Digital Innovation, Entrepreneurship and New Business Models

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Paper Type

Short

Paper Number

2144

Description

While smart products are on the verge of transforming markets, numerous incumbent firms are not capable of developing such products on their own and, therefore, seek help from innovative startups that frequently provide the missing information systems (IS) competencies. However, most incumbent firms do not publicly disclose their cooperation with a startup. Our ongoing research is concerned with the possible reasons for this. Building on the signaling theory, we conducted two experimental studies to investigate whether cooperation with a startup to develop a smart product (in our studies, a smart dog collar) serves as a positive signal for prospective customers. The results revealed that the perceived innovation ability of the incumbent firm decreases, which results in a lower purchase intention in cases where such cooperation is disclosed. Hence, we recommend that incumbent firms should not disclose such cooperation.

COinS
 
Dec 14th, 12:00 AM

Shh! … I Got Help to Become Smart: Should Incumbent Firms Disclose Their Cooperation with a Startup?

While smart products are on the verge of transforming markets, numerous incumbent firms are not capable of developing such products on their own and, therefore, seek help from innovative startups that frequently provide the missing information systems (IS) competencies. However, most incumbent firms do not publicly disclose their cooperation with a startup. Our ongoing research is concerned with the possible reasons for this. Building on the signaling theory, we conducted two experimental studies to investigate whether cooperation with a startup to develop a smart product (in our studies, a smart dog collar) serves as a positive signal for prospective customers. The results revealed that the perceived innovation ability of the incumbent firm decreases, which results in a lower purchase intention in cases where such cooperation is disclosed. Hence, we recommend that incumbent firms should not disclose such cooperation.

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