Mark B. Houston

Buyer–Supplier Contracts Versus Joint Ventures: Determinants and Consequences of Transaction Structure

When a buyer firm and a supplier firm plan to transact, what factors drive their choice of mechanism to govern the relationship? Focusing on contract-governed versus joint venture–governed relationships, the authors present a theoretical framework that specifies the conditions that make one or the other form of relationship structure more appropriate. This study was designed to address potential limitations regarding measurement, financial consequences, and context in the extant literature. The authors employ measures derived from Standard & Poors Compustat financial database and an overall measure of firm reputation to examine empirically differences in firm characteristics across the two types of relationships. To examine the financial consequences of relationship structure, the authors use event-study techniques that tie stock price reactions to the governance mechanism choice. The results suggest that buyers and suppliers are more likely to form a joint venture (versus simple contract) when (1) the suppliers degree of asset specificity is high, (2) monitoring the suppliers behavior is difficult, and (3) the supplier has a poorer reputation. The authors find that vertical joint ventures (between buyers and suppliers) are economically similar to contracts, to the extent that abnormal wealth gains go solely to the supplier firms. Horizontal joint ventures (partners are at the same level of the value chain), however, provide bilateral, synergistic wealth gains. The results suggest that buyers and suppliers can use joint ventures to reduce certain governance problems rather than to gain synergies.

Relationship Velocity: Toward a Theory of Relationship Dynamics

The dynamic components of relational constructs should play an important role in driving performance. To take an initial step toward a theory of relationship dynamics, the authors introduce the construct of commitment velocity—or the rate and direction of change in commitment—and articulate its important role in understanding relationships. In two studies, the authors demonstrate that commitment velocity has a strong impact on performance, beyond the impact of the level of commitment. In Study 1, modeling six years of longitudinal data in a latent growth curve analysis, the authors empirically demonstrate the significance of commitment velocity as a predictor of performance. In Study 2, the authors use matched multiple-source data to investigate the drivers of commitment velocity. Both customer trust and dynamic capabilities for creating value through exchange relationships (i.e., communication capabilities for exploring and investment capabilities for exploiting opportunities) affect commitment velocity. However, trust and communication capabilities become less impactful as a relationship ages, while investment capabilities grow more important. The authors offer three post hoc tenets that represent initial components of a theory of relationship dynamics that integrates two streams of relationship marketing research into a unified perspective.

Conceptualizing and Measuring the Monetary Value of Brand Extensions: The Case of Motion Pictures

Brand extension value is the part of brand value that derives from a brand owners right to introduce new products related to the brand. The authors draw on a theoretical conceptualization of brand extension success and present an approach to measure the monetary value of brand extension rights in the context of motion pictures (i.e., movie sequel rights) and to calculate the effect of variations of key extension product attributes, such as the continued participation of stars, on this value. Their measure incorporates both the forward spillover effect and the reciprocal spillover effect and accounts for differences between brand extensions and new original products in revenues and risk, thereby offering marketing scholars a novel approach for evaluating the riskiness of investment alternatives. With respect to the forward spillover effect of a parent brand on the extension product, the authors apply regression analysis to data from all 101 initial movie sequels released in North American theaters between 1998 and 2006 and to a matched subsample of original movies and calculate the risk-adjusted monetary brand extension value by comparing success predictions for both sequels and matched original movies. Regarding the reciprocal spillover effect by which the extension product affects the success of the parent brand, the authors use longitudinal data of parent-brand DVD sales to monetize the risk-adjusted impact of the brand extension on the parent. The usefulness of their approach is illustrated by calculating the monetary brand extension value for an actual movie title.

Barriers to Matching New Technologies and Market Opportunities in Established Firms

In industries that produce high-technology products or are reliant on technology for administrative or manufacturing processes, it is essential appropriately to link technologies to markets in order to increase shareholder value and to build future cash flows. Research and development (R&D) allocations in such industries are greatly dependent on forecasts of the R&D projects estimated potential contribution to future cash flows, which is related to the projects ability to satisfy current or future customer needs. The resource allocation decisions are difficult, however, since both markets and technology are likely to be highly uncertain. Although the innovation literature ably has addressed specific relationships between certain factors and new product development outcomes, less attention has been given to obstacles faced in linking technology to markets. Grounded in a literature-based discussion of technology and market opportunity, the authors develop a conceptual framework for identifying and understanding the barriers facing managers in the process of matching technologies to market opportunities. Technology and market barriers include technology-market linkage, technology availability, technology and market capabilities of competitors, and business model feasibility. Strategy and structure barriers include competition for limited resources, technology capabilities, technology portfolio goals, current market strategies, and competition for control of market charters. Social and cultural barriers include interpretive and communication barriers between functional units and language and cultural barriers within the technology workforce. The article concludes with implications for researchers and managers. The conceptual framework presented here can encourage the development of a stream of research in the area of technology strategy and planning processes, allowing researchers to improve our understanding of the process of technology innovation. Managers can use the framework as a guide for addressing a wide range of issues related to the process of matching technologies to market opportunities. For example, rather than relying strictly on cash flow projections for estimating the value of a new technology, managers also should consider how the technology could create new market opportunities or could reshape existing ones.

