Product personalization focus in the pharmaceutical industry and shareholder wealth: The roles of marketing capability and financial leverage

Marouen Ben-Jebara, Saurabh Mishra, Sachin B. Modi and Stephen Mahar

Journal of Business Research, 2023, vol. 159, issue C

Abstract: Personalized medicine is an integral part of a pharmaceutical firm’s product offerings. However, the implications of product personalization on shareholder wealth, with both positive and negative forces at play, remain unclear. This research evaluates how personalization focus by pharmaceutical firms affects their stock returns and idiosyncratic stock risk. It further examines the roles of marketing capability and financial leverage in these relationships. Results, based on a unique secondary data set, reveal that personalization focus has a nonlinear effect on shareholder wealth. Personalization focus is seen to increase (decrease) stock returns (idiosyncratic risk) but only up to a point, beyond which it decreases (increases) returns (risk). Marketing capability and financial leverage are observed to play complex roles in these relationships between personalization on stock returns and idiosyncratic risk but only when personalization focus is low or high. This study draws on these findings to illustrate research and managerial implications.

Keywords: Product personalization; Pharmaceuticals; Shareholder wealth; Marketing capability; Financial leverage; Latent-instrumental variables (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:159:y:2023:i:c:s0148296323000437

DOI: 10.1016/j.jbusres.2023.113685

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