Prior research indicates the importance of new product launches across international markets for firm performance. However, little is known about if, and how, new product launches in international markets drive firm financial value. This study examines the drivers of stock market reactions to a new product introduction in a foreign country, along with the moderating impact of cultural context. Using a sample of 1,154 products in 34 product categories launched in 48 countries between 2011 and 2018, the authors investigate how product characteristics such as product innovativeness and product type affect abnormal stock reactions to a new product launch event. Furthermore, the authors assess the role of the national culture by considering the individualism, uncertainty avoidance, and indulgence characteristics of the country where the new product is launched. Results of a mixed-effects estimation model indicate that product launches in international markets with innovativeness and hedonism characteristics positively affect firm value. The effects of culture are complex and multifarious, providing valuable insights regarding the impact of new product introductions in global markets on firm value.
AkdenizM. BillurTalayM. Berk (2013), “Cultural Variations in the Use of Marketing Signals: A Multilevel Analysis of the Motion Picture Industry,” Journal of the Academy of Marketing Science, 41 (5), 601–24.
2.
AnselmssonJohanJohanssonUlf (2009), “Retailer Brands and the Impact on Innovativeness in the Grocery Market,” Journal of Marketing Management, 25 (1/2), 75–95.
3.
BazermanMax H.TenbrunselAnn E.Wade-BenzoniKimberly A. (1998), “Negotiating with Yourself and Losing: Making Decisions with Competing Internal Preferences,” Academy of Management Review, 23 (2), 225–41.
4.
BeattyRandolph P.ZajacEdward J. (1987), “CEO Change and Firm Performance in Large Corporations: Succession Effects and Manager Effects,” Strategic Management Journal, 8 (4), 305–17.
5.
BelsleyDavid A. (1991), “A Guide to Using the Collinearity Diagnostics,” Computer Science in Economics and Management, 4 (1), 33–50.
6.
BoehmerEkkehartMasumeciJimPoulsenAnnette B. (1991), “Event-Study Methodology Under Conditions of Event-Induced Variance,” Journal of Financial Economics, 30 (2), 253–72.
7.
BroderickAmanda J. (2007), “A Cross-National Study of the Individual and National–Cultural Nomological Network of Consumer Involvement,” Psychology & Marketing, 24 (4), 343–74.
8.
BrykAnthony S.RaudenbushStephen W. (1992), Hierarchical Linear Models: Applications and Data Analysis Methods. Newbury Park, CA: SAGE Publications.
9.
CalantoneRoger J.GriffithDavid A. (2007), “From the Special Issue Editors: Challenges and Opportunities in the Field of Global Product Launch,” Journal of Product Innovation Management, 24 (5), 414–18.
10.
CaoZixiaSorescuAlina (2013), “Wedded Bliss or Tainted Love? Stock Market Reactions to the Introduction of Cobranded Products,” Marketing Science, 32 (6), 939–59.
11.
CarhartMark M. (1997), “On Persistence in Mutual Fund Performance,” The Journal of Finance, 52 (1), 57–82.
12.
ChakravartyAninditaGrewalRajdeep (2011), “The Stock Market in the Driver’s Seat! Implications for R&D and Marketing,” Management Science, 57 (9), 1594–609.
13.
ChanSu H.KensingerJohn W.MartinJohn D. (1992), “The Market Rewards Promising R&D—And Punishes the Rest,” Journal of Applied Corporate Finance, 5 (2), 59–66.
14.
ChandrasekaranDeepaTellisGerard J. (2008), “Global Takeoff of New Products: Culture, Wealth, or Vanishing Differences?” Marketing Science, 27 (5), 844–60.
15.
ChandyRajesh K.TellisGerard J. (1998), “Organizing for Radical Product Innovation: The Overlooked Role of Willingness to Cannibalize,” Journal of Marketing Research, 35 (4), 474–87.
16.
ChatterjeeSayanLubatkinMichael H.SchweigerDavid M.WeberYaakov (1992), “Cultural Differences and Shareholder Value in Related Mergers: Linking Equity and Human Capital,” Strategic Management Journal, 13 (5), 319–34.
17.
ChenYuboGanesanShankarLiuYong (2009), “Does a Firm’s Product-Recall Strategy Affect Its Financial Value? An Examination of Strategic Alternatives During Product-Harm Crises,” Journal of Marketing, 73 (6), 214–26.
