Reputation of an original project and its effect on the commercial success of the project remake : the case of film remakes in the US film industry

Reputation of an original project and its effect on the

commercial success of the project remake: The case of film

remakes in the US film industry

Eva Hamann 11731788

22nd _{June 2018 – Final version} MSc. Business Administration

Entrepreneurship and Management in the Creative Industries Track Amsterdam Business School – University of Amsterdam

Statement of Originality

This document is written by student Eva Hamann, who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document are original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

T

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1. INTRODUCTION 4

2. THEORETICAL BACKGROUND 7

2.1. REPUTATION AND ORGANIZATIONAL PERFORMANCE 7

2.2. REPUTATION AND PROJECT PERFORMANCE 8

2.3. REPUTATION AND RECRUITMENT 11

2.4. STAR PROFESSIONALS 11

3. HYPOTHESES BUILDING 13

3.1. DIFFERENT TYPES OF REPUTATION 13

3.2. MEDIATING ROLE OF STAR PROFESSIONALS 15

4. METHOD AND DATA 18

4.1. RESEARCH SETTING AND SAMPLE 18

4.2. FILM INDUSTRY AND PROJECT REMAKES 18

4.3. FILM INDUSTRY AND STAR PROFESSIONALS 19

5. MEASURES 20 6. RESULTS 23 6.1. DESCRIPTIVE STATISTICS 23 6.2. CORRELATIONS 24 6.3. TESTING HYPOTHESES 26 7. DISCUSSION 28 7.1. HYPOTHESES 28 7.2. THEORETICAL CONTRIBUTIONS 31 7.3. MANAGERIAL IMPLICATIONS 32 7.4. LIMITATIONS AND FUTURE RESEARCH 33 8. CONCLUSION 35 REFERENCES 36 APPENDIX 41

1.

I

Reputation and the effect it has on performance is a well-studied phenomenon. Many studies

show that a good corporate reputation can affect financial performance (Rindova, Petkova, &

Sever, 2005) reduce perceived risk for suppliers and other stakeholders (Roberts & Dowling,

2002) and attract more talented applicants (Cable & Turban, 2003). However, according to

Fombrun and Shonley (1990) reputation is a multi-dimensional construct, which is perceived

differently amongst stakeholders. Several studies attempted to operationalize reputation in, for

example, perceived quality and prominence (Rindova, Petkova, & Sever, 2005) or artistic and

economic reputation (Delmestri, Monanari, & Usai, 2005). In addition, Wijnberg (1995) set

up the selection system theory, which includes the different types of stakeholders called

“selectors” and how they in turn affect consumer behavior. The selection system theory aims

to shed light on the competitive process by categorizing three types of selectors, each

dominant in their competitive environment: market, peer and expert. Ebbers and Wijnberg

(2012) used the selection system theory to analyze an organizations’ reputational signals

divided in the different types of selectors. The selection system theory has already been

applied by earlier studies, showing how “winning or being nominated for an award impacts

box office revenues of mainstream or art-house films” (Gemser, Leenders, & Wijnberg,

2008). No studies have used selection system theory to explain how the reputation attached to

an old project can influence the level of star professionals within the founding team of a

remake project. And no studies have explained how both – the reputation attached to an old

project and the star professional in the remake project – influence the final performance of the

remake project. Hence, to gain a more in-depth knowledge on which type of reputation

influences this success, the following research question was conducted: “How are the

related to the commercial success of its project remake? And how does the level of star

professionals involved in the project remake mediate this relation?”

The empirical setting is the US film industry from 1980 to 2016. Many studies have focused

on the effect of reputation from directors, producers and others on box office success and

future projects, however none have studied the effect of the reputation of an original film on

its remake. A movie remake is different than original films, since consumers already know the

story and how the movie ends (Bohnenkamp, Knapp, Hennig-Thurau, & Schauerte, 2014).

Still, the past few years it has become noticeable that many of the new movie releases are

actual remakes of past movies. Whether it is Disney remaking their nostalgic animated

classics into live-action form or Stephen King’s mini-series It being turned into a movie, the

presence of movie remakes is hard to ignore. After Disney’s remake of Beauty and the Beast

became the highest grossing PG-rated film in de U.S. ever, with over $1 billion at the

domestic box office, Disney has planned at least 14 other live-action adaptations coming over

to the big screen in the next 5 years.1

The final results show that there is indeed a positive effect of the market reputation of an

original project on the commercial success of its remake. However, contrary to the

expectations beforehand, peer reputation and expert reputation did not affect the commercial

success. This could be explained by the study of Ebbers and Wijnberg (2012), who state that

the selection system only affects outcomes that match their dimension, which would imply

that peer reputation only influences peer results. Additionally, this study falls in accordance

with the literature since the results provide evidence that the presence of star professionals in

the team of the project remake increases the odds of having commercial success.

Unfortunately, the overall mediation model was not confirmed, perhaps because the different

types of reputation were measured on a project basis instead of the individuals involved in the

original project.

This study contributes to previous studies since in provides evidence that reputation is indeed

a multidimensional construct and should be treated as such. Also, it shows that managers

should try and involve star professionals in their project remakes since they increase the

chances of commercial success. By studying both of these constructs, this study provides new

insights of the possible combined effect, an avenue that has not yet previously been

researched. It applies the selection system theory on reputation, as tested by Ebbers and

Wijnberg (2012), to the “galacticos effect” tested in the study of Ferriani et al. (2013).

However, Ebbers and Wijnberg only applied the dimensions of reputation on their matched

selectors, whereas this study tests if the dimensions can also affect the other types, in this case

market selection. By using the selection system theory, this study aims to provide a more

in-depth explanation of the effect that was found by Ferriani et al. (2013). To elaborate, it uses

the multi-dimensional approach to reputation in contrast to the one-dimensional approach.

This thesis is structured as follows: First, an overview will be given of reputation, selection

system theory and how it influences recruitment. Next, star power and how it affects financial

performance will be highlighted as a mediator, resulting in a number of hypotheses. Then the

variable and their measurements will be explained, followed by the results of the quantitative

analysis. This is followed by a discussion of the results including implications and limitation.

