Showing papers in "Journal of Marketing in 2018"
TL;DR: In this paper, the authors hypothesize varying effects of owned and earned social media (OSM and ESM) on brand awareness, purchase intent, and customer satisfaction and link these consumer mindset metrics to shareholder value (abnormal returns and idiosyncratic risk).
Abstract: Although research has examined the social media–shareholder value link, the role of consumer mindset metrics in this relationship remains unexplored. To this end, drawing on the elaboration likelihood model and accessibility/diagnosticity perspective, the authors hypothesize varying effects of owned and earned social media (OSM and ESM) on brand awareness, purchase intent, and customer satisfaction and link these consumer mindset metrics to shareholder value (abnormal returns and idiosyncratic risk). Analyzing daily data for 45 brands in 21 sectors using vector autoregression models, they find that brand fan following improves all three mindset metrics. ESM engagement volume affects brand awareness and purchase intent but not customer satisfaction, while ESM positive and negative valence have the largest effects on customer satisfaction. OSM increases brand awareness and customer satisfaction but not purchase intent, highlighting a nonlinear effect of OSM. Interestingly, OSM is more likely to incr...
228 citations
TL;DR: In this paper, a broad-based and differentiated understanding of peer-to-peer, sharing, and access-based markets is presented. But the authors focus on two key axes: the extent of consociality and platform intermediation.
Abstract: Lateral exchange markets (LEMs) are sites of technologically intermediated exchange between actors occupying equivalent network positions. To develop an enriched understanding of these markets, the authors develop a more broad-based and differentiated understanding of peer-to-peer, sharing, and access-based markets. They focus on two key axes: the extent of (1) consociality and (2) platform intermediation. Drawing on these attributes, the authors theoretically deduce four ideal types—Forums, Enablers, Matchmakers, and Hubs. Each type provides value in a different way: Forums connect actors, Enablers equip actors, Matchmakers pair actors, and Hubs centralize exchange. Twenty organizational cases reveal insights into the failure, adaptation, and success of LEMs. Lateral exchange markets shift responsibility for personal and exchange security to relevant personal actors, to institutions, or to the governing algorithms of technology platforms. Extending the general proposition that sociality increasin...
207 citations
TL;DR: In this paper, the authors draw on institutional theory and service-dominant logic to advance a service ecosystems perspective and define selling in terms of the interaction between actors aimed at creating and maintaining thin crossing points.
Abstract: This article demonstrates that the sales literature is converging on a systemic and institutional perspective that recognizes that selling and value creation unfold over time and are embedded in broader social systems. This convergence illustrates that selling needs a more robust theoretical foundation. To contribute to this foundation, the authors draw on institutional theory and service-dominant logic to advance a service ecosystems perspective. This perspective leads them to redefine selling in terms of the interaction between actors aimed at creating and maintaining thin crossing points—the locations at which service can be efficiently exchanged for service—through the ongoing alignment of institutional arrangements and the optimization of relationships. This definition underscores how broad sets of human actors engage in selling processes, regardless of the roles that characterize them (e.g., firm, customer, stakeholder). A service ecosystems perspective reveals (1) that selling continues to ...
179 citations
TL;DR: In this paper, the authors developed hypotheses regarding the relationship between device switching and conversion rates and test the hypotheses by analyzing clickstream data from a large online retailer and apply propensity score matching to account for self-selection in device switching.
Abstract: The increased penetration of mobile devices has a significant impact on customers’ online shopping behavior, with customers frequently switching between mobile and fixed devices on the path to purchase. By accounting for the attributes of the devices and the perceived risks related to each product category, the authors develop hypotheses regarding the relationship between device switching and conversion rates. They test the hypotheses by analyzing clickstream data from a large online retailer and apply propensity score matching to account for self-selection in device switching. They find that when customers switch from a more mobile device, such as a smartphone, to a less mobile device, such as a desktop, their conversion rate is significantly higher. This effect is larger when product category–related perceived risk is higher, when the product price is higher, and when the customer’s experience with the product category and the online retailer is lower. The findings illustrate the importance of f...