18.
ChitturiRavindraRaghunathanRajagopalMahajanVijay (2007), “Form Versus Function: How the Intensities of Specific Emotions Evoked in Functional Versus Hedonic Trade-Offs Mediate Product Preferences,” Journal of Marketing Research, 44 (4), 702–14.
19.
CilloPaolaGriffithDavid A.RuberaGaia (2018), “The New Product Portfolio Innovativeness–Stock Returns Relationship: The Role of Large Individual Investors’ Culture,” Journal of Marketing, 82 (6), 49–70.
20.
Cooper-MartinElizabeth (1991), “Consumers and Movies: Some Findings on Experiential Products,” in NA - Advances in Consumer Research, Vol. 18, RebeccaH. HolmanSolomonMichael R., eds. Provo, UT: Association for Consumer Research, 372–78.
21.
CorhayA.RadA. Tourani (1996), “Conditional Heteroskedasticity Adjusted Market Model and an Event Study,” The Quarterly Review of Economics and Finance, 36 (4), 529–38.
22.
CuiGengLiuQiming (2001), “Emerging Market Segments in a Transitional Economy: A Study of Urban Consumers in China,” Journal of International Marketing, 9 (1), 84–106.
23.
De BrentaniUlrikeKleinschmidtElko J.SalomoSören (2010), “Success in Global New Product Development: Impact of Strategy and the Behavioral Environment of the Firm,” Journal of Product Innovation Management, 27 (2), 143–60.
24.
De MooijMariekeHofstedeGeert (2002), “Convergence and Divergence in Consumer Behavior: Implications for International Retailing,” Journal of Retailing, 78 (1), 61–69.
25.
DewarRobert D.DuttonJane E. (1986), “The Adoption of Radical and Incremental Innovations: An Empirical Analysis,” Management Science, 32 (11), 1422–33.
26.
DharRaviWertenbrochKlaus (2000), “Consumer Choice Between Hedonic and Utilitarian Goods,” Journal of Marketing Research, 37 (1), 60–71.
27.
EttlieJohn E. (1983), “Organizational Policy and Innovation Among Suppliers to the Food Processing Sector,” Academy of Management Journal, 26 (1), 27–44.
28.
EttlieJohn E.BridgesWilliam P.O’KeefeRobert D. (1984), “Organization Strategy and Structural Differences for Radical Versus Incremental Innovation,” Management Science, 30 (6), 682–95.
29.
EvanschitzkyHeinerEisendMartinCalantoneRoger J.JiangYuanyuan (2012), “Success Factors of Product Innovation: An Updated Meta-Analysis,” Journal of Product Innovation Management, 29 (S1), 21–37.
30.
FamaEugene F. (1965), “The Behavior of Stock-Market Prices,” The Journal of Business, 38 (1), 34–105.
31.
FamaEugene F. (1998), “Market Efficiency, Long-Term Returns, and Behavioral Finance,” Journal of Financial Economics, 49 (3), 283–306.
32.
FamaEugene F.FrenchKenneth R. (1996), “Multifactor Explanations of Asset Pricing Anomalies,” The Journal of Finance, 51 (1), 55–84.
33.
FosterRichard N. (1988), Innovation: The Attacker’s Advantage. New York: Summit Books.
34.
FullerGordon W. (2016), New Food Product Development: From Concept to Marketplace. Boca Raton, FL: CRC Press.
35.
GalloIñigoTownsendClaudiaAlegreInés (2019), “Experiential Product Framing and its Influence on the Creation of Consumer Reviews,” Journal of Business Research, 98, 177–90.
36.
GaneshJaishankarKumarV.SubramaniamVelavan (1997), “Learning Effect in Multinational Diffusion of Consumer Durables: An Exploratory Investigation,” Journal of the Academy of Marketing Science, 25 (3), 214–28.
37.
GatignonHubertEliashbergJehoshuaRobertsonThomas S. (1989), “Modeling Multinational Diffusion Patterns: An Efficient Methodology,” Marketing Science, 8 (3), 231–47.
GriffithDavid A.RuberaGaia (2014), “A Cross-cultural Investigation of New Product Strategies for Technological and Design Innovations,” Journal of International Marketing, 22 (1), 5–20.
