Integrating the Dirichlet-multinomial and multinomial logit models of brand choice

This paper discusses the interpretative benefits that arise from merging the Dirichlet-multinomial (DM) model as a loyalty variable in the multinomial logit (MNL) model of brand choice. The estimated parameters of this hybrid model compare favorably to those of a pure DM model (with no marketing mix variables) as well as those of a standard MNL model with an exponentially smoothed loyalty measure. The hybrid model offers an index of consumer heterogeneity and estimates of each brand's preference share, adjusted for the effects of price and promotional activities. We illustrate the unique interpretations offered by these parameters across four different product categories, showing how changes in heterogeneity (across categories or model specifications) are closely related to changes in the overall impact of marketing mix variables.The author is grateful to Bruce Hardie, Barbara Kahn, Jim Lattin, Len Lodish, Bob Meyer, and Don Morrison for their comments and suggestions. He appreciates the support of Doug Honnold and Information Resources, Inc., for providing the data and computational facilities used in this paper.     

Assessing Industrial Buyer Preferences: Using the Swait-Louviere Test to Test the Key Informant Assumption

When using professional buyers to study an organizations buying behavior an important consideration is whether their preferences reflect those of the organization. Since this is a key informant problem, the present article focuses on the issue of the degree to which key informants can be used to provide insights into their own organizations preferences. We conduct a direct test of the key informant assumption using the Swait-Louviere test. In this test preferences from a choice experiment using actual buyers, and from market decisions made by the organization, are estimated separately, then jointly in multinomial logit models. We found that buyers experimental preferences were similar to estimates obtained from the market decisions. Buyers preferences were closer to the intuitive preferences of the organizations top executives than the estimates based on past market decisions, although a model based on the combined data outperformed either. We discuss the implications of these results for industrial buying research.This revised version was published online in May 2005 with a corrected cover date.     

Are physicians a “delinquent community”?: Issues in professional competence,conduct, and self-regulation

This paper examines the moral responsibilities of physicians, toward themselves and their colleagues, their students and patients, and society, in terms of the nature and exercise of professional self-regulation. Some of the author's close encounters with cases involving research misconduct, behavioral impairment or deviance, and medical practice at the moral margin, are described to illustrate why, in Freidson's words, physicians are a delinquent community with respect to the ways they meet their responsibility to govern the competence and conduct of their members. Judith P. Swazey, president of The Acadia Insttute, is co-author of The Courage to Fail: A Social View of Organ Transplants and Hemodialysis and co-editor of several books on medical responsibility. The include Human Aspects of Biomedical Innovation, Social Controls and the Medical Profession and Whistleblowing in Biomedical Research: Policies and Procedures for Responding to Reports of Misconduct. Her Ph.D. in the history of science.     

Student Ethical Perceptions and Ethical Action Propensities: An Analysis of Situation Familiarity

Recently McCuddy and Peery (1996) have suggested that business students may not respond the same way to unfamiliar business ethical dilemmas as they would to more familiar academic ethical dilemmas. The purpose of this study was to present the same students with both unfamiliar business dilemmas as well as possibly more familiar academic dilemmas in order to examine this issue.Findings of the study revealed that students did not exhibit different perceptions of the unethical actions performed in the academic and accounting/business ethical vignettes. However, the students indicated that both they and their peers would be more likely to act unethically to resolve the dilemmas in the accounting/business cases than in the academic cases. This finding is troubling in that it suggests that students either feel less compelled to act ethically in business, or that they perceive that ethical standards in the business world are generally low when compared to their current educational environment. In addition, the students in the study maintained the same halo effect (i.e., the difference between an individual's perception of their likelihood of performing an unethical action compared to their perception of their peers' likelihood to perform the same unethical action) across the two types of ethical dilemma.     

Values in Decision-Making Processes: Systematic Structures of J. Habermas and N. Luhmann for the Appreciation of Responsibility in Leadership

"Ethical Leadership" in modern multicultural corporations is first the consideration of different personal and cultural value systems in decision-making processes. Second, it is the assignment of responsibility either to individual or organisational causalities. The task of this study is to set the stage for a distinction between rational entities and the arbitrary preferences of individuals in economic decision making processes.Defining rational aspects of behaviour in economics will lead to the formal structures of organisational systems, which are independent of concrete but varying values. Luhmann's Theory of systems of communication describes the internal dynamic forces of economic communication processes in terms of formal structures. On the other hand Habermas' Theory of discourse integrates the previous relationship between individual subjectivity and rational behaviour. Habermas gives an indication of how to separate subjective values and meaning from rational arguments in rational communication processes. The translation of these theoretical structures into practical applications for decision making processes and decision taking acts links the ethical, or value-oriented, context precisely to both individual and organisational areas of responsibility.     

