Ghosts in the Machine: How Marketing and Human Capital Investments Enhance Customer Growth When Innovative Services Leverage Self-Service Technologies

2022 | Information Systems Research | Citations: 0

Authors: Saldanha, Terence J. V.; Kathuria, Abhishek; Khuntia, Jiban; Konsynski, Benn R.

Abstract: Rapid improvements in underlying technologies coupled with the diminution of con ... Expand

Abstract: Rapid improvements in underlying technologies coupled with the diminution of contact-based interactions are resulting in commensurate increases in the supply of and demand for innovative electronic services over self-service technologies (SSTs). This situation raises critical questions regarding value creation as prior research suggests mixed effects of SSTs on customers and unclear implications of SSTs for firm customer growth. These implications are accentuated when firms offer innovative electronic services because of customers’ unfamiliarity with the services. In turn, this dynamic raises vital questions about (a) how SSTs influence firm customer growth, particularly when the firm’s electronic services are more innovative, and (b) what complementary investments help firms achieve customer growth from SSTs and innovative electronic services. In this study, we conceptualize the theoretical mechanisms underlying these relationships and empirically examine seven-year longitudinal secondary data of over 3,800 credit unions in the United States to obtain three main findings. First, consistent with prior views of SSTs, we find no significant unconditional effect of SSTs on firm customer growth. Second, we find that the innovativeness of the firm’s electronic services (IES) negatively moderates the influence of SSTs on firm customer growth, suggesting that SSTs may positively influence growth when IES is low but may deter growth when IES is high. Third, marketing intensity and human capital intensity positively moderate the influence of IES on the effect of SSTs on customer growth. In supplementary analysis, we find similar results using cross-sectional primary data from a sample of 186 U.S. credit unions and their customers matched with secondary data. Our unique theoretical contribution lies in highlighting that innovative electronic services on SSTs aimed at bringing the enterprise to the customer may not be enough for firms to achieve customer growth unless those services are accompanied by complementary investments in marketing and human capital. Collapse

Topics: marketing management human resource management innovation management digital innovation website

Methods: longitudinal research survey robustness check statistical hypothesis test cross sectional research

Where You Live Matters: Local Bank Competition, Online Marketplace Lending, and Disparity in Borrower Benefits

2021 | Information Systems Research | Citations: 0

Authors: Alyakoob, Mohammed; Rahman, Mohammad S.; Wei, Zaiyan

Abstract: In the past decade, the proliferation of online marketplace lending has been dis ... Expand

Abstract: In the past decade, the proliferation of online marketplace lending has been disrupting the consumer credit market, especially personal loans used for debt consolidation. These lenders, for example, Lending Club, transcend the geographic boundaries within which local banks operate and offer homogeneous access and terms to borrowers. However, the ultimate benefits borrowers derive from marketplace lending can differ significantly because local alternatives may be used to replace marketplace loans when they are available and favorable. Correspondingly, if local bank competition drives the substitution of an existing marketplace loan with a traditional bank loan, the promise of equal benefits to all borrowers from marketplace lending is unlikely to fully materialize. This competitive dynamic also has implications for policy making, particularly in judging the ramifications of bank mergers and acquisitions. We utilize data from Lending Club, a major peer-to-peer (P2P) lending platform, to study whether local market structure drives heterogeneous incentives of traditional banks to convert borrowers of marketplace lending to conventional bank loans. The results indicate that a borrower who resides in a more competitive market is more likely to pay off a P2P loan early by making a large, one-time payment compared with a borrower from a less competitive market. Thus, borrowers from different markets do not benefit equally from online marketplace lending disrupting the consumer credit market. Our study has implications for online marketplace lending, other FinTech-based markets, and the consumer credit market in general. Collapse

Topics: crowdsourcing peer-to-peer model electronic market Prosper peer-to-peer lending

Methods: robustness check instrumental variables estimation probit regression experiment parametric test

Categorical Competition in the Wake of Crisis: Banks vs. Credit Unions

2021 | Organization Science | Citations: 0

Authors: Chatterji, Aaron K.; Luo, Jiao; Seamans, Robert C.

