The need for understanding the key factors/dimensions of product evaluation becomes more crucial when analyzing high-dimensional data, especially unstructured text reviews. In this study, we propose Text2ConfFact (short for “Texts to Confirmatory Factors”), a novel empirical dimensionality reduction framework for identifying the confirmatory factors underlying product ratings in these online reviews. Text2ConfFact begins with cost-effective preprocessing to generate a word rating matrix capturing word positivity and negativity strengths. It then identifies groups of correlated words that are significantly associated with product ratings while filtering out noise. Finally, the framework estimates factor scores using these identified word groups. In an empirical study analyzing 2825 video game reviews, Text2ConfFact successfully identified the confirmatory factors of game ratings and outperformed six benchmark methods, including two topic models, BERTopic, principal component analysis, principal component regression, and exploratory factor analysis, in terms of both predictability and interpretability. Specifically, Virtual Playability Issues, Money Value Concerns, Worthwhile Fun, and Fantasy emerged as four key factors. In addition to the factor-level effects, our framework captures word-level effects within each identified factor, enhancing managerial actionability. Our results also indicate that these factors impact free and paid game ratings differently.

Acquisitions provide acquirers with opportunities to utilize resources available from target firms and, thereby, to advance their technological inventions. However, acquirers face fundamental challenges in this process due to the intrinsic trade-off between accessing new resources and effectively integrating the new resources to facilitate technological inventions. In this study, we investigate multidimensional nature of external resources gained from acquisitions and the interplay between them to better understand post-acquisition performance. Specifically, we maintain that post-acquisition technological inventions are influenced by the interplay between technology relatedness and market relatedness of the acquiring and target firms, and this relationship is further moderated by the acquiring firm’s technology share and its technological environment. Results of empirical analysis using cross-sectional and time-series data of 408 observations by 235 acquiring firms show that technology relatedness and market relatedness are in a substitutional relationship in that post-acquisition inventive performance would increase when either of them is high, not both. The results also show that the extent of the substitutional relationship becomes weaker when the acquiring firm occupies a technologically dominant position in its industry or the industry’s technological environment is dynamic. Our findings provide important insights into the multidimensional nature of external resources gained from acquisitions and contingencies that affect the extent of the interplay between technology and market resources.

Inward licensing of technology is an important route for firms to secure technological advances. With varying uncertainties and licensing opportunities along the innovation process, firms face challenges in deciding whether to license technologies during their early stages of development when they present opportunities as well as high uncertainty, or to wait until they have developed further towards commercialization, when they have lower technological uncertainty and are left with few opportunities. Building on studies of interfirm networks, we investigate how a firm's network structure and reputation affect such decisions. Our empirical analysis of licensing agreements in the biotechnology and pharmaceutical industries shows that firms tend to initiate licensing agreements during the early stage of technology development when their network structure is rich in structural holes. This tendency is higher when they are of good reputation. This research contributes to our understanding of how licensing agreements occur along the innovation process.

Licensing technologies at different stages reflects time competition in a technology market, whereby firms race to secure technological advances earlier than their competitors. We explore the nature of technology licensing across stages of the innovation process to find the boundary conditions that affect returns from early- vs. late-stage inward technology licensing agreements. Using an event study methodology with 508 licensing agreements of the biotechnology and pharmaceutical firms, we find early-stage inward licensing agreements produce greater returns than late stage inward licensing agreements when the licensee is embedded in a more interconnected ego-network lacking structural holes, when it has a larger ego-network, and when it invests more heavily in R&D. Our contingency model reveals the potential benefits and challenges associated with forming technology licensing agreements at different stages of the innovation process. This study provides important managerial implications to effectively implement inward licensing agreements as strategic tools for promoting innovation.

