The aesthetic fidelity effect

Product aesthetics is a powerful means for achieving competitive advantage. Yet most studies to date have focused on the role of aesthetics in shaping pre-purchase preferences and have failed to consider how product aesthetics affects post-purchase processes and consumers' usage behavior. This research focuses on the relationship between aesthetics and usage behavior in the context of durable products. Studies 1A to 1C provide evidence of a positive effect of product aesthetics on usage intensity using market data from the car and the fashion industries. Study 2 corroborates these findings and shows that the more intensive use of highly aesthetic products may lead to the acquisition of product-specific usage skills that form the basis for a cognitive lock-in. Hence, consumers are less likely to switch away from products with appealing designs, an effect that is labeled as the ‘aesthetic fidelity’ effect. Study 3 addresses an alternative explanation for the ‘aesthetic fidelity effect’ based on mood and motivation but finds that the ‘aesthetic fidelity’ effect is indeed determined by usage intensity. Finally, Study 4 identifies a boundary condition of the positive effect of product aesthetics on product usage, showing that it is limited to durable products. In sum, this research demonstrates that the effects of product aesthetics extend beyond the pre-consumption stage and have an enduring impact on people's consumption experiences.     

Miscounselling in the German Insurance Market—Utility-Orientated Implications for the Meaning of Miscounselling

Miscounselling results from the fact that consumers have difficulty matching their needs and preferences with the characteristics of the products and have to rely upon an intermediary. The ideal contract can be found by applying the theory of the consumer by Lancaster and, thus, using different amounts of the contract characteristics. Using a spatial representation of the contractual alternatives yields a model framework. The main question is how to differentiate between advice that improves the consumers’ situation and those that are wrong in order to define an accuracy level for the liability rule imposed by the Insurance Contract Act. After identifying the relevant variables via case studies, it is possible to state a general definition of miscounselling: miscounselling can be defined as the provision of any additional information that does not help to reduce the utility loss referring to an initial situation. Considering this definition, one can think about rewording the current liability rule.     

Informal Caregiving and the Retirement Decision

The probability of providing informal care grows with one's own age. While labor market effects due to caregiving are moderate, they could be concentrated in the years close to retirement. Therefore, I investigate whether care in the previous year leads to retirement in the year after by using German Socio‐Economic Panel data from 2001 to 2009 and discrete‐time hazard models. The effect of care on the retirement decision is indeed much higher than its effect on the labor or working hours of middle‐aged individuals. Women are affected to a larger extent but the retirement decision of men also reacts to their caregiving obligations.     

Quality and Welfare in a Mixed Duopoly with Regulated Prices: The Case of a Public and a Private Hospital

Abstract. Hospital markets are often characterized by price regulation and the existence of different ownership types. Using a Hotelling framework, this paper analyses the effect of heterogeneous objectives of hospitals on quality differentiation, profits and overall welfare in a price‐regulated duopoly with exogenous symmetric locations. In contrast to other studies on mixed duopolies, this paper shows that, in this framework, privatization of the public hospital may increase overall welfare. This holds if the public hospital is similar to the private hospital or less efficient and competition is low. The main driving force is the single‐regulated price which induces under‐provision (over‐provision) of quality of the more (less) efficient hospital compared with the first best. However, if the public hospital is sufficiently more efficient and competition is fierce, a mixed duopoly outperforms both a private and a public duopoly due to an equilibrium price below (above) the price of the private (public) duopoly. This medium price discourages over‐provision of quality of the less efficient hospital and – together with the non‐profit objective – encourages an increase in quality of the more efficient public hospital.     

