Knowledge that Transforms

A fundamental tension exists in creativity between novelty and similarity. This research exploits this tension to help creators craft successful projects in crowdfunding. To do so, the authors apply the concept of combinatorial creativity, analyzing each new project in connection to prior similar projects. By using machine learning techniques (Word2vec and Word Mover’s Distance), they measure the degrees of similarity between crowdfunding projects on Kickstarter. They analyze how this similarity pattern relates to a project’s funding performance and find that (1) the prior level of success of similar projects strongly predicts a new project’s funding performance, (2) the funding performance increases with a balance between being novel and imitative, (3) the optimal funding goal is close to the funds raised by prior similar projects, and (4) the funding performance increases with a balance between atypical and conventional imitation. The authors use these findings to generate actionable recommendations for project creators and crowdfunding platforms.

The authors investigate how the geographical distance between online users is associated with electronic word-of-mouth (eWOM) effectiveness. Their research leverages variation in the visibility of eWOM messages on the social media platform of Twitter to address the issue of correlated user behaviors and preferences. The study shows that the likelihood that followers who are exposed to users’ WOM subsequently make purchases increases with followers’ geographic proximity to the users. The authors propose social identification as a potential mechanism for why geographical distance still matters online in eWOM: because consumers may form a sense of social identity based on their physical location, information regarding the spatial proximity of users could trigger online social identification with others. The findings are robust to alternative methods and specifications, such as further controlling for latent user homophily by incorporating user characteristics and embeddings based on advanced machine-learning and deep-learning models and a corpus of 140 million messages. The authors also rule out several alternative explanations. The findings have important implications for platform design, content curation, and seeding and targeting strategies.

U.S. households currently hold $770 billion in credit card debt, often managing repayments across multiple accounts. The authors investigate how minimum payment requirements (i.e., the requirement to allocate at least some money to each account with a balance) alter consumers’ allocation strategies across multiple accounts. Across four experiments, they find that minimum payment requirements cause consumers to increase dispersion (i.e., spread their repayments more evenly) across accounts. The authors term this change in strategy “the dispersion effect of minimum payments” and provide evidence that it can be costly for consumers. They find that the effect is partially driven by the tendency for consumers to interpret minimum payment requirements as recommendations to pay more than the minimum amount. While the presence of the minimum payment requirement is unlikely to change, the authors propose that marketers and policy makers can influence the effects of minimum payments on dispersion by altering the way that information is displayed to consumers. Specifically, they investigate five distinct information displays and find that choice of display can either exaggerate or minimize dispersion and corresponding costs. They discuss implications for consumers, policy makers, and firms, with a particular focus on ways to improve consumer financial well-being.

Online, pure-labor service platforms (e.g., Zeel, Amazon Home Services, Freelancer.com) represent a multibillion-dollar market. An increasing managerial concern in such markets is the opportunistic behavior of service agents who defect with customers off platform for future transactions. Using multiple methods across studies, the authors explain this platform exploitation phenomenon. In Study 1, they utilize a theories-in-use approach to clarify why and when platform exploitation occurs and derive some hypotheses. Study 2 empirically tests these hypotheses using data from a health care platform that connects nurses and patients. The results indicate that high-quality, long-tenured service agents may enhance platform usage, but customers also are more likely to defect with such agents. Platform exploitation also increases with greater customer–agent interaction frequency (i.e., building stronger relationships). This phenomenon decreases agents’ platform usage due to capacity constraints caused by serving more customers off platform. These effects are stronger as service price increases (because higher prices equate to more fee savings), as service repetitiveness increases, and as the agent’s on-platform customer pool comprises more repeat and more proximal customers. Finally, the authors use two scenario-based experiments to establish some managerial strategies to combat platform exploitation.

Sharing economy platforms have become increasingly popular, but many platforms do not create all the value that is possible because consumers face challenges while cocreating their experiences. The authors situate the origin of these challenges in the sharing economy’s hybrid cocreation logics, which combine competing communal and transactional logics. Using a qualitative study of Couchsurfing, a platform for sharing free accommodation, the authors find that consumers engage in orchestration work to overcome cocreation roadblocks and extract greater benefits from sharing economy platforms. This orchestration work consists of many actions reflected in four overarching mechanisms: consumer-to-consumer alignment, rewiring relations, trust investment, and network experimentation. The authors connect these mechanisms to known sources of value for firms (i.e., complementarities, efficiency, lock-in, and novelty) to make recommendations for how platform firms can foster consumer orchestration work and unlock the full value of consumer cocreation in the sharing economy.