2.

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2.1.

R

O

P

Many studies have showed the importance of reputation. As Fombrun and Shanley (1990, p.

233) defined it, reputation is “a perceptual representation of a company’s past actions and

future prospects that describe the firm’s overall appeal to all its key constituents when

compared to other leading rivals”. Reputation is multidimensional and constructed by many

signals, including media reports, accounting and market information, resource allocations,

media exposure and many more (Fombrun & Shanley, 1990).

“Reputation can affect the behavior of stakeholders and investors”, as quoted in the study by

Ebbers and Wijnberg (2012, p. 373). Another way to find more clarity into the

multidimensional construct of reputation is by linking it to the selection system theory of

Wijnberg (1995) consisting of three types of selection systems. Many studies have shown the

importance of separating stakeholders into these three categories to evaluate performance and

competition and how these influence consumers in the cultural industry. The selection system

theory divides the individuals and firms whose opinions determine the performance of certain

projects (Wijnberg N. G., 2000). There are three types of selection systems, market selection,

expert selection and peer selection. To elaborate, “market selection is when the consumers

themselves are the selectors, peer selection is when other producers are the selectors, and

expert selection is when evaluations by third parties – who are neither producers nor

consumers – are the decisive factor in determining which producers are successful” (Ebbers &

Wijnberg, 2012, p. 374). Ebbers en Wijnberg distinguish between these reputational signals

and provide evidence that each of them affect stakeholders and thus organizational

performance differently. For example, market reputation had a significant effect on the market

performance. Also, in their study on corporate reputation, Roberts and Dowling found that

the future if they also have a good reputation (Roberts & Dowling, 2002). In their attempt to

provide better insights into the concept of reputation, Rindova et al. (2005) divided reputation

in only two dimensions, perceived quality and prominence, and studied the contribution of

each dimension on the economic payoffs. This study showed that dividing reputation into

different dimensions results in interesting outcomes, since only prominence, which “derives

from the choices of influential third parties vis-à-vis an organization”, had a significant

contribution to the price premium. So, according to Rindova et al. prominence, for example

the concept of star professionals, affects the results of a product. However, linking this study

of Rindova et al. with the selection system theory (Wijnberg N. G., 2000; Ebbers & Wijnberg,

2012), the perceived quality could have been further divided into the three different selection

systems, which may have resulted in very different outcomes.

Since reputation also reduces risk for stakeholders, as Roberts and Dowling

mentioned, it could be an important concept to consider in industries where there is much

uncertainty and high risk. An example of this is the creative industry, where risk is high,

competition is high and many organizations are project-based. Peltoniemi mentions that there

is extreme uncertainty in the creative industries because they offer experience goods where

consumers cannot have complete information about the product prior to consumption, hence

reducing the chance to predict the success of a project (Peltoniemi, 2015). Additionally, these

project-based organizations have more uncertainty since these projects are usually

non-repetitive, with different skills necessary each project, a variety in stakeholders and thus high

managerial complexity (Atkinson, Crawford, & Ward, 2006).

2.2.

R

P

P

The previous paragraph has established the multiple effects reputation can have on

organizational performance, one of which is reducing the risk for stakeholders. If this is the

have a high uncertainty. This uncertainty is partly a result of the different roles and

responsibilities that the founders of projects have (Ebbers & Wijnberg, 2017). In their study

on the effect of reputation on project success in the software community, Cai and Zhu (2016)

provide evidence that the overall reputation of a group has a significant effect on the success

of their project. This study however, only focuses on the effect of reputation on the current

project’s success, without mentioning the effect it may have on any future projects. For

example, the reputation of a project could also increase the chances of success for a future

project, especially when this project is similar to the original, as is the case with project

remakes.

Lewis (1986) studied the effect of reputation on project performance. This study

shows that if the manager has high ratings on previous projects, the costs of the next project

reduce significantly. Also, high reputation increases the chances of attracting more

stakeholders in the future, since it shows them a sign of high quality, providing the project

with more resources to ensure higher performance, especially when projects are similar or the

same as the previous projects (Lewis, 1986). In an attempt to map a process-oriented model

for critical activities in building reputation and the following consequences, Christansen and

Vendelo (2003) provided more evidence that firms who built a better reputation performed

better in current and future projects than firms who did not focus on reputation building. This

was studied amongst collaborative firms who lacked prior knowledge about each other and

may have been hesitant to work on projects together. Both of these studies, however, only

provide evidence that reputation of individuals involved in the projects affects the success of

future projects. It could also be the case that the project itself has a good reputation, making it

attractive to perform again. For example, in the case of the Volkswagen Beetle, which has

been re-launched with large characteristics of the traditional product and state-of-the-art

wildly popular amongst the common working man, ensuring its huge market success. Its

market reputation remained significant over the years, so much that the remake was almost

destined to perform just as well. The fact that it was a good balance between the old and the

new ensured that it was a radical redefinition of the original Beetle and not a reproduction

(Brown, Kozinets, & Sherry, 2003). Another example is the case of the British model reviving

American musicals, studied by Peck (2011). In this situation, the British government first

subsidized small theatres to reinvent the original American musicals, which were both

commercial successes and critically acclaimed in their original country. Because of these

subsidies, there was a lack of pressure to ensure commercial success, which allowed the

theatre to really innovate and experiment with the original projects. Most of these projects

then ended up generating enough critical support to allow them to transfer into the

commercial sector, generating huge amount of box-office success. For these musicals, the

good reputation of the original resulted in the opportunity to reinvent the show without

copying it, which was the reason for their following success (Peck, 2011). Both remakes show

us that the reputation of an original can most certainly influence the success of the remake, as

long as some aspects are adjusted to the current time and environment. However, where the

Volkswagen beetle differs from the American musical, is that its good reputation was solely

based on the market success and the reputation it had amongst consumers. The American

musicals also had a good market reputation, but maybe an even better reputation amongst

critics. This could be the reason for the British government to allow small theatres to work

with the rights instead of West end theatres where the only end result would be a possible

commercial success, they wanted a product that would appease the critics. This difference

shows that reputation is a multi-dimensional construct, with each dimension possibly having

2.3.

