Value Creation Tradeoff in Business Ecosystems: Leveraging Complementarities While Managing Interdependencies

2023 | Organization Science | Citations: 0

Authors: Agarwal, Shiva; Kapoor, Rahul

Abstract: Complementary assets play an important role in shaping an innovation’s commercia ... Expand

Abstract: Complementary assets play an important role in shaping an innovation’s commercialization success. In this paper, we broaden the locus of complementarities to examine the role of complementary technologies residing in the business ecosystems that are becoming an important source of value creation for innovating firms. We argue that, on one hand, complementary technologies help innovations create more value for their users. On the other hand, they can also limit the focal innovation’s value creation by exposing them to performance bottlenecks as the underlying technological architecture of the ecosystem evolves. We further extend the notion of specialization of complementary assets to ecosystems by considering complementary technologies that are specialized to a focal ecosystem and those that are available across multiple ecosystems. We highlight that, although the complementary technologies that are specialized to an ecosystem facilitate greater value creation, they are more likely to subject the focal innovation to performance bottlenecks. Evidence from 244,034 apps launched by software developers for Apple’s iPhone ecosystem during 2008–2015 offers strong support for our framework. In summary, the study sheds light on the value creation tradeoff for firms innovating in business ecosystems—the opportunities associated with leveraging complementarities and the challenges associated with managing technological interdependencies. Funding: S. Agarwal was funded by the McCombs School of Business at The University of Texas at Austin [Research Excellence Grant]. Collapse

Topics: mobile application innovation management value creation Apple iPhone iOS

Methods: statistical hypothesis test instrumental variables estimation cross sectional research proportional hazards model robustness check

Symbolic Shareholder Democracy: Toward a Behavioral Understanding of the Role of Shareholder Voting in CEO Dismissals

2023 | Organization Science | Citations: 0

Authors: Andrei, Alina G.; van Oosterhout, J. (Hans); Sauerwald, Steve

Abstract: We investigate the effect of expressive shareholder dissent voting, in which sha ... Expand

Abstract: We investigate the effect of expressive shareholder dissent voting, in which shareholders use their votes symbolically to express their discontent with management, on subsequent chief executive officer (CEO) dismissals. Using the routine but highly symbolic executive board discharge proposal voted on at the annual shareholder meetings of German firms, we argue that the board of directors understands these votes as a “vote of confidence in management” that challenges the CEO’s mandate to lead the firm. Arguing that board chairs are uniquely positioned to take up the stance of a steward of the firm and its leadership, we examine how independent and family board chairs moderate the board’s response to expressive voting dissent. Using a sample of German public firms over the period 2008–2015, we find that expressive voting dissent increases the chance of CEO dismissal increasingly with the level of dissent expressed. Contrary to prevailing agency theoretical expectations, we do not find that independent chairs are more responsive to expressive voting dissent, nor that this relationship is strengthened by the degree of minority institutional investor ownership of the firm. Consistent with the symbolic perspective on shareholder voting that we seek to develop, however, we find that family chairs are more likely to lead the board to dismiss the CEO due to the intrinsic disvalue they incur from symbolic leadership legitimacy challenges in their firms, and that the positive effect of having a family chair on the dissent induced chance of CEO dismissal is strengthened by the level of family ownership in the firm. Funding: A University of Illinois at Chicago Summer Research Grant is gratefully acknowledged for S. Sauerwald. Collapse

Topics: corporate governance financial performance accounting organizational productivity

Methods: theory development statistical hypothesis test post-hoc analysis longitudinal research survival analysis

Theories: stewardship theory behavioral theory

When Does the Pre-entry Experience of New Entrants Improve Their Performance? A Meta-Analytical Investigation of Critical Moderators

2023 | Organization Science | Citations: 0

Authors: Cao, Zhi; Posen, Hart E.