Abstract: We connect two distinct streams of research on categories to study the role of w ... Expand

Abstract: We connect two distinct streams of research on categories to study the role of within-category typicality in the context of legitimacy shocks. We argue that, following a legitimacy shock, member organizations of the tainted, focal category suffer equally, irrespective of their typicality. However, only the typical members of the newly favored, oppositional category benefit. Therefore, the effects of legitimacy shocks are asymmetrically influenced by typicality. We argue this pattern is the result of a two-stage process of categorization by audiences, whereby audiences prioritize distinctions between organizations in a newly favored category and spend limited efforts considering distinctions in the tainted, focal category. We examine our theory in the context of the U.S. financial services industry, where four different kinds of organizations engage in competition: traditional commercial banks, community banks, single-bond credit unions, and multibond credit unions. Consistent with our theory, we show that both traditional commercial banks and community banks suffer in terms of deposit market share following the legitimacy shock of the 2007 financial crisis, but the relative gains to credit unions are strongest for single-bond credit unions. Collapse

Topics: database system terrorist incident social capital

Methods: post-hoc analysis robustness check ordinary least square descriptive statistic Compustat

Theories: theory of economic recessions

First Mover (Dis)advantages in IT Investment in the Digital Age: Empirical Study of Mobile Banking

2019 | International Conference on Information Systems | Citations: 0

Authors: Chae, Ho-Chang

Abstract: As new information technologies emerge every day, it is essential for firms to d ... Expand

Abstract: As new information technologies emerge every day, it is essential for firms to decide whether to be first adopters or later adopters of innovative IT applications. The dramatic impact of the Internet and digitization leads us to question whether the basic rules of first mover advantages are still relevant to information technology investment in an era of rapid diffusion of innovation and globalization. In the previous generation of information system development, early investment in complex information systems generated sustainable competitive advantage. However, as the costs of developing information systems decrease rapidly in the digital age, the business value from early investment in innovative IT applications is unlikely to be associated with durable profitability. Therefore, by looking at the investment timing in mobile banking, we examine whether early investment in innovative IT applications can lead to first mover advantages in the digital age. Collapse

Topics: digital distribution mobile application market internet technology IT investment mobile application

Methods: ANOVA parametric test statistical hypothesis test experimental group general multivariate regression model

Poverty alleviation through government-led e-commerce development in rural China: An activity theory perspective

2019 | Information Systems Journal | Citations: 0

Authors: Li, Liang; Du, Kui; Zhang, Wei; Mao, Ji-Ye

Abstract: This paper uses activity theoretic analyses to investigate the role of governmen ... Expand

Abstract: This paper uses activity theoretic analyses to investigate the role of governments in developing rural e‐commerce ecosystems and the effects of such ecosystems on poverty alleviation. On the basis of a case study of Longnan, one of the poorest regions in China, this paper reports and analyses the various actions taken by local governments in nurturing, supporting, and regulating the development of a local rural e‐commerce ecosystem and using this ecosystem to transform poverty alleviation. Our study articulates a model of poverty alleviation through e‐commerce. By documenting and theorizing the mechanisms underlying rural e‐commerce development and poverty alleviation through e‐commerce as well as governments' role in developing and sustaining them, this paper contributes to establishing a “theory of the solution” to the grand challenge of poverty alleviation both in China and globally. Collapse

Topics: electronic commerce societal challenge digital platform logistics management Erlang

Methods: qualitative interview archival research theory development case study conceptual modelling

Theories: activity theory

Determinants and heterogeneity of switching costs in IT outsourcing: estimates from firm-level data

2019 | European Journal of Information Systems | Citations: 0

Authors: Peukert, Christian

Abstract: We study how firms decide whether to continue an existing relationship or switch ... Expand

Abstract: We study how firms decide whether to continue an existing relationship or switch the vendor of outsourced services. Because of incomplete contracts and relationship-specific investments, client organisations may face switching costs, which in some cases may be large enough to render vendor switching an unattractive option. Based on an extensive review of the literature, we develop hypotheses about relationship-, firm-, and market-specific determinants of switching costs. We then develop an econometric model to identify those determinants and their relative importance and estimate the magnitude of switching costs. In the empirical study, we observe accounting data of 1318 US credit unions (CUs) and follow their IT outsourcing choices over 11 years. We find that the largest portion of switching costs is due to relationship- and firm-specific factors, while market-specific variables are much less important. Our estimates suggest that average switching costs account for one-third of the average annual expenditure for professional services. We further highlight that the average hides substantial heterogeneity. Switching costs of CUs that decide to switch vendors are about 50% lower than those of CUs that stay. Looking more closely at stayers, our most conservative estimate of the lock-in effect, i.e., the difference in switching costs of deliberate and non-deliberate stayers, is equivalent to about 70% of the average annual expenditure for professional services. Collapse

Topics: switching cost outsourcing accounting asset specificity online banking

Methods: econometric modeling descriptive statistic machine learning econometric model survey

Complacency, capabilities, and institutional pressure: understanding financial institutions’ participation in the nascent mobile payments ecosystem

2018 | Electronic Markets | Citations: 0

Authors: Du, Kui

Abstract: As mobile payments become increasingly popular, their ecosystem is also evolving ... Expand