This study investigates the relationship between CVC investment timing and CVC value addition. Drawing on the path dependence theory, we theorize that timing of CVC investment influences the extent of strategic misalignment between CVCs and ventures, which would, in turn, affects the extent of CVC value addition. We maintain that there is a U-shape relationship between CVC investment timing and CVC value addition. Results of empirical analysis with data of 450 US-based biotechnology ventures corroborate the main thesis of the current study that CVCs’ investment timing plays an important role in influencing performance and behavioral outcomes of CVC value addition.

In light of the critical role of price information in consumers’ decision making, this study investigates the effect of price rank on consumers’ responses to product list advertising (PLA). The research documents that the price rank is more influential than actual price for PLA. In addition, the research highlights a tradeoff in price-rank decisions: A price rank that drives more clicks does not necessarily lead to more conversions; to drive traffic, managers should strive for an extreme (i.e., either high or low) to elicit more clicks, then follow up with online engagement tools (e.g., cross-selling and product recommendations). To maximize direct revenue, managers instead should strive for moderate ranks to satisfy consumers’ desire for a compromise between price and quality. However, consumers without uncertainty tend to rely less on price rank, so the effects diminish among specific keywords and increase among popular keywords. In order to achieve the desired price ranks, firms participating in PLA might monitor and adjust their advertising offers. There are commonly two specific avenues: Change the product price if the required change is within a certain range or change the advertised product if the required price change is beyond a certain range.

Customer assets in the form of highly satisfied customers are valuable resources that a firm can use to improve its competitive advantage. While prior research has focused on a firm's own customers, this study investigates the partner firm's customer assets in business-to-business relationships. We argue that the partner firm's satisfied customers are a double-edged sword that may promote or hurt the focal firm's performance. An analysis of newly initiated marketing alliances from 1995 to 2009 supports our argument.Our further analyses suggest important moderators that determine the value of the partner's satisfied customers. Specifically, we demonstrate that partner's customer satisfaction generates more positive returns when the marketing alliance is extended to include research and development activities. When the level of product market relatedness is too high or low, the partner's satisfied customers reduce the focal firm's returns. Also, the partner's satisfied customers are more beneficial in a slowly growing market than in a fast growing market. This study extends the scope of interfirm relationship research by looking at business-to-business relationships as an important route by which to access the partner's customer assets. Our contingency framework provides guidance on how firms can build effectively on an external source of satisfied customers.

We investigate spatial heterogeneity of country-of-origin effects (COEs) within a country and its determinants. Drawing on the literature of COEs and information economics, we maintain that COEs are heterogeneous across regions within a country, which bears important implications to better understand subnational heterogeneity of consumer preferences. We employ a geographically weighted regression model, a spatial analysis to estimate varying COEs across regions in the USA, and analyze online review ratings of US and foreign car bands in the US market during the 2008–2014 period. The results show that (1) COEs of car brands from Germany, Japan, Korea, and the UK are heterogeneous across regions in the USA; (2) geographic distance from the country-of-origin exerts negative influences on COEs; and (3) the proportion of population born in the country-of-origin positively influences COEs.

This study examines customization as a coordination problem in transactions with business customers. Marketing research has investigated challenges associated with customized offers from the customer side; however, scant research has examined the supplier's challenges and their performance implications. The authors distinguish between project revenues and costs to reveal a fundamental dilemma that suppliers face during customization. Analyses of dyadic survey data collected from a software supplier and its business customers, as well as objective revenue and cost data, reveal a tension between project revenues and costs. The outcomes of customization depend on factors that relieve the coordination problem, such as customer demand ambiguity, customer participation, product modularity, project teamtechnological capability, and relational embeddedness. These findings provide a basis to assess the value of customization as a tool to implement a customer-oriented business-to-business marketing strategy.