40.
HelsenKristiaanJedidiKamelDeSarboWayne S. (1993), “A New Approach to Country Segmentation Utilizing Multinational Diffusion Patterns,” Journal of Marketing, 57 (4), 60–71.
41.
HofmannDavid A. (1997), “An Overview of the Logic and Rationale of Hierarchical Linear Models,” Journal of Management, 23 (6), 723–44.
42.
HofstedeGeert (2001), Culture’s Consequences: Comparing Values, Behaviors, Institutions and Organizations Across Nations. Thousand Oaks, CA: SAGE Publications.
43.
HofstedeGeertHofstedeGert J.MinkovMichael (2010), Cultures and Organizations: Software of the Mind: Intercultural Cooperation and its Importance for Survival. New York: McGrawHill.
44.
HolbrookMorris B.HirschmanElizabeth C. (1982), “The Experiential Aspects of Consumption: Consumer Fantasies, Feelings, and Fun,” Journal of Consumer Research, 9 (2), 132–40.
45.
HolbrookMorris B.MooreWilliam L. (1981), “Feature Interactions in Consumer Judgments of Verbal Versus Pictorial Presentations,” Journal of Consumer Research, 8 (1), 103–13.
46.
HoltDouglas B. (1995), “How Consumers Consume: A Typology of Consumption Practices,” Journal of Consumer Research, 22 (1), 1–16.
47.
HomburgChristianBornemannTorstenTotzekDirk (2009), “Preannouncing Pioneering Versus Follower Products: What Should the Message Be?” Journal of the Academy of Marketing Science, 37 (3), 310–27.
48.
HsuLiwuFournierSusanSrinivasanShuba (2016), “Brand Architecture Strategy and Firm Value: How Leveraging, Separating, and Distancing the Corporate Brand Affects Risk and Returns,” Journal of the Academy of Marketing Science, 44 (2), 261–80.
49.
JoshiAmitHanssensDominique M. (2010), “The Direct and Indirect Effects of Advertising Spending on Firm Value,” Journal of Marketing, 74 (1), 20–33.
50.
KagitcibasiCigdem (1997), “Individualism and Collectivism,” in Handbook of Cross-Cultural Psychology: Social Behavior and Applications, BerryJohn W.PoortingaYpe H.PandeyJanak, eds. Boston: Allyn & Bacon, 3, 1–49.
51.
KatsikeasConstantine SMorganNeil A.LeonidouLeonidas C.HultG. Tomas M. (2016), “Assessing Performance Outcomes in Marketing,” Journal of Marketing, 80 (2), 1–20.
52.
KhanRaihanCoxPamela (2017), “Country Culture and National Innovation,” Archives of Business Research, 5 (2), 85–101.
53.
KimMinChungMcAlisterLeigh M. (2011), “Stock Market Reaction to Unexpected Growth in Marketing Expenditure: Negative for Sales Force, Contingent on Spending Level for Advertising,” Journal of Marketing, 75 (4), 68–85.
54.
KleinschmidtElko J.De BrentaniUlrikeSalomoSören (2007), “Performance of Global New Product Development Programs: A Resource-Based View,” Journal of Product Innovation Management, 24 (5), 419–41.
55.
KochharRahulDavidParthiban (1996), “Institutional Investors and Firm Innovation: A Test of Competing Hypotheses,” Strategic Management Journal, 17 (1), 73–84.
56.
KumarV.GaneshJaishankarEchambadiRaj (1998), “Cross-National Diffusion Research: What Do We Know and How Certain Are We?” Journal of Product Innovation Management, 15 (3), 255–68.
57.
LeeYikuanLinBou-WenWongYim-YuCalantoneRoger J. (2011), “Understanding and Managing International Product Launch: A Comparison Between Developed and Emerging Markets,” Journal of Product Innovation Management, 28 (s1), 104–20.
58.
LimElison Ai ChingAngSwee Hoon (2008), “Hedonic vs. Utilitarian Consumption: A Cross-Cultural Perspective Based on Cultural Conditioning,” Journal of Business Research, 61 (3), 225–32.
59.
LynnMichaelZinkhanGeorge M.HarrisJudy (1993), “Consumer Tipping: A Cross-Country Study,” Journal of Consumer Research, 20 (3), 478–88.
