Brand equity,warranty costs,and firm value |
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Institution: | 1. Farmer School of Business, Miami University, 800 E. High Street, Oxford, OH, United States;1. Department of Industrial Engineering, University of Chile, Beauchef 851, Santiago, Chile;2. Columbia Business School, 3022 Broadway, New York, NY 10027, United States;3. Retail Management Institute at the Leavey School of Business at Santa Clara University, 500 El Camino Real, Santa Clara, CA 95053, United States;1. Xiamen University, Fujian Province 361005, China;2. University of Cincinnati, Cincinnati, OH 45220, United States;1. Department of Economics and Management, University of Parma, Italy;2. Department of Marketing, Faculty of Economics and Business, University of Groningen, the Netherlands;1. UBC Sauder School of Business, University of British Columbia, Canada;2. Faculty of Business, Hong Kong Polytechnic University, China;3. Beedie School of Business, Simon Fraser University, Canada |
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Abstract: | Warranty management is frequently discussed in the context of businesses’ ongoing efforts to reduce costs. However, how marketing can contribute to warranty cost reduction is empirically unclear. This opacity led to the current study, which focused on how warranty claim costs and abnormal warranty accrual costs mediate the relationship between brand equity and firm value—as well as the contingencies for the mediation. The result shows that brand equity reduces warranty claim rate and abnormal warranty accrual rate through which it increases firm value. In addition, product innovativeness decreases the association between brand equity and warranty claims and between brand equity and abnormal warranty accruals. As such, the findings revealed the roles of brand equity and product innovation in warranty cost reduction and thus suggested the need for managers to build and leverage their marketing resources when attempting to control warranty costs. |
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Keywords: | Brand equity Innovativeness Warranty claims Abnormal warranty accruals Warranty expenses |
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