Why Do Manufacturers Launch Virtual Nft Products? The Role of Aspirational Inventory Levels

Abstract

Manufacturers may face risks when transitioning from their traditional, tangible products to intangible offerings such as virtual Non-Fungible Tokens (NFTs), which differs from its conventional operations. Limited literature has explored why manufacturers opt to launch virtual NFTs. Motivated by Behavioral Theory of the Firm, we hypothesize that firms with excess inventory are more likely to engage in problemistic search strategies aimed at reducing surplus, thus utilizing NFTs launches as marketing tools to enhance sales of physical products and increase inventory turnover. Conversely, firms with inventory levels below their aspirations may adopt NFTs through slack search approaches, leveraging this new technology as an innovation strategy to bolster inventory performance and maintain competitive advantages. We sampled 104 firm level announcements regard virtual NFT products launching from United States listed manufacturing firms and tested the hypotheses. Our findings indicate that manufacturers with operational performance deviating from their aspirational inventory levels, whether positively or negatively, tend to launch NFTs. Furthermore, environmental cues like strong public attention and intense peer pressure significantly reinforce this tendency. This study enriches the operations management literature by bridging inventory management with technological adoption, and elucidates how physical inventory conditions drive firms' decisions to embrace emerging intangible NFT products.

Keywords: non-fungible tokens, inventories level, behavioural theory of the firm