Consumer intentions, reactance
and the marketing implications of

policy induced mergers and
acquisitions in financial services

Kobby Mensah
Department of Marketing and Entrepreneurship, University of Ghana, Accra, Ghana

Nnamdi O. Madichie
Business School, Bloomsbury Institute London, London, UK and

School of Graduate Studies, University of Kigali, Kigali, Rwanda, and

Gilbert Kofi Mensah and Gideon Awini
Department of Marketing and Entrepreneurship, University of Ghana, Accra, Ghana

Abstract

Purpose – The purpose of this study is to establish, drawing upon the indirect effects of customer reactance
from an emerging economy perspective, the marketing implications of policy induced Mergers and
Acquisitions (M&A) in Financial Services.
Design/methodology/approach – The study employed a quantitative research approach, relying on data
from 517 customers ofM&Abanks in Ghana. Purposive sampling techniquewas used in selecting respondents
for the study. Hypotheses were tested using a structural equation modelling.
Findings – A positive and significant relationship between immersive marketing communication and
consumer intention is revealed in the study. The presence of consumer reactance highly influenced the
relationship. As a public policy tool, forcedmergers and acquisitionswas found to increase customer reactance.
However, when customers are frequently engaged with relevant and consistent marketing communications
through appropriate channels, such reactance would only be partial.
Research limitations/implications – Although some of the information were collected, they were not the
main focus of our analysis. We acknowledge, from the sample demographics perspective, the study did not
consider certain other confounding factors that could influence customers’ decisions to remain or switch such
as customers’ level of banking, type of account, income level, banking experiences in relation to service fees,
online banking etc., as these could also potentially influence customers’ reactance. Perhaps these may have to
be considered in future studies.
Social implications – When timely and relevant marketing communications are targeted at the customers
who are directly impacted by theM&Aprocess, theywould experience reactance, but only partially. This has a
range of marketing implications for policy-induced M&A and its impact on consumer intention, reactance and
attitudes towards the new entity.
Originality/value –Themarketing of financial services literature has been silent on the implications ofM&A
from a policy induced perspective. This study, therefore, contributes to theory by highlighting that the
“destruction” of brand value of the affected firms is relatively high in a policy inducedM&Aand thus increases
the level of customer reactance. This is because a regulator enforced M&A, as public policy, usually generates
high public interest and public discourse, leading to a heightened customer reactance. However, when
immersive marketing communications are targeted at the customers directly impacted by the M&A, they
would experience reactance, but only partially.

KeywordsMergers and acquisitions, Consumer intention, Consumer reactance, Financial services marketing

Paper type Research paper

1. Introduction
This study suggests that mergers and acquisitions as a public policy to ensure firm survival
destroys brand value and increases customer reactance, eventually failing in the ultimate
objective for which it is proposed. However, when customers are effectively engaged through

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The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0265-2323.htm

Received 20 November 2020
Revised 7 April 2021
11 June 2021
20 October 2021
Accepted 11 December 2021

International Journal of Bank
Marketing
Vol. 40 No. 3, 2022
pp. 536-557
© Emerald Publishing Limited
0265-2323
DOI 10.1108/IJBM-10-2020-0516

https://doi.org/10.1108/IJBM-10-2020-0516


the appropriate channels of communication in regard to the affected firms’ efforts inmanaging
the process to ensure customer value, the customer would experience reactance but partially.

In recent years, central banks in most emerging economies have facilitated M&A in their
bid to consolidate the financial markets as a means to, arguably, protect customer assets,
ensure employment, shareholder value and to save the economy (Akolaa, 2018). Therefore,
distressed financial institutions were recommended for M&A. In Ghana, during the banking
and financial crisis in 2016–2017, the country experienced what is referred to as the “financial
clean up” where financial institutions in the country were instructed to increase their
capitalisation to ensure survival. The directive given by the regulator proposed M&A as the
alternative to those institutions that were unable to raise the capitalisation. Whereas some
banks were able to meet the capitalisation requirement to survive, others had to take the
alternative option of M&A. The eventual M&A process that ensued, as facilitated by the
regulator, was perceived by customers as “messy” (Amewu and Alagidede, 2018). This is
because there were numerous news headlines of mostly negative posturing of the
management of acquiring and acquired firms involved in the process. The public was also
exposed to regulatory reports of financial underperformance of target firms, managerial
inefficiencies and non-compliance with good governance behaviours of these firms.

This is not the first time Ghana has experienced financial reforms. According to Antwi-
Asare and Addison (2000), Ghana has undertaken several financial sector reforms since the
1980s but has failed to achieve most of its intended outcomes except for the “enhancement of
financial development and the expansion in size and diversity of the banking sector.”Antwi-
Asare and Addison (2000) also note other successes such as banks deriving considerable
profit from their investments in government and central bank’s securities, whereas the
failures have been the decline in private deposits and the continuous sub-performance of
state-owned banks against private banks. The recent financial sector reforms, which began in
August 2017, saw the resolution of failed Universal Banks, Specialised Deposit-taking
Institutions (SDIs) and Micro Finance Institutions (MFIs). According to the regulator, their
continual existence was a threat to the interest of depositors (Afum, 2020). A total of nine
universal banks headlined the exercise, which according to the then financeminister, was as a
result of the mismanagement on the part of the directors of the collapsed banks and the
financial institutions (Ghanaweb business News of Friday, 24 July 2020). Speaking on the
floor of Parliament on Thursday in July 2020, the Finance Minister seemed to dismiss critics
of the financial sector reform:

Let it be said that a serious government, aswe are, desperate aswewere to fix a broken economy as it
was and fund our own programmes, as promised, and as patriotic as we are, had absolutely no
thoughts, no time, no energy or the luxury to conspire with the central bank to deliberately cause the
downfall of Ghanaian banks that were already in zombie state, fatally insolvent, by the time we took
office.

Financial sector reform as a public policy has characterised recent M&As in Africa
(Angwin et al., 2016), and in most cases, it has generated controversy and divided public
opinion about its intention and efficacy to achieve what it set out to do. This has led to
studies on how communication impacts on consumer behaviour – before, during and after
M&A (Angwin et al., 2016). The termM&Ahas different meanings, and are of various types
(Zagelmeyer et al., 2018). On the one hand, a merger, on the other hand, refers to the fusion of
two or more organisations into one. An acquisition, on the other hand, is the purchase of one
organisation by another, where the acquirer takes control over the acquired firm. It can be
hostile or friendly. It is usually voluntary and often results in a new corporate name
(Alao, 2010; Zagelmeyer et al., 2018). Lee et al. (2011) defined a merger as a combination of
two firms, where the acquiring firm tends to survive whereas the acquired firm ceases
operations.