Is capitalism still viable?

This essay is an attempt to clarify the meaning of capitalism and to argue that this form of economic pattern will survive in the U.S. in the twentieth century. Capitalism should not be viewed as an abstraction which implies a religion, an ideology, a form of government, or a moral philosophy, but rather the private ownership of capital. Marx was wrong when he predicted the speedy decay of the capitalistic system in the West and when he claimed that a competitive system will lead to servitude and poverty for the masses; on the contrary, the American economic system is a grand success. Part of this success resulted from natural resources; part from America's being one of the largest free-trade areas; and part from the economic system, so-called capitalism, by which we have governed ourselves. The outcome is a greater measure of freedom, prosperity, leisure, and industrial sophistication. These achievements are hardly paralleled by any of the advanced countries of the world. Russell Kirk is a Distinguished Scholar of The Heritage Foundation in Washington, D.C. He is the author of twenty-three books and of several hundred essays. His books include The Conservative Mind; The Roots of American Order; and, recently, Decadence and Renewal in the Higher Learning.This article was originally published in The Hillsdale Review. Copyright © 1982 by Hillsdale Review Inc.     

Can Ethical Organizational Character Be Stimulated and Enabled?: “Upbuilding” Dialog As Crisis Management Method

Crisis management can be simultaneously a content specific problem solving process and an opportunity for stimulating and enabling an organizations ethical tradition. Crisis can be an opportunity for ethical organizational development. Kierkegaardian upbuilding dialog method builds from within the internal ethical tradition of an organization to respond to crises while simultaneously adapting and protecting the organizations tradition. The crisis itself may not be a directly ethical crisis, but the method of responding to the crisis is built upon the ethical foundations of an organizations tradition. A limitation of this method is that it may be less applicable to organizations with questionably ethical traditions. The concept of upbuilding dialog is derived from Kierkegaard, but here is applied to organizational crisis management. The method is illustrated and discussed in the context of a wrongful death crisis of the Dana- Farber Cancer Institute, a nonprofit organization, and an economic survival crisis at Ben and Jerrys, a business organization.     

Learning to solve the right problems: The case of nuclear power in America

Three general types of problems entail different strategies. Continuing to seek solutions to tame problems when we face messes, let alone wicked problems, is potentially catastrophic hence fundamentally irresponsible. In our turbulent times, it is therefore becoming a strategic necessity to learn how to solve the right problems.

But then, you may agree that it becomes morally objectionable for the planner to treat a wicked problem as though it were a tame one, or to tame a wicked problem prematurely, or to refuse to recognize the inherent wickedness of social problems. Rittel and Webber (1973).

Jonathan King is Associate Professor of Management at the College of Business at Oregon State University. His primary research interests are in the areas of moral philosophy and modern technology. His most important publications are Confronting Chaos and Common Knowledge of the Second Kind,Journal of Business Ethics (1989).     

Confronting chaos

While it is common to observe that our society and world are becoming increasingly complex and fast paced, most of our theories provide no bases upon which to develop appropriate strategies. The need for developing holistic strategies is becoming urgent in two related areas: major interactive technologies and morality. Jonathan King is Associate Professor of Management at the College of Business at Oregon State University. He received his B.A. in philosophy from Antioch College (1965) and his M.B.A. in Finance (1975) and Ph.D. in Business, Government and Society (1980) from the University of Washington. His primary research interests are in the areas of moral philosophy and General Systems Theory. His most important publications are The Three Faces of Thinking, Journal of Higher Education (1986) and Prisoner's Paradoxes, Journal of Business Ethics (1988).     

Firm size,small business presence and sales of innovative products: A micro-econometric analysis

In our generalized TOBIT analysis we identify a number of variables which have an impact on a firm's innovation output. Among others we find that larger firms generally have a higher probability of selling some innovative products, although this probability increases less than proportionately with firm size. Given that a firm has some sales of innovative products, the share of such products in a firm's total sales tends to be higher in smaller firms. Moreover, a strong small business presence in a sector seems to enhance imitative innovation but has no influence on true innovations, whereas market concentration has no influence on innovation output in whatever definition. We also find evidence of regional knowledge spill-overs. Furthermore, our results are consistent with Schmookler's hypothesis that the growth of demand enhances innovation. The outcomes about the impact of R&D collaboration and technology transfer on innovation remain ambiguous.     

Real Wages,Business Cycles and New Production Patterns

In contrast with most conventional business cycle models, empirical data show no clear correlation between real wage movements and output and employment. This paper presents a model, largely based on concepts presented by Joseph Schumpeter,in which economic growth and the business cycle are triggered by endogenous real shocks to technology. It suggests that the speed and magnitude by which technological shocks spread throughout the economy determine whether the resulting changes in real wages will be pro-or counter-cyclical.     

