Raji Srinivasan

Technological Opportunism and Radical Technology Adoption: An Application to E-Business

Using the resource-based view of the firm, the authors hypothesize that differences in adoption of radical technologies among firms can be attributed to a sense-and-respond capability of firms with respect to new technologies, which is termed technological opportunism. Using survey data from senior managers in business-to-business firms, the authors study the adoption of e-business, a radical technology with the potential to alter business models. The authors first establish the distinctiveness of technological opportunism from related constructs, such as organizational innovativeness, and show that it offers a significantly better explanation of technology adoption than existing constructs do. In a follow-up survey of senior managers, the authors investigate the antecedents of technological opportunism and find that organizations can develop technological opportunism by taking specific actions such as focusing on the future, by having top management advocate new technologies, and by becoming more of an adhocracy culture and less of a hierarchy culture. The proposed technological opportunism construct can inform theory development on the relative emphasis on internal (research and development) versus external (buying, licensing) development of technologies and the complementarities in technology orientation and market orientation in the firm. The results can be used by managers who seek to develop the technological opportunism capability of their firms and by those in technology vendor firms who seek to develop segmentation strategies based on the technological opportunism capabilities of their customer firms.

First in, First out? The Effects of Network Externalities on Pioneer Survival

Network externalities are playing an increasingly important role in the economy, and they have significant implications for firms’ marketing strategies. The authors study the effects of network externalities in conjunction with other product and firm characteristics on the survival of pioneers. They apply an accelerated failure time model to data on 45 office products and consumer durables. The authors find evidence that network externalities have a negative main effect on the survival duration of pioneers. However, for more radical products and for technologically intense products, increases in network externalities are associated with increased survival duration. The larger the pioneer, the more network externalities increase its survival duration, whereas incumbent pioneers experience a decrease in survival duration compared with nonincumbents. The findings of this article contribute to theory in marketing strategy and have important implications for firms that are developing market entry strategies for products with network externalities.

Social Influence Effects in Online Product Ratings

Websites prominently display consumers’ product ratings, which influence consumers’ buying decisions and willingness to pay. Few insights exist regarding whether a consumers online product rating is prone to social influence from others’ online ratings. Examining this issue, the authors hypothesize that other consumers’ online ratings moderate the effects of positive and regular negative features of product experience, product failure, and product recovery (to address product failure) on the reviewers online product rating. The results from a model using 7499 consumers’ online ratings of 114 hotels support the hypotheses. Other consumers’ online ratings weaken the effects of positive and regular negative features of product experience but can either exacerbate or overturn the negative effect of product failure, depending on the quality of product recovery. For marketing theory, the findings indicate that consumers who influence others are themselves influenced by other consumers and that this influence is contingent on their product experience. For managerial practice, the authors offer a method to estimate the effects of product experience characteristics on online product ratings and show that social influence effects make high online product ratings a double-edged sword, exacerbating the negative effect of product failure and strengthening the benefit of product recovery.

Dual Distribution and Intangible Firm Value: Franchising in Restaurant Chains

Dual distribution systems where firms simultaneously use vertical integration and market governance are widely used across diverse marketing contexts (e.g., restaurants, retailing, and industrial selling). A prominent example of dual distribution includes business format franchising, where firms, the franchisors, license operation of some of its units to franchisees while simultaneously owning and operating some units themselves. Despite the widespread prevalence of dual distribution, there are few insights on their performance implications. In this paper, I examine the relationship between a firms dual distribution strategy and its intangible value. Franchising in restaurant chains serves as the empirical context for the study. I propose that a firms dual distribution strategy will affect its intangible value both independently and jointly with a set of firm characteristics. I consider the firms age, the scope of its vertical integration, advertising, financial leverage, and financial liquidity as firm characteristics influencing the relationship between dual distribution strategy and intangible value. I measure the firms dual distribution strategy by the proportion of its franchised units to its total units and intangible value by its Tobins Q. I estimate the proposed model using panel data on 55 publicly-listed U.S. restaurant chains for the period 1992-2002. Unobserved firm heterogeneity is accommodated using latent class regression analysis. Results support a four segment model. Dual distribution increases intangible value for some firms, but decreases intangible value for others, both independently and, in conjunction with other firm characteristics.

Should Firms Spend More on Research and Development and Advertising During Recessions

Whenever a recession occurs, there is a heated dialog among marketing academics and practitioners about the appropriate levels of marketing spending. In this article, the authors investigate whether firms should spend more on research and development (R&D) and advertising in recessions. They propose that the effects of changes in firms’ R&D and advertising spending in recessions on profits and stock returns are contingent on their market share, financial leverage, and product-market profile (i.e., business-to-consumer goods, business-to-business services, business-to-business goods, or business-to-consumer services). They estimate the model using a panel of more than 10,000 firm-years of publicly listed U.S. firms from 1969 to 2008, during which there were seven recessions. Their results support the contingency approach. The authors compute the marginal effects, which show how the effects of changes in R&D and advertising spending in recessions vary across firms. The marginal effects provide evidence of inadequate spending (e.g., 98% of business-to-consumer goods firms underspend on R&D), proactivity (e.g., 96% of business-to-business services firms are at approximately the right levels on advertising). and excess spending (e.g., 92% of business-to-consumer services firms overspend on advertising). Using the authors’ approach and publicly available data, managers can estimate the effects of their firms’ and competitors’ R&D and advertising spending on profits and stock returns in recessions.

