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Seong Soo Jang

DBA Graduate - 2014

Thesis title

effects of customer-customer and customer-firm interaction orientation on market performance and continuous product innovation: an empirical investigation in the mobile application market


Max Von Zedtwitz
This dissertation is designed to conduct a comprehensive research on interaction orientation-performance relationship by investigating two empirical studies: the relationship between interaction orientation activities and market performance and continuous product innovation from a volume perspective (Study 1) and the relationship between detailed content sentiments of customer-customer interaction communications and market performance (Study 2) from a valence perspective. This research selects MAMs where customer-to-customer (C2C) and customer-to-firm interactions (C2B) are prevalent and firms can easily upgrade their products (B2C). I started this research by conducting intensive review of the literature on the interaction orientation (customer-initiated and firm-responsive), content of customer-to-customer communications (C2C) and new product performance. In this research, a framework for interaction activities, market performance, and a firm’s R&D is developed. Seven hypotheses and two exploratory questions are constructed and empirically tested using the mobile game products. Data collection covers all identified aspects on C2C, C2B, B2C interaction activities, C2C communication messages and new product market performance for 19 months from 2010 to 2011. First, for the analysis of market performance, a hierarchical Bayesian regression model is used with 10,840 weekly interaction and transaction dataset from 305 mobile games for sales analysis (Model A) and 291 aggregate level data for lifetime analysis (Model B). Data analysis was carried out with appropriate tools such as R software package. Second, for the analysis of a firm’s continuous product innovation (Model C), Cox’s proportional hazard model is used with the 10,840 weekly interactions dataset. Third, for the analysis of content sentiments (Model D), a generalized linear model (GLM) is applied to investigate how volume and valence of functional, emotional, and image values created by mobile app users influence the sales 3 performance. The empirical results obtained from the application of Models A, B, and C for Study 1 show that first, active and instantaneous communications among customers, as well as between firms and customers, have strong immediate effects (i.e. weekly sales), but no long-term effects (i.e. lifetime). Second, continuous product innovation, or a firm’s interaction response capacity, positively affects both sales and lifetime performance of a mobile app. Third, C2C and C2B communication activities encourage firms to engage in R&D activities related to product upgrades, suggesting that that firms in MAMs monitor customers’ product-related messages and use the information contained therein to improve their products. The empirical results obtained from the application of Model D for Study 2 present interesting results.