The authors investigate the role of the physical store in today’s multichannel environment. They posit that one benefit of the store to the retailer is to enhance customer value by providing the physical engagement needed to purchase deep products—products that require ample inspection for customers to make an informed decision. Using a multimethod approach involving a hidden Markov model of transaction data and two experiments, the authors find that buying deep products in the physical store transitions customers to the high-value state more than other product/channel combinations. Findings confirm the hypotheses derived from experiential learning theory . A moderated serial mediation test supports the experiential learning theory–based mechanism for translating physical engagement into customer value: Customers purchase a deep product from the physical store. They reflect on this physical engagement experience, and because it is tangible, concrete, and multisensory, it enables them to develop strong learning about the retailer. This experiential knowledge precipitates repatronage and generalizes to future online purchases in the same category and in adjacent categories, thus contributing to higher customer value. This research suggests that multichannel retailers use a combination of right-channel and right-product strategies for customer development and provides implications for experiential retail designs.

When faced with new technologies, the incumbents’ dilemma is whether to embrace the new technology, stick with their old technology, or invest in both. The entrants’ dilemma is whether to target a niche and avoid incumbent reaction or target the mass market and incur the incumbent’s wrath. The solution is knowing to what extent the new technology cannibalizes the old one or whether both technologies may exist in tandem. The authors develop a generalized model of the diffusion of successive technologies, which allows for the rate of disengagement from the old technology to differ from the rate of adoption of the new. A low rate of disengagement indicates people hold both technologies (coexistence), whereas a high rate of disengagement indicates they let go of the old technology in favor of the new (cannibalization). The authors test the validity of the model using a simulation of individual-level data. They apply the model to 660 technology pairs and triplets–country combinations from 108 countries spanning 70 years. Data include both penetration and sales plus important case studies. The model helps managers estimate evolving proportions of segments that play different roles in the competition between technologies and predict technological leapfrogging, cannibalization, and coexistence.

This article studies how organizations should design a product by choosing the carbon footprint and price in a market with climate concerns. The authors develop a model and first show how the cost and demand effects of reducing the product carbon footprint determine the profit-maximizing product design. They find that stronger climate concerns reduce the product carbon footprint, demand, the overall corporate carbon footprint and profit, but have an ambiguous impact on price. Next, the authors establish that offsetting carbon emissions can create a win-win outcome for the firm and the climate if the cost of compensation is sufficiently low. Going net zero leads to a win for society if the cost of offsetting is sufficiently low compared to the social cost of pollution created by the corporate carbon footprint. Third, the authors show how regulation in the form of a cap-and-trade scheme or a carbon tax affects product design, firm profitability, and green technology adoption. Finally, the authors extend the analysis to a competitive scenario and show that going net zero creates a win-win-win outcome for the firm, the climate, and society if the offset technology is sufficiently effective.

Most researchers focus on the effect of mergers and acquisitions (M&As) on investor returns and overlook customer reactions, despite the fact that customers are directly impacted by these corporate transformations. Others suggest that in M&A contexts, a dual emphasis of customer satisfaction and firm efficiency is both likely and beneficial. In contrast, the authors demonstrate that M&As not only do not yield a dual emphasis but also cause a decline in customer satisfaction to the extent that they eclipse any gain in firm value from an increase in firm efficiency. A quasiexperimental difference-in-differences analysis and an instrumental variable panel regression provide robust evidence for the dark side of M&As for customers. The authors use the attention-based view of the firm to demonstrate that post-M&A customer dissatisfaction occurs because of a shift in executive attention away from customers and toward financial issues. In line with the related upper echelons theory, they find that marketing representation on a firm’s board of directors helps maintain executive attention on customers, which mitigates the dysfunctional effect of M&As on customer satisfaction. This research identifies a negative M&A–customer satisfaction relationship and highlights executive attention to customer issues and marketing leadership as factors that mitigate this negative relationship.

Digital platforms that aggregate products and services, such as Google Shopping or Amazon, have emerged as powerful intermediaries to brand offerings, challenging traditional product brands that have largely lost direct access to consumers. As a countermeasure, several long-established brands have built their own flagship platforms to resume control and foster consumer loyalty. For example, sports brands such as Nike, Adidas, or Asics launched tracking and training platforms that allow for ongoing versatile interactions among participants beyond product purchase. The authors analyze these emerging platform offerings, whose potential brands struggle to exploit, and provide guidance for brands that aim to platformize their business. This guidance comprises the conceptualization of digital platforms as places of consumer crowdsourcing (i.e., consumers drawing value from platform participants such as the brand, other consumers, or third-party businesses) and crowdsending (i.e., consumers providing value to platform participants) of products, services, and content along with a well-defined framework that brands can apply to assemble different types of flagship platforms. Evaluating the consequences of crowdsourcing and crowdsending for consumer–platform relationships, the authors derive a typology of archetypical relationship states and develop a set of propositions to help offline-born product brands thrive through platformization.