On Creating and Claiming Value in Negotiations

This paper presents a negotiation model that includes value creation. It shows that creative negotiation efforts tend to intensify toward the deadline, and that the deadline is determined endogenously by the tension between two motives, creating more value and claiming from existing value. When the parties can present misleading offers in order to claim rather than create value, the outcome in early negotiation rounds may display an impasse where any proposal is rejected without inspection, while negotiation activities such as value creation through sincere offers and inspection of clauses intensify toward the deadline.     

Consumers and the internal market for services: Shortcomings of the “new approach” of the Community

The paper discusses the new approach of the Community in the area of services, namely the principle that every service — like every good — should be allowed to circulate freely in the entire Internal Market provided it meets the standards of EEC law and of the country of origin. There are some exceptions to this principle, especially in the insurance area (market segregation in the industry's interest). The paper points out that the new approach might endanger consumer protection of Member States unless adequate standards of the receiving country exist. ECLG makes a number of suggestions to overcome the lacunae left by the new approach, especially by opting for minimal harmonisation, by applying rules of private internal law under the Rome Convention, and by providing for safeguard clauses.

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Verbraucher und Binnenmarkt für Dienstleistungen: Mängel der sog. neuen Konzeption der Gemeinschaft

Zusammenfassung Die Gemeinschaft versucht in Vewirklichung der Grundfreiheiten des durch die Einheitliche Akte geänderten EWG-Vertrages die Vollendung des Binnenmarktes auch im Dienstleistungsbereich. Dabei sind unterschiedliche Herangehensweisen denkbar, nämlich das Prinzip der Minimalharmonisierung, die Marktsegmentierung oder die sog. neue Konzeption. Letztere findet sich vor allem im Banken- und Rundfunkbereich; dancah soll es für den Marktzutritt im gesamten Binnenmarkt ausreichen, daß die (angeglichenen) Standards des Ursprungslandes eingehalten werden. Die ECLG befürchtet einen Abbau des Verbraucherschutzes bei einer konsequenten Durchführung dieses Prinzips und macht Gegenvorschläge. Diese beziehen sich auf eine verstärkte Durchsetzung des Prinzips der Minimalharmonisierung, auf die Notwendigkeit der Anwendung der Regeln des Internationalen Privatrechts nach dem Römischen Schuldrechtsübereinkommen von 1980, und durch Verankerung von Schutzklauseln.

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The European Consumer Law Group (ECLG) is a group of lawyers and law scholars in the EEC and EFTA countries, concerned with legal aspects of consumer protection. Correspondence regarding the paper should be directed to: Professor Norbert Reich, Centre for European Legal Policy, Universitätsallee GW 1, D-2800 Bremen 33, Federal Republic of Germany.     

From Adam Smith to the American Catholic bishops: Debating visions of economic life

Considerable controversy was stirred by the contrast between the specific approaches to public policy contained in the first draft of the Catholic bishops' letter on the U.S. economy and the policies favored by the Reagan administration. However, a much more basic contrast actually existed between the bishops' underlying vision of economic life and contemporary capitalism. The pastoral challenges a separation between moral criteria and economic activity that is deeply embedded in modernity itself. Indeed, the splitting off of economic life from its moral-religious matrix is seen by the bishops' critics as a positive, defining feature of democratic capitalism. The critics see the separate economic and moral-religious spheres related by due balance; the bishops, while acknowledging an autonomy to economic life, emphasize that its fundamental choices remain moral. The bishops (and, for different reasons, their critics) have preferred to minimize the contrast between the letter's vision and the contemporary economy. They avoid any clearcut judgment on the economic system by stressing pragmatism and reforms; but implicitly they are granting a strictly conditioned acceptance of reformist capitalism, the condition being the system's openness to questioning and change. Peter Steinfels is Editor of Commonweal Magazine and he is the author of The Neoconservatives (Simon and Schuster, 1979).     

Comment on The Microsoft Antitrust Policy Case

This paper both responds to Economides analysis and attempts to address the Microsoft case from a broader than U.S. perspective. The importance of the roles played by disloyalty payments, compatibility requirements, information asymmetry and the rather static nature of market definition, particularly in the context of allegations of tying, in the Microsoft case are highlighted. In contrast to the position in the U.S., the European Commission acts for all EU member states and has its disposal the possibility of imposing large fines. However, structural remedies are not available to the European Commission. Comity procedures, by allowing for the inclusion of foreign surplus in domestic welfare functions, offer a model for international co-operation in the future application of competition laws.     

Does Greater Amount of Information Always Bolster Attitudinal Resistance?

