Reputation for Product Innovation: Its Impact on Consumers

Abstract

Just as firms compete for customers, they also vie for reputational status across their relevant constituent groups. To many firms, a reputation as an innovative company is something that is both prized and actively sought after. Despite an abundance of anecdotal evidence pointing to several firms' active pursuit of an innovative reputation, there is little empirical evidence to evaluate the soundness of this pursuit. On a general level, this research recognizes that firms compete for competitive advantage via their tangible and intangible resources. Much of the innovation literature centers on the tangible impact that new product development initiatives have on outcomes of innovation. Yet research investigations of the less tangible facets of innovation, such as a reputation, remain relatively uninvestigated despite their promise as a source of sustainable competitive advantage. This study investigates the effects of a corporate reputation for product innovation (RPI) and its impact on consumers. Consumer involvement levels are proposed to mediate the relationship between RPI and consumer outcomes. Empirical results indicate that a high consumer perceived RPI, via the involvement construct, leads to excitement toward and heightened loyalty to the innovative firm. A more positive overall corporate image and tolerance for occasional product failures are also positive outcomes noted in the results. Contrary to expectations, a high perceived RPI does not lead to a consumer propensity to pay price premiums.