R

R

Previous studies have shown the effect that reputation can have on commercial success,

however there are more different outcomes of a having a good reputation. Firstly, Roberts and

Dowling (2002) state that a good reputation can also retain a cost advantage since these

organizations tend to seem less risky for suppliers and attract more employees who are willing

to work harder and demand less pay. As mentioned, a good reputation is an indicator of good

quality, which can attract more and better applicants for an organization, thus influencing

recruitment (Roberts & Dowling, 2002). Additionally, institutional theory proposes that the

reputation of an organization is a reflection of the social standing in the organizational field

(Rindova, Petkova, & Sever, 2005). Firms with good reputations are likely to be prominent

and to receive public recognition, thereby validating them as suitable employers (Rindova,

Petkova, & Sever, 2005). Similarly, Cable and Turban (2003) also found that the

organization’s reputation is used as a signal about job attributes for applications in addition to

affecting the possible pride “that individuals expect from organizational membership”.

Moreover, individuals were willing to pay a premium in the form of lower wages to join firms

with positive reputations. Ertug and Castellucci (2013) also research the effect of reputation

on recruitment, hiring and in return team performance in the empirical setting of the NBA

recruitment. Their results show that high reputation results in better quality and thus

performance, in addition to the fact that their numbers show that high reputation also attracts

individuals with a high reputation towards their organization.

2.4.

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P

Although reputation can have a positive effect on attracting talented individuals, it is unclear

how these individuals affect the overall performance, in particular, the commercial

performance of a project. The assets obtained by talented professionals can be transferred to

(1998) this is especially the case when there are knowledge workers involved, since they can

bring that knowledge with them to whatever their next project may be. On the other hand,

hiring stars can negatively influence the market response since it may imply in overpayment

of the stars (Groysberg, Lee, & Nanda, 2008). Additionally, star individuals may also be more

inclined to show championing behavior by expressing confidence about a project in addition

to involving and motivating others to support said project (Howell & Shea, 2001). This

championing behavior has proven to affect performance of projects because star individuals

have a bigger network to involve, which increases the amount of resources available.

As shown by Drucker (1998), star individuals are more likely to affect performance in

an industry where knowledge is one of the most important assets, for example the creative

industries. The effect of the presence of star professionals is studied quite frequently in this

industry, with a variety of results. Firstly, Ravid (1999) provides evidence that implies that

hiring star professionals with the skill of generating revenues do not necessarily lead to

greater profits. Additionally, the study by Delmestri et. al. shows us that there was no impact

of stars on the final profits (Delmestri, Monanari, & Usai, 2005). But, as mentioned by

Groysberg and Lee (2009) commercial success and the revenues it entails is a bigger objective

for executives in the movie industry, since profits are either “less important or more

unpredictable, or both” (Groysberg & Lee, 2009, p. 743). Hence, it is more important to show

the effect of star professionals on the box office success than on the overall financial success.

So, even though the study by De Vany and Walls (1999) shows us that the presence of stars

did not influence the overall financial success, they more importantly, did find proof that stars

influenced the attendance decision of consumers and thus positively influenced the

commercial success. Also, Prag and Casavant (1994) provided evidence that star power

indeed has a positive effect on the box office success of a film. Additionally, other studies

another way of increasing the commercial success of movies (Litman & Kohl, 1989; Sochay,

1994). Wanting to add more research to the on-going discussion concerning the effect of star

power, Ferriani et al. (2013) tested the so-called Galacticos effect known in NBA teams. They

tested the Galacticos effect: “the case in which the arrival of too many star professionals

results in very disappointing team performance” in Hollywood films (Ferriani, Cattani,

Mariani, & Mengoli, 2013, p. 28). Their results show that signing star professionals to a

movie project has positive impact on the box office revenues, hence providing arguments

against the Galacticos effect.

To summarize, studies on the effect of the presence of star professionals have different

viewpoints. Some have provided evidence that the presence negatively influences overall

profits, however this depends on the costs of these star professionals. On the other hand

evidence has been found that star professionals have a positive influence on the commercial

success of projects. Thus, in an industry where commercial success is considered more

important than profit, star professionals can be an important asset to project leaders and

organizations.

3.

H

B

3.1.

D

T

R

So, studies have shown the different effects of reputation on project performance, however

most of these studies see reputation as a one-dimensional construct. This one-dimensional

construct of reputation has been proven to have an effect on the commercial success of

several project remakes. In addition, it is shown to the influence the recruitment of star

professionals, who in turn also affect project performance. The separate relationships have

been researched, though one more extensively than the other. But, reputation as a

One of the studies that divided reputation into different dimensions is the study by Ebbers and

Wijnberg (2012). They show us that the selection system theory can be applied to reputation,

which will provide different outcomes than reputation as a one-dimensional construct. They

stated that market reputation had a significant effect on the market success. Similarly, in the

study by Brown et al. about the Volkswagen Beetle, it is evident that the project remake was

successful because the original had such a good market reputation (Brown, Kozinets, &

Sherry, 2003). An additional result of Ebbers and Wijnberg (2012) is that the expert

reputation has a significant effect on success with expert selectors. In line with these results is

the study on the revivals of American musicals, where expert selectors were the most

important, since they were the ones who decided to support a musical or not. This support

then allowed the revival access into the commercial market (Peck, 2011). However, when

looking at the environments where reputation can have the most effect, the industries with

high risk and uncertainty, expert selectors are still not the main focus, the market success is

(Groysberg & Lee, 2009). Even though peer reputation had no significant effect in the study

by Ebbers and Wijnberg, it could still have an effect on commercial success. Since in an

industry with high uncertainty, individuals can become more well known and benefit

immensely in the market if they are supported by their peers (Mol & Wijnberg, 2007). So, if

the support from peers influenced the notoriety of an original project, it may also influence

the success of its remake. So, based on the theoretical background the next hypothesis was

tested:

H1a. The market reputation of an original project, compared to the other types of reputation, has the strongest positive effect on the commercialperformance of the project remake.

