Information Exchange in User Communities:A Study of Individual Level Determinants and Firm Level Effects in the U.S. Snowsports Industry

Public Dissertation Defense

by Thomas Langenberg

August 31, 2007

Content

myBackground

myResearch

myFuture

Where do I come from?

Education

Professional Background

Extracurricular Activities

• Diploma in Aerospace Engineering (University Bw Munich, Germany), obtained Sept 2001

• Management Consulting: 2.5 yrs SAP Consulting with Accenture

• Executive Education: 2 yrs Program Manager “Executive Master in e- Governance”

• Triathlon: Classic + Ironman Distance

• Mountaineering: Mountain climbing, Ski Touring

Personal Background• Nationality: German, born and raised in Dresden

• Currently: Consultant for CVRD (Brazilian mining company)

myBACKGROUND

My Dissertation Journey: “Catching and Riding the Next Wave”

January• Accepted the invitation

from Prof. Finger to join the MIR Chair

June• Applied for a Rotary

International research grant

December• Canceled Hawaii

conference due to e-governance master

2004 2005 2006 2007

January• Launched the Executive

Master in e-Governance Program

February• Accepted invitation from

Harvard University

March• Failed to submit a PhD

proposal successfully

June• Abandoned PhD project

in electronic governance

September• Went to Harvard

University without a PhD project

October• Got inspired by social

network analysis

March• Submitted a PhD research

proposal to EPFL successfully

July• Returned to Lausanne

and joined the Chair CSI

December• Finished draft version of

paper two and three• Submitted paper one to

AMR

April• Submitted final version of

PhD thesis

June• Successful private PhD

Defense

August• Public PhD Defense

myBACKGROUND

Content

myBackground

myResearch

myFuture

Let me introduce to you Bob, the R&D manager, and Frank, an engineer. Both are enthusiastic about skiing and work for Rossignol Skis on a technology project.

Bob, R&D Manager Frank, Engineer

INTRODUCTIO

N

INTRODUCTIO

N

Bob & Frank, a social network

Bob and Frank have been assigned to work together on a new powder ski project. They

work in a team of five (1 Bob and many Franks).

signals information flow in one direction only

Information Exchange in Social Networks

The Franks and Bob actively exchange information about potential aspects of this project.

signals information flow in two directions

It is interesting to look at Bob and Frank’s social network, because the academic literature shows increasing interest in the comparison of structural network configurations and their effects on information exchange (IE)

INTRODUCTIO

N

INTRODUCTIO

N

The network could look like this ..

Str

uct

ura

l C

on

fig

ura

tio

nE

ffe

cts

on

IE Frank is dependent on

Bob’s input

Bob can actively control what Frank knows

information exchange

it could also look like that

vs

Both Bob and Frank are sharing the same

information

Frank is totally independent from

Frank

myBackground

myResearch

Conceptual Research

Paper 1

Empirical Research

myFuture

Content

Over the last years, Rossignol observed that changing the set-up of its engineering teams also alters its ability to innovate.

myRESEARCH

different set-ups of engineering

teams

different set-ups of engineering

teams

More research is required to understand how a firm’s ability to transform ideas into innovations depends

on the structure of its intrafirm social networks

Research Gap

Research Question: How does the set-up of Bob and Frank’s engineering team influence Rossignol’s ability to innovate?

• Cohen, W. M. & Levinthal, D. A. 1990. Absorptive Capacity: A New Perspective on Learning and Innovation. Administrative Science Quarterly, 35 (Special Issue: Technology, Organizations, and Innovation): 128-152

• Lane, P. J. & Lubatkin, M. 1998. Relative Absorptive Capacity and Interorganizational Learning. Strategic Management Journal, 19(5): 461-477

Literaturenew idea

new idea

input

Rossignol

innovative product

innovative product

no product

no product

output

INTRODUCTIO

N

INTRODUCTIO

N

Based on an intensive literature review, I find that Rossignol’s ability to innovate is among other things a result of Bob’s position in the engineering team’s set-up

myRESEARCH

Set-ups of Engineering Team

Bob, R&D Manager Frank, Engineer

FINDINGS

FINDINGS

Bob’s position: decentral

Network Structure: sparse

Ability to Innovate: low

Explanation: Bob has no control over or access to information and communication flows.

