Unlocking the roles of product Innovation and branding in driving customer value creation and firm value appropriation

The creation of value for customers has been recognised as a central concern of marketing academics and managers. Yet, it is increasingly acknowledged that customer value creation alone is insufficient to ensure a firm's profitability. Pragmatically firms have little incentives to engage in creating value for customers in the absence of opportunities to appropriate value back from their value creation effort. Hence, research needs to address how firms can achieve simultaneously ‚Äö- customer value creation and firm value appropriation. The study's primary objective is to identify the mechanisms that assist firms to achieve customer value creation and firm value appropriation. The literature emphasises the firms' capabilities (i.e. product innovation) as the means of creating customer value, to the neglect of firm value appropriation. This study contends that brand equity is a key mechanism that can link product innovation and customer value creation and firm value appropriation. This view is advanced because a brand adds value to the product endowed by that brand and at the same time the brand influences the customers' preferences that favour the brand's base of differentiation, resulting in competitive advantage attributable to the brand. The study's secondary objective is to advance the roles of brand orientation, market orientation, and transformational leadership. This study examines the effect of the interaction between brand orientation and market orientation on product innovation and the moderating effect of transformation leadership on product innovation ‚Äö- brand equity relationship. The results show that brand equity mediates the relationship between product innovation and customer value creation and firm value appropriation. Further, the interaction between market orientation and brand orientation acts as a key driver of product innovation in the development of a strong brand equity. Finally, transformational leadership moderates product innovation ‚Äö- brand equity relationship.