Marketing in a Connected World

This dissertation is dedicated to studying important changes in Marketing due to the increasing ubiquitous connections among customers and companies. With the advance in Information Technology, cohesiveness and interdependency among customers themselves and companies become more pronounced and constantly create new marketing phenomena, casting interesting research questions. Essay one studies the positive impact of Airbnb, where customers are closely connected and enabled to make transactions with each other, on the local restaurant's revenue. In this paper, I employ multiple identification strategies and methodologies such as a difference-in-difference, a spatial regression discontinuity design, falsification tests, distance-based analysis, and randomization inference, and find that Airbnb has a positive spillover effect on the local restaurant's revenue. Further, I identify that this positive impact is stronger for independent restaurants and in less commercial areas, which likely need the benefit the most. These findings are important since it shows the positive influence of Airbnb, in contrast to some of its negative influences documented in the literature (e.g., Airbnb increases housing and rent price), helping evaluate the overall impact of the sharing economy platforms like Airbnb. Essay two explores digital firms' new business environment in which firms are able to actively learn from their actual customers after launching their digital product and improve the product following such learning. Specifically, I study the impact of this post-launch continuous improvement (PL-CI) on customer engagement in the context of mobile applications (apps). Utilizing a novel dataset on apps' usage data and employing a dynamic panel model with instrumental variables, I estimate that app updates, app firm's PL-CI activities, have a positive impact on user engagement. urther, I apply a text-mining technique and disentangle three different types of app updates: addition of new features, improvement of existing features, and bug fix. I identify that these different types of app updates have differential effects, which vary depending on two important moderators, app age and user satisfaction.