Strategic Use of Analytical CRM in a Market with Network Effects and Switching Costs: Terminating Unprofitable Customer Relationships

Analytical customer relationship management (CRM) systems make firms more informed than ever about their customers. This further gives firms the ability to serve customers selectively in a way that ensures retaining profitable customers and eliminating unprofitable ones. However, when firms of products/services with network effects decide to eliminate unprofitable customers, they may face the risk associated with firing them, which is user-based shrinkage. This risk incurred as a result of network effects has been widely neglected in CRM literature. In this study, considering this risk, we investigate when firms can eliminate unprofitable customers in the competitive market with network effects and consumer switching costs, which often co-exist with network effects, using a game-theoretic model of a duopoly. Our results show that it is not desirable for firms to fire unprofitable customers in the presence of strong network effects or sufficiently low consumer-switching costs. Otherwise, firms can fire unprofitable customers and benefit from the ability to eliminate them. An interesting point is that competing firms can be better off when both have the ability to eliminate unprofitable customers in the presence of moderate switching costs and small network effects.     

Antecedents of organizational citizenship behaviours among part-time employees of service organizations in Korea

This study investigates the antecedents of organizational citizenship behaviours by using data consisting of 196 part-time instructors drawn from six sport centres in the Republic of Korea. The results of a structural equation analysis suggest that job satisfaction has a positive effect on organizational and occupational commitment, occupational satisfaction has a positive effect on organizational and occupational commitment, organizational commitment has a positive effect on organizational citizenship behaviours (OCBs) and a negative effect on turnover intentions, and turnover intentions has a negative effect on OCBs. The effect of occupational commitment on both turnover intentions and OCBs was not significant. This research addresses a number of important issues in the management of human resources (i.e. part-time workers) in service organizations; that is, this study examines how part-time employees' satisfaction and commitment with respect to their jobs, occupations or organizations are related to their OCBs; this relationship is arguably one the most important issues facing service organizations today.     

Comparative analysis of innovative diffusion in the high-tech markets of Japan and South Korea: a use–diffusion model approach

In recent years, many scholars and practitioners have raised doubt as to whether or not conventional research on the diffusion of innovation can explain and predict the needs and behavioral patterns of consumers in the raiding and converging market environment. Thus, it has been suggested that the use–diffusion model would be a good alternative framework to study innovation diffusion. This study explores whether the new model is effective in explaining and predicting the needs and innovative behavioral patterns of consumers in the Internet Protocol Television (IPTV) market in Japan and South Korea. Nation-wide surveys were conducted in Japan and South Korea for data collection, resulting in a large random sample (n = 500 in Japan and n = 500 in South Korea). Important findings of the study are: (1) product experience and sophistication of technology were found to be the most important factors in explaining the innovative diffusion process among IPTV users; (2) functional similarity, complementarity, and substitution effect were also main determinants for enhancing users’ satisfaction with IPTV services; (3) complexity and relative advantage were crucial measures of IPTV’s current technological level, functional performance, and quality with regard to services; and (4) a comparative analysis of diffusion patterns of IPTV between Japan and South Korea indicated that IPTV users in Japan appeared to be still in the phase of early adopters, while South Korean users have gone beyond to the phase of early majority in the adoption cycle.     

Consumer Attitude towards Organic Labeling Schemes in Japan

ABSTRACT

Japan is the most lucrative organic market in the Asian region and is projected to account for about 80% of the Asian market revenues by 2009 (Kuhlmann and Jones, 2006). This study identifies Japanese consumer preference and interest in two major labeling information- source of organic certification/traceability and country of origin for organic food products. Stated preference method (SPM) based survey data was collected from two major cities in Japan in order to develop Japanese consumers' organic food choice model. Findings show that Japanese consumers are willing to pay 10% price premium for the organic food products compared to conventional products that have no specific labeling, suggesting a significant profit margin to be possibly captured by the organic producers and marketers. The Japanese consumers have perceived value of the JAS label in their stated preference and showed willingness to pay a price premium for this quality certification system, which validates the importance of government-regulated mandatory labeling. Regarding the country origin labeling issue, the Japanese consumers showed clear preference for the domestic organic products to the imported products, while showing no preference for any particular country origin for imported organic products. For private-voluntary organic labeling, the consumer organization-led organic label is considered to be more reliable source than the retailer-guaranteed organic label.     

