Online Information Practices for User Innovation in Data-Rich Environments

Internet has been changing contemporary information environments into being data-rich by with user-generated content. The rich data generated by users on the Internet provide new opportunities for customer-driven and open innovation on the one hand, and potentially lead to information overload when boundedly rational managers allocate their scarce attention to abundant information on the other. Drawing on a symbolic value perspective, we study firms’ information practices in using online user innovation communities and their impacts on firm value. By extending the theory of information as symbol in data-rich environments, we conceptualize two types of information practices in using online user innovation communities: gathering of information refers to a firm’s practices to acquire information about new products and services from its online user innovation community; justifying for innovation refers to a firm’s practices to show that its new products and services are decided based on the most pertinent information from its online user innovation community. We propose that, in data-rich environments, gathering of information does not have symbolic value while justifying for innovation has. By using a longitudinal data set from Starbucks, we conduct an event study to empirically test our theory. We found evidence showing that gathering of information is not related to firm value but justifying for innovation is positively related to firm value in the financial market.