The contrasting influences of incidental anger and fear on responses to a service failure

Customers’ disposition to register a formal complaint about an inferior product or poor service is often mediated by attributions of responsibility. However, the anger or fear that people happen to be experiencing for totally irrelevant reasons can also influence this disposition. Two field studies and four laboratory experiments indicate that when people feel angry at the time they encounter a service failure, they are more likely to blame the service provider for the failure and more likely to register a complaint. When they experience fear, however, they are uncertain about the cause of their misfortune and decrease their negative reactions relative to conditions in which fear is not experienced. The effects of these incidental emotions are evident both when a service failure is personally experienced and when it is only observed. These effects are eliminated, however, when individuals do not have the cognitive resources available to assess the reasons for the service failure and the conditions surrounding it.     

The Making of Entrepreneurs in Germany: Are Native Men and Immigrants Alike?

This paper uses a state of the art three-stage estimation technique to identify the determinants of the self-employed immigrant and native men in Germany. Their making is surprisingly alike. Employing data from the German Socioeconomic Panel 2000 (GSOEP) release we find that self-employment is not significantly affected by exposure to Germany or by human capital. But this choice has a very strong intergenerational link and it is also related to homeownership and financial worries. While individuals are strongly pulled into self-employment if it offers higher earnings, immigrants are additionally pushed into self-employment when they feel discriminated. Married immigrants are more likely to go into self-employment, but less likely when they have young children. Immigrants with foreign passports living in ethnic households are more likely self-employed than native Germans. The earnings of self-employed men increase with exposure to Germany, hours worked and occupational prestige; they decrease with high regional unemployment to vacancies ratios. Everything else equal, the earnings of self-employed Germans are not much different from the earnings of the self-employed immigrants, including those who have become German citizens. However, immigrants suffer a strong earnings penalty if they feel discriminated against while they receive a premium if they are German educated.     

Institutions and female entrepreneurship

This paper compares the impact of institutions on men and women’s decisions to establish new business start-ups between 2001 and 2006. We use data from the Global Entrepreneurship Monitor survey (GEM) which cover at least 2,000 individuals per year in each of up to 55 countries and have merged it with country-level data, from the World Bank, Economist Intelligence Unit, Polity IV and the Heritage Foundation. We find that women are less likely to undertake entrepreneurial activity in countries where the state sector is larger, but the rule of law is not generally found to have gender-specific effects. However, more detailed institutional components of discrimination against women, in particular, restrictions on freedom of movement away from home, make it less likely for women to have high entrepreneurial aspirations in terms of employment growth, even if their entry into entrepreneurial activities, including self-employment, is not affected by this.     

Competitiveness of Firm Behavior and Public Policy for New Technology Adoption in an Oligopoly

Economic growth requires that firms adopt new technologies. However, it may be insufficient or excessive in less competitive industries from the social welfare point of view. In this case, a government subsidy or tax is necessary. We analyze the optimum subsidy or tax policy for new technology adoption by firms when firms maximize the weighted average of absolute and relative profits. We do not consider that firms really maximize the weighted average, but the weight on the relative profit is used as a parameter indicating competitiveness of firm behavior. We show that the optimum policy is likely to be subsidization (or taxation) when the set-up cost for new technology adoption is large (or small). It is likely to be subsidization (or taxation) when competitiveness is large (or small), that is, it is near to perfect competition (or joint profit maximization).     

Gender bias and the availability of business loans

Social structure, values, and gender socialization have undoubtedly disadvantaged women in the process of preparing for a career in business, and there is a widely held view that women are subject to discrimination by financial institutions. However, the “evidence” to verify this belief has largely been from studies where women have claimed that they were subject to discrimination in the loan situation, without either supporting evidence, or control data from a sample of male loan applicants.Two experiments were carried out, using a Goldberg type procedure, to test the belief that women are unfairly discriminated against when seeking a loan to establish a business venture. Carefully constructed scenarios of an application for loan finance to purchase a commercial enterprise were mailed to loan officers of major trading bank branches. The scenarios were identical in all respects except for the sex and education level of applicants. Loan officers were asked whether or not they would approve loan finance for the proposed business purchase and to indicate factors that contributed to their decisions.Significant differences in response to female and male applicants were observed in both experiments. In Experiment I (University education) both sexes were equally likely to obtain a loan, but “education” was considered a more important factor for the female applicant than for the male. In Experiment II (High school education) the female applicant was less likely to obtain a loan than the male applicant.The results support the widely held perception that women can experience gender discrimination when seeking start-up capital. Such discriminatory behavior by loan officers may not be, and probably is not, intentional. Rather, the pervasiveness of the social construction of differential gender roles in western culture is such that it is more likely that discrimination is unconscious, and consequently more difficult to change.     