H1b. The expert reputation of an original project has a stronger positive effect on the commercial performance of the project remake, compared to the peer reputation, but a weaker effect compared to the market reputation.

H1c. The peer reputation of an original project, compared to the other types of reputation, has the weakest positive effect on the commercial performance of the project remake.

3.2.

M

R

S

P

Ertug and Castellucci (2013) have shown that reputation can affect hiring and team

performance in addition to attracting individuals with a strong positive reputation. Applying

this theory to and industry with high uncertainty, Delmestri et. al (2005) provide evidence that

a director with a good economic reputation ensures future success, because “it helps attract

talented individuals who share with the director the knowledge of how to design a successful

movie.” Their study also mentions the importance of having talented individuals by quoting

the research from Lacey (2002): “Cultural industries need the constant infusion of new

talented individuals in order to assure the vitality of its cultural production in the long run.”

As it is proven that reputation can affect recruitment and attract more talented individuals, one

could argue that the reputation of an original product can also attract so-called stars to

participate in the remake of an original project with a good reputation. However, it has not yet

been studied which type of reputation has the most effect on attracting star professionals.

According to Roberts and Dowling (2002), firms with a good reputation amongst consumers

are more likely to be popular employers since their reputation is a sign of good quality. Thus

indicating that a good market reputation increases the chances of attracting star professionals

in a team. In turn, the study by Ertug and Castellucci (2010) provides evidence that the expert

reputation increases the chances of attracting star professionals. In their study the reputation

star professionals to be interested in certain teams. As mentioned by Rindova et al. (2005), the

reputation of an organization within the organizational field attracts better applicants. Hence,

if there is a positive reputation amongst peers, it is more likely that star professionals will be

interested in working at that organization. To conclude, each type of reputation could affect

the capacity to attract star professionals in different ways, hence the following hypotheses:

H2a. The market reputation of an original project has a positive impact on the capacity to attract star professionals for a project remake.

H2b. The expert reputation of an original project has a positive impact on the capacity to attract star professionals for a project remake.

H2c. The peer reputation of an original project has a positive impact on the capacity to attract star professionals for a project remake.

Studies have shown that the presence of star professionals can affect performance in multiple

ways. As mentioned by Lewis (1986), having talented individuals, especially with a good

reputation, ensures less costs and better outcomes. Additionally, star professionals have a

better chance at attracting more stakeholders, increasing the amount of resources available

and influencing the consumers buying behavior (Howell & Shea, 2001; De Vany & Walls,

1999). The positive effects of star professionals can be of importance for projects that are

dependent on their talents for success. For example, project remakes tend to have more

commercial success if there are certain adaptations from the original (Brown, Kozinets, &

Sherry, 2003; Peck, 2011). Involving star professionals may lead to these necessary

adaptations. Star professionals can increase performance by sharing their knowledge and

adaption project remakes need to have commercial success (Brown, Kozinets, & Sherry,

2003). Hence, the following hypothesis was tested:

H3. The level of star professionals in a project remake is positively related to the commercial performance of a project remake.

As theory shows, project remakes have more commercial success when there are adaptations

of the original. In the case of the Volkswagen Beetle and its remake, the good reputation of

the original was not enough for its remake to also be successful (Brown, Kozinets, & Sherry,

2003). The innovations that were suitable for the more modern times were found to be the

main reason for the project remake to be a commercial success. Since theory shows that

involving star professionals results in experimentation and innovations to a project because of

their skills and knowledge, it could be implied that the inclusion of star professionals signal

consumers that suitable and interesting innovations were added (Drucker, 1998; Lacey, 2002).

Additionally, star professionals have a positive influence on the consumers’ attendance

decision (De Vany & Walls, 1999; Prag & Casavant, 1994). Thus, if the reputation of an

original project can attract these star professionals to the team for the project remake, then

their presence may be the reason for its commercial success. Hence, the following mediation

model is proposed:

H4a. The market reputation of an original project has a positive effect on the commercial performance of a project remake, which is mediated by the level of star professionals involved in the project remake.

H4b. The expert reputation of an original project has a positive effect on the commercial performance of a project remake, which is mediated by the level of star professionals involved in the project remake.

H4c. The peer reputation of an original project has a positive effect on the commercial performance of a project remake, which is mediated by the level of star professionals involved in the project remake.

4.

M

D

4.1.

R

S

S

The empirical setting of this study is the U.S. film industry. A dataset consisting of 492 movie

remakes released in the U.S. from 1980-2016 was used with data collected from IMDB.com,

RottenTomatoes and several other sources. These remakes included remakes from plays,

series, movies and short movies. In total, 467 of the originals were movies, 15 were

tv-series, 5 were tv-movies and lastly 7 were short movies. Additionally, variables were added

by collecting data about achieved awards, market success, genres and star presence. This total

sample size meets the requirements according to Field (2009).

4.2.

F

I

P

R

The film industry has been an important aspect of the creative industries for a long period of

time. In the year 2016 alone, the total box office tickets sold in the U.S. grossed over 1.2

billion, spread across about 5800 cinema sites2_{. Of the total spending across the entire creative}

industry, the movie industry is known to spend more than 30%3. Also, the creative industries

2_{https://www.statista.com/topics/964/film/}

3_{https://www.filmfonds.nl/nl/media/inline/2017/9/4/spi_creative_industries_report_for_publication_2017_07_31}

are more likely to imitate their projects due to the high market and technical uncertainty there

is because of the high costs of producing creative content (DeFillipi, 2015). Since reputation

can have a big effect in a project-based industry where risk and uncertainty is high, the movie

industry is an ideal empirical setting. As mentioned by Ebbers and Wijnberg, the film industry

is characterized by project-based organizations and according to Caves (2000) has high sunk

cost and high demand uncertainty. It is stated that the “performance-based reputations are

relatively valuable in such uncertain environments because they seem to offer at least an

indication of the likelihood of future success” (Ebbers & Wijnberg, 2012, p. 376).