no productno product

Effect on Rossignol’s Innovativeness

Bob’s position: central

Network Structure: dense

Ability to Innovate: high

Explanation: Bob has access to information and communication flows. Also, team members are always informed about what is going on.

innovative product

innovative product

myBackground

myResearch

Conceptual Research

Empirical Research

Data Collection

Paper 2

Paper 3

myFuture

Content

U.S. alpine skiing is an interesting subfield of U.S. Snowsports due to its contradicting developments: decreasing sales & participation and increasing firm creation activities

9736

11354

9449

7392

5903

0

2000

4000

6000

8000

10000

12000

1986 1990 1995 2000 2004

Year

Num

ber

of S

kier

Day

s

Participation in U.S. Alpine Skiing

source: leisuretrends.com

source: SIA Report 2005

myRESEARCH INTRODUCTIO

N

INTRODUCTIO

N

Participation & Equipment Sales are Decreasing

0

10

20

30

40

50

60

70

Firm Entries in U.S. Alpine Skiing (Cumulated)

Entrepreneurial Wave in U.S. Alpine Skiing

30% of the currently competing ski firms in U.S. alpine skiing have been founded during the last 6 years. All of them are in the freestyle skiing segment.

For companies operating in U.S. alpine skiing, there are basically two technical dimension along which they can differentiate themselves from competitors

(2) Differentiation along core design & construction principles

Ski length

Running length

Camber source: www.skibuilders.com

Tip and tail width Waist width

(1) Differentiation along ski geometry/design parameters

source: www.fischer-ski.com

myRESEARCH INTRODUCTIO

N

INTRODUCTIO

N

I collected data through qualitative methods to arrive at a better understanding of how the industry works, especially with respect to freestyle skiing.

• I conducted 20+ interviews with industry representatives (CEO, product managers, resort managers, industry analysts etc.) during the annual industry trade show

• Average length of the interview 30minutes

• Interviews were voice recorded

• I conducted 20+ in depth interviews with managers, founders, veterans, and analysts of the local Colorado/Utah ski industry

• Average length of the interview was 60+ minutes

• Interviews were voice recorded

(In)Formal Interviews, Archival Data Analysis & Trade Magazine Research

Product Manager Incumbent Ski Firm

“These small start-up firms that are popping up all over Colorado, California, and the East Coast now are exactly what we need. They attract a new generation of skiers that might support the sport for a long period of time.”

CEO of a freestyle ski start-up company

“Our products are going back to the roots of skiing. We want to change the industry from the inside. We are not big and corporate, but our company is rider owned and rider operated.”

Newschoolers.com community member about the freestyle skiing

movement

“These up-start companies are sick. They support the skiing sports and push the industry forward.”

Better understanding of how the industry works: start-ups are challenging established firms

myRESEARCH

DATA

COLLECTIO

N

DATA

COLLECTIO

N

During my interviews, I learned that newschoolers.com is a highly referred to and influential online community of freestyle ski enthusiasts

Demographics of the User Community

• The community is the largest community of freestyle skiers in U.S. alpine skiing

• Newschoolers.com is said to be the most influential community when it comes to setting trends, creating opinions, or initiating collective action in U.S. freestyle skiing

• Newschoolers.com is actively driving the freestyle skiing sport

myRESEARCH

DATA

COLLECTIO

N

DATA

COLLECTIO

N

Content

myBackground

myResearch

Conceptual Research

Empirical Research

Data Collection

Paper 2

Paper 3

myFuture

Bob and Frank are members of various communities, such as newschoolers.com or skibuilders.com. In all of them, they are perceived as very important. Why?

Creative individuals often

use online communities to

share ideas

Research Question: Why are Bob and Frank indispensable for information exchange, while others are not?

myRESEARCH INTRODUCTIO

N

INTRODUCTIO

N

It is not yet clear how one can

identify members that are more

relevant to informaiton

exchange in a user community

than others

Research Gap

First, one reason why Bob and Frank are perceived as more important might be because they are more actively exchanging information with other members

• Lakhani, K. R. & von Hippel, E. 2002. How open source software works: “free” user-to-user assistance. Research Policy, 1451: 1–21

• Franke, N. & Shah, S. 2003. How communities support innovative activities: an exploration of assistance and sharing among end-users. Research Policy, 32: 157-178

• Shah, S. K. 2006. Motivation, Governance and the Viability of Hybrid Forms in Open Source Software Development. Management Science, 52(7): 1000-1014

Supporting Literature

** adopted from Lakhani, K. R. & von Hippel, E. 2002. How open source software works: “free” user-to-user assistance. Research

Policy, 1451: 1–21, p.9

The “theory” of information exchange in user communities

myRESEARCH

HYPOTHESIS

BUILDING

HYPOTHESIS

BUILDING

Participation in information exchange

FrankRest of Community

Low

High

Bob

Second, Bob and Frank are extremely enthusiastic about skiing and fully committed to building skis.