Evaluating User Satisfaction with a Consumer Protection Hotline

The consumer complaint-handling literature characterizes users of toll-free Hotlines, but satisfaction with this consumer service has not been evaluated. A telephone survey was conducted of callers to a Wisconsin consumer protection Hotline in an effort to assess user satisfaction. When filers of complaints and inquiries were compared, it was found that complainants were more likely to have used the Hotline more than once or to have recommended it to others, while inquirers expressed greater satisfaction with the agency. As expected from previous research, users were generally satisfied with the Hotline and related services; high-status groups were most satisfied; and low-status persons were less likely to have used the Hotline.     

The effect of culture on consumer choice: the need for conformity vs. the need for uniqueness

This paper investigates whether East Asians are more likely than Westerners to purchase a brand presented as a best‐seller given that East Asians tend to have a higher need for conformity and Westerners tend to have a higher need for uniqueness. Results show that East Asians are more likely than their Western counterparts to purchase such brands when the perceived risk is low. However, when the perceived risk is high, both East Asians and Westerners tend to prefer a brand presented as a best‐seller. Results also show that, in a three‐option set in which the C option is dominated by the B option but not by the A, both East Asians and Westerners are more likely to select option C when it is presented as a best‐seller than when it is not. Managerial implications and the study's limitations are also discussed.     

Offshore Production and the Base of Import Taxation

The Scheme is designed to encourage the maximum use of Australian made fabrics which are cut or knitted to shape in Australia (Textiles, Clothing and Footwear Development Authority, 1993, p. 4). When an Australian firm sets up production in South East Asia, it often attracts criticism because it means losing jobs to low-cost labour in the region. However, our study shows that such criticism is not wholly justified. For many firms, offshore production is critical to establishing a long-term position as an insider in the market and therefore is critical to exports from an Australian base. Different methods have been used to determine origin, but none has proved totally unsatisfactory, and none is likely to do so.     

Factors influencing the foreign entry mode of Asian and Latin-American banks

The majority of past studies on the foreign market mode of entry have focused on manufacturing industries. Although some studies have explored the entry mode decisions of the banking industry, most of them have adopted the case study method, and systematic studies have been relatively few. This study intends to fill this gap through an investigation of 7041 Asian and Latin-American bank branches covering the period from 1999 to 2005. The analytical results demonstrate that both Asian and Latin-American banks are market seekers. However, Latin-American banks are not customer followers. In addition, the larger the scale of the bank or the greater the net interest margin the more likely it is that high-control entry modes will be adopted. In contrast, in countries in Asia with a greater cultural distance, banks tend to establish low-control entry modes to avoid uncertainty. However, this does not apply in the case of Latin America.     

Unravelling the mystery of low Japanese profit rates

Japanese companies have, it is claimed, pursued growth and market share at the expense of profitability and dividends–precisely those policies which those concerned with the "creation of shareholder value" would deplore. This paper shows that while operating profitability has indeed been lower in Japan than in the West, returns to shareholders have been higher. While part of the difference is explained by differences in business conventions, a gap remains. An examination of valuation and price-earnings ratios suggests that the growth in the underlying value of the business has generally more than compensated for lower operating profits. Japanese experience suggests that excessive emphasis on "shareholder value" may not only damage the economy but may not be in the interest of shareholders themselves.     

High quality positioning and the success of reputable products

It has become almost a conventional wisdom that high quality is an essential route to high profits. In this article Evan Davis shows that the truth is likely to be more complicated. The large profits that accrue to high quality producers are usually rewarding some inimitable production skill, or are reflecting the faith that customers have in the reputation of the producer to deliver a quality product in a market where quality is hard to monitor. For producers that do not have special skills, or who have no easy means of acquiring a reputation, the benefits of high quality positioning may not be great.     

The “New Economic Reality”: How New and How Real?

Is there a “new economic reality” as the United States gradually emerges from the Great Recession? It appears that some major new forces are indeed likely to persist and must be taken into account in public policy and business planning. Others may or may not be transitory. Still other major factors, both good and bad, are not new but are likely to persist for the foreseeable future. This NABE presidential address describes the factors that are likely to have the most influence on the U.S. economic future and the implications that they have for economists in contributing to productive analysis and debate.     

