The Online Shadow of Offline Signals: Which Sellers Get Contacted in Online B2B Marketplaces?

Abstract

Abstract:This article extends the understanding of what impels buyers to contact particular sellers in online business-to-business (B2B) marketplaces, which are typically characterized by sparse social structures and concomitant limitations in observing social cues. Integrating an institutional perspective with signaling theory, our core argument is that offline seller characteristics that are visible online-in particular, geographic location and legal statusconvey credible signals of seller behavior because they provide buyers with information on sellers' local institutional quality and the institutionallyinduced obligations and controls acting on sellers. Using unique data from a large Italian online B2B marketplace between the fourth quarter of 1999 and July 2001, we find that both sellers' local institutional quality and their legal statuses affect a buyer's likelihood of contacting a seller. Moreover, consistent with the idea that a buyer's own local institutional quality generates a relevant reference point against which sellers are evaluated, we find that a buyer is progressively more likely to contact sellers the higher their local institutional quality relative to the buyer. Jointly, our findings imply that in online B2B marketplaces, signals conveyed by sellers' geographic locations and legal statuses may be substantive sources of competitive heterogeneity and market segmentation. Academy of Management JournalThe Forthcoming, Academy of Management Journal * Both authors contributed equally to the research in this article. Associate Editor Heli Wang provided excellent guidance and three anonymous reviewers provided detailed and constructive comments and suggestions. We thank the B2B marketplace for sharing proprietary data, Kaizad Doctor for research assistance, Francesco Calderoni for advice on the measurement of corruption and organized crime in Italy, Enrico Spaziani at the Italian National Institute of Statistics (ISTAT) for advice on Italian territorial statistics, and Marco Bitetto, Daniela Latorre, and Tecla Ubaldi for generous advice on Italian commercial law. We also thank Argyro Avgoustaki, Charles Baden-Fuller, Mariachiara Barzotto, Gokhan Ertug, Igor Filatotchev, Santi Furnari, Stefan Haefliger, Wilko Letterie, Joanne Oxley, Carol Saunders, and audiences at Ca' Foscari University of Venice, HEC Lausanne, Singapore Management University, University of Groningen, and Warwick Business School for helpful comments and discussions related to this article. A predecessor version of this study was presented at the 2013 Academy of Management Annual Conference in Lake Buena Vista, Florida. During part of the research for this article, Gianvito Lanzolla was a Visiting Scholar at London Business School and Hans Frankort was a Visiting Scholar at the University of Toronto's Joseph L. Rotman School of Management. The authors gratefully acknowledge the support received at these two institutions.

The impact of social media signals on supplier selection: insights from two experiments

“…Research indicates that to overcome some of the information asymmetry in B2B markets, buyers are likely to rely on signals that are either generated by the supplier -intentional signals, or by the market -unintentional signals, to shortlist and engage with suppliers in online B2B markets (Lanzolla and Frankort, 2016). As many suppliers provide the same intentional signals, studying how buyers are influenced by unintentional signals such as those generated by social media feedback presents both theoretical and practical relevance.…”

“…The transaction value in these markets is also substantially different. Buyers in B2B markets typically engage in much higher value transactions -therefore both the trading risk and value appropriation risk are much higher compared to B2C transactions (Lanzolla and Frankort, 2016).…”

Geographic Co-location of Partners and Rivals: Implications for the Design of R&D Alliances

“…In addition to the Lanzolla and Frankort (2016) suggested study, which we appreciate, we also now cite Almazan, DeMotta, Titman and Uysal (2010) who describes the increased formation of acquisitions with clustered firms. To provide more specific evidence relevant to our context, we now mention Folta, Cooper, and Baik (2006) who provide evidence of the higher levels of partnering with firms located in biotechnology clusters and Coombs, Mudambi and Deeds (2006) who show that the technological munificence of a biotechnology firm's region plays an important role in attracting alliance capital from corporate partners.…”

“…For instance, Jaffe et al (1993) Forming relationships with firms in clusters has been suggested as a way for isolated firms to access the benefits of clusters (McCann & Folta, 2008). Empirical research has indicated that clustered firms are involved in more acquisitions (Almazan, DeMotta, Titman & Uysal, 2010) and are targeted more frequently in online B2B markets (Lanzolla & Frankort, 2016). Both Rothaermel (2002) and Folta, Cooper, and Baik (2006) provided similar evidence of the higher levels of partnering with firms located in biotechnology clusters, just as Coombs, Mudambi and Deeds (2006) showed that the technological munificence of a biotechnology firm's region plays an important role in attracting alliance capital from corporate partners.…”

With whom do firms form ties? A meta-analysis on the influence of embeddedness and proximity on inter-organizational tie formation

“…We excluded studies that study market exchanges/spot sourcing relationships between two organizations (see e.g. Lanzolla and Frankort, 2016) as these are not structural agreements. We also excluded buyer-supplier relationships and board interlocks, because the interdependence and amount of resource control is lower in these interorganizational arrangements as compared to e.g.…”