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The total value of announcedM&A transactions on a global basis exceededUS$3.5 trillion
in 2019, up 50% from 2013 levels and the strongest annual level since 2007 (Reddy et al., 2019;
Rahman and Lambkin, 2015). Specifically, M&As made by firms in emerging economies
contributed to US$129 billion, approximately 37% of the total value worldwide in 2013
(Hammond and Massoudi, 2014). However, studies have shown that the survival of most
M&As are minimal with an estimated failure rate of 60–80% (DeYoung et al., 2009;
Thorbjørnsen and Dahl�en, 2011; Papadakis and Thanos, 2010). Christofi et al. (2017) assert
that this is due to heightened attention attributed to the financial objectives and firm
performance. Thus, most M&A processes often neglect the significance of marketing related
issues. In any case, the literature is replete with a significant number of marketing reasons
whyM&As fail, and these reasons are attributed to all the stages of the process-before, during
and after the M&A. Bekier and Shelton (2002), for example, note that during the integration
stage of the M&A process, customer-related issues are not paid attention to, leading to loss of
customers post-merger, and eventual failure.

Whereas the situation is similar to what pertains in African markets (Angwin et al., 2016),
there are some notable differences with the current study. The current study concerns itself
withM&A as public policy as opposed toM&A as a business strategy, a context widely dealt
with in existing literature. The difference is that a regulator enforced M&A, as public policy,
would generate a heightened public interest beyond just the customers of the firms involved.
In this case, the parties involved in the M&A have at least two core audiences to persuade.
The first party to persuade is the public, who become the primary audience to persuade with
justification of the importance of the M&A, at least from the perspectives of the regulator
sponsoring the M&A. The second is the customers of the affected firms. These customers are
directly and immediately impacted upon by the process but become secondary and are most
likely to be lost in the court of public opinion as interested parties justify the need or otherwise
of the policy. In this situation, customers find themselves in two roles – citizen-consumer. As
“a citizen”, the customers are faced with the challenge of being persuaded by the regulator’s
justification of the M&A as a necessary condition to safeguard the public good, protect
consumer assets, investor equity, secure employment and save the economy. As “a
consumer”, the customers are concerned about their own individual consumption choices and
how they are being impacted upon directly and immediately by the M&A.

This study thus argues that in a situation of a regulator enforced M&A, consumers could
experience reactance due to their citizen-consumer role. The reactance arises because of at
least three conditions that present conflict: that is, being in a dilemmawhether they are better
off to stay as customers or to switch. The first condition is that revelations in the regulator
reports, usually publicised through news items on the target firm’s managerial improprieties,
corporate governance lapses and possible insolvency that led to the proposed M&A, might
persuade the public (including the customers of the banks involved) to believe that the
regulator is indeed securing their welfare through the recommended action, which is the
enforced M&A. The second condition is that possible counter policy narrative advanced by
critics of the policy, could influence the public (including the customers of the banks involved)
not to believe that the policy indeed protects their interests. The third condition is that the
customers of the banks involved could be unhappy that their individual choices have been
curtailed and are unable to access the banking services that they subscribed to if they are
unable to access the services during the integration process.

While the first two conditions speak to the general public ofwhich the firms’ customers are a
part, the last condition is specific to the individuals as customers of the firms involved. This
situation could result in reactance, where affected customers may have the desire to push back
the choice being forced upon them by the regulator, thereby increasing their intensions to
switch (Thorbjørnsen andDahl�en, 2011). Broadly speaking, this study revealed that immersive
marketing communication, through a deliberate strategywould influence customer intention to

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remain committed to the firm post M&A. Such a strategy, in our view, minimises the impact of
customer reactance. The study, therefore, contributes to the existing body of knowledge by
unveiling the reactance dilemma customers encounter during a policy induced M&A.

2. Literature review and hypotheses development
2.1 The reactance theory
The reactance theory assumes that people are mostly motivated to resist control (Brehm,
1966; Brehm and Brehm, 2013). Thus, individuals value their freedom and will oppose any
threat that will hinder their liberty to make free choices. Steindl et al. (2015) note that
psychological reactance is an unpleasant motivation that a person feels to regain freedom
that is threatened or taken away. In reactance studies (Steindl et al., 2015; Brehm and Brehm,
2013; Brehm, 1966), threatened freedoms are in the form of decisions and choices taken by an
individual which is being impeded by a third party. People who are threatened usually feel
uncomfortable and become hostile, aggressive and angry (Berkowitz, 1973; Brehm, 1966;
Brehm and Brehm, 1981; Dillard and Shen, 2005; Rains, 2013), which motivate them to act
behaviourally or cognitively to re-establish their freedom. The behavioural efforts could
manifest in the individual directly performing the threatened or restricted freedom or actively
lending support to another individual whose freedom (or behaviour) is under threat. The
cognitive effort, on the other hand, is expressed in derogating the source of threat, upgrading
the restricted freedom or downgrading the imposed option. These consequences of reactance,
it is acknowledged in the literature, are widely explored in extent literature but little attention
has been paid to “reactance as a state.” Few references are made to studies indicating three
different states of reactance.

The first is when freedom threats arouse an intermingled state of affect and cognition; the
second is when freedom threats arouse immediate, emotional reaction and the third is when
freedom threats arouse cognitive and a delayed emotional reaction. These measures of
reactance being immediate or delayed, according to Sittenthaler et al. (2015), are dependent on
the importance of the threatened freedom, the strengths of the freedom threats and the
legitimacy of the occurrence of the freedom threats, as perceived by the consumer, where
perceived legitimacy is when reasons are ascribed to the occurrence. Thus, people seem
to either react to the threat immediately or after a time delay with intermediary cognitions
(e.g., Sittenthaler et al., 2015; Rosenberg and Siegel, 2018).

