The dark side of innovation: How new SKUs affect brand choice in the presence of consumer uncertainty and learning

New product activity is critical for sustained success of consumer packaged goods (CPG) brands. However, the impact of new SKUs on the perceived quality, quality uncertainty and subsequent choice of the brand as a whole is, as of yet, not well understood. The authors study how new additions to the brand line shape consumers’ quality perceptions, and how this – next to the mere line length effect – influences their choice of brands over time. They do so in the setting of an emerging market (China), where new product activity is particularly pervasive. Using a unique scanner panel dataset of Chinese households over the period 2011–2014, they estimate a Bayesian learning model that accommodates varying quality, on two CPG categories, and for two types of new-product additions (new sensory SKUs vs. new non-sensory SKUs). They show that while adding new SKUs may lift the brand’s perceived quality level, it also makes consumers more uncertain about the quality of the brand – dampening their brand choice. This holds especially for light customers – an important part of the brand clientele. Managerial implications are discussed.     

Drivers of eWOM engagement on social media for luxury consumers: Analysis,implications, and future research directions

The rapid industrialization and growth across the world have fostered the consumption of luxury fashion brands. Electronic word-of- mouth on social media (eWOM) is fast becoming an effective and germane strategy to engage luxury consumers through posting pictures, sharing reviews, and communicating information on platforms like Facebook, Instagram, and TikTok. Extant research has not examined the antecedents and drivers that lead to eWOM behavior. We leverage self-congruity theory and through its focal lens, our study addresses this research gap through a survey conducted with 453 consumers in Mexico, Latin America's fastest growing market. Our results indicate that need for status, susceptibility to normative influence, and luxury brand involvement, moderated by authentic pride and social media influencers lead to eWOM behavior on social media. We also demonstrate that luxury brand involvement and susceptibility to normative influence mediate the relationship between need for status and eWOM behavior on social media. The study provides important implications to managers and researchers by suggesting long-term actionable strategies for growth that can help luxury firms develop a sustainable competitive advantage over rivals and competitors.     

When push comes to shove: How coach versus student athlete misconduct affects event attendance intentions

Though onand off-the-field misconduct is common among U.S. college athletic programs, little is known regarding the ramifications that may result. Drawing on social learning theory, the current research suggests consumers intentions (e.g., likelihood of attending a game) differ depending on violator's team role. Across one qualitative and five experimental studies, we demonstrate that consumers' intentions are influenced by violator's team role, such that likelihood of attending a game is lower when a coach (vs. student athlete) misbehaves, an effect driven by evaluation of the academic institution. This effect is robust across both winning and losing records and moderated by perceived fairness of the university's actions toward the violator.     

The impact of influencers' multi-SNS use on followers’ behavioral intentions: An integration of cue consistency theory and social identity theory

The considerable marketing potential brought by the rapid growth of social media has been extensively examined in the literature, particularly in terms of the impact of influencers' recommendations on their followers' decisions. However, little attention has been given to how the individual influencers' use of multiple social networking sites affects their followers' behavioral intentions. Hence, this academic gap warrants further exploration. Drawing on cue consistency theory, social identity theory, and stimulus-organism-response framework, this research proposes three research questions and constructs an integrated research model to explore how the influencers' cue consistency affects the social identification of their followers, subsequently influencing their behavioral intentions. A structural equation modeling technique is performed to analyze the data of 510 valid respondents. The findings show that influencers' consistent cues (i.e., information and image consistency) across social media have positive impacts on followers' cognitive and affective identification toward the influencers. Furthermore, the determinants for followers' purchase intention and electronic word-of-mouth intention are affirmed to serve as both cognitive and affective identification. Especially, the results indicate that the relationships between followers’ social identifications and behavioral intentions are moderated by the type of influencer (i.e., lifestyle vs. review). Accordingly, the results indicate how the use of multiple social networking sites by influencers impacts the behavioral intentions of their followers. The findings offer new insights into influencer marketing and provide important lessons for marketers.     

The effect of place attachment of geographical indication agricultural products on repurchase intention

[Objective] This study aims to investigate how place attachment and the quality of experience affect consumers' intention to repurchase Geographical Indication (GI) agricultural products. [Methodology] Based on the special functional value and symbolic meaning of GI agricultural products, we constructed a five-dimensional model of place attachment for GI agricultural products consumers. Expanding on the original two-dimensional place attachment model, we introduced three connection concepts: nature, society, and emotion. We also combined this model with the quality of experience model and consumer purchase intention model to form a research model of repurchase intention for GI agricultural products. A questionnaire survey was used to collect data (n = 340), and a partial least squares structural equation model was used to test the empirical evidence. [Research results] (1) Place attachment to Geographical Indication agricultural products significantly affects the quality of experience. (2) Quality of experience significantly affects consumer trust and repurchase intention. (3) Consumer trust significantly affects repurchase intention. (4) There is a mediating effect of experience quality between place attachment and repurchase intention; there is a mediating effect of trust in the relationship between quality of experience and repurchase intention. (5) There is a chain mediating effect of “place attachment→quality of experience→consumer trust→repurchase intention” in the model.     

