The value of branding for B2B service firms—The shareholders' perspective

Abstract

Increasingly fierce competition in many B2B service industries led managers to seek a competitive advantage through branding, as many firms operating in B2C markets have done. Although advertising spending in B2B service industries has soared and branding could be relevant for customers' purchase decisions, the distinct characteristics of B2B service transactions can make the creation of brand equity challenging. Conceptual arguments thus both support and question the net financial value of B2B service brands and, since empirical research on that value is missing, managers are left with no agreed upon and validated guidance. Drawing on observations of the brands and shareholder values of 380 U.S.-based public B2B service firms, this study introduces a shareholder perspective to empirically examine the financial value of B2B service brands. Results reveal that B2B service brands have positive value to shareholders. However, the extent of that value depends on a firm's branding strategy (corporate branding vs. multi-branding) in conjunction with the type of services offered (professional services vs. other B2B services) but not in conjunction with the breadth of services offered (degree of diversification). This research provides new insights for researchers and managers with regard to B2B service brands' value and important contingency factors.