Abstract: Although pre-entry experience is widely regarded as a critical asset that positi ... Expand

Abstract: Although pre-entry experience is widely regarded as a critical asset that positively influences new entrant performance, empirical support is mixed. To address this inconsistency, we conduct a meta-analysis of the empirical findings in 272 papers. We draw theoretically on the organizational learning literature to argue that the pre-entry experience–new entrant performance relationship is contingent on the characteristics of pre-entry experience, the environmental context of the new entrant, and the interaction between the two. In particular, we examine the effects of two levels of pre-entry experience (firm and founder), four types of founder-level pre-entry experience (entrepreneurial, managerial, industry, and functional experience), and two types of environments (industry and institutional). The meta-analysis results show a significant and positive correlation between founder-level pre-entry experience and economic performance of 0.07. Likewise, the failure rates of spinouts and diversifying entrants are 11% lower than that of start-ups. The moderating analysis results show that the correlation of founder-level pre-entry experience and economic performance is lower in knowledge- or technology-intensive (KTI) industries and higher in low-KTI manufacturing and service industries. The correlation is also higher in institutional environments with high power distance and individualism. These findings provide compelling new evidence for the importance of pre-entry experience and advance our understanding of the boundary conditions on the pre-entry experience–new entrant performance relationship. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2022.1589. Collapse

Topics: national culture organization learning entrepreneurship productivity research and development

Methods: descriptive statistic hazard function meta analysis literature sample chi squared test

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

Do Early Words from New Ventures Predict Fundraising? A Comparative View of Social Media Narratives

2023 | Management Information Systems Quarterly | Citations: 0

Authors: Havakhor, Taha; Golmohammadi, Alireza; Sabherwal, Rajiv; Gauri, Dinesh

Abstract: Online equity markets have significantly changed the dynamics of connecting ang ... Expand

Abstract: Online equity markets have significantly changed the dynamics of connecting angels and individual equity investors to new ventures that seek early-stage capital. However, for those early-stage investors, information pointing to the success of business-to-business (B2B) new ventures (B2BNVs) is scattered and disconnected. This paper focuses on social media narratives (SMNs) as a source of insight for such investors and proposes that predicting a B2BNV's likelihood of success requires a comparative view, i.e., a comparison of its SMNs with those of its competitors and customers. We expect that higher (lower) lingual similarity between the SMNs of an early-stage B2BNV and those of its prospective customers (competitors) predict its success. Using a longitudinal panel of 574 B2BNVs resulting in more than 2,700 venture-round observations, we find that a comparative view of a venture's SMNs can give early-stage investors reliable predictions about the B2BNV's ability to manage its market presence and its success in later stages. Our models show that a comparative view of SMNs increases the accuracy of predicting a B2BNV's later-stage fundraising success by an average of 15%. Furthermore, predictive models can reliably point to a successful market presence in later stages, including the landing of customers, the winning of awards and competitions, the receiving of endorsements, the generating of revenue, and the successful patenting of products. Our study contributes to existing literature that focuses on the business impacts of social media by demonstrating the usefulness of comparative linguistics in social media analytics, i.e., comparing the firm's social media communications to those of its competitors and business customers in the prediction of the entrepreneurial firm's success. Collapse

Topics: Twitter social media social media analytics social capital website

Methods: machine learning chi squared test latent dirichlet allocation robustness check theoretical contribution

Theories: lemon market theory

Maximizing Online Revisiting and Purchasing: A Clickstream-Based Approach to Enhancing Customer Lifetime Value

2023 | Journal of Management Information Systems | Citations: 0

Authors: Jabr, Wael; Ghoshal, Abhijeet; Cheng, Yichen; Pavlou, Paul

Abstract: Online retailers are increasingly focused on maintaining a long-term relationshi ... Expand

Abstract: Online retailers are increasingly focused on maintaining a long-term relationship with customers, encouraging repeat visits rather than single-time purchases to increase customer lifetime value. To help retailers maximize the probabilities of customers' revisiting and purchasing, we develop a two-stage model to better characterize and predict these two fundamental customer activities. In the first stage, we characterize the propensity of a customer revisiting the retailer's website. In the second stage, we develop a stochastic model that predicts revisits while also incorporating individual customer heterogeneity in exerted search effort during repeated visits. This heterogeneity is based on individual customer preferences in the choice of consideration sets, product information, pricing, and the search environment. Using customer level clickstream data, we show that our approach is not only better at predicting repeat customer visits, compared to existing methods, but also explainable and managerially interpretable. Most importantly, using computationally efficient simulation-based prescriptive analytics, we leverage our modeling approach to propose practical intervention strategies that maximize the joint likelihoods of customers revisiting and purchasing at the individual customer level. Collapse

Topics: website price management mobile system accounting logistics management

Methods: simulation logistic regression proportional hazards model cluster analysis machine learning

From Seeker to Provider: User Ability and Role Switching in Online Support Communities

