Nikolaus Franke

Satisfying Heterogeneous User Needs via Innovation Toolkits: The Case of Apache Security Software

User needs for a given product type can be quite heterogeneous. Segmenting the market and providing solutions for average user needs in each segment is a partial answer that will typically leave many dissatisfied ? some seriously so. We hypothesize that providing users with ?toolkits for user innovation? to enable them to more easily design customized products for themselves will increase user satisfaction under these conditions. We test this hypothesis via an empirical study of Apache security software ? ?open source? software that is designed to be modifiable by skilled users. We find that heterogeneity of need is high, and that many Apache users are dissatisfied with standard security functionality on offer. We also find that users creating their own software modifications are significantly more satisfied than are non-innovating users. We conclude by suggesting that the ?toolkits for user innovation? approach to enhancing user satisfaction might be generally applicable to markets characterized by heterogeneous user needs.

The “I Designed It Myself” Effect in Mass Customization

Many companies offer websites that enable customers to design their own individual products, which the manufacturer can then produce to order. To date, the economic value of products self-designed using mass customization (MC) toolkits has been attributed to the two factors of preference fit achieved (which should be as high as possible) and design effort (which should be as low as possible). On the basis of literature on behavioral decision making, we suggest a third factor, namely the awareness of being the creator of the product design. In the course of five different studies, we provide experimental evidence that this “I designed it myself” effect creates economic value for the customer. Regardless of the two other factors, self-designed products generate a significantly higher willingness to pay. This effect is mediated by feelings of accomplishment and moderated by the outcome of the process as well as the individuals perceived contribution to the self-design process. These findings have important implications for MC companies: It is not enough merely to design MC toolkits in such a way that preference fit is maximized and design effort is minimized. To capture the full value of MC, toolkits should also elicit “I designed it myself” feelings.

Testing the Value of Customization: When Do Customers Really Prefer Products Tailored to Their Preferences?

Recently, researchers have paid increasing attention to the marketing strategy of customization. A key assumption is that customized products create higher benefits for customers than standard products because they deliver a closer preference fit. The prerequisite for this effect is the ability to obtain precise information on what customers actually want. But are customers able to specify their preferences that precisely? Several theoretical arguments raise doubts about this, implicitly challenging the value of customization. The authors conduct two studies in which they find that products customized on the basis of expressed preferences bring about significantly higher benefits for customers in terms of willingness to pay, purchase intention, and attitude toward the product than standard products. The benefit gain is higher if customers have (1) better insight into their own preferences, (2) a better ability to express their preferences, and (3) greater product involvement. This suggests that customization has the potential to be a powerful marketing strategy if these conditions are met. In the opposite case, firms willing to serve heterogeneous customer preferences need to adapt their customization systems in such a way that they explicitly address the customers’ inability to provide valid preference information.

ENTREPRENEURIAL INTENTIONS OF BUSINESS STUDENTS — A BENCHMARKING STUDY

It is widely accepted that the educational system of universities has to provide an academic environment that may serve as a catalyst for high-technology start-ups. The academic tradition of entrepreneurship in German-speaking countries is very short. Until recently, fostering innovations and new product development through entrepreneurship has not been regarded as a primary task of universities. However, perspectives have changed in this respect, and there have been numerous attempts to enhance the role of university graduates as founders of innovative businesses. In this paper, we compare the entrepreneurial intentions of students at two German-speaking universities (the Vienna University of Economics and Business Administration and the University of Munich) with the corresponding results for a leading institution in this field: Massachusetts Institute of Technology (MIT). We find very distinct patterns of entrepreneurial spirit in these universities. The results also suggest that the lower level of founding intentions among students in Munich and Vienna may be attributed to their less distinctive entrepreneurship education. This leaves a great deal of room for improvement.

Venture Capitalists' Evaluations of Start-Up Teams: Trade-Offs, Knock-Out Criteria, and the Impact of VC Experience

The start–up team plays a key role in venture capitalists’ evaluations of venture proposals. Our findings go beyond existing research, first by providing a detailed exploration of VCs’ team evaluation criteria, and second by investigating the moderator variable of VC experience. Our results reveal utility trade–offs between team characteristics and thus provide answers to questions such as “What strength does it take to compensate for a weakness in characteristic A?” Moreover, our analysis reveals that novice VCs tend to focus on the qualifications of individual team members, while experienced VCs focus more on team cohesion. Data were obtained in a conjoint experiment with 51 professionals in VC firms and analyzed using discrete choice econometric models.

Entrepreneurial opportunities with toolkits for user innovation and design

Abstract This article discusses a promising entrepreneurial opportunity: toolkits for user innovation and design. This innovative method of new product development (NDP) shifts the design task to the customer by making use of recent developments in IT, media, and production technologies. The customer, in turn, gets a product that perfectly suits his/her needs. This new approach challenges the time‐consuming and costly traditional approach of screening the market for new product needs which are then converted into novel or adapted products. Our analysis shows that there are basically two different ways to exploit this opportunity. First, by means of high‐end toolkits, radically new products can be gathered. Second, low‐end toolkits can be used efficiently to further exploit seemingly mature markets. We argue that in particular startups might be in the best position to take advantage of these entrepreneurial opportunities. They can either enter the arena of manufacturers or they can act as new intermediaries between manufacturers and users.

