Customer and Competitor Responses to Mergers and Acquisitions: An Empirical Investigation in the Logistics Industry

Abstract

We present an empirical investigation into how customers and competitors respond to merger and acquisition (M&A) activity, using data obtained from business-to-business customers of logistics industry acquisitions. We draw on the M&A and marketing literatures to develop a set of hypotheses about how customer loyalty may be affected by a supplier's involvement in an acquisition, including the influence of competitors reactions. Our data confirm that customers purchase behaviours can be affected by M&A activity, both positively and negatively, and we find support for a causal chain whereby post-acquisition integration actions cause changes in key customer relationship variables, which in turn drive changes in customer loyalty. Our results also provide empirical evidence of the significant role that competitors responses can play in reducing customer loyalty following an acquisition. We identify a number of factors that appear to influence the magnitude of competitors reactions, namely the scale and scope of the acquisition, the form of post-acquisition integration pursued and the ‘stickiness’ of existing customers. The implications of our findings for future research, as well as for executives engaged in M&A activity, are discussed.

Citation

Kato, J. and Schoenberg, R. (2012), "Customer and Competitor Responses to Mergers and Acquisitions: An Empirical Investigation in the Logistics Industry", Finkelstein, S. and Cooper, C.L. (Ed.) Advances in Mergers and Acquisitions (Advances in Mergers and Acquisitions, Vol. 11), Emerald Group Publishing Limited, Leeds, pp. 155-180. https://doi.org/10.1108/S1479-361X(2012)0000011011