144 citations
TL;DR: In my interactions within the academic community, I am often posed with the following question: What are some of the topics we should be thinking about so that we can contribute to advancing the marketing discipline? As I reflect on how to respond, I recognize the transformation that is occurring within the marketing domain this paper.
Abstract: In my interactions within the academic community, I am often posed with the following question: What are some of the topics we should be thinking about so that we can contribute to advancing the marketing discipline? As I reflect on how to respond, I recognize the transformation that is occurring within the marketing discipline. I view this transformation as an important phenomenon occurring around us, and I present my thoughts on the same in this editorial.
124 citations
TL;DR: In this paper, the authors examined consumers' general in-store mobile phone use and shopping behavior, and found that mobile phone usage and actual phone use patterns both lead to increased purchases because consumers divert from their conventional shopping loop, spend more time in the store, and spend more attention examining products and prices on shelves.
Abstract: This research examines consumers’ general in-store mobile phone use and shopping behavior. Anecdotal evidence has suggested that mobile phone use decreases point-of-purchase sales, but the results of the current study indicate instead that it can increase purchases overall. Using eye-tracking technology in both a field study and a field experiment, matched with sales receipts and survey responses, the authors show that mobile phone use (vs. nonuse) and actual mobile phone use patterns both lead to increased purchases, because consumers divert from their conventional shopping loop, spend more time in the store, and spend more time examining products and prices on shelves. Building on attention capacity theories, this study proposes and demonstrates that the underlying mechanism for these effects is distraction. This article also provides some insights into boundary conditions of the mobile phone use effect.
118 citations
TL;DR: In this paper, the authors assess the effects of a data breach announcement (DBA) by a multichannel retailer on customer behavior and find that although the data breach results in a significant decrease in customer spending, customers of the firm migrate from the breached to the unbreached channels of the retailer.
Abstract: In this study, the authors assess the effects of a data breach announcement (DBA) by a multichannel retailer on customer behavior. They exploit a natural experiment and use individual customer transaction data from the retailer to conduct a detailed and systematic empirical examination of the effects of a DBA on customer spending and channel migration behavior. To identify the effects, the authors compare the change in customer behavior before and after the DBA between a treatment group (customers whose information is breached) and a control group (customers whose information is not breached) using the difference-in-differences modeling framework. They find that although the data breach results in a significant decrease in customer spending, customers of the firm migrate from the breached to the unbreached channels of the retailer. The findings further reflect that customers with a higher retailer patronage are more forgiving because the negative effects of the DBA are lower for customers with a h...
103 citations
TL;DR: In this article, the authors proposed a customer valuation theory (CVT) based on economic principles that conceptualizes the generation of value from customers to firms, and discussed the concept of customer lifetime value (CLV) as the metric that can provide a reliable, forward-looking estimate of direct customer value.
Abstract: Customer value refers to the economic value of the customer’s relationship with the firm. This study approaches the topic of customer value for measuring, managing, and maximizing customer contributions by proposing a customer valuation theory (CVT) based on economic principles that conceptualizes the generation of value from customers to firms. The author reviews the established economic theories for valuing investor assets (e.g., stocks) and draws a comparison to valuing customer contributions. Furthermore, the author recognizes the differences in the guiding principles between valuing stocks and valuing customers in proposing CVT. Using CVT, the author discusses the concept of customer lifetime value (CLV) as the metric that can provide a reliable, forward-looking estimate of direct customer value. In addition, economic models to estimate CLV, ways to manage CLV using portfolio management principles, and strategies to maximize CLV are discussed in detail. The author extends the customer value c...
100 citations
TL;DR: Digitalized Interactive Platform (DIP) as discussed by the authors is an example of a digitalized networked arrangement of artifacts, persons, processes, and interfaces for value creation in an interactive environment.
