an acquisition depends on if it was a friendly or hostile deal.

The reasons for entering into an M&A deal are numerous, including strategic realignment, growth and diversification (Trautwein, 1990; Bower, 2001 in Brooks & Rosson, 2004). Trautwein (1990) designed a very comprehensive overview of the reasoning behind M&A strategy. He divided the theory on merger motives into 7 different categories as shown in Figure 4 below. On the right are the 7 merger theories and left of them are the main characteristics of each of these theories.

Figure 4. Theories of merger motives

Source: Trautwein (1990) p. 284

Brooks, Rosson & Gassmann (2005) have summarized the theory on M&A into a few thematic approaches. One theme is the motives and thinking that guide M&A activity. Another theme concerns performance questions such as the influence of M&A activity on shareholder value, operating results or rate of success. The last theme focuses on the cultural and management factors in M&A in which the issue of corporate identity is found to be given little attention.

(31)

The process of corporate rebranding due to M&A is quite difficult. One of the more important organizational and marketing questions that arise in M&A is the choice of a name for the new entity as well as how this is supported through visual devices (Brooks, Rosson & Gassmann, 2005). This view is supported by Balmer & Greyser (2002) who claim that mergers, spin-offs, acquisitions and alliances have led to many new or meaningfully changed companies, in turn calling for new identities by name and/or business focus. In relation to the evolutionary-revolutionary continuum defined earlier, in the case of M&A, corporate rebranding often involves revolutionary creations of new corporate names (Gotsi & Andriopoulos, 2007).

Evidence to date suggests that rebranding has been treated as an afterthought in the context of M&A decisions, something to be tidied up in the implementation phase after the deal has taken place, rather than being considered as an intrinsic part of the decision (Ettenson & Knowles, 2006 in Lambkin & Muzellec, 2008). However, according to Ettenson & Knowles (2006), with no solid brand platform to work from, company integration will often be mismanaged and communications to key constituencies will necessarily suffer.

Unfortunately, evidence also points out that M&A deals have a high failure rate. More often than not, such deals end up destroying instead of creating value for the companies involved (Ettenson & Knowles, 2006). Findings show that many M&A deals fail due to the small amount of attention paid to issues such as vision and leadership, stakeholder communication, employee moral and retention, corporate culture (Balmer & Dinnie, 1999; Kay & Shelton, 2000; Melewar & Harold, 2000 in Brooks & Rosson, 2004), overestimating synergy and slow integration speed (DePamphilis, 2001 in Brooks & Rosson, 2004). Believed to be of major influence however, is the fact that the branding of the new corporate entity is often given little attention (Ettenson & Knowles, 2006). In other words, due to rebranding mismanagement, M&A deals in many cases do not fulfill the goals aspired in the beginning.

(32)

2.5.3. The various CVI choices

In the small amount of research on CVI decision making during M&A, a few authors have acknowledged different CVI choices that have been generated by empirical research. The first author to do so was Kleefeld (1999) who based his typology of three CVI choices on practitioner observations. Then, in two consecutive papers, Brooks & Rosson (2004) and Brooks, Rosson & Gassmann (2005) identified a total of 6 CVI choices by studying a sample of 83 domestic and cross-border M&A deals. Ettenson & Knowles (2006) reveal even 10 different possibilities that can be categorized into four different types. Finally, Basu (2006 in Lambkin & Muzellec, 2008) also mentions four CVI choices. In Table 7 a comparison is shown of these authors and it is evident that their theories overlap considerably. Moreover, the CVI choices introduced by Brooks & Rosson (2004) and Brooks, Rosson & Gassmann (2005) are the most elaborate, consisting of 6 different choices of which one is not mentioned by any other author (target CVI retained for subsidiary/brand). For this reason, I will use the categorization proposed by Brooks, Rosson & Gassmann (2005) in my investigation.

