When should star power and eWOM be responsible for the box office performance? - An empirical study based on signaling theory

Liu Fan, Xiaoping Zhang and Laxmisha Rai

Journal of Retailing and Consumer Services, 2021, vol. 62, issue C

Abstract: Information asymmetry universally exists in the market transactions. In the movie industry, consumers usually have limited access to quality information before they actually watch the movie, which increases the difficulty of purchase decision. Quality signaling is regarded as an effective solution for information asymmetry. Drawing upon the signaling theory, this study identifies the two types of signals, namely internal signals (i.e., actor/actress power and director power) and external signals (i.e., eWOM volume and eWOM valence). We further empirically investigate how the two types of signals influence the box office performance in different time periods of the movie's theatrical running (i.e., opening week and later-run weeks). The moderating effect of the signaling environment (i.e., number of ongoing movies in the same period) on the relationship between the signals and box office performance is also examined. Analyzing the data obtained from 80 Chinese movies, this study finds that all signals except eWOM valence positively influence box office performance. Internal signals are instrumental in enhancing box office performance during the opening week, whereas external signal (only eWOM volume) is more influential in boosting box office performance in the later-run weeks. Our results also reveal that the signaling environment can augment the positive effect of internal signals on box office performance. Based on these findings, both theoretical and managerial implications are discussed for researchers and practitioners in establishing ways to produce, distribute and promote movies.

Keywords: Signaling theory; Box office performance; eWOM; Star power; Signaling environment (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joreco:v:62:y:2021:i:c:s0969698921001570

DOI: 10.1016/j.jretconser.2021.102591

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