All External Reference Prices Are Not the Same: How Magnitude, Source, and Fairness Shape Payment for Digital Goods

2023 | Information Systems Research | Citations: 0

Authors: Bassellier, Geneviève; Ramaprasad, Jui

Abstract: External reference prices (ERPs) are recognized to influence consumers’ payment ... Expand

Abstract: External reference prices (ERPs) are recognized to influence consumers’ payment for physical goods. We examine the role of ERPs in a digital goods context, emphasizing the importance of disentangling the effects of two components of ERPs: the magnitude and the source. We first examine the impact of the price magnitude and then investigate how the impact of ERP magnitude is moderated by its source―the specific context in which the reference price is set—and by its perceived fairness. Using a laboratory experiment with 471 participants, we first establish that as an ERP increases, payment for digital songs also increases. Furthermore, the source of the ERP motivates payment differently. Indeed, consumers’ willingness to pay is more strongly influenced by a price recommended by the site than by information on the price paid by others. Last, we show that the perceived fairness of the ERP matters. Results indicate that when the ERP is perceived to be high, the marginal effect of an increase in ERP on payment is smaller than when it is perceived to be fair. We contribute to the understanding of the effect of ERPs in digital context, where the source of an ERP can be varied, and perception of fairness can be heterogenous across consumers. This has implications for the design of digital platforms seeking to sell digital goods using a flexible pricing scheme. History: Anandasivam Gopal, Senior Editor; Sunil Wattal, Associate Editor. Funding: This work was supported by the Social Science and Humanities Research Council of Canada [Insight Development Grant 430-2017-01055]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2023.1206. Collapse

Topics: enterprise resource planning digital good website price management digital platform

Methods: experiment Student's t-test survey regression analysis method laboratory experiment

Theories: behavioral economics

The Cost of Free: The Effects of “Wait-for-Free” Pricing Schemes on the Monetization of Serialized Digital Content

2023 | Management Information Systems Quarterly | Citations: 0

Authors: Choi, Angela; Rhee, Ki-Eun; Yoon, Chamna; Oh, Wonseok

Abstract: Leveraging a combination of analytical frameworks and empirical assessments, th ... Expand

Abstract: Leveraging a combination of analytical frameworks and empirical assessments, this study investigates the effects of wait-for-free (WFF) pricing schemes on the monetization of serialized, digital entertainment content, which has become increasingly pervasive on online platforms. WFF pricing is a strategy in which consumers are given the option to either wait a certain amount of time to acquire digital content at no cost or pay to consume it immediately. We evaluate the extent to which habit formation and presentbiased preferences driven by the consumption of addictive stock affect individual consumers' willingness to wait (or pay) for content, which, in turn, determines the efficacy of WFF pricing. We also examine the conditions under which consumers switch from waiting for free content to instantaneously purchasing content. Our findings indicate that WFF pricing increases the sales of serialized digital content, generating new demand from customers who would otherwise forgo participation in the market. In addition, the pricing design effectively generates sustained profits in the long run. We found that most consumers who initiate a purchase either upon initial market entry or upon switching continue to purchase as new episodes become available. Moreover, the results indicate that as a user accumulates free episodes of a specific series, given extended waiting periods, the likelihood of their conversion from a wait-for-free customer to an instant-purchase customer increases. In particular, WFF pricing effectively augments the willingness to pay of low-valuation consumers as habit formation builds up through time with the free consumption of serialized content. One free episode can elevate the likelihood of consumer purchase by up to 13%. However, as the number of free episodes consumed goes beyond a threshold, the likelihood of conversion decreases. We conclude with a discussion of managerial implications that can help content providers monetize their serialized digital content products. Collapse

Topics: price management consumer behavior advertising management digital good customer satisfaction

Methods: mathematical model robustness check econometric modeling proportional hazards model survival analysis

Theories: behavioral economics

What is Digital about Digital Innovation? An Ontological Discussion of Digitality

2023 | Americas Conference on Information Systems | Citations: 0

Authors: Fitz, Lukas; Scheeg, Jochen

Abstract: Digital" is a popular adjective for concepts related to electronic, computerize ... Expand