The concept of reputation has already been studied quite frequently in the movie

industry, for example Delmestri et al. (2005) studied how the reputation of a director affects

the performance of that movie. The creative industries are known for prioritizing

psychological income, also called Art for Art’s Sake (Menger, 1999) so as a result, Delmestri

et al. (2005) divided the directors’ reputation in artistic reputation and economic reputation.

Both affected the commercial success and artistic merit of the film. In the study of Ebbers and

Wijnberg, the authors also distinguish the three types of reputation, both of the producer and

director, and the effect these have on different types of investors in the Dutch movie industry.

Their results show many different effects of all three selection systems. As shown by these

two studies, directors’ reputation is related to artistic and economic performance, both for this

film and future films, and affects the chance of attracting investors. Additionally, in the movie

industry it has become noticeable that many of the new movie releases are actual remakes of

past movies.

4.3.

F

I

S

P

The creative industries are probably the industries that produce the most star professionals in

the world, with film stars earning over 20 million a picture and even more if the films are a

commercial success. Delmestri et al. (2005, p. 996) provide evidence that a director with a

good economic reputation ensures future success, because “it helps attract talented individuals

who share with the director the knowledge of how to design a successful movie.” Their study

also mentions the importance of having talented individuals by quoting the research from

Lacey (2002, p. 998): “need the constant infusion of new talented individuals in order to

assure the vitality of its cultural production in the long run.” As it is proven that reputation

can affect recruitment and attracts more talented individuals, one could argue that the good

reputation of an original film can also attract so-called stars to participate in the remake.

5.

M

This study uses the single project as the unit of analysis, hence all variables are measured at

project level.

Dependent variable

Box office revenues of film remake: The commercial performance of the remake was

collected from the reported Box Office Performance on IMDB.com. All revenues were

exchanged into U.S. dollars and adjusted accordingly using a CPI index. In the analysis the

standardized variables were used.

Independent variables.

Market Reputation Original Movie: Market reputation data was collected by studying

the top 20 highest US grossing films in its year of release. The original assumed the value of 1

if it occurred in this ranking and 0 if it did not. It was assumed that any of the missing values

occurred because it was a relatively small film or it was not released in the cinema. In these

cases, the market reputation of other similar movies was observed by looking at both similar

genres and year. The missing values were then computed into the minimal number that

Peer Reputation Original Movie: To analyze the effect of peer reputation, data was

collected on the Academy Awards received by the original movie. The Academy of Motion

Picture Arts and Sciences is made up of members from every field of film production.

Therefore, other producers are the selectors of quality. A dummy variable was measured,

where 0 represents “no Academy Awards” and 1 represents “1 or more Academy Awards”

were received. In the case of an original that was not produced in the U.S., similar award

shows were found for the specific country. A list can be found in Appendix 1.

Expert Reputation Original Movie: Data for this variable was collected via the number

of Golden Globes received by the original film. Winners and nominees of the Golden Globes

are selected by the Hollywood Foreign Press Association. The Hollywood Foreign Press

Association (HFPA) is a non-profit organization of journalists and photographers who report

on the entertainment industry activity and interests in the United States for information

outlets. The HFPA is made up of 90 correspondents for media outlets around the world. As

shown, receiving a Golden Globe can be a sign of quality since the winners and nominees are

all selected by third-party experts. Again, a dummy variable was measured, where 0

represents “no Golden Globes” and 1 represents “1 or more Golden Globes” were received.

As with the peer reputation measurement, local award shows were used to determine the

results for films outside the U.S.

Commercial Performance of Movie Remake: The commercial performance of the

remake was collected from the reported Box Office Performance on IMDB.com. All revenues

were exchanged into U.S. dollars and adjusted accordingly using a CPI index.

Star Presence: Since this study builds on the study by Ferriani et al., the same criteria

is used. To elaborate, Ferriani et al. (2013) based their variables on the historical performance

of the individuals. They “computed the cumulative number of “top 10 box office” movies in

in the previous years to the focal one.” Similar to the study of Ferriani et al. (2013), a star

professional was someone who performed in at least two top-grossing movies over the

selected 4-year time window.

Control variables

As stated by Bohnenkamp et al. (2014) remakes with certain types of characteristics are more

successful, since they have less risk and higher revenue. Such films include, as quoted:

“remakes based on films with medium awareness, a medium-/low- image, medium recency”

(Bohnenkamp, Knapp, Hennig-Thurau, & Schauerte, 2014, p. 37). This has resulted in the

following control variables.

Budget of remake: Since the dependent variable is commercial success, we must take

into account that the budget of the remake may influence this outcome. The study of Ferriani

et al. (2013) provides evidence that the budget of movies strongly affects the outcome, since

their independent variables had significantly more effect on the big-budget movies than the

small-budget movies. Hence, data on the budget of films was included from the IMDB.com

website. All budgets were transformed into U.S. dollars and adjusted using the CPI index.

Genre overlap: According to Chang and Ki (2005) remakes could be successful

because consumers value familiarity, since in that case they already have experience with the

good character and story, reducing their consumption risk. Adding a genre means changing

the story, which can result in less attendance by consumers.

Time distance: As mentioned by Bohnenkamp et al. (2014) a remake with medium

recency has a higher chance of a good commercial performance. Hence it is important to

include the time distance between the original film and the film remake as a control variable.

The recency of the film was measured by adding the amount of years between the two release

6.

R

6.1.

D

S

A descriptive summary of all projects in the dataset (N=492) can be found in Table 1.

Noticeably, there is a higher number of projects that have a good market reputation compared

to the expert and peer reputation. In specific, approximately 26,4% of film remakes are

known to have a good market reputation, whereas only 11,8% have a good expert reputation.

Peer reputation lies in between with 15,7% of films having received an Academy Awards or

something similar. More than three quarters of the remakes (78%) lack the presence of a star

professional, with only 0,8% having three stars in the cast. On average, the remakes share less

than 2 genres with their original, which could confirm that project remakes tend to innovate as

to attract more consumers. The budget of the remake is generally lower than the overall box

office revenues, which could imply that when sticking to the budget the remakes generally

make a profit. Lastly, the remakes are most likely produced more than 20 years after the

original was released.