Abstract: In an age of digitalized interactions, offerings are no longer “finished” in the traditional sense; creation of value continues by engaging actors (often consumers and their associated social networks) interacting with organizing actors (often firms and their associated organizational ecosystem) in a joint space of interactive system-environments. One can think of the Apple Watch NikePlus (AWNP) offering in which the consumer co-creates valuable experienced outcomes with a mix of applications, touchpoints, and uses, while AWNP and its organizing actors co-create environments with consumers. Actors increasingly find themselves in such a joint enactment of interactional value creation, through offerings as evolving digitalized networked arrangements of artifacts, persons, processes, and interfaces, which the authors refer to as a Digitalized Interactive Platform (DIP). This implies a broader view of value creation—one in which value is created through interactions, versus one where value is simply t...
99 citations
TL;DR: The authors proposed that power distance beliefs (PDB), a cultural orientation related to the extent to which people expect and accept differences in power, moderate the effects of celebrity endorsements, and found that a positive effect of celebrity endorsers on evaluations of advertising should be more potent with greater PDB; source expertise and trustworthiness likely underlie this effect.
Abstract: The use of celebrity endorsements varies across countries; does their effectiveness similarly vary across cultures? The authors propose that power distance beliefs (PDB), a cultural orientation related to the extent to which people expect and accept differences in power, moderate the effects of celebrity endorsements. A positive effect of celebrity endorsers on evaluations of advertising should be more potent with greater PDB; source expertise and trustworthiness likely underlie this effect. To test the hypotheses, the authors use moderated mediation analyses, with corrections for measurement error and endogeneity of the mediators (source expertise and trustworthiness). The results of three studies, using both manipulated and measured PDB for respondents in different countries and with a variety of endorsers, demonstrate that PDB determine the effectiveness of celebrity endorsements on attitudes toward the advertisement and the brand. In support of the moderated mediation model, perceptions of sou...
95 citations
TL;DR: The authors find that design crowdsourcing is positively related to unit sales and that this effect is moderated by the idea quality of the initial product concept.
Abstract: The authors examine an increasingly popular open innovation practice, “design crowdsourcing,” wherein firms seek external inputs in the form of functional design solutions for new product development from the “crowd.” They investigate conditions under which managers crowdsource design and determine whether such decisions subsequently boost product sales. The empirical analysis is guided by qualitative insights gathered from executive interviews. The authors use a novel data set from a pioneering crowdsourcing firm and find that three concept design characteristics—perceived usability, reliability, and technical complexity—are associated with the decision to crowdsource design. They use an instrumental variable method accounting for the endogenous nature of crowdsourcing decisions to understand when such a decision affects downstream sales. The authors find that design crowdsourcing is positively related to unit sales and that this effect is moderated by the idea quality of the initial product conc...
TL;DR: This article conducted an ethnographic analysis of producers, distributors, retailers, critics, and consumers in the U.S. wine market and found that firms drive the market by playing a status game.
Abstract: Research on market orientation finds that market-driven firms succeed by identifying and appealing to consumer needs. Yet many technologically innovative firms achieve remarkable success by taking a market-driving approach. The ways that firms drive markets without disruptive innovation, however, remain unclear. Adopting a market-systems perspective, the authors conduct an ethnographic analysis of producers, distributors, retailers, critics, and consumers in the U.S. wine market. They find that firms drive the market by playing a status game. Firms pursue a vision and advance that vision among influencers inside and outside the industry to gain recognition. Winners of the status game influence and drive social consensus by setting benchmarks and shaping consumer preferences to the firm’s advantage. High status is difficult to imitate, creating an advantage that can endure for years or decades.
TL;DR: In this article, a conceptual model of the influence of the social media power of partner brands on brand alliance success is developed, and the authors test this framework with an extensive data set from the film industry.
Abstract: Managers frequently seek strategies to profit systematically from social media to increase product sales. By forming a brand alliance, they can acquire an installed social media base from a partner brand in an attempt to boost the sales of their composite products. Drawing from power theory, this article develops a conceptual model of the influence of the social media power of partner brands on brand alliance success. The proposed framework details the partner brand’s social media power potential (size and activity of the social media network), social media power exertion (different posting behaviors and comments), and their interaction. The authors test this framework with an extensive data set from the film industry, in which films function as composite products and actors represent partner brands. The data set features 442 movies, including 1,318 actor–movie combinations and weekly social media data (including 41,547 coded Facebook posts). The authors apply a linear mixed-effects model, in whic...