The dot.com retail failures of 2000: Were there any winners?

In the year 2000, several dot.com retailers filed for bankruptcy, shut down their operations, or faced the risk of their stock being delisted on the stock market. But did any dot.com retailer do it right? Were there any winners? If yes, who are these winners? What is the product and firm profile of these winners? What lesson, if any, can be learned from these winners and losers? This article addresses these questions based on a study of 48 dot.com retailers, conducted in December 2000. The study identified 1–800contacts.com as the sole winner, using two performance indicators: percentage change in stock price since the initial public offering and stock options underwater. Based on a proposed conceptual framework of product and firm characteristics, the profile of 1–800contacts.com is compared with the hypothesized winner, Amazon.com, and other dot.com retailers. Implications of the study and limitations and opportunities for future research are discussed.

Vicarious Learning in New Product Introductions in the Early Years of a Converging Market

Technological developments combine previously distinct technologies that result in converging markets. In converging markets, firms from different industries compete against each other, often for the first time. We propose that firms introducing new products in converging markets will learn vicariously from other firms in the market. Further, we propose that this learning will vary across the dual-technology frontier (DTF), where the high-technology frontier (HTF) and low-technology frontier (LTF) map onto innovative activities driven by technological opportunity and user needs. We propose that at the HTF, local search will dominate and firms will be influenced by HTF product introductions of similarly sized, successful firms. At the LTF, learning will occur across the DTF, vary by origin industry of the firm, and be affected by complementarities in routines and capabilities and market competition among firms. We test the proposed model of vicarious learning using panel data on new product introductions of 67 firms in the U.S. digital camera market in the 1990s. Findings generally support our proposed model of vicarious learning in this market. They show heterogeneity in vicarious learning across the technology frontier and firm characteristics---including the origin industry of target firms. Our results show that vicarious learning in new product introductions in converging markets---which includes both mimetic and nonmimetic learning---is similar in some ways, but different from more traditional markets. We conclude with a discussion of the implications of our findings for theories of organizational learning, new product development, and converging markets.

Supplier Performance in Vertical Alliances: The Effects of Self-Enforcing Agreements and Enforceable Contracts

The paper examines the significance of enforceability and adaptability in governing vertical alliances and their performance ramifications for suppliers. Literature on supplier relations suggests that suppliers are skeptical of close ties with their buyers (Helper 1991, Helper and Sako 1995). Such skepticism persists in spite of the fact that buyers are writing longer (enforceable) contracts with fewer suppliers. In this context, the paper develops a transaction cost economics (TCE)-based model that distinguishes between the verifiable and nonverifiable aspects of governance attributes (of safeguards, incentive intensity, and adaptability) in explaining supplier performance variations. The paper argues that the following factors prove valuable for suppliers: (1) the adaptive and collaborative orientation fostered by the original equipment manufacturers (OEMs) credible commitment to the exchange and by information sharing on the part of the supplier, (2) the presence of certain nonverifiable safeguards, and (3) the incentives inherent in target pricing. These assertions have been tested using data from the home appliance industry. Results indicate that information sharing together with (1) OEM dependence and (2) target pricing does indeed enhance supplier performance. Also, results suggest that while nonverifiable safeguards can help, verifiable safeguards do not have a positive association with supplier interests. Under certain conditions then, suppliers can venture into closer relationships with buyers and benefit.

When Do Transparent Packages Increase (or Decrease) Food Consumption

Transparent packages are pervasive in food consumption environments. Yet prior research has not systematically examined whether and how transparent packaging affects food consumption. The authors propose that transparent packaging has two opposing effects on food consumption: it enhances food salience, which increases consumption (salience effect), and it facilitates consumption monitoring, which decreases consumption (monitoring effect). They argue that the net effect of transparent packaging on food consumption is moderated by food characteristics (e.g., unit size, appearance). For small, visually attractive foods, the monitoring effect is low, so the salience effect dominates, and people eat more from a transparent package than from an opaque package. For large foods, the monitoring effect dominates the salience effect, decreasing consumption. For vegetables, which are primarily consumed for their health benefits, consumption monitoring is not activated, so the salience effect dominates, which ironically decreases consumption. The authors’ findings suggest that marketers should offer small foods in transparent packages and large foods and vegetables in opaque packages to increase postpurchase consumption (and sales).

Developing Customer Service Innovations for Service Employees: The Effects of NSD Characteristics on Internal Innovation Magnitude

During product recovery, firms rely on their customer service agents to recover customers’ product failures and deliver superior customer service. However, customers who contact the firm about a product failure often are dissatisfied, which makes customer service agents’ jobs challenging. Therefore, firms continuously try to improve their internal customer service operations to increase benefits for customer service agents and, by extension, their customers. The authors hypothesize that the way firms design (agent codesign and design acceleration) and implement (agent enablement) an internal customer service innovation has direct and joint effects on the magnitude of benefits of the innovation to customer service agents, termed internal innovation magnitude. The authors test the conceptual model using data on 38 internal customer service innovations at a Fortune 500 high-technology firm. The findings extend the internal marketing literature by demonstrating that service employees represent a critical source of user-generated feedback. The findings also contribute to marketing practice by suggesting that accelerating the design process not only saves costs but also increases benefits for the internal users of the innovation.