Signaling effects and the role of culture: movies in international auxiliary channels

Given the high uncertainty in the quality perception of experiential products, manufacturers use signals to influence consumers’ decisions. In the movie industry, literature shows that performance of the main channel (e.g. cinema) strongly influences the performance of auxiliary channels (e.g. DVDs). The success of a movie in the home country is also to be resonated by its good performance in host countries. However, the cultural contingency of these success-breeds-success (SBS) effects has not been examined. This paper aims to test the influence of cultural values on the SBS effects across channels and countries.

Borrowing concepts from the signaling literature and analyzing DVD sales data from six international markets using a multilevel mixed-effects model, the study finds that culture plays a significant role to influence both SBS effects.

In countries with low power distance, short-term orientation and high indulgence, consumers who purchase from auxiliary channels are more likely to be influenced by the box office performance of movies. Meanwhile, cultural distance between the home and host nations significantly decreases the cross-national SBS effect.

The findings are likely to be generalized to online auxiliary channels of movies, but empirical testing is required to ensure that no major adaptation is required in the process. Future research can also extend the framework of this paper to include more countries into the analysis and investigate cultural variables beyond Hofstede’s dimensions.

This paper suggests that the SBS effects may vary across nations. When managers plan for the sequential distributions of experiential products, the cultural values of target markets should be considered to decrease the uncertainty in sales prediction.

This paper contributes to the existing literature by investigating the international auxiliary channels of movies and incorporating cultural values into the framework of sequential distributions. To the best of the authors’ knowledge, this study is the first to test the links between the main and auxiliary channels from an international marketing perspective.