Frank is a true engineer

• Frank loves tinkering with materials and process technologies. Finding new ways of doing certain things is a core competence of Frank.

• Frank’s regularly meets with friends to chat about the latest projects and mechanical challenges he is currently facing.

Bob is obsessed by the idea of developing a radically new ski

• Getting in touch with other people in order to exchange tips & tricks regarding ski technology is an important concern of Bob.

• Bob is very enthusiastic about the ski project and thus wants to understand every piece of information he can get a hold of.

myRESEARCH

HYPOTHESIS

BUILDING

HYPOTHESIS

BUILDING

Hence, such emotional commitment can be another reason why Bob and Frank are being perceived as more important than others.

According to my analysis Frank and Bob indeed outperform most of the members with respect to participation in information exchange and emotional commitment

Variable Mean Median Std. Dev. Min Max 1 2 3 4 5 6 7 8 9

1 RELEVANCE_TO_COMMUNITY 2.24 3.00 1.85 0.00 15.00 1.002 PARTICIPATION_IN_INFORMATION_EXCHANGE 1.06 0.19 1.88 0.00 13.00 0.27 *** 1.003 EMOTIONAL_COMMITMENT 4.71 5.00 1.43 1.00 7.00 0.15 ** 0.03 1.004 USER_EXPERIENCE 26.47 24.00 18.73 1.00 70.00 0.11 * 0.18 *** -0.05 1.005 AGE 18.55 18.00 4.28 8.00 70.00 -0.03 0.01 -0.22 *** 0.27 *** 1.006 GENDER 0.08 0.00 0.27 0.00 1.00 -0.03 -0.07 0.01 -0.10 * 0.02 1.007 USER_IS_EFFECTIVE_IND_OBSERVER 5.34 5.33 1.23 1.00 7.00 0.06 0.05 0.28 *** 0.07 0.08 -0.14 ** 1.008 USER_MAINTAINS_BIZ_RELATIONS 3.50 3.00 2.09 1.00 7.00 0.06 0.18 *** 0.31 *** 0.11 * -0.03 0.03 0.19 *** 1.009 USER_COLLABORATES_WITH_INDUSTRY 0.19 0.00 0.39 0.00 1.00 0.11 * 0.08 -0.02 0.22 *** 0.20 *** 0.05 0.06 0.17 *** 1.00

°°° in thousands*** p < .001, ** p < .01, * p < .05

Descriptive Statistics & Pairwise Correlation

Regression Results

RELEVANCE_TO_COMMUNITY

1 EMOTIONAL_COMMITMENT 0.25 *

2 PARTICIPATION_IN_INFORMATION_EXCHANGE°°° 0.51 ***

3 USER_EXPERIENCE 0.10

4 AGE -0.02

5 GENDER -0.11

6 USER_COLLABORATES_WITH_INDUSTRY_SOURCES 0.14

7 USER_MAINTAINS_BIZ_RELATIONS_INSIDE_COM -0.03

8 USER_IS_EFFECTIVE_IND_OBSERVER 0.03

n 451

Pseudo R-Squared 2.83%

°°° in thousands

*** p < .001, ** p < .01, * p < .05

myRESEARCH

FINDINGS

FINDINGS

A user community depends on the participation in information exchange and emotional commitment of a few selected individuals that are “most central” to the community

•User communities react very sensitively to taking out key members

• “Vibrant” user communities draw on a “common glue” (shared norms and beliefs) which keeps information exchange alive and the user community together

•User communities can be “accessed” and understood by observing/getting in touch with the most “central” members

myRESEARCH

IMPLICATIO

NS

IMPLICATIO

NS

BobBob

FrankFrank

ImplicationsThe communication network on newschoolers.com

Content

myBackground

myResearch

Conceptual Research

Empirical Research

Data Collection

Paper 2

Paper 3

myFuture

Pam & Jim, friends of Bob and Frank, have been skiing for all their lives. Just one year ago, they started to get into freestyle skiing.