Abstract: Digital" is a popular adjective for concepts related to electronic, computerized or networked processes in current research and practice. From an ontological-theoretical perspective, the prevalence of digital things triggers the question, how Digitality itself could be conceptualized. This article studies the ontology of Digitality and consequently discusses Digital Innovation (DI) from a new perspective. First, literature on Digitality is analyzed. Based on the findings, an ontological conceptual framework of Digitality (OCFD) is proposed. It describes four layers of Digitality: physical foundations, virtuality, digital culture and world, and digital metaphysics. From a human perspective, requirements to grasp and embody Digitality are highlighted, as well as the expansion of reality. Finally, Digitality is discussed as a paradigm of DI and exemplary digital phenomena are projected onto the OCFD. This paper contributes to DI research and practice through theory-building towards a better understanding of ontological characteristics and practical implications of Digitality in DI. Collapse

Topics: database system digital good digital business ebook knowledge representation

Methods: literature study theory development ontological modelling

Communication of post-release plans in crowdfunding development initiatives: A signaling perspective

2023 | International Journal of Information Management | Citations: 0

Authors: Ghobadi, Shahla

Abstract: Significant research explores how developers leverage crowdfunding to attract fi ... Expand

Abstract: Significant research explores how developers leverage crowdfunding to attract finance for releasing digital goods. However, researchers seldom study “post-release activities” that are crucial for maintaining and advancing those goods. This article elaborates on the challenging nature of post-release activities for crowd­ funding initiatives, asking how developers communicate their post-release plans to effectively prepare backers for possible changes. Using a grounded approach that connects the longitudinal history of fundraising to development to post-release, I examine initiatives that achieved impressive fundraising and development results yet varied significantly in their post-release outcomes. While they consistently signaled post-release plans, the differences are the signals’ costs, backers’ reactions, and the post-release activities and outcomes. I present theoretical propositions that (1) developers benefit in the long run by combining high-cost signaling with engaging backers in follow-up conversations about post-release issues and (2) prospective backers can utilize developers’ communication to identify their post-release signals. Unlike dominant research findings about sig­ nals’ impacts on mobilizing resources during fundraising, the findings emphasize signals’ post-release conse­ quences for stakeholders. While different signaling approaches can enhance short-term performance, they also seed contrasting longer-term outcomes for developers, backers, and the industry. These findings advance knowledge on effective strategies for engaging society to build sustainable digital goods. Collapse

Topics: crowdsourcing crowdfunding digital good Twitter strategic management

Methods: longitudinal research case study grounded theory theory development cross sectional research

When Images Backfire: The Effect of Customer-Generated Images on Product Rating Dynamics

2023 | Information Systems Research | Citations: 0

Authors: Guan, Yue; Tan, Yong; Wei, Qiang; Chen, Guoqing

Abstract: Customer-generated images (CGIs) on e-commerce platforms have been widely adopte ... Expand

Abstract: Customer-generated images (CGIs) on e-commerce platforms have been widely adopted as a promotional tool to persuade customers into purchases. Despite their prevalent applications, the effect of CGIs on customer postpurchase satisfaction has not been extensively examined. This study postulates that CGIs could cause expectation disconfirmation and reduce product uncertainty for customers, therefore making their effect on subsequent product ratings complex. We leverage multiple methods and data sets to gain a better understanding of this problem and underlying mechanisms. We employ a difference-in-differences model to empirically test our hypotheses and find that CGIs lead to a decline in subsequent ratings compared with product ratings not exposed to CGIs. Further heterogeneity analyses demonstrate that high CGI review rating and high aesthetic quality exacerbate the negative effect, whereas reviewer face disclosure could alleviate the negative effect. Through cross-product analyses, we find that the negative effect is more prominent for experience goods (e.g., women’s dresses) than for search goods (e.g., lightning cables). Finally, the underlying mechanism is further validated through a laboratory experiment that shows participants experience significantly higher expectation and more negative disconfirmation in the CGI group with high review ratings, whereas uncertainty reduction effect is insignificant, which collectively explains the decline of subsequent product ratings. These findings suggest that platforms and retailers should be aware of the potential negative effect of CGIs on the rating dynamics and take appropriate measures to circumvent it. History: Ravi Bapna, Senior Editor; Gordon Burtch, Associate Editor. Funding: This work was supported in part by National Science Foundation of China [Grants 72202220, 72172070, and 71729001]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2023.1201. Collapse