TL;DR: In this article, the cultural, economic, and structural differences across countries to examine how app popularity reacts to price and ratings, controlling for product characteristics, were analyzed across 60 countries, and a dynamic panel model with product-specific effects revealed that price sensitivity is higher in countries with higher masculinity and uncertainty avoidance.
Abstract: Many companies compete globally in a world in which user ratings and price are important drivers of performance but whose importance may differ by country. This study builds on the cultural, economic, and structural differences across countries to examine how app popularity reacts to price and ratings, controlling for product characteristics. Estimated across 60 countries, a dynamic panel model with product-specific effects reveals that price sensitivity is higher in countries with higher masculinity and uncertainty avoidance. Ratings valence sensitivity is higher in countries with higher individualism and uncertainty avoidance, while ratings volume sensitivity is higher in countries with higher power distance and uncertainty avoidance and those that are richer and have more income equality. For managers, the authors visualize country groups and calculate how much price should decrease to compensate for a negative review or lack of reviews. For researchers, they highlight the moderators of the vol...
TL;DR: In this paper, the authors consider the effect of the firm's board interlock centrality, the extent to which board members are connected to boards of other firms, on its new product introductions.
Abstract: Firms’ boards of directors affect many strategic outcomes Yet the impact of boards on new products, a key organizational adaptation mechanism, has been overlooked Addressing this gap, the authors consider the effect of the firm’s board interlock centrality, the extent to which board members are connected to boards of other firms, on its new product introductions They propose that board interlock centrality provides firms access to market intelligence, creating opportunities to introduce incremental new products Applying the motivation-opportunity-ability theory, the authors propose that two aspects of board leadership moderate this relationship: internal (vs external) leadership and marketing leadership They test the hypotheses using a panel of publicly listed US consumer packaged goods firms, in which most new products are incremental innovations As hypothesized, board interlock centrality increases new product introductions This effect is stronger when firms have high internal leadersh
TL;DR: In this paper, the authors developed a theoretical framework to evaluate the impact of marketing-experienced board members on firm growth. But, they did not consider the effect of board diversity on the effectiveness of revenue growth.
Abstract: Scholars have expressed concern that marketing’s influence at the strategic levels of the firm is waning. Consistent with this view, only 2.6% of firms’ board members have marketing experience. The authors suggest that this is short-sighted and that including more marketing-experienced board members (MEBMs) will increase firm growth by (1) helping firms prioritize growth as a strategic objective and (2) contributing their expertise to improve the effectiveness of revenue growth strategies. Drawing on the behavioral model of corporate governance, the authors develop a theoretical framework explicating the situational, dispositional, and structural influence moderators that alter the impact of MEBMs on firm growth. Using 64,086 director biographies from S&P 1500 firms, the authors find that MEBMs positively affect firm-level revenue growth and that this relationship is strengthened or weakened by important contingencies that occur in the firm. The findings suggest that the common practice of not inc...
TL;DR: In this article, the authors examined the effect of online social connections on users' product purchases in an online role-playing game community and found evidence of "social dollars" whereby social interaction between gamers in the communi...
Abstract: Online communities have experienced burgeoning popularity over the last decade and have become a key platform for users to share information and interests, and to engage in social interactions. Drawing on the social contagion literature, the authors examine the effect of online social connections on users’ product purchases in an online community. They assess how product, user, and network characteristics influence the social contagion effect in users’ spending behavior. The authors use a unique large-scale data set from a popular massively multiplayer online role-playing game community—consisting of users’ detailed gaming activities, their social connections, and their in-game purchases of functional and hedonic products—to examine the impact of gamers’ social networks on their purchase behavior. The analysis, based on a double-hurdle model that captures gamers’ decisions of playing and spending levels, reveals evidence of “social dollars,” whereby social interaction between gamers in the communi...
TL;DR: This research is the first to propose an approach to produce such clips and to study their effectiveness, focusing on comedy movies as an application, and provides evidence that the production of short clips using the proposed methodology can be an effective tool to market movies and other online content.