60.
MarkhamStephen K.LeeHyunjung (2013), “Product Development and Management Association’s 2012 Comparative Performance Assessment Study,” Journal of Product Innovation Management, 30 (3), 408–29.
61.
McWilliamsAbagailSiegelDonald (1997), “Event Studies in Management Research: Theoretical and Empirical Issues,” Academy of Management Journal, 40 (3), 626–57.
62.
MoormanChristineWiesSimoneMizikNatalieSpencerFredrika J. (2012), “Firm Innovation and the Ratchet Effect Among Consumer Packaged Goods Firms,” Marketing Science, 31 (6), 934–51.
63.
OkadaErica Mina (2005), “Justification Effects on Consumer Choice of Hedonic and Utilitarian Goods,” Journal of Marketing Research, 42 (1), 43–53.
64.
PalazonMariolaDelgado-BallesterElena (2013), “Hedonic or Utilitarian Premiums: Does It Matter?” European Journal of Marketing, 47 (8), 1256–75.
65.
PauwelsKoenSilva-RissoJorgeSrinivasanShubaHanssensDominique M. (2004), “New Products, Sales Promotions, and Firm Value: The Case of the Automobile Industry,” Journal of Marketing, 68 (4), 142–56.
66.
PetersenJ. AndrewKushwahaTarunKumarV. (2015), “Marketing Communication Strategies and Consumer Financial Decision Making: The Role of National Culture,” Journal of Marketing, 79 (1), 44–63.
67.
PironFrancis (2000), “Consumers’ Perceptions of the Country-of-Origin Effect on Purchasing Intentions of (in) Conspicuous Products,” Journal of Consumer Marketing, 17 (4), 308–21.
68.
RothMartin S. (1995), “The Effects of Culture and Socioeconomics on the Performance of Global Brand Image Strategies,” Journal of Marketing Research, 32 (2), 163–75.
69.
RuberaGaiaKircaAhmet H. (2012), “Firm Innovativeness and Its Performance Outcomes: A Meta-Analytic Review and Theoretical Integration,” Journal of Marketing, 76 (3), 130–47.
70.
SchwartzShalom H. (1994), “Are There Universal Aspects in the Structure and Contents of Human Values?” Journal of Social Issues, 50 (4), 19–45.
71.
SharmaAnuragLaceyNelson (2004), “Linking Product Development Outcomes to Market Valuation of the Firm: The Case of the U.S. Pharmaceutical Industry,” Journal of Product Innovation Management, 21 (5), 297–308.
72.
SharmaPiyush (2011), “Demystifying Cultural Differences in Country-of-Origin Effects: Exploring the Moderating Roles of Product Type, Consumption Context, and Involvement,”Journal of International Consumer Marketing, 23 (5), 344–64.
73.
SoaresAna MariaFarhangmehrMinooShohamAviv (2007), “Hofstede’s Dimensions of Culture in International Marketing Studies,” Journal of Business Research, 60 (3), 277–84.
74.
SongX. MichaelMontoya-WeissMitzi M.SchmidtJeffrey B. (1997), “The Role of Marketing in Developing Successful New Products in South Korea and Taiwan,” Journal of International Marketing, 5 (3), 47–69.
75.
SongX. MichaelParryMark E. (1997), “A Cross-national Comparative Study of New Product Development Processes: Japan and the United States,” Journal of Marketing, 61 (2), 1–18.
76.
SoodAshishTellisGerard J. (2009), “Do Innovations Really Pay Off? Total Stock Market Returns to Innovation,” Marketing Science, 28 (3), 442–56.
77.
SorescuAlina B.ChandyRajesh K.PrabhuJaideep C. (2003), “Sources and Financial Consequences of Radical Innovation: Insights from Pharmaceuticals,” Journal of Marketing, 67 (4), 82–102.
78.
SorescuAlinaShankarVenkateshKushwahaTarun (2007), “New Product Preannouncements and Shareholder Value: Don’t Make Promises You Can’t Keep,” Journal of Marketing Research, 44 (3), 468–89.
79.
SorescuAlina B.SpanjolJelena (2008), “Innovation’s Effect on Firm Value and Risk: Insights from Consumer-Packaged Goods,” Journal of Marketing, 72 (2), 114–32.