Table 1: Descriptive statistics for all projects

Variables N % Min Mean Max SD

Model 1.Box Office Remake (mil. $) 492 0,001 52,4 369,5 64,8 2.Market Reputation 0 = No 1 = Yes 492 362 130 73,6 26,4 3.Expert Reputation 0 = No 1 = Yes 492 434 58 88,2 11,8 4.Peer Reputation 0 = No 1 = Yes 492 415 77 84,3 15,7 5.Star Professionals 0 = no stars 1 = 1 star 2 = 2 stars 3 = 3 stars 492 385 90 13 4 78,3 18,3 2,6 0,8 0 .260 3 .5429

Controls 6. Shared Genres 7. Budget Remake (mil. $) 8. Recency 492 492 492 0 0 0 1,79 40,2 23,73 5 286,1 113 0,971 44,4 17,48

6.2.

C

In Table 2, the correlation matrix is provided, which includes all variables of the model in

addition to the control variables. As is shown in the matrix, only the market reputation of an

original, compared to the other types of reputation, is positively correlated with the dependent

variable (r =.189, p < 0.01). Additionally, the mediating variable of star professionals present

also has a significant positive effect on the dependent variable (r = .286, p < 0.01). This

suggests that market reputation and the presence of star professionals have a positive effect on

the box office performance of the remake. Expert reputation and peer reputation show small

positive but insignificant correlation with the box office performance (r = .063, p > 0.05; r =

.028, p > 0.05). An interesting result of the correlation matrix is the fact that both expert

reputation and peer reputation have significant positive effects on the market reputation of an

original project (r = .238, p < 0.01; r = .173, p < 0.01). This would mean that an original with

an Academy Award or Golden Globes is more popular with consumers than films without

such an awards. Additionally, peer reputation also has a strong correlation with expert

reputation (r = .415, p < 0.01). Hence, it is implied that a film remake that has received one of

the types of awards is more likely to also receive the other. Another interesting finding is the

fact that the reputation of the original project does not increase the likelihood of having star

professionals present in the project remake. Market reputation has the biggest relation to star

professionals, however it is not significant (r = .053, p > 0.05). Expert reputation has a

slightly smaller insignificant relation (r = .045, p > 0.05) and peer reputation has neither

positive nor negative insignificant effect on the presence of star professionals (r = 000, p >

0.05).

Most of the control variables have a significant with the other variables. For example,

the number of overlapping genres is positively related to the dependent variable, to market

Thus, the higher the amount of overlapping genres between the original and the remake, the

higher the box office performance will be. Also, it is more likely for genres to overlap if the

original project had a high market and expert reputation. The genre overlap did no have

significant relations with peer reputation and the presence of star professionals (r = .086, p >

0.05; r = .064, p > 0.05). The budget of the remake had significant positive relation with all

other variables except for peer reputation, where it had an insignificant negative relation (r =

-.019, p > 0.05). It had an especially high positive relation with the box office performance of

the remake (r = .613, p < 0.01), which could imply that indeed a higher budget results in

higher commercial performance. According to the results, it is also suggested that a good

market and expert reputation results in a higher budget for the remake (r = .172, p < 0.01; r =

.097, p < 0.01). The budget of the remake correlates positively to star professionals and genre

overlap as well, thus a high budget implies more star professionals and more overlapping

genres (r = .313, p < 0.01; r = .238, p < 0.01). Lastly, the control variable recency also relates

positively to multiple variables. Firstly, it has a positive significant relation with the box

office performance of the remake (r = .170, p < 0.01), hence the higher the amount of years in

between the releases of both films, the higher the likelihood of commercial success. Secondly,

market reputation and peer reputation both relate to the recency (r = .168, p < 0.01; r = -.171,

p < 0.01). However, in contrast to market reputation, peer reputation is negatively related to

recency, implying that it is more likely for the remake to be released earlier if the peer

reputation of the original was high. Also, the more years between the release date of the

original and the release date of the remake, the higher the budget of the remake, according to

Table 2: Means, standard deviations and correlations

M SD 1 2 3 4 5 6 7

1. Box Office Remake (mil. $) 55.5 65,7

2. Market Reputation .42 .49 .189**

3. Expert Reputation .14 .35 .063 .238**

4. Peer Reputation .16 .37 .028 .173** .415** 5. Star Professionals .26 .52 .286** .053 .045 .000

6. Genre Overlap 1.86 .89 .116* .100* .098* .086 .064

7. Budget Remake (mil. $) 40.7 40.9 .613** .172** .097** -.019 .313** .238** 8. Recency 27.37 16.78 .170** .168** .014 -.171** -.019 .036 .340**

Note: * = p < 0,05 and ** = p < 0,01

6.3.

T

H

Table 3 shows the results of the regression analysis. Before calculating all relations, a control

model was estimated for “genre overlap”, “budget of remake” and “recency” (Model 1: Rˆ2 =

0,399). The budget of the remake had a significant positive effect on the outcome (B = 0,848,

p < 0,01). This means that the higher the budget of the remake, the higher the commercial

performance will be. Other than that, no control variables had a significant effect on the

dependent variable.

Hypotheses 1a,b,c – Next, the independent variables of the different types of

reputation were added to calculate the direct effect they have on the dependent variable of box

office performance of the remake. As is shows in Table 3, only market reputation had a small,

yet significant effect on the box office performance. This means that hypothesis 1a is

accepted, since p < 0,01. It was expected that expert reputation would have a positive effect,

albeit smaller than the market reputation. The coefficient was indeed smaller, however since

the result was insignificant hypothesis 1b is rejected. Contrary to what was expected, peer

reputation has a higher coefficient than expert reputation, nevertheless because the p-value is

higher than 0,05 hypothesis 1c is also rejected. However, after calculating the correlations,

based, assumption (1) “the independent variable must significantly affect the outcome when

the mediator is not included” is met, since market reputation has a direct significant effect on

box office performance. It is not met for the other two types of reputation, hence the

mediation effect will not occur for expert and peer reputation.