Ample evidence suggests that customers react negatively to new brands after being
merged or acquired (Alvarez-Gonz�alez and Otero-Neira, 2020; Akkus et al., 2016; Søderberg,
2006). This is because they believe their personal freedom of choice is restricted as acquisition
typically eliminate the target firm’s corporate brand and replaces it with the acquirer’s brand
(Liu et al., 2018). According to Thorbjørnsen and Dahl�en (2011), mergers and acquisition are
occurrences outside the consumers’ control, and as consumers are accustomed to the freedom
of choosing among alternative brands, they experience reactance in accepting brands that are
forced on them (Hinner, 2019), which is the case in M&A. In this regard, the theory of
psychological reactance postulates that consumers can re-establish their threatened freedom
through cognitive reorganisation. InM&Asituations, customers of themerged firms perceive
the acquisition as threatening to their behavioural freedom. This perception therefore results
in psychological reactance, leading to customers devaluing the firm and articulating negative
attitudinal predisposition towards the merger. This situation therefore leaves customers of
the target brand with two options: the intention to reluctantly accept to become customers of
the acquirer brand, or switch to other competing brands.

2.2 Mergers and acquisitions
The M&A concept has a long history (Bauer et al., 2016; van Marrewijk, 2016) which was
necessitated by the global credit crunch that began from the US and Europe in 2008.

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Cartwright and Schoenberg (2006) report that over the years, studies onM&As have “towed”
disciplinary lines with finance researchers focusing on profitability of acquisitions for
shareholders and acquiring firms. Management research has also concentrated on the
strategic fit between the two combining firms, looking at levels of relatedness between the
affected firms in order to create value post-M&A and the importance of knowledge sharing in
realising post-merger performance (Cartwright and Schoenberg, 2006).

However, research in the area of marketing has had little attention, although there is
considerable risk of losing customers in M&A when marketing-related activities are not
properly integrated (Matarazzo et al., 2019). Alvarez-Gonz�alez and Otero-Neira (2020)
discover three crucial findings in their study of the impact of M&A on customers’
relationships with banks. Using the approach of face-to-face interviews of banking staff
involved in M&As, they observe that the integration process does not affect customers
equally, as customers of the acquirer bank fare relatively better post-merger than those of the
target bank. The former “contribute, in most cases, to the culture, the operating systems and
theway ofworking of the new entity” (Alvarez-Gonz�alez andOtero-Neira, 2020). Their second
finding indicates that customers of the target bank, on the other hand, suffer in the change
because they have to adjust their way of dealings in order to integratewell into the new entity.
The third point they note is that marketing mix variables may affect customer behaviour in
M&A, but price, more than any variable, is what impacts heavily on customers’ reactions,
leading to the dissipation of value (Alvarez-Gonz�alez and Otero-Neira, 2020). In emphasising
the significance of market-related issues for the success of post-merger, Morall (1996, p. 19)
notes that “cost reduction to make a merger payoff is not as key as customer retention.”

M&A has also been noted as a mechanism by regulators to control sectors that are found
to be in distress and with potential macro-economic impact. From the regulator perspective,
the focus of M&A is to ensure market efficiency and the protection of consumer welfare. This
study, thus, stems frommergers enforced by the regulator during the 2017–18 financial clean-
up in Ghana. Regardless of the rearrangement and the assurances from the policy promoters,
there was a feeling of “messiness” from the consumers’ viewpoint since the various media
platforms communicated diverse perspectives (mostly negative stories) of the M&A and its
implications.

2.3 Consumer intention
Research has shown that consumers do not willingly accept M&As, hence their negative
intentions towards firms that embark on M&A. These negative intentions are usually
revealed through the reactions and comments of customers (Kato and Schoenberg, 2014). The
M&A literature asserts that mergers have a significant effect on internal employees,
especially when the communication regarding the entireM&Aprocess (pre-stage, integration
and post-merger) is withheld or when there is ineffective flow of communication (Oduro and
Agyei, 2013). This brings about negative consequences to consumers, if not well managed.
The fixation on negotiation, operational efficiency, legal and regulatory activities and
financial achievement leads firms to ignore the perceptions and concerns of consumers
(Tissera et al., 2018; Kernstock and Tomczak, 2019; Thorbjørnsen and Dahl�en, 2011). As a
result, consumers may have qualms about their future relationship with the merging or
acquired firm (McLelland et al., 2014). This leads to frustration among customers causing
long queues at the banking halls and increase in account closure (Liu et al., 2018). An instance
is the enforced merger during the 2017–18 financial clean-up by the regulator, the central
bank of Ghana (Afum, 2020). Their actions during the first round of the M&A, which were
corrected in the second wave, instigated panic withdrawal and long queues of customers
trooping into the affected banks, with media bulletins and rumors widely circulating in the
absence of communications from the affected institutions. Hence, this brings to light the

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importance of immersive marketing communication (promotions) to reassure customers on
the marketing efforts that the firms have taken, in terms of product and service quality
(product actions) at their convenience (place actions), and affordable cost (price actions)
(Alvarez-Gonz�alez and Otero-Neira, 2020). According to Thorbjørnsen and Dahl�en (2011),
lack of or ineffective communication will contribute to negative customer reaction towards
M&A and thus translate to financial underperformance of the acquirer firms after M&A, as
customers withdraw in panic and demand to close accounts. This is noted in Collins et al.’s
(2009) work on antecedent and moderating factors in determining acquisition outcomes. The
negative intention and reaction of customers towards M&A can be controlled with effective
marketing practices and a well-crafted marketing communication between management and
stakeholders, with the consumers at the centre (Beladi et al., 2019; Han and Kang, 2018). This
will enable M&A firms to influence consumer intention to remain with the firm.

2.4 Immersive marketing communication
Communication research and theory (Krone et al., 1987), have suggested that both the medium
and the content/type of communication have a role in determining the outcome of M&A
activity.According toKrone et al. (1987) the volume, frequency and length of communication, as
well as message content, are critical components of the communication process in M&A.
Angwin et al. (2016) affirms this assertion by reporting on the various communication
typologies (immersive, drip-feeding, “feast or famine” and perfunctory) and their effectiveness
at the pre-M&A stage, during and post M&A. This study adapts “immersive communication
through direct marketing” as an effective communication strategy to retain customers post
M&A. This is due to the rich content, medium and timely dissemination of information
embedded in the immersive marketing communication (IMMC) strategy.