Analyst reputation and management earnings forecasts

Prior studies show that analysts with high reputation are influential in the market. This paper examines whether managers consider analyst reputation in shaping their voluntary disclosure strategy. Using Institutional Investor magazine’s All-American (AA) rankings as a proxy for analyst reputation, we find that the coverage of AA analysts is positively associated with the likelihood of quarterly management earnings forecasts (MEFs). We also find that AA analysts’ forecast optimism is more positively associated with the likelihood of MEFs than non-AA analysts’ forecast optimism when the firm is covered by AA analysts. Analyses based on AA analyst coverage changes and AA status changes confirm the relation between analyst reputation and MEFs. We further find that analyst reputation influences other MEF properties, such as forecast news, bias, and revisions, and that our results are robust to alternative measures of analyst reputation. Further analyses show that market reactions at quarterly earnings announcements are more positive (negative) when firms meet/beat (miss) AA analysts’ forecasts than when firms meet/beat (miss) non-AA analysts’ forecasts. Collectively, our findings suggest that managers strategically provide voluntary forecasts by taking into account the reputation of individual analysts following their firms.     

The innovation consequences of mandatory patent disclosures

We investigate the effect of patent disclosures on corporate innovation. Using the American Inventor's Protection Act (AIPA) as a shock that increased patent disclosures, we find an increase in innovation for firms whose rivals reveal more information after the AIPA and a decrease in innovation for firms whose own disclosures are divulged to competitors as a result of the law. These findings suggest patent disclosures generate both spillover benefits and proprietary costs. Our findings provide justification for patent disclosure requirements by demonstrating positive externalities: rivals' disclosures facilitate a firm's innovation. However, we also highlight that mandatory patent disclosures can impose proprietary costs on firms. These results broadly contribute to our understanding of the real effects of disclosure, such that forcing firms to share proprietary information can be privately costly but beneficial to other firms.     

Comparison of Internet and interview survey modes when estimating willingness to pay using choice experiments

With the increasing use of the Internet as a survey mode, questions of mode effects and how potential effects influence inferences arise. Using a choice experiment combined with mixed logit estimation, willingness-to-pays (WTPs) for attributes are compared between the Internet mode and the more traditional interview survey mode. The results suggest that there are differences in WTP between the two survey models for three of four attributes. Furthermore, WTPs obtained from the interview survey are larger than the WTPs obtained from the Internet survey, suggesting potential social desirability behaviour by the interview respondents. Internet surveys involving sensitive issues may be desirable because of potential social desirability behaviour.     

Estimating interest rate setting behaviour in Korea: a constrained ordered choices model approach

We study the Bank of Korea’s interest rate setting behaviour using an array of constrained ordered choices models, where the Monetary Policy Committee revises the target policy interest rate only when the current market interest rate deviates from the optimal rate by more than certain threshold values. Our models explain changes in the monetary policy stance well for the monthly frequency Korean data since January 2000. We find important roles for the output gap and the foreign exchange rate in understanding the Bank of Korea’s rate decision-making process. We also implement out-of-sample forecast exercises with September 2008 (Lehman Brothers Bankruptcy) for a split point. We demonstrate that out-of-sample predictability improves greatly for the rate cut and the rate hike decisions using SE-adjusted inaction bands.     

Economic and capital market antecedents of venture capital commitments (1960–2010)

Using vector autoregression technique, we examine the interrelation between venture capital flows, economic development, capital market fund-raising activities, and capital market valuation, based on annual data of the United States over the past half-century. We find that venture capital commitments appear to be correlated with GDP and capital market valuation. While capital market fund-raising activities (Initial Public Offerings and Seasoned Equity Offerings) are also correlated with venture capital flows, these effects are subsumed by GDP, indicating that the overall economy drives both venture capital flows and capital market financing activities. Analyses from impulse response functions suggest that shocks to GDP have a permanent effect on venture capital flows, while the impact of capital market valuation (Standard & Poor 500 returns) on venture capital flows is rather short lived. Overall, both economy-wide development and financial market fluctuations seem to impact venture capital flows.     

Many ways of qualitative contrast in probabilistic theories of causality

Hitchcock (Synthese 97:335–364, 1993) argues that the ternary probabilistic theory of causality meets two problems due to the problem of disjunctive factors, while arguing that the unanimity probabilistic theory of causality, which is founded on the binary contrast, does not meet them. Hitchcock also argues that only the ternary theory conveys the information about complex relations of causal relevance. In this paper, I show that Eells’ solution (Probabilistic causality, Cambridge University Press, Cambridge, 1991), which is founded on the unanimity theory, meet the two problems. I also show that the unanimity theory too reveals complex relations of causal relevance. I conclude that the two probabilistic theories of causality carve up the same causal structure in two formally different and conceptually consistent ways. Hitchcock’s ternary theory inspires several major philosophers (Maslen, Causation and counterfactuals, pp. 341–357. MIT Press, Cambridge, 2004; Schaffer, Philos Rev 114, 297–328, 2005; Northcott, Phil Stud 139, 111–123, 2007; Hausman, The place of probability in science: In honor of Eelleys Eells (1953–2006), pp. 47–64, Springer, Dordrecht, 2010) who have recently developed the ternary theory or the quaternary theory. This paper leads them to reconsider the relation between the ternary theory and the binary theory.