80.
SouderW. E.SongX. Michael (1998), “Analyses of U.S. and Japanese Management Processes Associated with New Product Success and Failure in High and Low Familiarity Markets,” Journal of Product Innovation Management, 15 (3), 208–23.
81.
SrinivasanShubaHanssensDominique M. (2009), “Marketing and Firm Value: Metrics, Methods, Findings, and Future Directions,” Journal of Marketing Research, 46 (3), 293–312.
82.
SrinivasanShubaPauwelsKoenSilva-RissoJorgeHanssensDominique M. (2009), “Product Innovations, Advertising, and Stock Returns,” Journal of Marketing, 73 (1), 24–43.
83.
StahlGunter K.VoigtAndreas (2008), “Do Cultural Differences Matter in Mergers and Acquisitions? A Tentative Model and Examination,” Organization Science, 19 (1), 160–76.
84.
SteenkampJan-Benedict E.GeyskensInge (2006), “How Country Characteristics Affect the Perceived Value of Web Sites,” Journal of Marketing, 70 (3), 136–50.
85.
SubrahmanyanSaroja (2004), “Effects of Price Premium and Product Type on the Choice of Cause-Related Brands: A Singapore Perspective,” Journal of Product & Brand Management, 13 (2), 116–24.
86.
SwanK. ScottKotabeMasaakiAllredBrent B. (2005), “Exploring Robust Design Capabilities, Their Role in Creating Global Products, and Their Relationship to Firm Performance,” Journal of Product Innovation Management, 22 (2), 144–64.
87.
SyedHiraMalikAkhtar Nawaz (2014), “Comparative Study of Effect of Culture on Technology Adoption in Pakistan and USA,” The Business & Management Review, 5 (1), 42.
88.
TabakFilizBarrSteve H. (1999), “Propensity to Adopt Technological Innovations: The Impact of Personal Characteristics and Organizational Context,” Journal of Engineering and Technology Management, 16 (3/4), 247–70.
89.
TakadaHirokazuJainDipak (1991), “Cross-National Analysis of Diffusion of Consumer Durable Goods in Pacific Rim Countries,” Journal of Marketing, 55 (2), 48–54.
90.
TalayM. BerkBillur AkdenizM.KircaAhmet H. (2017), “When Do the Stock Market Returns to New Product Preannouncements Predict Product Performance? Empirical Evidence from the U.S. Automotive Industry,” Journal of the Academy of Marketing Science, 45 (4), 513–33.
91.
TalayM. BerkTownsendJanell D.YeniyurtSengun (2015), “Global Brand Architecture Position and Market-Based Performance: The Moderating Role of Culture,” Journal of International Marketing, 23 (2), 55–72.
92.
TownsendJanell D.YeniyurtSengunTalayM. Berk (2009), “Getting to Global: An Evolutionary Perspective of Brand Expansion in International Markets,” Journal of International Business Studies, 40 (4), 539–58.
93.
TseDavid K.BelkRussell W.ZhouNan (1989), “Becoming a Consumer Society: A Longitudinal and Cross-cultural Content Analysis of Print Ads from Hong Kong, the People’s Republic of China, and Taiwan,” Journal of Consumer Research, 15 (4), 457–72.
94.
VossKevin E.SpangenbergEric R.GrohmannBianca (2003), “Measuring the Hedonic and Utilitarian Dimensions of Consumer Attitude,” Journal of Marketing Research, 40 (3), 310–20.
95.
WilesMichael A.MorganNeil A.RegoLopo L. (2012), “The Effect of Brand Acquisition and Disposal on Stock Returns,” Journal of Marketing, 76 (1), 38–58.
96.
WuYuhongBalasubramanianSridharMahajanVijay (2004), “When Is a Preannounced New Product Likely to be Delayed?” Journal of Marketing, 68 (2), 101–13.
97.
YeniyurtSengunTownsendJanell D. (2003), “Does Culture Explain Acceptance of New Products in a Country? An Empirical Investigation,” International Marketing Review, 20 (4), 377–96.
98.
ZouShaomingÖzsomerAysegül (1999), “Global Product R&D and the Firm’s Strategic Position,” Journal of International Marketing, 7 (1), 57–76.
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
