Paper Type
Complete
Paper Number
1726
Description
Firms have been increasingly adopting virtual reality (VR) technologies in their marketing activities, but it is still unclear whether firms can gain real value from these VR marketing initiatives. We quantify the impact of VR marketing initiatives on firm value in terms of abnormal stock returns. Our event study results show that VR marketing initiatives lead to negative abnormal stock returns. This suggests that shareholders are more concerned about the uncertainties and risks associated with these initiatives. Consistent with this view, we further find that the negative effects become even more pronounced at a high level of firm uncertainty. Nevertheless, the negative effects are reduced when firms collaborate to implement VR marketing initiatives and when firms are focused on value appropriation strategies. Overall, our research demonstrates the negative impact of VR marketing initiatives but also reveals how the negative impact can be mitigated through marketing alliance and strategic focus.
Recommended Citation
Xiong, Chris; Lam, Hugo; Karimi, Sahar; Xinyue, Wang; Tian, Anan; and Lei, Shicheng, "Virtual Reality Adoption in Marketing: Unveiling Its Impact on Firm Value" (2024). PACIS 2024 Proceedings. 5.
https://aisel.aisnet.org/pacis2024/track20_general/track20_general/5
Virtual Reality Adoption in Marketing: Unveiling Its Impact on Firm Value
Firms have been increasingly adopting virtual reality (VR) technologies in their marketing activities, but it is still unclear whether firms can gain real value from these VR marketing initiatives. We quantify the impact of VR marketing initiatives on firm value in terms of abnormal stock returns. Our event study results show that VR marketing initiatives lead to negative abnormal stock returns. This suggests that shareholders are more concerned about the uncertainties and risks associated with these initiatives. Consistent with this view, we further find that the negative effects become even more pronounced at a high level of firm uncertainty. Nevertheless, the negative effects are reduced when firms collaborate to implement VR marketing initiatives and when firms are focused on value appropriation strategies. Overall, our research demonstrates the negative impact of VR marketing initiatives but also reveals how the negative impact can be mitigated through marketing alliance and strategic focus.
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