The Differing Roles of Success Drivers Across Sequential Channels: An Application to the Motion Picture Industry

In several product categories, it is typical to release products sequentially to different markets and customer segments. Conventional knowledge holds that the roles of various product success drivers do not differ significantly across these sequential channels of distribution. The authors examine sequential distribution channels within the motion picture industry and develop a model that proposes that such differences exist between a primary (short- and long-term theatrical box office) and a sequential (video rental) channel. The authors test their model with a sample of 331 motion pictures released in theaters and on video during 1999–2001 using partial least squares. Results reveal differences in the impact of success factors across channels. For example, cultural familiarity enhances box office success but relates negatively to video rental success, and distribution intensity and date of release enhance box office outcomes but have no impact on rental revenues.

Cross-Unit Competition for a Market Charter: The Enduring Influence of Structure

Marketing strategists who operate in turbulent markets face a competitive landscape marked by volatility and evolving market structures. As customer requirements change, an organization that stays in alignment with its markets will form new business units or alter the market charters of existing business units. In a longitudinal study, the authors traced the structural realignments that accompanied a Fortune-500 firms entry into the Internet market. As the charter moved from a freshly created unit to an established business unit, the authors found support for the prediction that the former organizational structure will continue to shape the identity, beliefs, and social ties of managers. The study highlights the structural, social, and cognitive factors that must be managed as corporate decision makers search for the best strategy–structure fit for an emerging market opportunity.

Assessing the validity of secondary data proxies for marketing constructs

Abstract This paper outlines alternative methods for assessing the validity of secondary data proxies for marketing constructs. By employing secondary data proxies, researchers can avail themselves to new sources of data and can shed new light on or provide important corroborating evidence to established streams of research that have relied on a limited variety of methodological approaches. Still, secondary data proxies are not heavily used for marketing constructs, appearing especially infrequently as independent variables in the extant literature. A key issue that reduces their attractiveness appears to relate to construct validity [Rindfleisch and Heide, 1997]. Unlike multi-item scales, procedures for investigating the construct validity of a secondary data proxy are not well-defined or generally accepted. This paper argues that judicious selection of an appropriate proxy and careful assessment of the proxys performance within a theoretically specified nomological network of constructs can provide compelling evidence of construct validity.

Reference Diversity in JCR, JM, and JMR: A Reexamination and Extension of Tellis, Chandy, and Ackerman (1999)

Results of a reference analysis led Tellis, Chandy, and Ackerman ([1999][1]) to conclude that Journal of Consumer Research ( JCR ) was not as diverse in its references as Journal of Marketing ( JM ) and Journal of Marketing Research ( JMR ). We reexamine the Tellis et al. conclusions with a reference analysis comparison of JCR, JM , and JMR from 1976 to 1995 using an expanded set of reference diversity indicators at the article level of analysis. Our reexamination reveals small or nonsignificant differences among the journals in discipline and journal variety. The results also indicate that JCR articles are more likely to rely on sources that are more conceptually distant from marketing and business than are articles in JM or JMR , regardless of time period. Trends over time reveal that whereas reference diversity among JCR articles has remained relatively stable, reference diversity among JM and JMR articles has increased and decreased, respectively, for two out of three diversity factors. We also extend the findings of Tellis et al. ([1999][1]) with a test of the assumption of a positive relationship between reference diversity and subsequent article influence using all 228 articles appearing in JCR from 1991 to 1995. Interestingly, we find that reference diversity has both positive and negative effects on article influence. [1]: #ref-19

The Impact of Article Method Type and Subject Area on Article Citations and Reference Diversity in JM, JMR, and JCR

It has been argued that the scientific status of the marketing discipline is reflected in both the ability of its articles to be cited and the degree to which its articles draw from a diverse set of reference sources. We combine a content analysis of a sample of 561 JM, JMR, and JCR articles with a citation analysis and reference analysis of those same articles to investigate the impact of article method type and subject area on article citation rates and reference diversity. Our results reveal that verbal-theory and field study papers are both more likely to be cited and more likely to draw from a wide variety of journal and disciplinary reference sources. The results also reveal that services/customer satisfaction and general theory and philosophy of science articles are generally more likely to be cited than other subject areas, although services/customer satisfaction articles are also less likely to rely on a diverse set of references.

Transformational Relationship Events

Exchange events are fundamental building blocks of business relationships and essential to relationship development. However, some events contribute to incremental relationship development, as predicted by life cycle theories, whereas others spark “turning points” with dramatic impacts on the relationship. Such transformational relationship events are encounters between exchange partners that significantly disconfirm relational expectations (positively or negatively); they result in dramatic, discontinuous change to the relationships trajectory and often reformulate the relationship itself. With a three-study, multimethod design, the authors (1) establish a foundation for differentiating dramatic and incremental exchange events on the basis of relational versus product expectations and disconfirmations, thus revealing that strong relationships benefit product disconfirmations but harm relational disconfirmations, and (2) conceptualize, define, and differentiate transformational relationship events from other types of disconfirming events and then link them to exchange performance.