Topics: online review experience good electronic commerce data breach digital good

Methods: experiment experimental group laboratory experiment computational algorithm product review

Special Section: Digital Strategies for Business Readiness

2023 | Journal of Management Information Systems | Citations: 0

Authors: Kauffman, Robert J.; Lahiri, Atanu

Abstract: Product Recommendation Strategy and Seller-Biased Recommendations We now segue f ... Expand

Abstract: Product Recommendation Strategy and Seller-Biased Recommendations We now segue from bundling economics to the theory of strategic product recommendation, and the nuances that arise when a product or service provider rethinks its approach about how to push a more profitable product to consumers, who exhibit heterogeneity with respect to their fit with it. The optimal strategy depends both on the search cost faced by consumers as well as the accuracy of information the seller possesses about consumer preferences. Using a recommendation system, for example, a seller can nudge potential consumers to a high-margin product, instead of simply recommending the product that would have offered them the highest utility [[28]]. In a two-channel scenario, a larger bundle discount entices more consumers to buy both channels but also results in a higher lost revenue as consumers who would have purchased both in any case can now do so at a lower price. Collapse

Topics: IS discipline IT career digital good

Methods: simulation mathematical model

Editorial Introduction

2023 | Journal of Management Information Systems | Citations: 0

Authors: Zwass, Vladimir

Abstract: The Guest Editors of the Special Section that opens this third issue of the ann ... Expand

Abstract: The Guest Editors of the Special Section that opens this third issue of the anniversary 40 th volume of Journal of Management Information Systems (JMIS) frame the contributions the included papers make to our knowledge of information systems (IS) as "Digital Strategies for Business Readiness." This frame is becoming ever more appropriate with the several decades of the organizational deployment of information technology (IT). Without a strategic approach to this deployment, organizations are simply not ready to compete in the marketplace, or-in the case of administrative entities, which do not face competition-do not provide adequate support for the mission of the entities where they are embedded. Productivity analyses, the absence or presence of IT in the productivity statistics, and the adequacy of these statistics to measure IT productivity are only a part of this far larger picture.It is crucial to understand that advanced general technologies, such as IT, enable societies and organizations to make choices. The technology is necessary as an enabler of business models, products, and processes. But it is the choices we make in the deployment of the technology for the organizational and societal benefits that lead to the effective strategic positioning of the firms and-we expect-to the wellbeing of societies. The socio-technical core of our discipline that combines the understanding of the age-defining technology with the knowledge of business and administration is uniquely positioned to guide all of us to better choices.We are speaking about the readiness to do business-or the absence of this readiness. The readiness can wane when swept away by a major new technological wave. IT is not singular: We have witnessed several technological opportunities (or challenges) that have required organizations to revise their strategic and operational course, to mention only integrated mainframe families, personal computing, Internet-Web, smartphone, cloud computing, and now neural network-based artificial intelligence (AI). It is in the assimilation of the generative AI and in its adhesion to the existing IS that the competitive battles of the present decade will be fought. As shown by the Special Section, among many publications in JMIS and in other scholarly journals, our scholarly discipline has laid a firm groundwork for the assessment of the existing organizational IS capabilities that is necessary to move to the next competitive framework.The Special Section, guest-edited by Robert J. Kauffman and Atanu Lahiri, encompasses the work by the thought leaders of our field on the optimal bundling strategy for digital goods, the impacts of integrating recommendations into the consumer search, the effects of the bot involvement in blockchain-based social media platforms, and the dynamics of strategic investment and pricing in multisided platforms, with the specialized consideration of several industrial segments. The papers demonstrate both the theoretical and methodological diversity of our discipline, and its contribution to the actionable understanding of the current and potential future environments of our economies and organizations. The Guest Editors provide an extensive introduction to the Special Section.The paper opening the general section of the issue analyzes choices to be made in the deployment of IT in the healthcare setting. Healthcare informatics is now firmly a part of Collapse

