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When a Multinational Buys a 'Social Brand'

It's an honest reaction, a groan to one's self, when a conglomerate such as Coca-Cola buys a stake in a small company known for its contributions to society, such as HonestTea.

In recent times we've seen more of these Goliaths purchasing Davids, such as Unilever's deal for Ben & Jerry's, Cadbury Schweppes' bid for Green & Black, and Loreal's acquisition of The Body Shop.

It turns out many of these deals work out well for the acquirer, the acquiree, and society as a whole, concludes recent research from Harvard Business School.

The big companies, which are extremely careful at preserving the "specialness" of their acquisitions, benefit from exposure to new customers and new ways of doing business. The small concerns, which retain a goodly amount of independence, gain by additional resources that allow them to spread their messages to a larger audience.

In their working paper "Can the Virtuous Mouse and the Wealthy Elephant Live Happily Ever After?" professors James E. Austin and Herman B. "Dutch" Leonard explain:

"Making a virtuous mouse and rich elephant merger work is a delicate, but potentially high-value undertaking in terms of generating both greater economic and social value."

Read why these marriages have worked in an interview with the authors on HBS Working Knowledge.

Do you have a favorite company that was ruined or improved when a multinational took over?

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