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Product personalization focus in the pharmaceutical industry and shareholder wealth: The roles of marketing capability and financial leverage

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  • Ben-Jebara, Marouen
  • Mishra, Saurabh
  • Modi, Sachin B.
  • Mahar, Stephen

Abstract

Personalized medicine is an integral part of a pharmaceutical firm’s product offerings. However, the implications of product personalization on shareholder wealth, with both positive and negative forces at play, remain unclear. This research evaluates how personalization focus by pharmaceutical firms affects their stock returns and idiosyncratic stock risk. It further examines the roles of marketing capability and financial leverage in these relationships. Results, based on a unique secondary data set, reveal that personalization focus has a nonlinear effect on shareholder wealth. Personalization focus is seen to increase (decrease) stock returns (idiosyncratic risk) but only up to a point, beyond which it decreases (increases) returns (risk). Marketing capability and financial leverage are observed to play complex roles in these relationships between personalization on stock returns and idiosyncratic risk but only when personalization focus is low or high. This study draws on these findings to illustrate research and managerial implications.

Suggested Citation

  • Ben-Jebara, Marouen & Mishra, Saurabh & Modi, Sachin B. & Mahar, Stephen, 2023. "Product personalization focus in the pharmaceutical industry and shareholder wealth: The roles of marketing capability and financial leverage," Journal of Business Research, Elsevier, vol. 159(C).
    • Handle: RePEc:eee:jbrese:v:159:y:2023:i:c:s0148296323000437
    DOI: 10.1016/j.jbusres.2023.113685
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