PurposeThe purpose of this paper is to understand the mechanisms of partner selection from the transaction cost economics’ viewpoint. This paper reveals that a firm’s choice to initiate a new alliance with a new partner or form a repeated alliance with an existing partner depends on contract terms and the relative characteristics of partners.Design/methodology/approachThe authors examine 555 alliances in high-tech industries from 2001 to 2009, which the authors collected from secondary sources, including the Securities Data Company Platinum and Compustat databases. The authors use a logit model to reveal the effect of contract terms and relative partner characteristics on repeated partnership.FindingsThe results show that repeated partnership is less likely to be combined with equity sharing. Repeated partnership is also negatively associated with the functional scope of a new alliance. Finally, a firm is more likely to enter a repeated partnership when its partner is from a different country.Originality/valueThis research provides new insights into how the choice of an alliance partner depends on contract terms and the relative characteristics of partners. Identifying factors associated with partner selection helps us understand the fundamental mechanisms of initiating a new alliance. It allows focal firms to foresee the behavior of their peers or competitors in certain circumstances and thus provides important insights for developing corresponding strategies more effectively.

This study is an effort to reveal market-driven innovation via acquisitions. By differentiating the organizational process of resource integration pertaining to market- versus technology-driven innovation via acquisitions, we show that product market relatedness and technology relatedness have differential effects on postacquisition innovation performance, depending on the size of the acquirer. Our analysis of acquisitions in high-tech industries indicates that larger firms maximize their postacquisition technological innovation performance at a lower level of technology relatedness and, in contrast, at a higher level of product market relatedness, whereas the opposite is true for smaller firms. This study contributes to the acquisitions research by identifying (a) market-driven innovation via acquisitions and (b) different mechanisms through which product market and technological resources affect postacquisition technological innovation.

Extending the extant literature on the Country-of-Origin Effects (COEs), we investigate spatial heterogeneity of COEs within a country and its determinants. Drawing on the literature of COEs, information economics, and the construal level theory, we maintain that (1) COEs are heterogeneous across regions within a country, which bears important implications for the choices of location and entry modes; and (2) geographic distance from the country-of-origin plays a significant role in driving the spatial heterogeneity in COEs. Empirical analysis corroborates the main thesis of the current study: (1) COEs of automakers from Korea, Japan, and Europe are heterogeneous across regions in the US; (2) increasing distance from the country-of-origin exerts negative influences on COEs; and (3) increasing number of the dealerships of the automakers mitigates the detrimental effects of geographic distance.

Launching breakthrough and incremental new products is vital to firm performance; it also resonates with both ego (i.e., directly connected partners) and global (i.e., interconnected ties in an industry) network perspectives. Prior research has listed several ego network– and global network–level factors that affect innovations, but this study goes a step further, to reveal the interactions of these factors as critical product launch mechanisms. An analysis of alliance networks in the consumer packaged goods industry from 1990 to 2010 shows that a central position in a global network represents a double-edged sword: it improves a firm's incremental new product launches but harms its breakthrough new product launches. Furthermore, a firm's ego network (manifested as density and diversity) and R&D capability enable it to leverage its global network position by enhancing the benefits for incremental new products and mitigating its hazards for breakthrough new products. This study's findings thus offer new insights into the role of ego and global networks in facilitating or hindering new product launches.

A plural alliance structure involving multiple downstream partners has become increasingly popular, yet investigations of marketing alliances continue to address mainly dyadic structures. The authors present learning and dependence balancing as key mechanisms to understand the relative performance differences between plural and dyadic structures, as well as the determinants of effective collaboration in a plural structure. Two complementary studies test the performance of plural and dyadic structures in a wide range of high-tech industries. The analysis of both plural and dyadic structure alliances in an event study shows that plural structures outperform dyadic structures for the upstream firm when marketing alliances extend to product-related tasks, the upstream firm has more alliance experience, or the industry is growing fast; however, dyadic structures perform better when the upstream market is more competitive. A second study, focusing only on plural structure alliances, shows that horizontal relationship factors (i.e., market overlap and prior relationship between downstream partners) interact with the upstream firm's greater alliance experience and reputation to lead to better returns for the upstream firm.

