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- Title
The Market Valuation of Internet Channel Additions.
- Authors
Geyskens, Inge; Gielens, Katrijn; Dekimpe, Marnik G.
- Abstract
The emergence of the Internet has pushed many established companies to explore this radically new distribution channel. Like all market discontinuities, the Internet creates opportunities as well as threats--it can be performance-enhancing as readily as it can be performance-destroying. Making use of even-study methodology, the authors assess the net impact of adding an Internet channel on a firm's stock market return, a measure of the change in expected future cash flows. The authors find that, on average, Internet channel investments are positive net-present-value investments. The authors then identify firm, introduction strategy, and marketplace characteristics that influence the direction and magnitude of the stock market reaction. The results indicate that powerful firms with a few direct channels are expected to achieve greater gains in financial performance than are less powerful firms with a broader direct channel offering. In terms of order of entry, early followers have a competitive advantage over both innovators and later followers, even when time of entry is controlled for. The authors also find that Internet channel additions that are supported by more publicity are perceived as having a higher performance potential.
- Subjects
INTERNET marketing research; ELECTRONIC commerce management; MARKETING channel management; BUSINESS enterprise digital resources; BUSINESS planning; MARKET entry; MARKETING strategy; COMPETITIVE advantage in business; DEBT-to-equity ratio; VALUATION; COMPUTER network resources
- Publication
Journal of Marketing, 2002, Vol 66, Issue 2, p102
- ISSN
0022-2429
- Publication type
Article
- DOI
10.1509/jmkg.66.2.102.18478