Signalling theory

About: Signalling theory is a research topic. Over the lifetime, 63 publications have been published within this topic receiving 2366 citations. The topic is also known as: Vilmo.

Signalling reputation in international online markets

Abstract: Although online technology enables young and small firms to gain access to buyers in foreign markets efficiently, it does not overcome the liability of being an unknown seller among a sea of largely unknown firms. In order to internationalize effectively through online markets, such firms need to establish an online reputation within a context where there are a large number of competitors, most of (or all of) are relatively unfamiliar to customers. The purpose of this article is to explore how they might do so. Drawing on economics-based signalling theory as well as past research in the areas of strategic management, marketing, and MIS, we hypothesize that firm-controlled reputation signals with credible commitments—price, advertising, and umbrella branding—will impact reputational performance and moderate the impact of user-generated reputation signals. We test the hypotheses using data collected about software products sold on the Web site Download.com. Our results show that signalling by advertising and umbrella branding affects reputational performance. The article provides insights about signalling in online markets for managers developing reputation-building strategies, as well as for international entrepreneurship researchers. Copyright © 2009 Strategic Management Society.

Modelling and the fall and rise of the handicap principle

Abstract: The story of the fall and rise of Zahavi’s handicap principle is one of a battle between models Early attempts at formal modeling produced negative results and, unsurprisingly, scepticism about the principle A major change came in 1990 with Grafen’s production of coherent models of a handicap mechanism of honest signalling This paper’s first claim is that acceptance of the principle, and its dissemination into other disciplines, has been driven principally by that, and subsequent modeling, rather than by empirical results Secondly, there is a vast literature on biological signalling but few studies that make all of the observations necessary to diagnose the handicap mechanism My final claim is that many of the applications of “costly signalling theory” in other disciplines are conceptually confused Misinterpretations of what is meant by “costly signalling” are common Demonstrating that a signal is costly is insufficient and is not always necessary in order to prove that, and explain why, a signal is honest In addition to the biological modelling of signals, there is an economic literature on the same subject The two run in parallel in the sense that they have had little mutual interaction Additionally, it is the biological modelling that has been picked up, and often misapplied, by other disciplines

Expert capital and perceived legitimacy Female-run entrepreneurial venture signalling and performance

Abstract: Research has shown that female entrepreneurs face unique barriers to entrepreneurial success, such as procuring funding and being perceived as credible. Limited past theory has addressed how these challenges can be met effectively by female-run entrepreneurial ventures. As a result, effective strategies for female entrepreneurs to overcome them are unclear. To address the need for research in this area, the authors use signalling theory to guide an empirical study utilizing panel study data based on 711 entrepreneurial ventures (334 female-run; 377 male-run). Signals perceived by outsiders pertaining to the risk preference, legitimacy and social capital of female-run ventures are examined and linked to venture funding, net worth and longevity outcomes. The results, based on non-parametric analyses and statistical modelling, suggest that expert capital (social capital from experts) leads to perceptions of higher legitimacy and funding success for female-run ventures.

Theoretical perspectives on corporate disclosure: a critical evaluation and literature survey

Abstract: Purpose – The purpose of this paper is to provide an extensive and critical overview of the theoretical perspectives used in the accounting disclosure literature including economic theories, political and social theories. Design/methodology/approach – The paper reviews and discusses in details the positive accounting theory (PAT), agency theory, signalling theory, political economy theory (PET), stakeholder theory, legitimacy theory and contingency theory to identify the situations suit each of these perspectives. Findings – The main finding shows that there is no universal theory applicable for all situations or societies. For example, PAT is probably used when a corporation believes that its primary responsibility is to use its resources and engage in activities designed to maximise its profits. On the other hand, the PET seems to better explain why some corporations appear to respond to government or public pressure for information about their social impact. The agency theory provides the required fram...

Implications from cue utilisation theory and signalling theory for firm reputation and the marketing of new products

Abstract: The main research streams, which focus on signals, signalling theory and Cue utilisation theory, stress the importance of a producer's credibility or reputation as an important factor that determines a signal's potential to reduce customer risk and to motivate customers to adopt a product. Earlier empirical research has focused on the isolated effect of cues like price, guarantees, advertising or reputation on perceptions of quality of new products rather than on the impact of reputation on perceptions of other cues, such as advertising and bonding instruments, e.g. guarantees. This research focuses on the impact of reputation on the effectiveness of various types of information and bonding instruments, which are said to depend on the character of the instrument. The major goal of this paper is to identify adequate strategies for an innovative producer with low reputation to signal high quality credibility.