Effects of broadband availability on total factor productivity in service sector firms: Evidence from Ireland

While broadband is widely believed to augment productivity, there is little firm-level evidence of a generalised causal effect. In this paper we examine whether the introduction of digital subscriber line (DSL) broadband services increased firms' productivity in nine sub-sectors within the services and distribution sector in Ireland from 2006 to 2012. Firm-level panel data on firms' characteristics are linked to spatial information on the rollout of DSL. While we do not find significant productivity effects in the services sectors taken together, we do find positive and significant effects on firm's total factor productivity in Information & Communication and Administrative & Support Services.     

Analytical approximations of local‐Heston volatility model and error analysis

This paper studies the expansion of an option price (with bounded Lipschitz payoff) in a stochastic volatility model including a local volatility component. The stochastic volatility is a square root process, which is widely used for modeling the behavior of the variance process (Heston model). The local volatility part is of general form, requiring only appropriate growth and boundedness assumptions. We rigorously establish tight error estimates of our expansions, using Malliavin calculus. The error analysis, which requires a careful treatment because of the lack of weak differentiability of the model, is interesting on its own. Moreover, in the particular case of call–put options, we also provide expansions of the Black–Scholes implied volatility that allow to obtain very simple formulas that are fast to compute compared to the Monte Carlo approach and maintain a very competitive accuracy.     

Error analysis of finite difference and Markov chain approximations for option pricing

Mijatovi? and Pistorius proposed an efficient Markov chain approximation method for pricing European and barrier options in general one‐dimensional Markovian models. However, sharp convergence rates of this method for realistic financial payoffs, which are nonsmooth, are rarely available. In this paper, we solve this problem for general one‐dimensional diffusion models, which play a fundamental role in financial applications. For such models, the Markov chain approximation method is equivalent to the method of lines using the central difference. Our analysis is based on the spectral representation of the exact solution and the approximate solution. By establishing the convergence rate for the eigenvalues and the eigenfunctions, we obtain sharp convergence rates for the transition density and the price of options with nonsmooth payoffs. In particular, we show that for call‐/put‐type payoffs, convergence is second order, while for digital‐type payoffs, convergence is generally only first order. Furthermore, we provide theoretical justification for two well‐known smoothing techniques that can restore second‐order convergence for digital‐type payoffs and explain oscillations observed in the convergence for options with nonsmooth payoffs. As an extension, we also establish sharp convergence rates for European options for a rich class of Markovian jump models constructed from diffusions via subordination. The theoretical estimates are confirmed using numerical examples.     

Deunionization and job polarization – a macroeconomic model analysis for a small open economy

Declining unionization rates and job polarization are two important labor market developments of recent decades. A large body of literature has analyzed these phenomena separately, but little has been done to see whether there is a link between them. We employ a macroeconomic model for a small open economy with a large input–output core to analyze how deunionization may cause job polarization. Our analysis shows that medium-skilled workers are negatively affected by deunionization, mainly as a result of the heterogeneity of the elasticities of substitution between different types of labor. While the elasticities of substitution between high- and medium-skilled labor are relatively low, the elasticities of substitution between medium- and low-skilled are relatively high. As a result, when deunionization leads to increased wage dispersion, we find that demand for low-skilled increases at the expense of medium-skilled labor, thus yielding a more polarized labor market.     

Overconfidence and tax avoidance: The role of CEO and CFO interaction

We investigate how overconfident CEOs and CFOs may interact to influence firms’ tax avoidance. We adopt an equity measure to capture overconfident CEOs and CFOs and utilize multiple measures to identify companies’ tax-avoidance activities. We document that CFOs, as CEOs’ business partners, play an important role in facilitating and executing overconfident CEOs’ decisions in regard to tax avoidance. Specifically, we find that companies are more likely to engage in tax-avoidance activities when they have both overconfident CEOs and overconfident CFOs, compared with companies that have other combinations of CEO/CFO overconfidence (e.g., an overconfident CEO with a non-overconfident CFO), which is consistent with the False Consensus Effect Theory. Our study helps investors, regulators, and policymakers understand companies’ decision-making processes with regard to tax avoidance.