For the purpose of this study IMMC is defined as the continuous process of disseminating
rich information to customers at the pre-M&A stage, during and post M&A stage through
direct marketing mediums. This implies that information concerning mergers and
acquisitions must be concise but contain relevant information and circulated through
effective direct contact mediums. The timely intervention of the communique is equally
important as its content. This means in applying immersive communication, it is pertinent to
inform customers about the merger from the initial stage through to the climax, and not only
at the completion stage of the M&A process. Timely dissemination of information and being
cautious of information overload are also advised. The first phase of immersive
communication is richness. Prior communication research (Riad et al., 2012; Riad and
Vaara, 2011) has found that the communication medium serves as proxy for communication
richness. The medium of communication, which is described as the means of communication,
such as email, face-to-face meetings and conferences, is essential as they present a hierarchy
of richness, with more personalized communication having a greater influence on the listener
than impersonal communications (Huber and Daft, 1987; Marmenout, 2011; Mohr and Nevin,
1990). This brings to conformity the concept of direct marketing as a communication strategy
(Mensah and Amenuvor, 2021). Thus, customers’ views are influenced by whether messages
are available to everyone or restricted in scope, and whether they are unidirectional or
interactive. This study argues that rich interactive communication through direct marketing,
minimizes consumer confusion, false rumours and dysfunctional consequences (Weber et al.,
2014; Lengel and Daft, 1988) and can help M&A firms during periods of transition by giving
clarity and direction (Ranft and Lord, 2002). Management may also consider communication
richness as a proxy for effective communication. However, if such communication is not seen
as relevant, trustworthy or honest (Angwin, 2000, 2015), it may not result in positive customer
commitment or favourable organizational results. According to existing data, for M&As to
work, communications must permeate throughout the company and not just the top

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management (Angwin, 2000). This enables employees from diverse departments to offer
accurate and uniformed information to consumers seeking clarity on the merger. This makes
it easier for customers to deal with uncertainty and change.

The second component is the communication process in terms of timeliness, since the time
frame of activities during M&A is becoming a crucial aspect of the process (Angwin, 2004;
Stahl et al., 2013). The bulk of research onM&A communications has divided the process into
pre- and post-phases, with most contributions concentrating on the post-deal integration
phase. This study is of the view that communications throughout the M&A process is a
crucial success factor for M&A results and customer retention. Hence, customers and other
stakeholders ofM&A firms should be engaged through direct marketing as early as possible,
in the pre-merger period and timely dispensation of information as the process evolves.

In an empirical study ofM&A in theNigerian financial services sector, Angwin et al. (2016)
show that employees and customers of firms that ensured comprehensive communication
before, during and after the merger showed commitment to the new firm. On the other hand,
mergers where communication was lacking, fragmented and or inconsistent, stakeholders
looked out for signals from management at a time of uncertainty and filled the blank spaces
with the “rumour mill.” Gomes et al. (2017) suggest that, even though an acquiring firm may
have an effective communication system, it is important that the acquired firm(s) also
maintain a good communication procedure throughout the process. This is significant in
managing uncertainties-disruption of management and employee duties, emotions
associated with threat of job losses and ultimately customer distress anticipating erosion
of value (Appelbaum et al., 2017). Appelbaum et al. further note that for the brand value to be
realised during the integration, the process must capture the new organisation’s value
proposition. This must be translated into execution actions and communicated to customers,
in terms of revitalising the full complement of products and services solutions to better meet
customer needs, delighting the most valuable customers, delivering consistent value over
time and ensuring to take small but better steps from day one of the merger.

Angwin et al. (2016) also examined how communication approaches impact mergers and
acquisition outcomes. Their study examines the link between different communication
approaches and M&A outcomes, incorporating both the process (timing) and content
(richness) of communication. Their findings lead to the creation of a typology that depicts
interactivity between the process, content and timing of communication andM&A outcomes.
They also assert that effective organisational communication during M&A helps to reduce
uncertainty, guides the business through the transition, enhances the degree of post-M&A
commitment to the “new” organisation and increases M&As’ success rates (Aguilera and
Dencker, 2004; Allata and Singh, 2011; Risberg, 2001). However, ineffective communication is
expected to lead to high levels of ambiguity, job insecurity, low level of trust and commitment.
According to Kato and Schoenberg (2012), the question of why the acquisition and how
customers will benefit must be answered diligently and communicated to stakeholders,
especially customers, in a timely and consistent fashion (see Angwin et al., 2016). Balmer and
Dinnie (1999) observe that merger communication towards customers and staff have been
found highly inadequate as their consideration in the M&A process is hardly acknowledged,
accounting for the increased attrition rate of customers and staff demonstrating against the
new corporate identity. Weber et al. (2014) revealed that effective marketing communication
impacts positively on customer intention to remain customers. This implies that when firms
properly communicate to customers their strategic position, there is a high probability of
retaining existing customers and acquiring new ones (Mensah and Amenuvor, 2021; Anning-
Dorson and Nyamekye, 2020; Xing et al., 2017).

In theory, the medium through which firms communicate to customers underpin the
success of the communication objective as explicated by the media richness theory. This
school of thought argues that performance improves when a firm or team uses “richer”media

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for equivocal tasks. Thus, for firms to successfully execute M&A activities, the channel of
communication must not be neglected. This study argues that firms that employ immersive
marketing communication (content richness and continuous timing) to customers through
direct marketing influence consumers intention to remain post M&A hence, minimising
attrition rate associated with M&A (Homburg and Bucerius, 2005). Thus, in a regulator
enforced M&A, communication pertaining to the merger must be disseminated by the
merged firms through direct marketing as opposed to the regulator’smassmedia approach to
the entire public. This study therefore hypothesises that:

H1. Immersive marketing communication directed towards individual customers by
M&A firms have a positive impact on consumers’ intention to remain customers.

Communication theory explicates that rich interactive communication reduce customer
anxiety, minimising the impact of customer reactance and dysfunctional outcomes (Lengel
and Daft, 1988; Weber et al., 2014) and supporting M&As through the various changing
phases, and offering clarity to customers (Angwin et al., 2016). However, Riad et al. (2012)
assert that if the content of the communication and timing is out of synchrony with the
M&A processes as they unfold, it may lead to confusion amongst customers and arouse
reactance towards the merger. This assertion is confirmed by Angwin (2000, 2015), as these
studies showed that rich communication content may be regarded as a proxy for effective
communication. However, if the content is perceived by customers as not honest, relevant
and reliable, it may provoke negative consumer reactions which may result in outright
rejection of the brand.Weber et al. (2014) in their findings also revealed that communicating
negative news especially from the mass media increases one’s sense of threat regarding the
consequences of the merger hence, engendering reactance. This usually happens in a
regulator enforcedM&A,where the regulator has to issue negative reports to justify the call
for the merger.