Previous research suggests that attitudinal resistance to information that challenges a prior evaluation increases with the amount of information underlying the prior evaluation. We revisit this proposition in a context in which a set of important claims about a target brand are presented either alone—a lower amount of isolated information—or along with other favorable, but less important claims—a higher amount of embedded information. Results from two experiments show that when the challenge occurs immediately after the initial evaluation, a greater amount of embedded initial information does produce greater attitudinal resistance. However, when the challenge occurs after a delay, a lesser amount of isolated information produces greater attitudinal resistance. The findings qualify previous assumptions about the role of prior information in attitudinal resistance, and support a constructive view of judgment revision and attitudinal resistance.     

Justice: The root of american business ideology and ethics

Although there are many conceptions of Justice, these different perceptions can provide many interesting insights into a business person's ethical standards as well as that person's decision-making processes. Using the Bishops' Pastoral Letter on the U.S. Economy as the basis for asking questions about justice, twenty-four business executives were interviewed about their conception of justice. An analysis of these interviews reveals that this group of businesspeople operated under very different conceptions of Justice at the Macroenvironmental and Microenvironmental levels. This result has some interesting implications not only for those scholars concerned with business ethics but for everyone who has a stake in business education.Men are called good, chiefly on account of their Justice. Cicero, 56 B.C. Ideology is applied philosophy. Lodge, 1986 Richard McGowan, S. J. is an Assistant Professor of Operations and Strategic Management at Boston College. His research focus involves examining both the rationale behind business and public policy decisions as well as determining the effectiveness of these policy measures. Some of his recent publications include Deciphering the Japanese Import Quota, Policy Studies Journal (1988) and Public Policy Measures and Cigarette Sales: An ARIMA Intervention Analysis Study JAI Social Issues Management Volume (1989).     

Technological paradigms,innovative behavior and the formation of dissipative enterprises

Although many studies have assigned a key role to technological paradigms in the development and diffusion of new technologies, which are often pioneered and led by small businesses, the nature of this term has remained somewhat unclear. This paper uses concepts from modern theories of chaos, information theory and dissipative structures, to describe the process through which new technological paradigms form and how the evolve. This analysis shows that the development of a new and innovative product or production methods drive existing as well as new firms to search for innovations. The interaction of all firms that are affected by this explorative behavior generates escalating waves of change and thereby creates chaos, which is the source of the materials from which new technological structures emerge. These new structures are arrangements of production tasks and activities that link an extended, interindustry group of firms into an interdependent system. This structure constitutes a technological paradigm when it serves as a matrix, or template, through which all firms in the system engage in innovative activity.     

The Methods Used to Implement an Ethical Code of Conduct and Employee Attitudes

In the process of implementing an ethical code of conduct, a business organization uses formal methods. Of these, training, courses and means of enforcement are common and are also suitable for self-regulation. The USA is encouraging business corporations to self regulate with the Federal Sentencing Guidelines (FSG). The Guidelines prescribe similar formal methods and specify that, unless such methods are used, the process of implementation will be considered ineffective, and the business will therefore not be considered to have complied with the guidelines. Business organizations invest enormous funds on formal methods. However, recent events indicate that these are not, by themselves, yielding the desired results. Our study, based on a sample of 812 employees and conducted in an Israeli subsidiary of a leading multinational High-Tech corporation headquartered in the US, indicates that, of the methods used in the process of implementation, one of the informal methods (namely, the social norms of the organization) is perceived by employees to have the most influence on their conduct. This result, when examined against employee tenure, remains relatively stable over the years, and stands in contradistinction to the formalistic approach embedded in the FSG. We indirectly measure the effectiveness of the percieved most influential implementation process methods by analyzing their impact on employee attitudes (namely, personal ethical commitment and employees' commitment to organizational values). Our results indicate that the informal methods (manager sets an example or social norms of the organization) are likely to yield greater commitment with respect to both employee attitudes than the formal method (training and courses on the subject of ethics). The personal control method (my own personal values) differs significantly from all the other methods in that it yields the highest degree of personal ethical commitment and the lowest degree of employees' commitment to organizational values.     

Risk,commitment, and project abandonment

This article deals briefly with the most loathsome of business topics — the admission of failure. Rather than actively encouraging project Anti-champions, many organizations experiencing financial duress inadverdently stifle opposing opinion. In some cases recognition is delayed until it is too late. This is unfortunate since failure can be managed like any other business situation. Companies with CEOs that foster open communications between finance and operations are more likely to avoid escalating commitment to failed projects.Prudence is a rich, ugly old maid courted by incapacity. William Blake Mike Devaney is Associate Professor of Finance at South-East Missouri State University. His primary research interest is real estate finance. He has published in the Journal of the American Real Estate and Urban Economics Association, Journal of Real Estate Research, and The Appraisal Journal to name a few. He also enjoys writing on popular business myth and has published on this subject in Business and Society Review as well as others.