Valuation Barriers with Mobile Services

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consider the potential of mobile service to deliver value-added, interactive, and location-based services to customers and thus to provide a competitive edge in the mobile marketplace. However, not all of the mobile services can proceed smoothly without a hitch. Barriers may arise after implementation and thus reduce the degree of implementation success. Some scholars mention that without mass use, mobile services will quickly fail, even under the best-designed business model (cf. Anckar and D’Incau, 2002; Pedersen et al., 2002; Pedersen and Ling, 2003). Wang et al.

(2006) argue that firms should take crucial barriers into consideration during the operation of mobile services, such as consumer acceptance. Bouwman and Carlsson (2007) also suggest three obstacles that have negative effects on the actual use of mobile services. Based on the above literature, the value of mobile services that can ultimately be realized by the firm may be different from the expected value because of the barriers that arise after mobile service has been implemented. The realized value of mobile services has significant implications for a firm to truly understand the mobile service they feel and perceive. Therefore, we define the realized value of mobile services as the real value that can be identified after mobile service implementation. According to Chircu and Kauffman (2000), this will be the result of a conversion process in which the transformation of potential value occurs.

Based on both values and the mobile service literature, we argue that high potential value means high expected value in combination with a high level of intention to use mobile services. The firms have features that facilitate the adoption of new mobile technologies and believe that such services can provide them with benefits. With a high level of support and a strong belief in mobile services, it is expected that conversion barriers will be proactively eliminated, thus leading to high levels of realized value. We develop the hypothesis H1 on this basis:

H1: Potential value is positively related to the realized value of a mobile service.

3.2 Valuation Barriers with Mobile Services 3.2.1 Industry barriers

As we discussed earlier, the potential value of mobile services is the expected value that a firm creates when it has the demand to use the service to gain benefits. This value will diminish during the valuation process because of different barriers. The industry barrier is one kind of barrier. Based on the past literature, three industrial barriers are discussed in this study: network externalities, industry characteristics of adopting new service innovation and competitive pressures.

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For some products or services, benefits to consumers depend on the number of other consumers who have purchased compatible devices (Katz and Shapiro, 1986).

As Katz and Shapiro (1986) have argued, network externalities are based on the assumption that the perceived benefits often depend on the number of other consumers who purchase identical or compatible items. In the mobile market, Wang et al. (2008) consider network externalities as well-verified concepts that can significantly explain the acceptance of new technologies; they confirm the effectiveness of network externalities in bolstering the acceptance of multimedia messaging services (MMS), an innovation in the field of mobile telecommunications.

Hence, we argue that network externalities affect potential users’ acceptance of new mobile service innovations before they actually use them. Once the number of other adopters who have used such mobile services on the market grows up, the potential adopters will expect a high level of value from the service. Therefore, we develop hypothesis H2a:

H2a: A lack of network externality has a negative effect on the potential value of mobile services.

At the same time, having such characteristics in adopting new service innovations is necessary to keep a firm growing. The world is moving ahead in terms of mobility, and mobile innovative investment is growing, too. Datamonitor (2009) provides an analysis of the global mobile industry, and this report shows that the global mobile phone market, which consists of all analog and digital handsets used associated with mobile telephones, generated total revenues of $101 billion in 2008, representing a compound annual growth rate (CAGR) of 12.2% for the period spanning 2004-2008. The global mobile phone market has been growing at a healthy rate over the past five years and will continue to do so during the forecast period (Datamonitor, 2009). Therefore, it seems that the widespread mobile market around the world will sustain mobile investment very well. Firms should take these innovative trends into account and work to create more powerful mobile services to facilitate market growth. Because the industry generally expects a bright future for new mobile services, such positive attitudes will help a specific firm to preserve a similar attitude and thus create high potential value for mobile services. Thus, we develop hypothesis H2b:

H2b: A lack of industrial positive attitude toward adopting new service innovation has a negative effect on the potential value of mobile services.

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Moreover, competitive pressure has a significant influence on mobile service.

Many firms mention that they will consider investing in mobile applications when their competitors and strategic partners, the source of competitive pressure, begin to experiment with new service practices (Wang and Cheung, 2004). Thus, competitive pressure can drive firms to seek the benefits of new mobile services. In other words, a lack of competitive pressure causes firms not to be able to see the value of mobile services and keeps them from moving into the realm of mobile business (Wang and Cheung, 2004). Thus, we developed hypothesis H2c:

H2c: A lack of competitive pressure has a negative effect on the potential value of mobile services.

3.2.2 Organizational barriers

In this study, we discuss three different kinds of organizational barriers:

organizational features (organization size and organization age), organizational culture, and business alignment.

Firm size is one of the most important structural factors that affects a firm’s speed and pattern of adopting innovations (Damanpour, 1991; Damanpour, 1992; Yao et al., 2003). Wang and Cheung (2004) have argued that firm size has an interaction effect on the use of mobile technologies in daily firm business and that larger firms demonstrate a significantly stronger intention to adopt e-business than do smaller firms. We can derive that large firms expect that mobile innovations can preserve organizational growth, attract more customers, and increase exposure rates. Thus, hypothesis H3a is as follows:

H3a: Organization size has a positive effect on the potential value of mobile services.

The past literature has indicated that organization age is negatively related to the adoption of innovations (Flanagin et al., 2000). Newer organizations are born into an environment saturated with advanced communication and information technologies, and thus, they naturally rely on technologies to achieve competitive advantage (Porter, 1985). Anthony et al. (2007) also argue that new organizations must create structures involving costly learning and other set-up costs, and older organizations are less like to react to environmental change due to bureaucratization and other time-dependent processes. Because mobile services are often perceived as a new technological trend, a new channel, and a new opportunity to gain competitive advantage in the specific industry to which a particular firm belongs, we argue that the newer organizations

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may be more inclined to use mobile services, and they may expect higher value from those mobile services than older organizations. Hypothesis H3b is as follows:

H3b: Organization age has a negative effect on the potential value of mobile services.

Organizational culture is also a key factor that affects a firm’s decision to invest in an innovation. Today, the new innovative market tendency is toward mobility and service orientation. Additionally, if senior managers in an organization such as the CEO recognize these market trends, they are more likely to adopt mobile services and perceive that the benefits of the service outweigh the risks. Then, the firm will be more likely to adopt the mobile service. Consequently, our hypothesis here is as follows:

H3c: Organizational culture has a positive effect on the potential value of a mobile service.

IT-business alignment can aid stakeholders in developing a clearer understanding of the goals and objectives of the project at the outset and can maximize the potential return on IT investment (Huang and Hu, 2007).Particularly now, in the information explosion age, firms take customer service seriously. If they aim to increase the productivity and efficiency of customer service representatives and enhance customer service value, the firms that want to gain competitive advantage will recognize the value of new IT innovations such as mobile service technology: they may help the firm to fulfill their need to transform an enormous amount of data into a reliable source, correct related customer information, access real-time customer information, and more. Because mobile service technology allows these firms to fulfill their business needs, the technology is more aligned with their business goals. Thus, hypothesis H3d is as follows:

H3d: A lack of business alignment has a negative effect on the potential value of a mobile service.