Transformation of firm innovation activities into brand effect

Purpose Brand effect is an important source of innovation performance, but rarely any study in the past has paid attention to explore the way firm innovation activities transform into brand effect. The purpose of this paper is to investigate how firm innovation activities transform into brand effect. Design/methodology/approach A set of hypothesis has been developed to show the relationships among firm innovation activities, brand prototype, brand preference and brand recommendation. The online survey method was used for data collection. In total, 546 valid questionnaires were retrieved. The study used confirmatory factor analysis and structural equation modeling technique to test the hypothesis. Findings Results indicate that brand prototype leads the process of cognitive processing from innovation activities’ perception to brand preference and recommendation. The consumer perception of process innovation, marketing innovation, product innovation and the store environment have direct impact on brand prototype that further influences product sophistication, brand preference and brand recommendation. But, the most powerful influence is on brand preference. Moreover, product sophistication–attribute-specific brand knowledge has direct impact on brand preference and indirect impact on the brand recommendation. The whole process from brand prototype to brand preference and brand recommendation mainly reflects the strength of the brand effect formation. Practical implications This study provides useful managerial insights so that firms can learn the way to maximize brand effect through the management of innovation perception and cultivation of innovation soft capability to enhance innovation performance. Originality/value This study unfolds the transformation of firm innovation activities into brand effect that provides a new theoretical explanation and a holistic framework for the source of innovation performance.