Prior studies have suggested that reactance mostly affects individuals’ intention
negatively (Bambauer-Sachse and Heinzle, 2018; Minton, 2018). Thus, when people
experience undesirable situations, the affective nature of reactance is negatively accrued.
Numerous studies have been conducted on the impact of reactance on customer intention
(Evgeniia, 2018; Rains, 2013; Gundersen and Meyn, 2014; Thorbjørnsen and Dahl�en, 2011).
Steindl and Jonas (2015) reported a significant positive impact of reactance on aggressive
behavioural intention in advertising. In the hotel industry, reactance was assessed from the
traditional environmental CSR perspective (Hanus, 2019). The outcome of the study revealed
that messages that are targeted to persuade customers to participate in environmental
programmes most often fail because customers perceive such messages as an attempt to
invade their freedom. Thus, the anticipated positive outcome results in undesirable
behaviours towards the company. The literature explicates that such failures can be
attributed to customer reactance (Rains, 2013; Hanus, 2019). The issue of brand fit and
consumers’ idiosyncratic perceptions of mergers has also been investigated in a study by
Thorbjørnsen and Dahl�en (2011), where consumers are found to show reactance towards the
acquirer brand because they believe that by the acquisition, their personal freedom of choice
has been curtailed and consequently react negatively to the merger and the acquiring brand,
which is more likely to make them leave the relationship. This study argues that even though
M&A activities may arouse consumer reactance, an immersive marketing communication as
proposed byAngwin et al. (2016) mayminimise the impact of customer reactance towards the
merger hence, positively influencing their intention to remain customers. To this end, the
study hypothesises that:

H2. Immersive marketing communication directed towards individual customers by
M&A firms has a positive impact on customer reactance (CR) towards a merger.

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H3. Customer reactance towards the merger has a significant impact on the customer’s
intention (CI) to switch.

2.5 The mediating role of consumer reactance
Psychological reactance as a construct was introduced by Brehn (1966), who opined that
people react towards an attempt to limit their behavioural freedom. Although Brehn
originally assumed that such reactions were a situation-specific phenomenon, a plethora of
literature has since established a stable predisposition (Pavey and Sparks, 2009; Wendlandt
and Schrader, 2007; Cherulnik and Citrin, 1974). Studies have been conducted to test the
mediating role of customer reactance in diverse disciplines. For instance, Bambauer-Sachse
et al. (2018) argue that consumer reactance serves as a mediator between framing messages
andmessage reactions. To Rains (2013), reactance occurswhen people experience restrictions
that are unfavourable to them and would react negatively to obtain their freedom. Studies
have also shown the detrimental effect of threats to freedom through persuasive
communication on consumer intention to switch (Brown and Krishna, 2004; Campbell and
Kirmani, 2000) and have noted reactance as a mediator amid the relationship. Noguti and
Russell (2014) suggest psychological reactance as a mediator for negative effects of merger
information on customers’ attitudes and switching intentions. Persuasive messages,
prohibitions and restrictions have all been identified as potential threats, causing
customers to experience a state of psychological reactance, which serves as a motivating
factor to reassert their threatened freedom. Brehm (1966) established that the state of
reactance varies, depending on the strength of the perceived threat and may not arise if the
persuasion is perceived as warranted. Thus, a regulator induced M&A, where the regulator
and the affected firms communicate the merger as a protection of customer assets, may
warrant customers to react positively, in turn influencing their intention to remain with the
firm. The study hypothesis that:

H4. The influence of immersive marketing communication on consumer intention to
remain with a firm is mediated by consumer reactance.

3. Methodology
The study employed a quantitative approach to address the hypothesised relationships. The
respondents for the study were customers of banks that were merged by a regulatory policy
in Ghana. These respondents are customers of the second wave of merging banks and were
selected using the mall intercept approach (Bush, 1985) at the premises of the merged banks
in Accra, the capital city of Ghana. The purposive sampling technique was used as a medium
to select and reach out to study participants for the study. In order to achieve the study’s
objective, it was pertinent to select customers that were previously banking with the affected
and nowmerged banks. The sample size of 517 is deemed fit for the study because it satisfies
the prerequisite of PLS-SEM,whereby the sample size to examine amodel must be at least ten
times the largest number of structural paths directed at a particular latent construct in the
structural model (Hair, 2017, 2019). In terms of measures, the study adapted a questionnaire-
based measuring instrument in assessing the constructs. These instruments were adapted
from extant literature to suit the context of the study. The measuring indicators for
immersive marketing communication (IMMC) was adapted from Angwin et al. (2016) and
Clemes et al. (2010, 2014). In the same disposition, the items for measuring customer reactance
were adapted from the study of Dillard et al. (2005) and Hong et al. (1996). The indicator
measurements were designed in a five-point Likert scale, oscillating from 1 (strongly
disagree) to 5 (strongly agree).

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4. Findings
In the course of this study, 600 questionnaires were administered, and out of that, a total of
517were completed. Out of the total respondents, 43.8%weremales and the other 56.2%were
females. The data further revealed that 41.9% of the respondents were degree holders, 30.2%
had diploma and 18.8% were postgraduate. In addition, 51.7% of the respondents were
between the ages of 26 and 35 years, and the next majority of the respondent were between
the ages of 18 and 25 years (36.6%). Also, 45.5% worked in private institutions and 22.5%
were Government employees. Lastly, the type of account held by the respondents and their
income levels were ascertained. It was realised that 85.3% had savings account and 10.7%
operated current accounts. In relation to their income levels, 60.1% of the respondents earned
a monthly income of ¢2,000–¢4,990 and 23.8% earned between ¢;250 and ¢1990. These data
retrieved, especially the type of account, informed the study about importance of theM&A to
the respondents.