Hypotheses 2a,b,c – The second set of hypotheses is based on the independent

variables having a direct effect on the mediating variable. As is shown in Table 3, none of the

independent variables have a direct significant effect on the presence of star professionals in

the project remake. Since market reputation is the only one with a direct effect on the

outcome, it also needs to significantly affect the mediator as the next step of a mediation

model. The results show that market reputation has a very positive, yet insignificant effect on

the presence of star professionals in a remake (B = .38, p > 0,05) hence hypothesis 2a is

rejected. In a similar fashion, hypothesis 2b and 2c are also rejected. Expert reputation also

has a positive insignificant effect (B = .52, p > 0,05) and peer reputation has a negative

insignificant effect on the outcome (B = -.70, p > 0,05). After this it can be stated that

assumption 2 for a mediation model is not met.

Hypothesis 3 – The second assumption of a mediation model is the mediator must

have a significant direct effect on the outcome. As shown in Table 3, the presence of star

professionals in the cast of a remake has a positive significant effect on the box office

performance of the remake (B = 11693,73, p < 0,01). Thus, hypothesis 3 is accepted.

Hypothesis 4a,b,c – Lastly, the entire mediation model is tested. The mediation is

tested for all independent variables, even though expert reputation and peer reputation did not

meet the original assumptions. As a result of the mediation, market reputation had a small

significant direct effect on the box office performance (B = .096, p < 0,01). Based on these

calculations, it can be stated that there is no mediation, since the direct effect of market

star professionals, thus hypothesis 4a is rejected. As expected after the correlation analysis,

neither hypothesis 4b nor hypothesis 4c are accepted. The result of the mediation model with

expert reputation was B = .003, p > 0,05 and for peer reputation it was B = .029 p > 0,05.

Table 3: Results regression analysis

Variables Model 1 Model 2 Model 4

Box Office Box Office Star Prof. Box Office

Controls Genre Overlap -.033 (.367) -.040 (284) -.441 (.660) -1,039 (.300) Budget Remake .636** (.000) .626** (.000) 7,772** (.000) 14,309** (.000) Recency -.045 (.239) -.054 (.168) -3,179** (.002) -1,117 (.265) Explanatory Market Reputation .098** (.010) .370 (.712) .096** (.009) Expert Reputation -.027 (.497) .090 (.112) .003 (.930) Peer Reputation .021 .604) .106 (.058) .029 (.432) Star Professionals (mediator) .098** (.009) N 492 492 492 492 R .615 .622 .342 .622 Rˆ2 .378 .387 .117 .387 F 98,901 51,134 16,082 76,787 Average VIF 1,132 1,179 1,193 1,213 Note: * = p < 0,05 and ** = p < 0,01

7.

D

7.1.

H

In this study it was sought to investigate the influence of reputation of an original project on

the commercial success of the project remake and how star professionals influenced this

good reputation all affected the commercial success positively, however market reputation

was expected to have the biggest effect. Secondly, in order to have a mediation model, it was

expected that these three types of reputation also affected the likelihood of having star

professionals in the team of the project remake. Next, it was proposed that the presence of star

professionals in the project remake team would positively affect the commercial success of

said remake. Lastly, a full mediation was expected, where the presence of star professionals in

the project team is the explanation for the effect the reputation of an original has on

commercial success. Hypothesis 1 was accepted in the case of market reputation and

hypothesis 3 was also accepted, whereas on the other hand, hypotheses 2 and 4 were rejected.

The first hypothesis was based on several theoretical assumptions. First, reputation is a

multidimensional construct that can be separated in three selection systems (Wijnberg N. ,

1995). Based on the theory of Ebbers and Wijnberg (2012), it was expected that the market

reputation of the original would have the greatest effect on the commercial success, compared

to the other types of reputation. This theory was partially confirmed by the results of this

study. Nevertheless, it was expected beforehand that both expert reputation and peer

reputation would also have a significant positive effect on the outcome, but these hypotheses

were not supported. Possible explanation for the fact that both expert and peer reputation did

not affect the commercial success could be explained by the theory of Ebbers and Wijnberg

(2012). They provided evidence that the type of reputation affected the outcome strongest

when it matched, for example, expert reputation would affect expert selection. In this study,

the outcome was commercial success, which is a market-based result, hence following the

theory of Ebbers and Wijnberg expert and peer reputation would not affect the dependent

variable.

Lastly, the mediation model was rejected. It was found that it did not meet all of the

assumption, however only in the case of market reputation. The mediator star professionals

has significant effect on commercial success, nevertheless, because reputation does not

significantly affect the likelihood of star professionals in the cast, the mediation model cannot

be significant. A possible explanation for the independent variable to not affect the mediator

could be that the reputation was tested on the project level instead of the individuals involved

in the project. For example, as mentioned by Ebbers and Wijnberg (2012), the reputation of a

producer indicates something differently than the reputation of a director. So basing the

reputation solely on the project and not the individuals involved in the project may not be

enough proof of quality for star professionals to be attracted to a project. Especially since the

remake regularly involves different cast members than the original.

Another explanation could be that most theories considering reputation and

recruitment are more focused on the organizational reputation instead of project reputation.

Organizational reputation has shown to influence the recruitment of talented individuals,

however this does not mean the same can be said about project reputation. Projects are more

uncertain, have higher risk for stakeholders and are usually non-repetitive. But as mentioned,

a project remake should have small innovations and upgrades for it to be a commercial

success (Brown, Kozinets, & Sherry, 2003; Peck, 2011), which may raise uncertainty for star

professionals since the success after adjustments is not guaranteed. With organizational

reputation star professionals are more certain what they can expect which is not necessarily

the case for project remakes, especially if they need to experiment.

Lastly, in the empirical setting, star professionals may not have been interested in the

reputation of an original project because they are more interested in making art for arts sake

(Menger, 1999). Since the market reputation of an original is not necessarily proof of artistic

quality, star professionals in the film industry may not be interested in joining the remake

7.2.