(33)

Kleefeld (1999) Brooks & Rosson (2004) and Brooks, Rosson & Gassmann (2005)

Ettenson &

Knowles (2006) Basu (2006)

One CVI

dominates Acquirer CVI dominates ---Target CVI dominates

Backing the stronger horse (using the stronger brand)

One brand

Hybrid CVI Hybrid CVI The best of both Joint brand

New CVI New CVI Different in kind New brand

Target CVI retained for subsidiary/brand

Both CVIs used Business as usual Flexible brand Source: Ettenson & Knowles (2006), Brooks & Rosson (2004), Brooks, Rosson & Gassmann (2005)

and Lambkin & Muzellec (2008)

(34)

Table 8. Characteristics of the 6 types of CVI choice

Type of CVI choice Usefulness Advantages Disadvantages

Acquirer CVI M&A deal can be positioned as an

upgrade for employees and customers of target brand. Employees experience an

expansion of career opportunities while customers perceive

advantages to dealing with a larger company.

Simplicity. Expediency.

Provides benefits of scale and presence.

Loss of affinity or loyalty of target firm’s employees and customers. Clear winner/loser.

Customers can experience loss of control, fear that they will have no voice within the new company, worry if history and relationship with former company will still be understood and honoured.

Might signal that little has changed within the firm whose CVI is kept.

Target CVI In the case that an acquiring firm

takes over a firm with a well established brand name, while the CVI of the acquirer is barely known.

Less severity of the winner/loser dynamic (implementing

management and culture of acquirer and CVI of target) leading to more satisfied customers.

Provides benefits of scale and presence.

Question arises of who actually won the deal resulting in

employees of acquiring firm being dissatisfied with the high status the employees of the target firm achieve.

Might signal that little has changed within the firm whose CVI is kept.

Hybrid CVI When both brands are perceived

to have high value pre-M&A. In a transitional period after which the stronger CVI will be used. When both firms will contribute significantly to the future of the new entity.

Signals a shared future while maintaining a separate sense of identity and pride for employees of both firms.

Sends a message of combined corporate strength and enhanced competencies to employees and

(35)

When solely a corporate change is desired to maximize market share while not affecting customer’s choice.

When one firm acts as a junior partner or endorser.

investors.

Avoids the winner/loser dynamic. If one firm acts as an endorser, the endorsing brand can add

credibility and prestige to the target brand. Employees get the sense of belonging to a larger group, having new career opportunities. Customers are reassured by knowing that a strong parent now stands behind the target firm.

evolution to a single brand. When used solely as a corporate change, the newness of the entity is not seen automatically which can result in scepticism from investors and other stakeholders. If one firm acts as an endorser it can lead to brand dilution or brand confusion. In addition, employees and customers can feel that the endorser is imposing its operating requirements and corporate culture.

Can result in loss of differentiation and lack of integration.

New CVI To signal a complete corporate

transformation with a new vision and direction.

To create the sense of a fresh, new

beginning. Most resource-intensive of all the types and most risky. There is a serious doubt of the benefit of writing off the equity of both brands.

Target CVI used as brand/subsidiary

In situations were the target brand still has equity of worth to the acquirer.

Avoids the winner/loser dynamic. Can result in confusion for

employees due to the preservation of the target CVI while adaptation to the acquiring firm’s culture is necessary.

Both CVIs used separately When both brands are perceived to have high value pre-M&A. An option to use in a transition period longer than 1 year.

The least cost-intensive choice due to minor adaptations.

(36)

For mergers that aren’t predicated on synergy between the employee and customer bases of the firms. Purpose is to maintain separate faces to the market in order to retain the customer and channel equity enjoyed by both distinct brands.

(37)

2.5.4. Factors influencing CVI choice in M&A deals

Lambkin & Muzellec (2008) mention several aspects especially important during M&A deals. These aspects could influence the decision-making process of the new name. They are the relative size and strength of the merged companies, the type of products or services offered, the relatedness of markets and products and the geographic distance. Lambkin & Muzellec’s (2008) analysis of two cases, Citigroup and Crédit Agricole, points out that the size and marketing strength of the target relative to the acquirer is the most significant variable influencing the rebranding decision. An unexpected finding in the analysis was that the degree of similarity between markets does not seem to be a determining variable in the decision to rebrand or not (Lambkin & Muzellec, 2008). However, the fact that this analysis was done in the banking industry could have unique implications for the findings.