To assess the measurement model, the reliability and validity tests were conducted. This
is incumbent and has been recommended by Hair et al. (2019). The study examined the
model’s internal consistency by testing for the reliability, discriminant validity and the
convergent validity. Furthermore, the factor loadings were ascertained, and as Hair et al.
(2019) recommend, loadings above 0.7 and 0.5 respectively represent an indicator of
acceptable item reliability. This is because the construct explains more than 50% of the
variance extracted. Most, but not all, the indicators for this study loaded well on their
corresponding constructs. After running the first analyses, it was necessary that loadings
below the threshold be dropped as asserted by Hair et al. (2019). However, all indicator
loadings attained the accepted thresholds hence, all the items were maintained. Figure 1
displays how well the indicators measured the latent variables. A confirmatory factor
analysis was conducted to assess the reliability and validity of the constructs and scales. To
perform this analysis, the measurement model was assessed, consisting of three latent
variables as presented in Table 1. It was also pertinent to assess the model fitness. Hence, the
fitness of the model was assessed using the Standardised Root Mean Residual
(SRMR 5 0.056) and the Normed Fit Index (NFI 5 0.908). SRMR values below 0.088 are
considered the best fit, and they also indicate that the model is not mis-specified (Henseler et
al., 2014). NFI values should be between the values of 0 and 1, and the closer the NFI value is to
1, the better the fit. An NFI value of 0.908 arrived at by running the PLS algorithm signifies a
high acceptable fit and thus confirms the overall fitness of the measurement model (Dijkstra
and Henseler, 2015; Bentler and Huang, 2014; Bentler and Bonett, 1980). The factor loadings
of the model have been displayed in Figure 1. Each indicator loading exceeded the acceptable
threshold of 0.5 and 0.7 as recommended in the literature (see for example, Marticotte and
Arcand, 2017; Hair et al., 2019).

3H2H

1H

Customer Reactance 

Customer Intention  
Immersive Marketing 

Communication 

H4 

Figure 1.
Hypotheses

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The study employed the Cronbach’s alpha, composite reliability and the average variance
extracted (AVE) in testing for the reliability and validity of the model (Fornell and Larcker,
1981; J€oreskog, 1971). According to Nunnally (1978), the recommended threshold for
Cronbach’s alpha is 0.7 and from the table (Table 1), all the constructs’ Cronbach’s alphas
were above the threshold (between 0.805 and 0.910). To ascertain the model’s validity, the
discriminant and convergent validities were assessed. In relation to the convergent validity,
the average variance was extracted. According to Hair et al. (2019) and Fornell and Larcker
(1981), the acceptable threshold for average variance extracted (AVE) is≥ 0.50 which implies
that the constructs explain at least 50%ormore of the variance of the items. The results of the
AVE assessment revealed that all the AVE values exceeded the required threshold. The
discriminant validity of the constructs was analysed by comparing the AVEvalues of each of
the constructs with the squared individual inter-construct correlations (Fornell and Larcker,
1981). The results in Table 2 reveal that the AVE values were higher than the square of each
inter-construct correlation which is an indication that the criteria for discriminant validity
have been achieved.

4.1 SEM analysis and hypothesis testing
The hypothesised relationships amid the antecedent and the outcome variables in the
framework were assessed using SEM. This was done by conducting separate estimation
structural models in PLS-SEM to examine the direct, mediating relationships. The results of
the relationships have been reported in Table 3 and graphically presented in Figure 2. From

Construct and measurement items Loadings β CR AVE α

Immersive marketing communication
The bank communicated the merger to me before the deal took
place

0.858

The content of the communication on the merger process was
relevant to my needs

0.830 0.714 0.933 0.736 0.91

There were frequent communications regarding the merger
processes

0.892

Communication about new products and prices after the merger
was appealing

0.874

Generally, promotional campaigns concerning the merger and
acquisition appealed to me

0.833

Consumer reactance
I Get irritated when I am unable to make free and independent
decisions

0.792

I become angry when my freedom of choice is restricted 0.890 0.568 0.907 0.710 0.863
I resist the attempts of others to influence my decision 0.857
I am contented only when reasons underpinning the restriction
is well communicated to me

0.828

Consumer intention
I intend to defect to a suitable alternative bank after the merger
and acquisition

0.877

I intend to operate multiple accounts with my current bank and
alternative bank

0.880 0.242 0.897 0.688 0.844

I intend to switch to a suitable bank within a year after the
merger and acquisition

0.880

I intend to move all my deposits and banking needs to the
alternative bank

0.658Table 1.
Loadings of constructs

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the table (Table 3), it has been realised that all the direct hypotheses tested were supported
(H1, H2, H3). Immersive marketing communication was found to have a significant positive
impact on consumer intention (β 5 0.714, p < 0.000) and consumer reactance (β 5 0.509,
p < 0.000), while consumer reactance also had a significant positive effect on consumer
intention (β5 0.568, p< 0.000). Themediation analysis was performed using a bootstrapping
of 5,000 samples. The results revealed the presence of a partial mediation. Thus, although
immersive marketing communication directly impact on consumer intention to remain, it can
also be observed from Table 4 that immersive marketing communication affects consumer

Constructs 1 2 3

Consumer intention 0.829
Consumer reactance 0.741 0.842
Marketing communication 0.445 0.097 0.773

Note(s): The italicised value on the diagonal are the average variance extracted (AVE) and the off-diagonals
are the squared correlations. The AVE values on the diagonal are higher than the corresponding inter-
construct square correlations which is an indication that the discriminant validity of the variables have be
ascertained

Hypothesis Path description β t-value p-value Results

H1 IMMC → Consumer Intention 0.242 5.002 0.000 Supported
H2 IMMC → Consumer Reactance 0.714 21.410 0.000 Supported
H3 CR → Consumer Intention 0.568 12.004 0.000 Supported

Note(s): *p < 0.05; **p < 0.001

Relationship Hypothesis p-value (indirect) Mediation type

IMMC → Consumer Reactance → CI H4 0.000 Partial mediation

Note(s): *p < 0.05; **p < 0.001

Table 2.
Convergent and

discriminant validities
of the measure

Table 3.
Direct path analysis

Figure 2.
Structural model

results

Table 4.
Results of mediation

analysis

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intention to remain through customer reactance. This demonstrates that consumer reactance
partially mediates the relationship between immersive marketing communication and
customer intention to stay with the M&A firm.