Research Question: What happened? Why did they change their opinion?

myRESEARCH INTRODUCTIO

N

INTRODUCTIO

N

Jim Pam

One Year Ago

Here is what they think

• “Rossignol is a traditional ski racing firm.”

• “They have got nothing to do with freestyle skiing”

Today

Jim Pam

Here is what they think today

• “Rossignol is sick & drives freestyle skiing.”

• “Start-up firms are great, but Rossignol has the resources to innovate”

On the slopes they get to know Bob and

Frank who invites them to join

newschoolers.com

Also, Jim and Pam are getting into the

ski press in order to find new insights into

new “tricks and moves”

The literature argues that the media are an important determinant of how a firm is perceived in the public. Little attention has been paid though to the effects of social influence.

myRESEARCH

HYPOTHESIS

BUILDING

HYPOTHESIS

BUILDING

• Moscovici, S. & Zavalloni, M. 1969. The Group as a Polarizer of Attitudes. Journal of Personality and Social Psychology, 12(2): 125-135.

• Rindova, V. P., Pollock, T. G., & Hayward, M. L. A. 2006. Celebrity firms: The social construction of market popularity. Academy of Management Review, 31(1): 50-71.

• Katz, E. 1957. The Two-Step Flow of Communication: An Up-To-Date Report on an Hypothesis. The Public Opinion Quarterly, 21(1): 61-78.

My Hypothesis:

Besides the media, exposure to information exchange in user communities can also alter an individual’s emotional response toward a selected firm

Supporting Literature

Media Reporting

• Established ski firms (e.g. Rossignol) are pushing ski technology

• Start-up ski firms base their success on a marketing hype

• Technology is the main industry driver

“Prevailing Opinion” Social Influence

• Start-up firms are the founding fathers of U.S. freestyle skiing

• Start-up firms challenge European incumbent firms successfully

• Start-up ski firms take skiing back to its natural roots

“Prevailing Opinion”

Pam

Being active members in the newschoolers.com community strengthens Jim & Pam’s opinion about Rossignol as being not very credible in U.S. freestyle skiing

Perceived Credibility of Rossignol

Low Exposure to newschoolers.com

High Exposure to newschoolers.com

myRESEARCH

Low

FINDINGS

FINDINGS

Low

PamJim

Jim

Case 1: Low Exposure to Media

<

Perceived Credibility of Rossignol of

Perceived Credibility of Rossignol of

Explanation

Jim is influenced by the “prevailing opinion” of newschoolers.com members

High

Exposure to Media

Actively sourcing additional information from the media helps Jim & Pam to improve their perception of Rossignol’s credibility in U.S. freestyle skiing

Pam

Exposure to Media

Low Exposure to newschoolers.com

High Exposure to newschoolers.com

Jim

Case 2: High Exposure to Media

High

Low

High

Perceived Credibility of Rossignol

PamJim

>

Perceived Credibility of Rossignol of

Perceived Credibility of Rossignol of

Explanation

Jim learns in the media that Rossignol is quite active when it comes to driving freestyle skiing

myRESEARCH

FINDINGS

FINDINGS

Pam

Exposure to Media

Low Exposure to User Community

High Exposure to User Community

myRESEARCH

IMPLICATIO

NS

IMPLICATIO

NS

Jim

Insights

The “social” media has gained importance

• Interaction among users can influence a customer’s perception of a firm’s performance within an industry

• User communities provide access to current thoughts, perceptions, and opinions with respect to industry developments, firm activities and products

High

When marketing products to Jim and Pam, Rossignol needs to take advantage of both the user community (case 1) as well as the media (case 2)

Low

High

Perceived Credibility of Rossignol

Pam

Jim

Case 1Case 1 Case 2Case 2

Content

myBackground

myResearch

myFuture

What am I going to do next? Good question, because there are so many options and opportunities …

(Semi) Professional Triathlete

myFUTURE

Iron Ore Mining & Steel Making Expert

… in any case, as many of you might already know, I think I will continue to ride waves!

e-governance

open source softwar

e

technolgical innovation

online social

networking

Aerospace Engineerin

g

IT Consultancy

& System Integration Academic

Program Manager & Researcher

Researcher Social

Sciences Professional Triathlete

technology &

operations managemen

t

myFUTURE

http://thomaslangenberg.com

This is the end!

Thank You For Your Attention