Brooks, Rosson & Gassmann (2005) researched to what extent the CVI choice is influenced by the relative power of both companies, the geographic scope of the M&A deal and the similarity of sectors from which the two companies are from. They however found that none of these aspects had significant influence on CVI choice but that the aspect of industry similarity needed further investigation. Furthermore, the authors claim that cultural similarity between acquirer and target may be more relevant to CVI decision making than whether the M&A deal has a domestic or international scope. They explicitly mention that differences could be found between the American-Anglo Saxon, Middle Eastern, Latin American and Asian business cultures. Research on this particular topic is encouraged by Brooks, Rosson & Gassmann (2005). As Ricks (1993 in Steenkamp, 2001) comments, the failure to take cultural differences between countries into account has been the cause of many business failures.

As of yet, the marketing models have been designed using a universal perspective, however cultural research in the business area has pointed out the need for revising these models and adapting them to cultural specifications. For example, in a paper by Balmer (2001) the author questions the saliency of using the generalized identity concept in various management disciplines and Anglo-Saxon, European and Asian business cultures.

(38)

In my literature review, a couple of main theoretical aspects can be distinguished and linked. First of all, corporate rebranding is a concept that has been studied for only the past two decades. The paper written by Muzellec, Doogan & Lambkin (2003) serves as a review of corporate rebranding and defines its concept, considers the factors causing rebranding to occur and explores the stages of the rebranding process. Merrilees & Miller (2008) base their review of corporate rebranding on four prominent case studies and extend the theory by creating 6 principles of corporate rebranding which are tested in a case study. These two papers serve as a useful theoretical base for corporate rebranding.

Concerning corporate identity, Balmer (2002) presents a summary of the various corporate identity mixes created by other authors and uses this information to design a new corporate identity mix accompanied by a new management tool. Within the area of CI, research on CVI has been dominated by a few different authors. In 2005, van den Bosch, de Jong & Elving presented a paper in which the relationship between CVI and corporate reputation was established. Then, in a series of papers, Van den Bosch, de Jong & Elving (2006a,b) studied specific CVI management instruments and the management of CVI. In this case, a relationship was found between the level of CVI consistency and the success of a corporate rebranding. The relationship between CVI and globalization has been a topic in research for only the past decade and is primarily dominated by Melewar & Saunders (1998, 1999, 2000) and Melewar, Saunders & Balmer (2001). CVI decision-making in the case of domestic and cross-border M&A deals has only been investigated by a few authors (Kleefeld, 1999; Brooks & Rosson, 2004; Brooks, Rosson & Gassmann, 2005; Ettenson & Knowles, 2006; Basu, 2006). One common belief of these authors is that there is much left to research in this particular area.

(39)

(40)

(41)

3. METHODOLOGY

3.1. Conceptual Model

Below in Figure 5, I present the conceptual model which forms the frame of reference in my thesis. Investigating the relationships shown in my conceptual model will ultimately help me to answer my research question, “Do culture, deal size, industry and

acquisition stake have a significant relationship with CVI choice in cross-border M&A deals?”.

The starting point is the occurrence of an M&A deal which leads to a corporate rebranding and in turn influences the CVI of the acquirer and/or target firm. From the literature review, I found that there are 6 different choices concerning CVI that can be decided upon. The point of my thesis is to investigate whether certain variables are significantly related to the type of CVI choice decided upon. The reasoning behind my choice of aspects will be explained in the remainder of chapter three.

Figure 5. Conceptual model

Corporate rebranding due to M&A

CVI choice:

Acquirer CVI Target CVI Hybrid CVI New CVI Target CVI for subsidiary/brand

Use of both CVIs separately

Influential factors:

Culture Industry type Deal size

(42)

3.2. Hypotheses

Hypotheses 1a, 1b and 1c focus on the factor of culture. According to Brooks, Rosson & Gassmann (2005), cultural similarity between acquirer and target may be more relevant to CVI decision making than nationality. In this respect, the cultural dimensions framework designed by Hofstede (1980, 1991 in Steenkamp, 2001) is useful, of which Steenkamp (2001) says is the most influential national cultural framework developed to date. In the literature review, I discussed the five cultural dimensions created by Hofstede (1980, 1991 in Steenkamp, 2001). These cultural dimensions also have implications for the business world because different cultures call for different management practices (Hofstede, 1994).