This study is an effort to reveal market-driven innovation via acquisitions. By differentiating the organizational process of resource integration pertaining to market- versus technology-driven innovation via acquisitions, we show that product market relatedness and technology relatedness have differential effects on postacquisition innovation performance, depending on the size of the acquirer. Our analysis of acquisitions in high-tech industries indicates that larger firms maximize their postacquisition technological innovation performance at a lower level of technology relatedness and, in contrast, at a higher level of product market relatedness, whereas the opposite is true for smaller firms. This study contributes to the acquisitions research by identifying (a) market-driven innovation via acquisitions and (b) different mechanisms through which product market and technological resources affect postacquisition technological innovation.

Forming interfirm collaborative relationships has become a key aspect of a firm’s marketing strategies to create value for customers and achieve greater firm performance. While empirical findings are mixed in previous studies, this study is an effort to identify boundary conditions for the benefits of marketing alliances. We investigate internal and environmental factors that may magnify or constrain the effect of marketing alliances on firm profitability. Given the complementary relationship between marketing and R&D activities, we focus on a firm’s R&D intensity as an internal factor that may magnify the value of marketing alliances for firm performance. For environmental factors, we focus on industry turbulence and industry competitiveness. Industry turbulence refers to the degree to which industry market conditions change quickly and unpredictably, whereas industry competitiveness refers to the degree to which a firm faces competition in the industry. By testing these factors, we are intended to reveal boundary conditions that determine the value of marketing alliances for firm profitability. The analysis of firms in the diverse industries shows that while the main effect of marketing alliances on firm profitability is not significant, it becomes more positive when R&D investment is more intensive or when industry environment is more turbulent. The results of this study imply that just forming more marketing alliances may not be enough to increase firm profitability. Our findings imply that marketing alliances become more effective in a dynamically changing industry environment. That is, firms can cope with industry uncertainties more effectively by forming marketing alliances. At the same time, the moderating effect of R&D intensity implies that the internal investments in R&D magnify the effect of marketing alliances on firm profitability. The findings of this study contributes to the existing alliance literature in three aspects. First, this study enhances our understanding of the contingent value of marketing alliances by testing both internal and external factors that may influence the effectiveness of marketing alliances. Second, this study responds to the need for research that investigates actual performance resulting from interfirm relationships. Third, while previous studies primarily focused on a specific industry, this study extend previous findings of the boundary conditions for the benefits of marketing alliances in a broader context.

Prior work has mapped the transaction at the heart of an alliance to the risks of opportunism inherent in that alliance and, ultimately, to how the alliance is structured and governed. We extend this approach by noting that the parties in an alliance do not necessarily perceive the same hazards as predominant and thus may have different preferences for how the alliance is structured. Nevertheless, it is in each party's best interest to find a structure that protects its interests, while also allowing its partner to protect its interests sufficiently. Drawing from the alliance management capabilities literature, we argue that firms with more alliance experience are better able to protect their interests under any given alliance structure, making the choice of structure less consequential to them. The resulting governance versatility provides a competitive advantage by enabling firms to form advantageous alliances that are less available to inexperienced competitors. Our study of innovative alliances in biopharmaceutical industry lends support to the hypotheses, allowing us to advance the literature on governance choice in alliances, the literature on alliance management, and their intersection.

Upstream biotech firms (i.e., upstream partners) and downstream pharmaceutical firms (i.e., downstream partners) often form alliances to cope with performance uncertainty and to exploit product specificity in new product development. Although the performance implications of such alliances have been investigated, research has not offered insight into how the timing of such codevelopment alliances influences partner returns. The authors develop and test predictions that timing changes the costs and benefits accruing to upstream and downstream partners and that the effect of timing is influenced by a set of alliance, firm, and market conditions. An event study of 276 codevelopment agreements between biotech and pharmaceutical firms during 1998–2010 reveals that alliance governance structure, partner technological capability, and the competitiveness of market environments change the abnormal returns achieved by partners entering these relationships in important ways.