Abstract: Consumers have an increasingly wide variety of options available to entertain themselves. This poses a challenge for content aggregators who want to effectively promote their video content online through original trailers of movies, sitcoms, and video games. Marketers are now trying to produce much shorter video clips to promote their content on a variety of digital channels. This research is the first to propose an approach to produce such clips and to study their effectiveness, focusing on comedy movies as an application. Web-based facial-expression tracking is used to study viewers’ real-time emotional responses when watching comedy movie trailers online. These data are used to predict both viewers’ intentions to watch the movie and the movie’s box office success. The authors then propose an optimization procedure for cutting scenes from trailers to produce clips and test it in an online experiment and in a field experiment. The results provide evidence that the production of short clips using ...
TL;DR: In this article, the authors presented an updated and extended meta-analysis based on all available 863 elasticities drawn from 89 studies and provided the following new empirical generalizations: (1) the average raw market share-financial performance elasticity is.132, which is substantially lower than the effectiveness of other intermediate marketing metrics.
Abstract: The impact of market share on financial firm performance is one of the most widely studied relationships in marketing strategy research. However, since the meta-analysis by Szymanski, Bharadwaj, and Varadarajan (1993), substantial environmental (e.g., digitization) and methodological (e.g., accounting for endogeneity) developments have occurred. The current work presents an updated and extended meta-analysis based on all available 863 elasticities drawn from 89 studies and provides the following new empirical generalizations: (1) The average raw market share–financial performance elasticity is .132, which is substantially lower than the effectiveness of other intermediate marketing metrics. This result challenges a widely used strategy that solely focuses on increasing market share. (2) Elasticities differ significantly between contextual settings. For example, they are lower for business-to-business firms than for business-to-consumer firms, for service firms than for manufacturing firms, and for...
TL;DR: In this article, the authors propose and test a theory in which countersignaling provides a mechanism to attenuate information asymmetry about financial products (loans) offered on the platform, and reveal significant, nonmonotonic relationships among the transmission of nonverifiable information, loan funding, and ex post loan quality.
Abstract: Peer-to-peer (P2P) marketplaces, such as Uber, Airbnb, and Lending Club, have experienced massive growth in recent years. They now constitute a significant portion of the world’s economy and provide opportunities for people to transact directly with one another. However, such growth also challenges participants to cope with information asymmetry about the quality of the offerings in the marketplace. By conducting an analysis of a P2P lending market, the authors propose and test a theory in which countersignaling provides a mechanism to attenuate information asymmetry about financial products (loans) offered on the platform. Data from a P2P lending website reveal significant, nonmonotonic relationships among the transmission of nonverifiable information, loan funding, and ex post loan quality, consistent with the proposed theory. The results provide insights for platform owners who seek to manage the level of information asymmetry in their P2P environments to create more balanced marketplaces, as w...
TL;DR: In this article, the authors introduce two new types of salesperson learning: exploratory and exploitative learning to reconcile inconsistencies in empirical findings, and find that salespeople exhibit both exploratory learning and exploitation.
Abstract: The literature examining the effect of sales control on salesperson performance is, at best, equivocal. To reconcile inconsistencies in empirical findings, this research introduces two new types of salesperson learning: exploratory and exploitative learning. Drawing on regulatory focus theory, the authors conceptualize exploratory learning as promotion focused and exploitative learning as prevention focused and find that salespeople exhibit both exploratory and exploitative learning, though one is used more than the other depending on the type of sales control employed. The results also suggest that the fit between salesperson learning type, customer characteristics (i.e., purchase-decision-making complexity), and salesperson characteristics (i.e., preference for sales predictability) is critical to salesperson performance and that salesperson learning mediates the relationship between sales control and salesperson performance (Study 1). Study 2 corroborates the findings using new panel data colle...
TL;DR: In this paper, the impact of Walmart's sustainability mandates on suppliers' short-term abnormal returns on their shareholders' value is examined. But the authors focus on the impact on the suppliers' (short-term) shareholder value, and they find that only one-third of suppliers benefit from these mandates.