However, scores on the last dimension (long-term versus short-term orientation) have not been collected for all countries. Moreover, there has been insufficient research on the implications of differences along this dimension (Hofstede & Hofstede, 2005). For the purpose of a justified investigation, I will not focus on this dimension.

Following the research suggestions posed by Brooks, Rosson & Gassmann (2005) I will first investigate whether acquirer firms with different cultural backgrounds (as scored on the cultural dimensions by Hofstede) also make different CVI choices during an M&A deal. More specifically, I believe that acquiring firms coming from an Anglo-Saxon culture will opt for the choice of using an acquirer CVI post-M&A more than acquirers from Latin America or India. The distinct Anglo-Saxon culture, with high individualism and masculinity, means that establishing a high status and being assertive in negotiations is important in this culture. This relates to the need of keeping an acquirer CVI after the M&A process. In contrast to the lower scores on these dimensions for both Latin America and India, I reason that the differences in culture will be apparent in the preference of the type of CVI choice made post-M&A. Therefore, my first hypothesis is:

(43)

I also believe that the degree of similarity of scores between the acquirer and target firm on certain cultural dimensions also influences CVI choice. According to Brooks, Rosson & Gassmann (2005), the power distance and uncertainty avoidance dimensions are the most important to consider when comparing corporate rebranding in cross-border M&A deals. Following this statement, I will test if there is a relationship between these two dimensions independently and the type of CVI choice decided upon in the Latin American, Indian and the USA cases. For each cultural dimension I will use different ranges of similarity. Analysis on different ranges or thresholds was also used in the paper by Brooks, Rosson & Gassmann (2005) and serves the purpose of extra verification in the case of analyzing a variable not previously investigated. Therefore, the next two hypotheses are:

Hypothesis 1b: Similarity in power distance scores between acquirer and target firm is related to the type of CVI choice made.

Hypothesis 1c: Similarity in uncertainty avoidance scores between acquirer and target firm is related to the type of CVI choice made.

(44)

This translates into the following hypothesis:

Hypothesis 2: Industry similarity between acquirer and target firm is related to the type of CVI choice made.

I will also investigate two aspects of which their influence on CVI choice has not been acknowledged in the literature thus far. The first aspect is deal size. I believe that when an M&A deal is concerned with a high amount of transaction money (high deal size), it will lead to different CVI choices than when an M&A deal has a low deal size. M&A deals with high deal sizes usually concern large multinationals with established brands which prefer to keep some aspect of their own CVI, possibly leading to the choice of a hybrid CVI. However, M&A deals with small deal sizes can mean that the target firm is not well known and that the acquiring firm will have more power post-M&A. A CVI choice relating to this would be the use of the acquirer CVI or maybe even using both CVIs in a separate way. As Brooks, Rosson & Gassmann (2005) claim, studies of large corporation M&A deals are often incorrectly used to draw conclusions about M&A deals of all sizes. However, the authors did not investigate its impact. This fact and the importance of including deal types of all sizes is the reason for investigating deal size. Therefore, my next hypothesis is:

Hypothesis 3: CVI choices made in M&A deals with low deal sizes are different from the CVI choices made in M&A deals with high deal sizes.

(45)

Hypothesis 4: CVI choices made in deals with an acquisition stake of 100% are different from the CVI choices made in deals with an acquisition stake of less than 100%.

3.3. Research design

3.3.1. Type of research

Distinguishing between qualitative and quantitative research is not directly related to the type of data collected but more to a difference in searching for causes versus searching for happenings. Quantitative researchers aim for explanation and control while qualitative researchers aim for understanding the complex interrelationships (Stake, 1995). Moreover, quantitative methods are more suitable for theory testing than theory generation (Deshpande, 1983 in Balmer, 2001). My hypotheses point out that I aim to investigate whether a significant influential relationship exists between certain independent variables and the type of CVI choice made in cross-border M&A deals. The choice of independent variables can all be justified by literature to a certain level. Therefore, I will perform a quantitative investigation.