Topics: system deployment enterprise architecture price management blockchain digital good

Methods: chatbot

A collaborative filtering model incorporating media promotions and users' variety-seeking tendencies in the digital music market

2023 | Decision Support Systems | Citations: 0

Authors: Lee, Myounggu; Kim, Hye-Jin

Abstract: Understanding customer preferences and providing the right products at the right ... Expand

Abstract: Understanding customer preferences and providing the right products at the right time to customers via personalized recommendations have been among the major interests of online retailers and service providers. This paper proposes an improved collaborative filtering model that incorporates a firm's marketing effort vari­ ables (i.e., media promotional variables) to improve the prediction of customers' digital music choices. In addition, we assert that the predictive model's effectiveness is different for consumers depending on their varietyseeking tendencies in music. We compared our predictive model to benchmark models and demonstrated that our proposed model is superior in predicting users' download behavior. We also found that the overall predictive performance is higher for active variety seekers who consume diverse types of music via streaming. We provide some evidence that this may be due to differences in the degree to which the two groups are influenced by different types of media promotions. The results suggest that considering psychological characteristics such as variety-seeking tendencies provides more advantages in prediction and recommendation systems, which opens new avenues for improvement. Collapse

Topics: collaborative filtering YouTube marketing management music download social media

Methods: experiment computational algorithm random forest classification regression analysis method deep learning

Information Asymmetry in Business-to-Business Negotiations: A Game Theoretical Approach to Support Purchasing Decisions with Suppliers

2022 | Group Decision and Negotiation | Citations: 0

Authors: Bodendorf, Frank; Hollweck, Barbara; Franke, Jörg

Abstract: The digital transformation confronts purchasing and supply management (PSM) with ... Expand

Abstract: The digital transformation confronts purchasing and supply management (PSM) with numerous new challenges, such as digital procurement objects and the information asymmetry between buyers and suppliers. Existing approaches contributing to PSM research (e. g., the selection of suppliers or the calculation of equilibrium prices) have in common that information regarding suppliers (e. g., production costs) must be well-known. However, this information is rarely accessible to purchasers due to the existing information asymmetry. This problem is addressed by a game-theoretical model based on a Stackelberg game to assist PSM in dealing with the information advantage of software suppliers. The applicability in practice is evaluated by a real-world case study from the automotive industry. The results show that the presented model can support decision-making in purchasing by a qualitative analysis of profit scenarios for different negotiation strategies. The model contributes to dismantling the information asymmetry and provides a basis for determining negotiation prices, also for digital procurement objects. This research motivates both supply and purchase managers to jointly optimize their product costs and thus increase their competitiveness on the market. Collapse

Topics: digital good IT investment procurement management usability supply chain management

Methods: game theoretical model case study simulation

Theories: lemon market theory game theory

A Typology of Digital Offerings

2022 | HICSS | Citations: 0

Authors: Folkmann, Katrine; Hedman, Jonas; Avital, Michel

Abstract: This paper develops a typology of digital offerings to shed light on the distinc ... Expand

Abstract: This paper develops a typology of digital offerings to shed light on the distinct characteristics of this emerging digital phenomenon. Drawing on Roman contract law, the typology focuses on digital rights offered (selling, leasing, partnering, and agencing) and digital assets involved (tangible and intangible). These two dimensions lead to eight archetypes that we illustrate through the diverse Amazon portfolio of digital offerings. The typology sets out to shape the scholarly discourse around digital offering research and practice and to provide a foundation from which the characteristics and mechanisms of digital offering value appropriation can be further understood and operationalized. Ultimately, by rejecting the traditional service vs. product distinction and instead accounting for offering variations based on the intrinsic merits of digital offerings, we are embracing a digital terminology rather than attempting to transfer the terminology of the physical world to the digital realm. Collapse

Topics: legal context digital ecosystem user experience digital economy digital service

Theories: transaction cost economics