مقاله سال ۲۰۱۶

Innovation is a major driver of business growth and expansion because it allows firms to transform their dynamic capabilities to become more adaptive and develop the ability to learn and exploit new ideas, given that every firm possesses a bundle of resources, skills and competencies as argued by the resource-based theory of the firms (Peres, Muller, & Mahajan, 2010). Product innovation is particularly important in marketing context because it allows firms to not only develop new market segments but to also expand its current market segments and product portfolios (Gupta, Raj, & Wilemon, 1986; Slotegraaf & Pauwels, 2008). However, product innovation may also lead to higher costs (Lynn, 1998) as well as higher risks and management challenges (Danneels & Kleinschmidt, 2001); hence despite growing research on product innovation, its effect on firm performance remains unclear (De Luca & Atuahene-Gima, 2007). Besides these effects, the relationship between product innovation and brand strategy may vary across different product categories. For instance, Sriram, Balachander, and Kalwani (2007) argue that product innovation leads to brand equity, whereas Beverland, Napoli, and Farrelly (2010) suggest that firm’s ability to innovate depends on brand portfolio strategy. In contrast to these opposite views, Slotegraaf and Pauwels (2008) assert the importance of interaction effects between brand equity and product innovation to affect sales.

Consumers often use brand equity to assess firms and their product or service offerings in the absence of reliable information about firms’ internal resources and capabilities, because it reduces their information search costs and increases their overall utility (Erdem & Swait, 1998; Erdem, Swait, & Valenzuela, 2006). Signaling theory argues that brands act as signals of the overall quality of a product or service and thereby help consumers resolve their uncertainty caused by a lack of information about a product or a company (Erdem & Swait, 1998). Strong brands signal unobservable quality and product performance expectations (Rao & Ruekert, 1994). Brands also give customers a positive emotional experience during the processes of information search, decisionmaking, purchase, consumption and ownership (Schmitt & Simonson, 1997).

Notwithstanding their useful theoretical contribution, prior studies on brand equity generally focus on the link between consumers’ perceptions of brand equity and their behavioral intentions and outcomes such as repeat purchase and brand loyalty at individual consumer level and not at the level of brands or product categories. Hence, there is still little clarity about the exact mechanism by which brand equity may affect marketing performance (e.g., market share) in a highly competitive marketplace. It is also unclear how marketing and intellectual proprietary assets interconnect with other resources to create a competitive advantage through a core business process, such as product innovation (Rust, Ambler, Carpenter, Kumar, & Srivastava, 2004).