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Business-to-Business Service Innovations (B2B-SIs) have a greater positive effect on firm value than Business-to-Consumer Service Innovations (B2C-SIs). At the same time, they don’t raise firm risk as much as B2C-SIs.
Business-to-Business Service Innovations (B2B-SIs) interact with product innovations to enhance firm value.
Business-to-Business Service Innovations (B2B-SIs) and customer-focus innovations interact to have a marginally negative interaction effect on firm value.
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Related Marketing Courses:
Business-to-Business Marketing; Digital Marketing; Innovation/New Product Development; Marketing Strategy; Services Marketing
Dotzel, Thomas and Venkatesh Shankar, “The Relative Effects of B2B (vs. B2C) Service Innovations on Firm Value and Firm Risk: An Empirical Analysis,” (2019). Journal of Marketing, 83(5), 133-152.
The global economy is becoming increasingly service-driven. Business-to-business (B2B) commerce dwarfs business-to-consumer (B2C) commerce. B2B firms are constantly seeking to introduce service innovations (SIs) to improve firm value. But they are unsure about B2B-SIs’ effects on firm value or firm risk, especially relative to those of B2C-SIs, because many firms introduce both B2B-SIs and B2C-SIs and need to better allocate their resources. We address these issues by developing hypotheses that relate the number of B2B-SIs and B2C-SIs to firm value and firm risk together with the moderators, the number of product innovations and customer-focus innovations. To test the hypotheses, we develop and estimate a model using unique panel data of 2,263 service innovations across 15 industries over eight years assembled from multiple data sources, controlling for firm- and market-specific factors, heterogeneity, and endogeneity. We analyze innovation announcements using natural language processing (NLP) to gather data on the quality of innovations. The results show that B2B-SIs have a positive effect on firm value and an insignificant influence on firm risk. Importantly, the effect of a B2B-SI on firm value is significantly greater than that of a B2C-SI. Unlike B2C-SIs, the effect of B2B-SIs on firm value is greater when the firm has more product innovations. However, surprisingly, unlike B2C-SIs, the effect of B2B-SIs on firm value is less positive when the SIs emphasize customers. The effects of B2B-SIs and B2C-SIs on firm risk vary across industries. Our findings offer executives important insights about the relative value of B2B service innovations.
Special thanks to Kelley Gullo and Holly Howe, Ph.D. candidates at Duke University, for their support in working with authors on submissions to this program.
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