One of the defining characteristics of the digital economy is the expansion of marketization. Beyond the traditionally marketable goods and services, the digital markets encompass ever new products. They offer time, space, knowledge, and ideas of unaffiliated individuals to complement the offerings of organizations, and they have now moved into marketing memes, multi-media articulations, and broadly understood digital art via blockchain-based tokens. Currencies have become products as well in their crypto implementations. Global digital economy, now in an advanced stage of formation, relies on the ever-new market mechanisms that support these ever-new marketplaces. The progressing marketization is supported in its many features by social media, acting—inter alia—as marketing channels and as fundraising means. The Special Section that opens this issue of the Journal of Management Information Systems, guest-edited by Robert J. Kauffman and Thomas A. Weber, presents two papers that address the issue of its title: Improving New Digital Market Mechanisms. The papers are both theoretically and empirically grounded, and advance our knowledge of the role of social media in the market advancement in the digital economy. The Guest Editors introduce the papers to you at length.
Two subsequent papers of the issue investigate two key aspects of competition in our digital economy. In the first of them, Mariana Giovanna Andrade-Rojas, Abhishek Kathuria, and Benn R. Konsynski empirically study the role of the firm’s information-management capability in the company’s performance. What makes the work important is the comparison between the information technology (IT)-based information management and the collaboration networks in which the firm participates, both as contributors to its competitive performance. Analyzing the longitudinal empirics of a long-term collaboration network and the data reflecting the firms’ information-management capability, the authors tease out their differential effects on the competition networks in which the firms participate. The strategic effects are pronounced and the results garnered here will guide companies in an informed addressing of their current and potential marketplaces.
The relationship between the level of competition in an industry and the innovativeness of its firms is of central importance in the marketplace where large companies dominate industry segments and this relationship is a vital subject of today’s policy debates. The argumentation in economics has ranged from the advantages of large firms in the ability to invest in innovation to the line of thought favoring the proliferation of smaller companies with access to capital and other resources. The authors of the next paper make a significant contribution here. Tao Chen, Hsing Kenneth Cheng, Yong (Jimmy) Jin, Shengli Li, and Liangfei Qiu examine the relationship between product competition and innovation in the IT industry, across various sectors. The authors find a positive causal relationship between the level of competition and innovation in the IT industry, a highly knowledge-intensive and innovative part of the economy. They stress the effects of so-called parallel search, i.e., simultaneous targeting of innovations by multiple actors in the marketplace. In particular, the authors’ findings support an argument for lowering import tariffs and thus exposing the firms to heightened international competition.
The next paper in the issue demonstrates how theory can undergird a highly practical method, in this case, to detect regulatory noncompliance by organizations’ employees. Jeffrey L. Jenkins, Joseph S. Valacich, Aaron F. Zimbelman, and Mark F. Zimbelman ground themselves in the theory of cognitive dissonance to develop a method based on an intelligent online compliance questionnaire that enables them to detect noncompliant behavior by tracking the mouse-cursor movements enacted by a responder. The authors empirically validate this method and thus provide the potential adopter firms with a low-cost and scalable noncompliance detection tool while expanding our understanding of the relationship between the cognitive and behavioral aspects of cognitive dissonance.
Cyber-insecurity has emerged as—without an exaggeration—an existential threat to the social order and the welfare of all of us. It is an abiding threat and no effort should be spared to combat it at all societal levels. At the organizational level, most security breaches begin with the behavior of individuals within the firm who might simply open an email attachment or release their credentials. From then on, an attacker may install ransomware or breach a massive database of the focus company or any company related to it through the Internet. Thus, cognitive studies of security-related behaviors of individuals in organizations are important. In this issue, Ka Chung Ng, Xiaojun Zhang, James Y.L. Thong, and Kar Yan Tam present such a study. They introduce and exercise empirically the attitudinal ambivalence theory in the context of information security and, more specifically, in the context of protection motivation, to study the effectiveness of fear appeals. A significant contribution is made to our understanding of the cognitive underpinnings of behavioral cybersecurity, which should also help in designing effective fear appeals.
With the greatly increased role of IT in organizations, the role of Chief Information Officers (CIO) in the top corporate echelons increases as well. A CIO must be enabled to actualize an alignment of the corporate strategy and the firm’s IT posture, which, in many cases directly affects the firm’s strategy itself. The question arises as to the extent of the structural power a CIO needs to possess in terms of the standing in the organizational hierarchy and in decision-making authority. In this issue, Cong Feng, Pankaj C. Patel, and Scott Fay address this question using an extensive firm-year data panel. The authors find that the structural power of the CIO is associated positively with the forward-looking performance of an organization. Among more granular results, the researchers determine that the positive effects of the greater structural power are more pronounced during greater market turbulence (i.e., when the market challenges and opportunities are stronger). This work is a well-researched signal to the corporate boards.
Three papers concluding the issue address online matching of customers with products. The first of the papers has, in fact, a broader ambit as it concerns itself with virtual advisors (VAs) that might serve as product recommenders but may also offer a more generalized advice about a course of action in some aspects of the healthcare or other domains. Such advisors require various extents of self-disclosure by their users. The authors, Sameh Al-Natour, Izak Benbasat, and Ron Cenfetelli, study the first stage of VA use, which is the information acquisition by VAs from the user. Their research question is: What factors encourage or inhibit the disclosure? Notably, the authors find that certain design features can increase the ability of a VA to enhance the users’ willingness to disclose, all within the ethical perimeter. The authors base their work on the social exchange theory and make additional contributions to it.
Wenjing Duan and Jie Zhang empirically study the effectiveness of the alternative online referral channels that steer customers to products. The authors compare search engines, social media, and third-party websites in their effectiveness and return on investment. They studied a large clickstream dataset using a model that allows them to arrive at very specific results. Thus, they were able to go beyond the conclusions regarding the relative effectiveness of the channels and show the synergies and other interdependencies in their use. Very pragmatic implications and recommendations follow.
Another referral channel is analyzed by the authors of the concluding paper of the issue. Zike Cao, Junhong Chu, Kai-Ling Hui, and Hong Xu examine empirically the effectiveness of referral marketing online, that is, providing incentives for their customers to refer others to a product acquisition. It is to be noted that this marketing method may leverage any of the three referral means compared by the authors of the preceding paper, in particular the personal networks formed on the social media, sometimes including prominent influencers. The authors study the effectiveness of such referral marketing in the presence of price promotions—and find that the latter may be antithetical to the former, particularly when the customers sought do not have another reason to trust the quality of the product. The results neatly expand the implications offered by the preceding paper.