The advantages of quantitative methods include the ease of cross-sectional assessments and comparisons (across individuals, organizations or sub-units), the replicability of the assessment in different units and by other researchers or organizational development professionals, and a common, articulated frame of reference for interpreting the collated information (Balthazard, Cooke & Potter, 2006). These are exactly the reasons for my choice of a quantitative research perspective. Due to the fact that corporate rebranding during a cross-border M&A deal has only been researched by a few authors, it is of importance that the research method is replicable and that the results can be generalized.

(46)

2008). In accordance with the research techniques of the few other papers covering this subject and the fact that testing whether a relationship exists between certain variables and CVI choice is the aim of my thesis, I will use a non-parametric test. To be specific, the chi-square analysis will be used in each of my hypotheses. In section 3.4. I will elaborate further on the use of this type of test.

3.3.2. Deductive or inductive approach

According to various authors such as Gill & Johnson (2002) and Patton (1990), a research method can have two approaches, either deductive or inductive. The deductive approach is to develop a conceptual and theoretical structure first and then to test this structure through empirical observation. Commonly, once the testing is finished and validated, the theory is assumed to be established as a justified explanation (Gill & Johnson, 2002). Ultimately in the deductive approach, observations are created of “unfalsified covering-laws” that explain the past and predict the future. This “hypothetico-deductive approach” emphasizes that what is important in science is not the sources of the theories and hypotheses a scientist begins with but rather the process by which those ideas are tested and confirmed (Gill & Johnson, 2002).

My research follows this deductive approach. First I examined the relevant literature in order to find a clear gap which would provide interesting research suggestions. Next, I designed a conceptual model from which I could formulate my hypotheses. Then, I collected the necessary data and entered it into SPSS 17.0 in order to analyze the data. Finally I used the analyses to discuss the results and ultimately to prove whether my hypothesis can be supported or not. In the end I was able to answer my research question and provide future research suggestions, also taking the limitations of my study into account.

3.3.3. The data sample

(47)

of culture, it is important that the countries sampled differ sufficiently on the focal dimensions (Steenkamp, 2001). First I will describe the reasons for including certain countries in my data sample. Then I will elaborate on the sampling technique I used and the final data sample this generated.

Taking the research suggestion of Brooks, Rosson & Gassmann (2005) into account, I researched which countries were included in the specific country groups (Anglo-Saxon, Middle Eastern, Latin American, Asian) according to the Zephyr database. I also checked if the amount of cross-border M&A deals for each of the four country groups would be sufficient for testing. The Zephyr database, accessible through the website of the Rijksuniversiteit Groningen, contains information on international M&A deals and provides detailed information for each deal. The use of a database for the collection of data in this research area can be justified by the reliance on databases in the other papers investigating this topic. For example, Ettenson & Knowles (2006) used the Securities Data Co. database and Brooks, Rosson & Gassmann (2005) used a database named Thomson Financial Securities Data.

The first group, Anglo-Saxon, had no specific country group option in the Zephyr database. However literature and common knowledge provide adequate definitions. The countries belonging to this group are the USA, Canada, the UK, Australia, New Zealand and Ireland (Mitchell, Muysken & van Veen, 2006; Sapir, 2006). Entering these countries in the Zephyr database generated the finding that the USA had engaged in the most cross-border M&A deals in 2007. For this reason, I included the USA as the country to represent the Anglo-Saxon culture in my data sample. The explanation for using 2007 as the sample year will be given in section 3.3.4.

The next cultural group to investigate was the Middle Eastern culture, which is represented by a group option in the Zephyr database. Of the countries in this region, Israel had engaged in the most cross-border M&A deals in 2007. However Steenkamp (2001) refers to Israel as having a very similar culture to the American-Anglo Saxon culture. This discrepancy led me to leave Israel out of the sample, because it could otherwise distort the results of my analysis. The number of cross-border M&A deals represented by any of the other countries in this region would not provide a sufficient data set, even if these countries were grouped together. Therefore, I decided to exclude the Middle Eastern culture from my investigation.

Corporate rebranding in cross-border M&A deals: Survival of the fittest or the best of both?