Abstract: Suppliers are increasingly being forced by dominant retailers to clean up their supply chains. These retailers argue that their sustainability mandates may translate into profits for suppliers, but many suppliers are cynical about these mandates because the onus to undertake the required investments is on them while potential gains may be usurped by the mandating retailer. We examine whether supplier fears are justified by studying the impact of Walmart’s sustainability mandate on its suppliers’ (short-term) shareholder value. Although about two-thirds of suppliers are indeed financially harmed, approximately one-third benefit. To delve deeper into this variation, we relate suppliers’ short-term abnormal returns to Walmart’s appropriation power and explore whether and to what extent a supplier’s referent and expert power sources, derived from its marketing and operational characteristics, respectively, can counteract Walmart’s appropriation attempts. We find that the supplier’s marketing character...
TL;DR: In this paper, the authors decompose consumer donation behavior into two components: donation choice and donation amount, and consider how information related to the donor and information related with characteristics of the soliciting organization may differentially influence the two decisions.
Abstract: The present research decomposes consumer donation behavior into two components: donation choice (i.e., whether to donate) and donation amount (i.e., how much to donate). It then considers how information related to the donor and information related to characteristics of the soliciting organization may differentially influence the two decisions. Results from four field experiments suggest that donor-related appeals have a greater effect on the donation choice decision (vs. organization-related appeals), whereas organization-related appeals have a greater effect on the donation amount decision (vs. donor-related appeals). This might lead one to conclude that presenting both types of appeals in a solicitation is ideal. However, the studies presented herein also suggest that this strategy may backfire. The simultaneous presentation of donor- and organization-related appeals can hamper both donation response rates and average contribution amounts. To address this issue, the authors identify and test an...
TL;DR: The success of a freemium model depends on the number of customers who purchase the premium version in the presence of the free version as mentioned in this paper, and the strategy of extending the premiu...
Abstract: The success of a freemium model depends on the number of customers who purchase the premium version in the presence of the free version. The authors investigate the strategy of extending the premiu...
TL;DR: The authors draw from literature on circadian rhythms in information processing capabilities to build a novel theoretical framework on social media content scheduling and explain how scheduling attributes (i.e., time of day, content type, and TCA) affect the link clicks metric.
Abstract: Content platforms (e.g., newspapers, magazines) post several stories everyday on their dedicated social media pages and promote some of them using targeted content advertising (TCA). Posting stories allows content platforms to grow their social media audiences and generate digital advertising revenue from the impressions channeled through social media posts' link clicks. However, optimal scheduling of social media posts and TCA is formidable, requiring content platforms to determine what to post, when to post, and whether, when and how much to spend on TCA to maximize profits. Social media managers lament this complexity, while academic literature offers little guidance. Consequently, the authors draw from literature on circadian rhythms in information processing capabilities to build a novel theoretical framework on social media content scheduling and explain how scheduling attributes (i.e., time of day, content type, and TCA) affect the link clicks metric. They test their hypotheses using a model estima...
TL;DR: In this article, the authors demonstrate the conditional influences of these two attributes as a function of the valence of average product ratings and the level of review numbers in a choice set, and demonstrate that when choosing among the best options on one of review attributes (average product ratings or the number of reviews), consumer preference shifts from the higherrated option with fewer reviews toward the lower-rated option having more reviews.
Abstract: Prior research has shown the independent effects of average product ratings and the number of reviews for on online purchases, but the relative influence of these aggregate review attributes is still debated in the literature In this research, we demonstrate the conditional influences of these two attributes as a function of the valence of average product ratings and the level of review numbers in a choice set Specifically, we argue that the diagnosticity of the number of reviews, relative to average product ratings, increases when average product ratings are negative or neutral (versus positive) and when the level of review numbers in a choice set is low (versus high) As a result, when choosing among the best options on one of review attributes (average product ratings or the number of reviews), consumer preference shifts from the higher-rated option with fewer reviews toward the lower-rated option with more reviews We demonstrate this preference shift in seven studies, elucidate the underlying proce
TL;DR: This paper investigated how consumers' political ideology triggers sensitivity to the status-maintenance (vs. status-advancement) goal, subsequently altering luxury consumption and found that conservatives are more sensitive to status maintenance than liberals and exhibit a greater desire for luxury goods when the status maintenance goal is activated.
