Simulating the Cinema Market: How Cross-Cultural Differences in Social Influence Explain Box Office Distributions

Social influence plays a prominent role in the diffusion of innovations. Social influences can determine an innovation’s success and may lead to extreme market inequalities. Various studies have already tried to establish the link between the degree of social influence and market inequalities, but relatively few studies use individual-level data to test the effects of social influences on market inequalities. This article shows, with the use of an empirically validated agent-based model, how cross-cultural differences in social influences can help explain differences in the distributions of market shares across different international markets. The authors develop an agent-based model that mimics the behavior of movie visitors and incorporates the social influences visitors exert on one another before and after attending movies. The simulation results indicate that social influences increase market inequalities and that the social influence derived from the intended behaviors of others (coordinated consumption effect) has a stronger effect on market inequalities than that derived from others’ past behavior (imitation effect). The authors empirically validate the simulation results at both the input and the output level. The input validation consists of a cross-national survey that makes use of the cross-cultural differences in Hofstede’s collectivism–individualism index as a proxy for the level of social influence in a market. The results of this field study, performed in China, the Netherlands, Italy, and Spain, show that social influences significantly differ across countries with China having the strongest influence, followed by the Netherlands, Italy, and Spain. The output validation makes use of actual box office sales in the four countries of interest and confirms that the market share distribution is most unequal for China, followed by the Netherlands, Italy, and Spain. The differences in the market share distributions predicted by the agent-based model are thus similar to actual differences in market share distributions observed in China, Spain, Italy, and the Netherlands and provides compelling evidence that markets characterized by stronger social influences display a greater dispersion in market shares. This article concludes by providing managerial implications for managers of similar fad and fashion products.