“Does This Sound Like a Fair Deal?”: Antecedents and Consequences of Fairness Expectations in the Individual’s Decision to Participate in Firm Innovation

The Internet has given rise to new organizational forms of integrating users into firm innovation. Companies willing to make use of external resources can now outsource innovation-related tasks to huge “crowds” outside the company. The extant literature on participation motives assumes a symbiotic relationship between the firm and external contributors in which both parties have largely complementary motives and are only interested in their own utility. In two experimental simulations, we show that this understanding has to be amended: potential contributors not only want a good deal, they also want a fair deal. Fairness expectations with regard to the distribution of value between the firm and contributors (distributive fairness) and the fairness of the procedures leading to this distribution (procedural fairness) impact the likelihood of participation beyond considerations of self-interest. Fairness expectations are formed on the basis of the terms and conditions of the crowdsourcing system and the ex ante level of identification with the firm organizing it. In turn, they impact the individuals’ transaction-specific reactions and also inform their future identification with the firm. These findings contribute not only to research on open and user innovation but also to theories on organizational fairness by enhancing our understanding of the emergent field of fairness expectations.

Mass or Only "Niche Customization"? Why We Should Interpret Configuration Toolkits as Learning Instruments*

In order to configure individual products according to their own preferences, customers are required to know what they want. While most research simply assumes that consumers have sufficient preference insight, a number of psychologically oriented scholars have recently voiced serious concerns about this assumption, arguing that most consumers in most product categories lack this knowledge. Not knowing what one wants means being unable to specify what one wants – and therefore, they conclude, the majority of customers are unable to use configuration tool-kits in a meaningful way. In this article, we investigate whether this pessimism is justified. Our core argument is that an individual’s preference insight is neither “given�? nor fixed – customers can learn about their preferences. In a series of experiments, we find that even short trial-and-error self-designing processes with typical existing configuration tool-kits bring about substantial and time-stable enhancements of preference insight, especially among consumers who initially have a poor understanding of what they want. This suggests that we should interpret configuration tool-kits as learning instruments that allow consumers to understand their preferences more clearly. Given that tool-kit providers follow this interpretation, this warrants the optimistic prediction that mass customization holds the potential to truly deserve its name.

Studentische Unternehmensgründungen — dank oder trotz Förderung?

ZusammenfassungEs ist bisher nicht bekannt, inwieweit studentische Unternehmensgründungen durch die zahlreichen Unterstützungsangebote gefördert werden können, oder ob die Gründungsentscheidung durch kurzfristig kaum veränderliche Persönlichkeitseigenschaften geprägt wird. In einer empirischen Untersuchung wird zunächst die tatsächliche und potentielle Bedeutung studentischer Unternehmensgründungen aufgezeigt. Der kovarianzstrukturanalytische Test eines Kausalmodells zeigt, dass sowohl die Wahrnehmung des Umfeldes als auch die Persönlichkeit der Studenten wesentliche Erklärungsbeiträge zur Frage leisten, ob ein Student ein Unternehmen gründen wird. Die Befunde erlauben Schlussfolgerungen für die universitäre Gründungsförderung: Empfohlen wird eine Maßnahmenkombination von Hilfsangeboten, Selektion der Studenten und kommunikativen Maßnahmen, die das Gründerimage befördern.SummaryWhy do students choose an entrepreneurial career? There are several possible determinants but little knowledge about the actual determinants. In this study we focus on the distinction between personality on one hand and perceived environmental factors on the other. Firstly, empirical results confirm that there are considerable entrepreneurial activities and intentions among students. Results of a structural equation model then show that both the perceived environmental factors (which can easily be influenced by universities) and the students’ personality (which hardly can be influenced) impact the students’, decision to start a business. Thus, as an effective lever to improve the entrepreneurial performance of a university a combination of the following is recommended: help offers, selection of students and communicative measures which are to further improve the image of the entrepreneur.

The six identities of marketing: a vector quantization of research approaches

Purpose: This article provides an empirical identification of groups of marketing scholars who share common beliefs about the role of science and the logic of scientific discovery. Design: We use Topology Representing Network quantization to empirically identify classes of marketing researchers within a representative sample of marketing professors. Findings: We find six distinct classes of marketing scholars. They differ with regard to popularity (size) and productivity (levels of publication output). Comparing the sub-samples of German-speaking and US respondents shows cross-cultural differences. Value: The study enhances our understanding of the current scientific orientation(s) of marketing. It may help to motivate marketing scholars to ponder on their own positions and assist them in judging where they may belong. Future comparisons over time would give us indication about the future of the academic discipline of marketing.(authors abstract)