-
Do Service Guarantees Guarantee Greater Market Value?
April 9, 2014 Editor 0
Service guarantees are an important feature of many service offerings because consumers recognize greater risk associated with the purchase of services than with the purchase of goods. Despite substantial service guarantee research in the past two decades though, no extant study has examined the return on service guarantee investments. To fill this gap, the authors examine the effect of a service guarantee on a firm’s market value by identifying new service guarantee announcements, then using these announcements as events in an event study. The results show that simply offering a service guarantee does not result in greater market value, as measured by a change in stock market returns, for the offering firm. Instead, the market value of a service guarantee depends on its scope and the process required to invoke the guarantee. In particular, service guarantees that are specific in scope or automatically invoked lead to significantly greater market value than unconditional or customer-invoked guarantees, respectively. In addition, these differences are moderated by firm size. From a theoretical point of view, this study extends signaling theory to explain the differential effects of service guarantees, depending on their design.
Related Posts
Customer Integration in Service Innovation: An Exploratory Study
Translating biotechnology to knowledge-based innovation, peace, and development? Deploy a Science Peace Corps–an open letter to world leaders.
Building Business Models
27 options to find revenues for your new idea
A New Model to Chip Away at the Infrastructure Financing Gap: Brazil Leads the Way
Ancient wisdom boosts sustainability of biotech cotton
Categories: Innovation
Tags: Business_Finance, Customer experience management, Service guarantee
Social media marketing What Military Service Could Teach MBAs
Subscribe to our stories
Recent Posts
- Entrepreneurial Alertness, Innovation Modes, And Business Models in Small- And Medium-Sized Enterprises December 30, 2021
- The Strategic Role of Design in Driving Digital Innovation June 10, 2021
- Correction to: Hybrid mosquitoes? Evidence from rural Tanzania on how local communities conceptualize and respond to modified mosquitoes as a tool for malaria control June 10, 2021
- BRIEF FOCUS: Optimal spacing for groundnuts in smallholder farming systems June 9, 2021
- COVID-19 pandemic: impacts on the achievements of Sustainable Development Goals in Africa June 9, 2021
Categories
Archives
Popular Post-All time
- A review on biomass-based... 1k views
- Can blockchain disrupt ge... 764 views
- Apply Now: $500,000 for Y... 760 views
- Prize-winning projects pr... 717 views
- Test Your Value Propositi... 707 views