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This study aims to examine how e‐service initiatives affect a firm's market valuation. To provide further insight, paper also assesses the impact of technology acquisition mode, the firm's organizational position, industry characteristics, and service introduction strategy on firm value.

Using an event study methodology, we examined the market value of e‐service initiatives through their impact on stock returns‐investors' expectations of firm performance. Based on strategy and marketing theories, we also developed a conceptual framework to examine factors that influence firm performance and value.

Findings include positive abnormal returns accompanying e‐service announcements. Regression results also show market size and firm size have negative effects on valuation while firm experience has positive effects on firm value. Whereas pioneers and late entrants have an advantage over early entrants, firms acquiring needed technology through collaborative R&D or using diversification expansion strategies experience increased returns. Results are consistent across diverse industry types.

Based on concepts derived from extant marketing strategy and technology management research, this research provides a new perspective for examining the performance implications of e‐services introduction by developing an integrated framework that identifies a comprehensive set of factors that shape the market valuation of e‐service initiatives. Future research can further evaluate the performance effects of e‐service initiatives on other dimensions of corporate performance as well as track the performance before and after announcements to give further insight into effective corporate strategies and long‐term investigation.

When firms initiate e‐services, technology acquisition mode, organizational position, industry characteristics, and service introduction strategies affect financial performance, and therefore, should be accounted for by managers. Recognizing value drivers and their varying effects on performance can provide managers with insights into developing e‐services.

This study presents a framework integrating various performance‐influencing forces at work when a firm initiates e‐services. This framework helps practitioners and researchers in clarifying the importance of e‐service initiatives and the fit of such services with performance‐affecting factors.