Abstract: As mobile payments become increasingly popular, their ecosystem is also evolving. The participation of financial institutions in this ecosystem, although is rapidly improving, remains relatively low. This paper studies why some financial institutions choose to, or not to, participate in this nascent mobile payments ecosystem. We developed hypotheses for the influence of three factors as aspiration gaps, customer-facing IT capabilities, and institutional pressures based on three theoretical foundations including the threat rigidity thesis, capability-based view, and institutional theory. We then empirically tested our hypotheses by analyzing the diffusion of mobile payments among 3549 U.S. credit unions from 2013 to 2016. Results from our event history analyses provide support to the hypotheses that credit unions experiencing performance gaps, having superior customer-facing IT capabilities, and facing strong institutional pressures are more likely to start providing mobile payment services. Collapse

Topics: mobile payment mobile system information technology capability customer service innovation management

Methods: proportional hazards model survival analysis hazard function statistical hypothesis test robustness check

Theories: institutional theory

The impact of multi-channel and multi-product strategies on firms' risk-return performance

2018 | Decision Support Systems | Citations: 0

Authors: Du, Kui

Abstract: This paper investigates the impact of a firm's multi-channel and multi-product s ... Expand

Abstract: This paper investigates the impact of a firm's multi-channel and multi-product strategies on its risk-return performance. We argue that channel diversity is positively associated with a firm's profitability and negatively associated with its profit volatility, and that channel diversity and product diversity are complementary in driving these profit-enhancing and volatility-suppressing effects. We test our hypotheses in the U.S. credit union industry, in which credit unions offer a variety of loan and deposit products through a variety of online and offline channels, including physical branches, ATMs, telephone banking, online banking, and mobile banking. By analyzing a longitudinal dataset of 7577 credit unions in 2009–2016, the study provides empirical evidence that operating a full spectrum of online and offline channels leads to higher profitability and lower profit volatility for credit unions. The study also reveals differential moderating effects of loan product diversity and deposit product diversity, in that loan product diversity enhances the profit-enhancing effect of channel diversity while deposit product diversity enhances the volatility-suppressing effect of channel diversity. This paper contributes to the studies of channel-based strategic differentiation as a competitive strategy and the studies of firms' risk-return performance. Collapse

Topics: online banking marketing management telephone IT investment accounting

Methods: longitudinal research descriptive statistic data modeling statistical hypothesis test cross sectional research

Leveraging Digitalization of Services for Performance: Evidence from the Credit Union Industry

2017 | International Conference on Information Systems | Citations: 4

Authors: Saldanha, Terence J.V.; Kathuria, Abhishek; Khuntia, Jiban; Konsynski, Benn R.; Rojas, Mariana G. Andrade

Abstract: We investigate contingent effects of digitalized B2B transactions (DBT), digital ... Expand

Abstract: We investigate contingent effects of digitalized B2B transactions (DBT), digitalized customer access (DCA), and digitalized core services (DCS), on performance of service firms. We theorize positive moderation effects of DBT and DCA on the relationship between DCS and performance. We also argue that advertising investment complements the moderating role of DCA on the relationship between DCS and firm performance. Further, we posit that participation in an inter-organizational network enhances the moderating role of DBT on the relationship between DCS and performance. Our empirical analysis of archival data from annual reports and publicly available information of 7,000 credit unions across the United States over a nine-year period largely supports our theoretical model. An important, albeit counter-intuitive finding, is that DCA has a negative moderating effect on the DCS-performance relationship. Overall, we uncover contingencies in the link between digitalization of services and firm performance, and demonstrate how investment strategies influence these relationships. Collapse

Topics: advertising management digital transformation organizational productivity business-to-business value creation

Methods: longitudinal research autocorrelation analysis archival research triangulation statistical hypothesis test

The Ripple Effect of an Information Security Breach Event: A Stakeholder Analysis

2014 | Communications of the Association for Information Systems | Citations: 17

Authors: Hovav, Anat; Gray, Paul

Abstract: While unfortunate physical events result in a negative market reaction, cyber ev ... Expand

Abstract: While unfortunate physical events result in a negative market reaction, cyber events rarely do. It is our contention that a security attack is a complex intervention that ripples through the attacked company’s ecosystem. Over time, new information about the incident is revealed which might change the trajectory of the effect. This study aims to understand the impact of a security breach on the attacked company, its ecosystem (e.g., consumers, vendors, banks, and hackers), and surrounding society. By utilizing a stakeholder analysis as a methodological framework, we found that, while some stakeholders are losers, other are winners. Our analysis also implies that, depending on subsequent events, the effect of a security breach on the attacked firm varies over time, suggesting a “wait and see” attitude by the market. Collapse

Topics: IT security threat data security Health Insurance Portability and Accountability Act privacy business model

Methods: case study event study longitudinal research longitudinal data analysis