Customer equity management as formative second-order construct

Despite intensive discussions about customer equity, little research addresses how to manage customer equity from a firm's perspective. Recent literature proposes various concepts of customer equity management but does not feature an empirical study that identifies and quantifies activities that aim explicitly to maximize customer equity. In the current study, the authors develop a formative measurement instrument for customer equity management as a second-order construct that indicates how intensively firms orient their customer management toward customer value and equity. The study presents a complete process for conceptualizing and operationalizing a formative second-order construct, including a thorough literature review, intensive qualitative research, and a quantitative study with 92 customer equity managers. On the basis of this process, the authors model customer equity management as a function of three formative dimensions - customer equity analysis, customer equity strategy, and customer equity actions - measured by several formative indicators. The resulting formative operationalization satisfies the criteria for evaluating formative indexes.     

Company Competencies as a Network: The Role of Product Development

Product development managers and academics like to assure themselves and each other that new product development is one of the most critical areas of company competence and contributes positively to company success. But does top management agree? Because if they do not, the consequences will heavily influence the resource allocation to product development and career possibilities of new product developments manager. This study examines how top managers view the importance of product development relative to other central competence areas. Although asking managers about their perception is one way of evaluating the importance, its contribution to company success is another important measure. In this study, the impact of product development, relative to other important competence areas, is measured to assess further how critical product development is for overall company success.The authors investigate these matters in a survey of top managers in 513 Danish production companies. Ten areas important for achieving company objectives are identified. These are product development, market intelligence, production management, strategy and vision, sales, market responsiveness, promotion, internal co-operation, image, and supply management. Product development is rated a fairly important competence as it ranks number four, with sales, market responsiveness, and production management ranking numbers one to three. Yet a distressing negative impact on overall company success is found for product development proficiency, whereas success is positively related to production management, image, and differentiation of products. Further analysis reveals that product development contributes positively to success by enabling product differentiation and enhancing promotion proficiency. Influenced by and influencing many other competencies, product development is found to be a central competence.Results support a nonfunctional and broad perspective of how bundles of competences interact and impact on success and establish a positive overall contribution to product development.     

Foreign competition and quality sorting: Overlaps in US and Chinese exports

The paper studies the performance of US exports conditional on presence and magnitude of Chinese exports in the same foreign markets. Outcomes within product—destination markets are analysed in a panel covering 4,219 products, 67 destinations and 11 years (1996–2006). Generally, an increasing exposure to Chinese export competition is related with lower US export revenues, quantity and market shares. Robustness checks support existence and direction of a causal relationship. Other outcomes, such as product switching, market exit and export unit value adjustments are less clear‐cut. Detailed analyses of responses in individual destinations and product categories suggest that this is, partly, because Chinese and US exports compete only in some markets. In product markets where lower US export quantity coincides with adjustments of export unit value, quality sorting appears to be prevalent. In some cases, however, lower export unit values appear to help export quantities remain unchanged. Overall, the average estimated displacement effects obtained from a pooled sample mask substantial panel‐unit heterogeneity.     

The Economic Approach to European State Aid Control: A Politico-Economic Analysis

Since the mid-2000s, the European Commission has employed a so-called ‘more economic approach’ to European state aid control. Under this modified regime, the Commission checks not only whether a state aid has competition-distorting effects, but in addition, whether it enhances social welfare. This reform implies an extension of the Commission’s competences vis-à-vis the Member States as the Commission gets the power to prohibit national state aid regarded as socially wasteful. The Commission explains its reform with the necessity of giving state aid control a sound economic basis. This article, however, demonstrates that the more economic approach – somewhat paradoxically – is not based on a consistent economic view of public policy that would justify the aforementioned shift of competences to the supranational EU level. The economic-theoretical inconsistencies identified in this article may be used by policymakers to rethink some elements of current EU state aid policy.     

Uncovered interest parity in Central and Eastern Europe: Expectations and structural breaks

This paper examines the empirical validity of the hypothesis of uncovered interest parity (UIP) using data from five Central and Eastern European countries with floating exchange rates for the period 2003 to 2014. The analysis includes forward‐looking as well as static expectations and allows for different types of structural break. The variable depicting the deviation from strict UIP is stationary when expectations are forward looking, suggesting that it is not possible to reject the UIP hypothesis with a constant risk premium. The deviation from strict UIP is however typically not stationary when expectations are static, even when structural breaks are incorporated, leading to the rejection of the UIP hypothesis with a constant risk premium. The results underscore the central role of expectations for the UIP hypothesis.     

A further investigation of unemployment persistence in European transition economies

This paper analyses the dynamics of the unemployment rate in the eight countries from Central and Eastern Europe which joined the EU in 2004. Unit root tests allowing for nonlinearities and structural changes suggest that the unemployment rate is not stationary in most of the sample countries. Tests allowing for fractional integration, however, reveal that shocks are highly persistent, implying a slow rate of convergence to the natural rate of unemployment. The unemployment rate is least persistent in Hungary and Slovenia, more persistent in the Czech Republic, Slovakia and the Baltic States and extremely persistent in Poland. The degree of persistence appears to reflect the different levels of economic and institutional development in the countries and possibly also the role of the government.     

Migrant happiness in China

In China, surveys find that migrant households’ average happiness (compared with rural households) is lower despite higher income. These findings appear to contradict the standard microeconomic utility function, which predicts that higher income will always result in higher utility. We show that an intuitively plausible modification of the utility function, relating income to status and security utility, preserves standard microeconomic maximization results, and also provides a consistent explanation for the empirical findings on happiness. These results lead to some novel but intuitively plausible implications for economic development in China and elsewhere.     

The psychological contract in Chinese-African informal labor relations

This qualitative study analyzes Chinese-Ghanaian employment in trade as an example of South-South cross-cultural labor relations. Based on ethnographic fieldwork, employment practices and labor conflicts are discussed with regard to psychological contract and equity. The analysis is guided by a process model of psychological contract that has been adjusted and extended in consideration of the dimensions of foreignness and cross-cultural communication. After briefly introducing the situation in Ghana we elaborate that under conditions of foreignness, employment relations are conflict prone because of contradictory equity expectations of employers and employees. We discuss how Ghanaian employees perceiving their psychological contract as violated attempt to restore equity by means of voice, silence, retreat or destruction and often fail due to lack of mutual cultural understanding between employers and employees. We conclude that exit in contrast to expectations is a viable option for employers rather than employees, but most employment relations, though defective, are perpetuated.