5. Discussions
The study sought to assess the impact of immersive marketing communication on consumer
intention (i.e., the intention to accept the new brand and remain customers postM&A) and the
mediating role of customer reactance. All the hypotheses tested proved highly significant (H1,
H2, H3, H4). Immersivemarketing communication had a direct impact on customers intention
to accept the new brand and remain customers. Studies have shown that customers mostly
reject M&A firms (Christofi et al., 2017; Angwin et al., 2016). This finding has been
underpinned by the reactance theory which elucidate that individual value their perceived
freedomandwill oppose to any threat that tends to subdue that freedom.As previously noted,
M&As have been perceived by customers as a threat to freedom, in that, their choice of
association with a preferred brand or firm is curtailed in the instance of M&A. This supports
the use of CR as a mediator between IMMC and CI to stay with or divorce the new brand. The
result revealed customer reactance as a partial mediator amid IMMC and CI. This is an
indication that IMMC can directly influence CI without the customer necessarily opposing the
M&A outcome. The results proved with strong evidence that immersive marketing
communication is crucial to the success of M&A. This affirms the assertion of Angwin et al.
(2016) and Gomes et al. (2011) that communication is an essential factor to the success or
failure of mergers and acquisitions and as such, needs to be scrutinised extensively before its
execution (Weber et al., 2012, 2014; Zhu et al., 2004; Angwin, 2000; Nikandrou et al., 2000).

Empirically, this study found that the communication activities executed before and
during the second wave of the M&Amet consumers’ needs, thus accounting for their delayed
decision to switch. This is attributed to the content of the communication, the timing and the
frequency. Furthermore, with respect to the content of M&A communicated, respondents
from the affected banks strongly agreed that the information given pertaining the marketing
activities – thereby ensuring the continued quality and trustworthiness of their purchased
products, no changes in price, protecting the jobs of employees among other things were
relevant to their needs, and reinforced the general assurances provided by the policy
promoters in the media (see, e.g., Opute andMadichie, 2017). This is in line with some existing
knowledge that immersive marketing communication with customers pertaining to affected
firms’ marketing-mix (product, price, promotion and place) reduces uncertainties, enhances
post-M&A commitment to the “new” brand’s success and most importantly, retains existing
customers (Angwin et al., 2016; Weber et al., 2012).

Furthermore, Angwin et al. (2016), in their study, found that IMMC enhances a smoothM&A
transition and conversely, an ineffective communication is expected to raise high levels of
ambiguity, customer loss, low level of trust and commitment. However, it is common
knowledge in the literature that consumers tend to have negative perceptions whenever M&A
strategy emergewithout a propermarketing communication (Farah, 2017). It is observed that in
times of such crisis, customers become unsure of their fate and resort to panic withdrawal. As
noted earlier, the results of the analysis revealed customer reactance as a partially mediator
amid marketing communication and consumer intention within M&A context. Thus, it was
found that customers are likely to experience reactance, but partially when two companies
merge or integrate, and they are duly informed about the process. Thus, this study found that
when firms communicate rich content pertaining to the M&A processes in a consistent and
timely manner, customers experience partial reactance. This is to state that inasmuch as a
customer of an M&A bank will want to reject the new firm, the intervention of immersive
marketing communication through direct marketing can mitigate the intention to defect.

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6. Conclusions
The contribution of this study is based on its ability to highlight the fact that M&A, as a
public policy tool to ensure firm survival could be counterproductive, and largely lead to
customer reactance as cases in Nigeria and Ghana have shown in recent times. The study
revealed that in a regulator enforced M&A, customers may experience high levels of
reactance because of negative communications that ensue in public discourse as authorities
seek to justify the necessity of the policy to the general public.

On the one hand, the champions of regulator-enforced M&As tend to use news media
outlets that seek persuading the public about the processes with reports of the bad practices
of the targeted firms – notably allegations of managerial inefficiencies, bad corporate
governance and the impending threat of insolvency or bankruptcy. Hence, the need to act in
order not to impact negatively on the economy and customers’ personal welfare. On the other
hand, when customers are engaged with IMMC on the M&A process, indicating the
marketing efforts undertaken by the firms to reduce the negative effect of the process, and
assuring them of value post merger, they are likely to be in a state of dilemma, hence
experiencing a state of partial reactance. This position is evident in our findings from the
instruments under marketing communication and consumer intentions. For example, most
customers strongly agreed that there was communication between them and the firms, and
further indicated their knowledge about the M&A. They also strongly agreed to the
frequency and relevance of communication to their needs. As a result of the positive effect of
IMMC most customers preferred to remain loyal to the firm. This is evident in our findings
from the instruments under CI, where customers were asked if they intended to remain as
customers or switch. We also found that most customers preferred to operate multiple
accounts with their current bank and another bank or switch entirely to a new bank within a
year after of any M&A, ostensibly preferring to “wait and see,” hence reluctantly delaying
their state of reactance. The study, therefore, recommends that stakeholders of future M&A
must ensure to reduce mass media communication due to their tendency to disseminate
negative information. They must, however, deploy and enhance the use of IMMC before,
during and after M&A, with direct access to affected customers in order to reduce their
anxiety and reactance thereof.

Overall, in this study, we have argued that although M&As largely lead to customer
reactance, the situation is heightened in the instance of regulator enforced M&A as was
previously the case in Nigeria, and Ghana in recent times. We have also argued that in a
regulator enforced M&A, customers may experience high levels of reactance as a result of
negative communications that ensue in public discourse as authorities seek to justify the
necessity of the policy to the general public. The promoters of a regulator enforced M&A
through news headlines try to persuade the public that bad practices of the target firm,
including managerial inefficiencies, bad corporate governance amongst others have led to
insolvency of the target firm, hence the need to act in order not to impact negatively on the
economy and customers’ personal welfare.

6.1 Theoretical implications
The theoretical implication of this study echoes a recommendation in existing literature that
there is a need for a joint communications operation by the parties involved, including the
regulator and the affected firms before, during and after the merger is set up to offer a
synchronous communication to reduce the incidences of conflicting andnegative newsheadlines
that is usually associated with regulator enforced M&A. We also add our voices to Alvarez-
Gonz�alez and Otero-Neira (2020), Appelbaum et al. (2017) and Morall (1996) that in all types of
M&A, communication must strongly focus on the marketing mix offerings that the customer is
getting and less on the financial efficiency perspectives such as cost savings. As Segal et al.

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(2021, p. 2,935) more recently pointed out, following their structured literature review, “the
literature is dominated by a unidirectional analysis that primarily considers the effect M&Ahas
on stakeholders, falls short in investigating inter- and intra-stakeholder relationships and in
eliciting the complex web of relationships between an M&A process and stakeholders.” We
postulate, therefore, that forced or regulatory induced M&A activity would bring about a
different kind of customer reactance than its organic, business strategy counterpart.

