McCombs TODAY

McCombs IROM faculty members, Professor Prabhudev Konana and Assistant Professor Bin Gu, won the 2007 Best Paper Award from the journal Information Systems Research for their paper “Competition Among Virtual Communities and User Valuation: The Case of Investing-Related Communities.” Virtual investment communities (VICs) are online message boards where investors share stock tips, earning forecasts and rumors.

“It is often difficult for new VICs to attract users away from established ones, which explains why Google Finance, which debuted its VIC recently, has difficulty competing against established VICs such as the Yahoo! Finance message boards,” says Gu. “However our research reveals that not all small virtual investment communities are doomed. Some smaller VICs actually thrive on certain challenges.”

Gu and Konana say the secret of small VICs’ success is leveraging the trade-offs between information quantity and quality in large online communities. This differentiation among VICs, in turn, attracts users with different characteristics and softens the competition.

“The insights from our study provide valuable guidance for developing and managing VICs and other virtual communities in a competitive environment,” says Konana.