Abstract: This research distinguishes between the goal of maintaining one's status from advancing one's status and investigates how consumers' political ideology triggers sensitivity to the status-maintenance (vs. status-advancement) goal, subsequently altering luxury consumption. Because conservative political ideology increases the preference for social stability, the authors propose that conservatives (vs. liberals) are more sensitive to status-maintenance (but not status-advancement) and thus exhibit a greater desire for luxury goods when the status-maintenance goal is activated. Six studies (N = 23,337) assessing status-maintenance using socio-demographic characteristics (Studies 1, 2, 3A) and controlled manipulations including ad framing (Study 3B) and semantic priming (Studies 4, 5) support this proposition. The studies show that the effect is specific to status-maintenance and does not occur (1) in the absence of a status goal or (2) when the status-advancement goal —a focus on increasing status—is activate...
TL;DR: This paper developed a threshold-based model to explain the inverted U-shaped effect of coupon face value on consumer spending level and showed that this effect occurs when the price level of products is high, when consumers have a strong saving orientation, when they experience low information load from processing a small number of products, or when they have a weak preexisting preference for a specific level of pr...
Abstract: Commonly, a coupon can be applied to one of several vertically differentiated products sold at different prices within the same product line of a brand. With such a product-line coupon, consumers need to decide on the specific product to buy, resulting in different levels of consumer spending. One field data set and four lab experiments demonstrate that the relationship between coupon face value and consumer spending level may not always be intuitively positive; under certain circumstances, it could take an inverted U-shape. The authors develop a threshold-based model to explain the inverted U-shaped effect of coupon face value on consumer spending level and show that this effect occurs when the price level of products is high, when consumers have a strong saving orientation, when they experience low information load from processing a small number of products, when they are inclined to engage in thorough product comparison, or when they have a weak preexisting preference for a specific level of pr...
TL;DR: In this paper, a regression analysis of an unbalanced data set of 212 firms in the pharmaceutical and medical device industry, tracked from 2003 to 2014, reveals that while PMC improves investor expectations through firm value and systematic risk, it increases idiosyncratic risk.
Abstract: Regulatory oversight that affects the firm’s product-market environment continues to increase. Political management capital (PMC) describes firm expenditure committed to address the political and regulatory context. Neoinstitutional theory casts PMC as an institutionally expected normative response investors use when evaluating firm performance. Although limited evidence has suggested that firms benefit from PMC, the authors demonstrate its effects across financial outcomes including firm value, systematic risk, and idiosyncratic risk. Likewise, they examine how PMC interacts with a firm’s product market through research-and-development (R&D) capital and advertising capital. Regression analysis of an unbalanced data set of 212 firms in the pharmaceutical and medical device industry, tracked from 2003 to 2014, reveals that while PMC improves investor expectations through firm value and systematic risk, it increases idiosyncratic risk. The authors find that PMC plays both substitutive and complement...
TL;DR: In this paper, a self-selected incentive scheme is proposed for sales employees to choose an individualized goal-reward level combination from a menu the firm proposes given the employee's past performance.
Abstract: Drawing on goal-setting theory, this study develops a new self-selected incentive scheme. Within this scheme, a sales employee chooses an individualized goal–reward level combination from a menu the firm proposes given the employee’s past performance. To test the effects of the self-selected incentive scheme, the authors conducted two field experiments at two Fortune 500 companies. Results of both experiments show that, compared with two equivalent quota systems, sales employees’ performance increased substantially under the self-selected incentive scheme. In addition, findings reveal that the performance increase induced by this scheme is substantially greater for sales employees with a high variation in past performance and for employees with a low past-performance level. Moreover, the authors find that the effects of the self-selected incentive scheme not only are durable when offered again but also persist after the scheme is discontinued. Through two additional online experiments, the authors...