Broadly speaking this study is arguably a departure from findings in existing literature
which argue that customers show reactance to an imposed brand choice through M&A. We
argue thatwhereas immediate reactancemay be the case in private sector-basedM&A,where
profitability and cost cutting are mostly the subject of M&A activities, the same cannot be
said of public policy-based M&A, where the State through the regulator proposes M&A as a
solution to the financial stability of the country. Hence, we propose a partial reactance option,
arguing that customers’ response to a public policy-based M&A may be different. The
findings also show that customers aremostly likely to delay their rejection, as they rationalise
the public good argument advanced by the regulator in support of the M&A proposition. In
this instance, customers exercise their judgment through the lens of citizen-consumer and are
prepared to give the State the “benefit of the doubt” in anticipation that the end result will
benefit the society as a whole. We also argue that such a situation is also enhanced if firms
involved in the M&A have intimate engagement with the customers through IMMC pre,
during and post the M&A.

6.2 Managerial implications
In terms of managerial implications, we observe and highlight the fact that regulator enforced
M&Aactivity, as a public policy tool, was bound to generate heightened public interest beyond
the customers of the firms involved, leading to two key audiences (i.e., public and the direct
customers of the affected firms) being aware of communication purposes. Both are important
for different purposes, and communication strategies must take cognisance of their roles and
how to influence them. Management must also be aware of the three conditions of conflict that
arise from a regulator enforced M&A activity, which could lead to different degrees of CR.

We draw the attention of management to the relatively high damage to the brand value of
a regulator enforced M&A due to the excessive negative media headlines, as noted byWeber
et al. (2014), and diverse ideological positions in public policy discourse. Although our study
did not test this propensity, anecdotal observation suggests so, which could be tested in
future studies. We also note that a regulator enforced M&A, as public policy, would generate
a heightened public interest beyond the customers of the firms involved, leading to two key
audiences to be aware of for communication purposes that is, the public and the direct
customers of the affected firm. Both are important for different purposes, and communication
strategies must take cognisance of their roles and how to influence them. Management must
also be aware of the three conditions of conflict that arise from a regulator enforced M&A,
which could lead to reactance. In this situation, we echo a recommendation in existing
literature that there is a need for a joint communications operation by the parties involved,
including the regulator and the affected firms before, during and after the merger is set up to
offer a synchronous communication to reduce the incidences of conflicting and negative news
headlines that is usually associated with regulated M&A.

Furthermore, this study enlightens themanagement on the factors that influence consumers
intention to remain customers post M&A using the various modes of communications. The
study recommends IMMC as the most effective to employ before, during and post M&A. The
study again suggests direct marketing as an efficient marketing communication tool for
managers to deploy during M&A transitions. The combination of these communication
strategies that is, immersive, and direct marketing communication minimizes the impact of CR

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during M&A and influences their intention to remain customers of the new M&A firm for at
least a year to experience the services of the new firm. Certainly, the “moment of truth” will
determine the survival rate of customers within the cohort. It is therefore imperative that
managers adapt to the recommended communication strategies aswell as dedicate the required
attention to the financial objectives to ensure M&A firms’ success and survival.

7. Limitations and future research directions
Like most other studies of this kind, there are bound to be limitations, which may well provide
grounds for future research enquiry. For one, although all hypotheses proved significant, the
study does not entirely represent emerging economies due to the reliance on a single source
countrydata.Multiple country source data is recommended for future studies to enrich theM&A
literature. As regulator enforced M&A is engrossed with excessive negative media headlines
and diverse ideological positions on public policy discourse, future studies must investigate the
extent to which the mass communications interfere with, and impact upon, the efficacy of the
marketing communications between affected firms and consumers. From the sample
demographics perspective, the study did not consider the confounding factors such as
customers’ level of banking, type of account, income level, banking experiences in relation to
service fees, online banking – all of which may also potentially influence customers’ reactance
anddecisions to remain or switch. This could evidently bean interesting area for future research.

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online brand dispositions of banks operating in Ghana”, International Journal of Bank
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About the authors
KobbyMensah is a Senior Lecturer at the Department ofMarketing andEntrepreneurship, University of
Ghana Business School. His teaching and research interests include financial services marketing and
social media engagement. His recent publication is on the “influence of marketing communications
strategy on consumer purchasing behaviour in the financial services industry in an emerging economy.”

Nnamdi O. Madichie, PhD, FCIM, is currently a Professor of Marketing and Entrepreneurship at the
School of Graduate Studies, University of Kigali, Rwanda. He is also a Research Fellow at the
Bloomsbury Institute London. He has published extensively in the areas of marketing and

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https://doi.org/10.1108/02652321011085176
https://doi.org/10.1108/02652321211274264


entrepreneurship in leading business management journals including the International Journal of Bank
Marketing, International Marketing Review and the Journal of Services Marketing. He is also the
co-author of the 2018 manuscript “Acquisitions of financially constrained targets.”Nnamdi O. Madichie
is the corresponding author and can be contacted at: nmadichie@uok.ac.rw

Gilbert KofiMensah is a PhD candidate and a teaching assistant at the University of Ghana Business
School. He holds a Master of Philosophy degree in Marketing and is a member of the Chartered Institute
of Administrators and Management Consultants-Ghana (CIAMC). His research interests include
marketing communications and branding. His recent publication is on “Fake News and SDG16: The
Situation in Ghana.”

Gideon Awini is a PhD candidate at the University of Ghana Business School, and a lecturer at
Tamale Technical University, Department of Marketing. He holds a Master of Philosophy degree in
Marketing. His research interests include sports marketing and branding. His recent publication is
on “Fake News and SDG16: The Situation in Ghana.”

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mailto:nmadichie@uok.ac.rw

	Consumer intentions, reactance and the marketing implications of policy induced mergers and acquisitions in financial services
	Introduction
	Literature review and hypotheses development
	The reactance theory
	Mergers and acquisitions
	Consumer intention
	Immersive marketing communication
	The mediating role of consumer reactance

	Methodology
	Findings
	SEM analysis and hypothesis testing

	Discussions
	Conclusions
	Theoretical implications
	Managerial implications

	Limitations and future research directions
	References
	Further reading
	About the authors