Building Reputational Stocks Through Strategic Action Flows: Lessons from Amazon.Com and its Competitors in Internet Retailing

Abstract

A growing body of strategy research has recognized that a firm's reputation is one of its most valuable intangible assets. For Internet firms, unprotected by traditional barriers to entry and locational advantages, reputation is a key source of competitive advantages. Drawing on the premise that a firm?s reputation is an asset stock that is accumulated through a flow of strategic actions (Dierickx & Cool, 1989), we analyzed the actions of Amazon.com, Barnesandnoble.com and CDNow to develop a framework about reputation building by Internet retailers. Our framework proposes that these firms relied on three types of actions: symbolic, competitive, and relational. Amazon.com, the firm that accumulated a superior reputational stock, took a greater number of more diverse and synergistic actions earlier than its competitors. Based on this analysis, the framework links the types of strategic of actions and their pattern over time to the accumulation of reputation stock.