T

C

Firstly, this thesis contributes to the literature that focuses on reputation and its effect. It

provides evidence that reputation indeed is a multidimensional construct, with each dimension

having different outcomes (Ebbers & Wijnberg, 2012; Rindova, Petkova, & Sever, 2005). The

studies performed on reputation and its effect on project performance provide evidence that

reputation of individuals in projects can affect the commercial success of its remake. This

thesis adds to that by proving that commercial success does depend on which type of

reputation system is used. By doing this, my thesis further elaborates on the selection system

theory by showing that the type of selection system only results in positive outcomes if it

matches, as it showed that market reputation significantly positively affects commercial

success of a remake. Additionally, although no significant evidence was found, this study is

an addition to literature on reputation and its effect on attracting star professionals. It has been

studied that a good reputation attract individuals with high reputation towards an organization

or project (Ertug & Castellucci, 2013) (Ferriani, Cattani, Mariani, & Mengoli, 2013).

However, those studies did not test reputation as a multidimensional construct. This study

shows that dividing reputation in different dimensions can influence the outcome differently

than when reputation is seen as a one-dimensional construct, as is done in previous studies.

Also, this study provides more evidence that the presence of star professionals does

indeed affect commercial success. As studied by Drucker (1998), star professionals,

especially in a knowledge-based industry such as the creative industries, ensure more

revenues and in this empirical setting influence the consumers attendance decision. This study

confirms this theory, since the direct effect of star professionals on commercial success was

significant and positive. An important contribution of this study is the combination of two

perspectives, namely selection system theory and star effects. Previous studies only focused

(Ebbers & Wijnberg, 2012; Ferriani, Cattani, Mariani, & Mengoli, 2013). Especially, the

avenue of the selection system’s dimensions of reputation, the effect it has on star

professionals and how the combined effect of both then influences commercial success. Even

though the mediation model was not found significant, this study aims to shed a light on the

possibilities of combining the two constructs, some of which shall be discussed in section 7.4.

An innovative aspect of this research was the use of film remakes as empirical setting.

Film remakes are becoming more popular, however not much research has been done on the

phenomenon. Especially on the aspects that influence the commercial success of such a

project remake. This study provides more evidence that reputation of a project as a whole can

affect the success of the project remake. Previous studies mostly focused on the reputation of

the individuals involved (Delmestri, Monanari, & Usai, 2005; Ertug & Castellucci, 2013),

however as is shown, the project itself and its reputation can also be relevant for the success

of the remake, especially when divided in different dimensions. Additionally, the use of star

professionals can give an indication towards consumers that adaptations from the original are

made, resulting in better commercial performance. This is in contrast with previous studies

that provide evidence that the use of star professionals in a project may decrease performance

(Groysberg & Lee, 2009). With an increase in popularity, the amount of literature on the

project remakes should also increase. This thesis is an attempt to provide evidence that project

remakes do not necessarily have the same influential aspects as regular projects.

7.3.

M

I

This study provides some implications for practitioners. These are of value for managers who

are interested in remaking projects with good reputation to ensure commercial success. Since

the last 10 years the films that were in the top 10 most successful box office results were

First of all, when choosing a project to remake, it is important to distinguish its

reputation in the different possible dimensions. The different selection systems each have

different effects on the outcome, hence for managers it is important to have a clear vision of

each of these dimensions and make sure they fit with the desired outcome. In correspondence

with the study by Ebbers and Wijnberg (2012), this study shows that if the outcome is

centered on the market and the consumers, it is important for an original project to have high

market reputation. This will then increase the chances for the remake to also have commercial

success. However, if the original has a high expert reputation, the chances of commercial

success will most certainly be smaller. This can help managers choose a suitable project that

fits their specific goals.

Secondly, this research adds on studies by providing more evidence that having star

professionals in your team will increase the commercial success. As mentioned, star

professionals do indeed increase consumers attendance decision and hence the commercial

success (De Vany & Walls, 1999; Prag & Casavant, 1994). However, budget also influenced

the commercial success, and since star professionals tend to have higher salary, the balance

between the two it important to remember. As literature shows, even though star professionals

increase revenues, they do not necessarily increase profits (Delmestri, Monanari, & Usai,

2005; Ferriani, Cattani, Mariani, & Mengoli, 2013). Thus if managers find a good balance

between the amount of star professionals and the required budget, they could achieve the

optimal outcome. Also, since this study did not provide significant evidence that reputation

affects the likelihood of attracting such star professionals for a project remake, managers

should focus on other aspects as proof of quality to ensure their presence in future teams.

7.4.

L

As with most studies, this thesis suffers from certain limitations. Nevertheless, it does indicate

can ensure different outcomes than seeing it as a one-dimensional construct. And since this

study focused only on commercial success, it is advised to conduct a similar research with

perhaps overall profit as the final outcome. Also, it could be an interesting avenue to study

whether the different dimensions of reputation do influence their matching outcome of the

project remake. These studies can be performed whilst taking into account the following

limitations and suggestions.

First of all, as mentioned by Ferriani et al. (2013), making use of the box office

performance and the budget may have resulted in biased outcomes. Distributors may have

adjusted certain aspects of the financial numbers to generate specific budget data.

Second, an important aspect of having star professionals in a team and the effect is has

on performance has shown to be affected by the team familiarity. It is stated that

“organizations with many stars are not necessarily better than organizations with fewer stars if

such stars have not developed some familiarity with other team members” (Ferriani et al.

2013 p. 29). Hence, taking this into account may be a better predictor for commercial success

of a remake than solely using the presence of star professionals.

Also, since this research is based on the study by Ferriani et al. (2013), a 4-year time

window is used to qualify individuals as star professionals. However, this time frame

excludes any movies that may have been great successes outside that frame. Because of this,

an individual that was a star professional in one certain year may not be classified as a star the

years after, because their successful film falls outside of the time frame. Future studies should

keep this in mind and perhaps find a different way to classify star professionals. Additionally,

it may be possible for individuals to be known as stars because of other media outlets, such as

music or tv shows. These were not taken into account, even though they may be seen as star