Informal home care and labor-force participation of household members

In Germany, informal home care is preferred to professional care services in the public discussion as well as in legal care regulations. However, only minor importance is ascribed to the opportunity costs caregivers face. Therefore, this article explores the influence home care has on the labor supply of caregivers who cohabitate with the care recipient. I use data from the German Socio-Economic Panel from 2001 to 2007, which allows researchers to merge the characteristics of both groups for the first time. Owing to diverging gender roles, I examine female and male caregivers separately. The results show that having an individual in need of care in the household does not decrease labor supply to an economically relevant quantity. As providing care might be endogenous to the labor-supply decision, I test for endogeneity by using characteristics of care recipients as instruments and I additionally test for sample attrition. Moreover, the panel structure allows me to control for unobserved heterogeneity.     

Maintaining a Reputation for Consistently Beating Earnings Expectations and the Slippery Slope to Earnings Manipulation

This paper investigates whether maintaining a reputation for consistently beating analysts' earnings expectations can motivate executives to move from “within GAAP” earnings management to “outside of GAAP” earnings manipulation. We analyze firms subject to SEC enforcement actions and find that these firms consistently beat analysts' quarterly earnings forecasts in the three years prior to the manipulation period and continue to do so by smaller “beats” during the manipulation period. We find that manipulating firms beat expectations around 86 percent of the time in the 12 quarters prior to the manipulation period (versus 75 percent for control firms) and that manipulation often ends with a miss in expectations. We document that executives of manipulating firms face strong stock market and CEO pressure to perform. Prior to the manipulation period, these firms have high analyst optimism, growing institutional interest, and high market valuations, along with powerful CEOs. Further, we find that maintaining a reputation for beating expectations is more important than CEO overconfidence and is incremental to CEO equity incentives for explaining manipulation. Our results suggest that pressure to maintain a reputation for beating analysts' expectations can encourage aggressive accounting and, ultimately, earnings manipulation.     

The socially and spatially bounded relationships of entrepreneurial activity: Olav Sorenson—recipient of the 2018 Global Award for Entrepreneurship Research

This article reviews the academic contributions of Olav Sorenson, recipient of the 2018 Global Award for Entrepreneurship Research. His work has advanced scholarly understanding of how entrepreneurship and innovation are strongly embedded in socially and spatially bounded relationships. Based on meticulous empirical studies using a broad range of methods, he has challenged conventional models of new firms’ location choices, explained patterns of and determinants of knowledge diffusion, and considered how social networks can lead to economic advantages. This article discusses Sorenson’s work specifically focusing on three themes—(i) the geography of entrepreneurial activity, (ii) social capital, and (iii) the evolution of learning and innovation—highlighting scholarly contributions and insights for management practice and public policy.     

Commentary on “Resource use and development across permeable project boundaries in open network contexts”

The purpose of this commentary is to analyze the paper “Resource use and development across permeable project boundaries in open network contexts”. Focus lies on commenting on the value of the paper in light of existing research on business networks. The paper is analyzed from a general, theoretical and empirical perspective. The conclusion of the commentary is that there are important contributions of the paper. It clearly adds to our understanding of resource use and development in business networks as it introduces a context involving several actors in a system of open innovation.     

Perception of Health Claims Among Nordic Consumers

Health claim perception was investigated by a web-based instrument with a sample of 4,612 respondents in the Nordic countries (Denmark, Finland, Iceland, Norway, Sweden). Respondents decided which of a pair of claims sounded better, was easier to understand and was more convincing in their opinion. Claims were constructed from an underlying universe combining different active ingredients (familiar, unfamiliar), type of claim (combination of information about ingredient, physiological function and health benefit), framing (positive, negative), and use of qualifier (with, without “may”). Across pairs, the claims differed in the health benefit addressed (cardiovascular health, dementia, bodyweight). Results showed that respondents could be grouped into two roughly equally sized classes that differed in the type of claim preferred: one class prefers “long” claims that give the full story consisting of active ingredient, physiological function and health benefit, whereas the other prefers “short” claims consisting of the health benefit only. Results also showed that the familiar ingredient is preferred to the unfamiliar one, whereas effects of positive versus negative framing depended on the type of health benefit addressed.