Do digital platforms promote or hinder corporate brand prestige?

Abstract

PurposeIn the era of digital evolution, companies are increasingly deploying digital platforms to optimize operational efficiencies and to connect with customers more directly. However, little is known about whether and how companies can leverage digital platforms to enhance their brand prestige. Integrating insights from the resource-based view of the firm into the branding literature, this study aims to compare and distinguish the effects of the two digital platform functions, technical and social functions, on a company’s brand prestige. This study also assesses the moderating roles of two institutional factors, market uncertainty and brand imitation.Design/methodology/approachThis study estimates a moderated regression model using a survey of 240 companies in China that deploy digital platforms. This study uses SPSS 24.0 to perform regression analysis.FindingsThe study finds that technical functions positively, whereas social functions negatively affect brand prestige. Moreover, the technical functions of digital platforms are more beneficial for companies to build their brand prestige when the market is turbulent and the extent of brand imitation is high, whereas, under the same conditions, social functions lead to lower brand prestige.Research limitations/implicationsThere are several limitations of this study that offer future research opportunities. First, due to the difficulties of data collection, measures were taken from the same source for which common method bias could be a potential concern. Second, this study considered two institutional boundary conditions in these models. Future research should consider mediators as well as other potential moderators to understand the underlying mechanisms of how digital platforms affect brand prestige. Third, future studies may develop better constructs to manifest these two types of digital platform functions. Finally, this sample was limited to companies in China.Practical implicationsThis study provides important implications for companies leveraging digital platforms to build brands. First, companies must distinguish between the different functions of digital platforms. The findings reveal that companies that leverage digital platforms to build brand prestige are suggested to make greater use of technical functions yet should be cautious in developing social functions. Second, this research suggests although market uncertainty and brand imitation are not conducive to enhancing brand prestige, it is possible for companies to take advantage of these unfavorable environments to better serve niche customers.Originality/valuePrior marketing studies emphasize the benefits of digital platforms and largely overlook the double-edged sword effect of digital platforms on companies’ brand building. This study contributes to the marketing literature by revealing the benefits of technical function and the challenges of social function in driving brand prestige in complex institutional settings.