2023 | Americas Conference on Information Systems | Citations: 0

Authors: Lee, Michael; Liao, Ruochen; Wang, Xunyi; Kishore, Rajiv

Abstract: Online health communities offer a platform for patients to seek support from ot ... Expand

Abstract: Online health communities offer a platform for patients to seek support from other users with similar conditions. As those support seekers' situation improves, they may ultimately want to give back to the community and provide support to others. This study explores how seekers' ability to provide support, operationalized using their cognitive state and social network structure, can influence the seekers' propensity to switch roles and become support providers. We leverage the Dual Perspective Model of Agency and Communion and Social Networks literature to theorize a seeker's ability to provide support. We apply survival analysis to study seekers' first role switch to a provider and the duration from seekers' initial post to role switch. We find that while seekers who have higher positive agency and closeness centrality are more likely to switch roles to a provider, those having higher positive communality, degree centrality, and eigenvector centrality are less likely to switch. Collapse

Topics: social network Python

Methods: survival analysis proportional hazards model theory development robustness check word2vec

How Lending Experience and Borrower Credit Influence Rational Herding Behavior in Peer-to-Peer Microloan Platform Markets

2023 | Journal of Management Information Systems | Citations: 0

Authors: Lowry, Paul Benjamin; Xiao, Junji; Yuan, Jia

Abstract: This paper analyzes the herding behavior that characterizes lenders' lending dec ... Expand

Abstract: This paper analyzes the herding behavior that characterizes lenders' lending decisions on a microloan platform and explains how rational herding behavior can resolve the information-asymmetry problem, which is a well-known reason for the failure of online microloan platforms. Using a set of panel data on individual lending decisions acquired from Paipaidai.com (PPDai), an online microloan platform, we examine the influence of the lending decisions of prominent, experienced lenders on novice lenders to identify rational herding behavior. Our empirical analysis demonstrates that rational herding behavior can in fact efficiently reduce lender loss from borrower defaults caused by limited information. Although it is typically assumed that herding behavior is irrational, we find that it can be rational in this context and can thus shed light on why PPDai has succeeded while most other microloan platforms have failed. Accordingly, we make three key contributions: 1) we use heterogeneous herding effects to empirically determine whether lenders' herding behavior on PPDai is rational based on observational learning; 2) we investigate the moderating effect of borrower credit and novice-lender experience on herding, and we leverage this heterogeneity in lender experience to better explain loan results; and 3) because PPDai publicly provides potential lenders with a transparent credit score—in contrast to platforms like Prosper.com, which leverage hidden proprietary credit information from Experian—we further analyze the credit composition of prominent lenders to better understand the crucial determinants of rational herding. In fact, our follow-up survival simulations indicate that without rational herding, the total number of successful PPDai loans would have decreased by around 46 percent during the study period—a finding that further underlines the crucial influence of rational herding and the unique contextual factors of PPDai that have fostered it. Collapse

Topics: peer-to-peer model decision making peer-to-peer lending crowdsourcing data breach

Methods: simulation survival function proportional hazards model longitudinal research hazard function

Theories: lemon market theory loss aversion

From Opaque to Accountable Governance: Investor Activism for Transparency in Social Media Amid Disruption in Cryptocurrency

2023 | International Conference on Information Systems | Citations: 0

Authors: Myeong, Jaeho; Jung, Miyeon; Auh, Seigyoung; Han, Sang Pil

Abstract: ... Expand

Abstract: Collapse

Topics: Twitter social media cryptocurrency blockchain Bitcoin

Methods: proportional hazards model survival analysis mediation analysis longitudinal research econometric modeling

Theories: uncertainty reduction theory

On Technology Ecosystems: De-Jure Standards Setting by Firms

2023 | Americas Conference on Information Systems | Citations: 0

Authors: Shams, Reza; Saraf, Nilesh; Ruckman, Karen

Abstract: We study how social structure, strategic heterogeneity, and competition impact ... Expand

Abstract: We study how social structure, strategic heterogeneity, and competition impact collaboration efforts among firms in a technological standard-setting organization. Our findings reveal that a higher level of social capital among firms in the standard committee leads to a quicker consensus over the current standard. However, more competition among committee firms and larger committees delays the time to consensus. Our study emphasizes that supporting open standard development and consensus-based decision making is a double-edged sword for SSOs. Our research has some implications for value cocreation in open innovation alliances. Collapse

Topics: open innovation decision making social capital Java participatory design

Methods: proportional hazards model statistical hypothesis test qualitative coding design methodology