Foreign portfolio investors before and during a crisis

Using a unique data set, we study the trading behavior of foreign portfolio investors in Korea before and during the currency crisis. The central message is that investors in different categories have different trading patterns. For example, foreign investors outside Korea are more likely to engage in positive feedback trading strategies and are more likely to engage in herding than the branches/subsidiaries of foreign institutions in Korea or foreign individuals living in Korea. This difference in trading behavior is possibly related to the difference in their information. This paper suggests that it may be worth exploring policies that can encourage foreign investors to acquire more information (e.g. by setting up a branch or a subsidiary in the emerging country).     

Consumer reactions to female and male cosmetic surgery beauty in Asian advertisements

Existing research shows that the attractiveness of advertising models enhances the effectiveness of firms’ commercial messages. However, it is unclear how consumers react to models who have enhanced their physical attractiveness through cosmetic surgery. We report on three empirical studies and show that when female or male advertising models have undergone cosmetic surgery procedures, both female and male consumers are likely to notice these changes. These perceptions of cosmetic surgery result in lower evaluations of model attractiveness, particularly when the consumers assess female models, which in turn affects other advertising outcomes. However, cosmetic surgery does not reduce consumers’ perceptions of models’ pride in their own identity, which are also relevant to consumers’ evaluations of model attractiveness.

     

Face-to-face communication: Is it really necessary in a digitizing world?

Many predictions regarding the extinction of face-to-face communication have themselves begun to disappear. While emerging information technologies are substantially altering the face of business communication, close-quarter discussion and debate remain important, as evidenced in the productivity of the medium and what we have recently learned about social behavior. Still, the possibility of dramatic change cannot be completely discounted. If technology ever manages to deliver what it has promised, there could be a significant shift toward digital communication. Although this will not likely occur over the next decade or two, beyond that, it should not be excluded from the realm of possibility.     

Industry effects and firm effects: No effect is an island

At the heart of business research is the identification and prioritization of the factors that create competitive advantage. Previous studies that decompose observed firm performance into industry and other effects have not considered the higher moments of the performance distribution (i.e., the excess kurtosis), nor estimated the correct null hypothesis level of those effects (i.e., of the industry effect). We address these issues to find that: (1) the industry effect impact on firm performance is likely overstated; and, (2) the interaction between the calculated component firm and industry effects is likely one that includes synergistic effects (i.e., the standard additive model of decomposition is likely mis-specified). We offer a new model, test it, and then discuss the resulting implications.     

Longitude matters: Time zones and the location of foreign direct investment

Using bilateral foreign direct investment (FDI) data, we find that differences in time zones have a negative and significant effect on the location of FDI. We show that this finding is robust across different specifications, estimation methods and proxies for time zone differences. Time zones also have a negative effect on trade, but this effect is smaller than that on FDI. Finally, the impact of the time zone effect has increased over time, suggesting that it is not likely to vanish with the introduction of new information technologies.     

Genetic Testing and the Demand for Cancer Insurance

There has been an expansion of the availability of disease-specific insurance policies in the United States over the past decade. At the same time, recently developed medical tests are providing consumers with new information regarding their risk of contracting particularly serious diseases. This exploratory study makes use of data from two groups of women to examine the demand for one type of disease-specific policy, cancer insurance. Members of the first group have been tested for a BRCA1 gene mutation that is associated with an 88% risk of contracting breast and/or ovarian cancer by age 70. The other group consists of women from the general population who have not been tested for any BRCA1 gene mutation.The study results indicate that women who have been tested for the BRCA1 gene mutation are more likely than untested respondents to have purchased cancer insurance and to have recently thought about purchasing cancer insurance. The results also indicate that older women and women who have modest household incomes are more likely to have purchased cancer insurance. Women who have minor children, who are more highly educated, who have no health insurance, who have had cancer, or who report that they are in poor health are more likely to have recently contemplated purchasing cancer insurance. Our discussion of the findings highlights several issues that merit further consideration on the part of consumer policy makers working in the area of insurance regulation.     

Oppositionists and group norms: The reciprocal influence of whistle-blowers and co-workers

Who blows the whistle — a “loner” or a well-liked “team player”? Which of them is more likely to lead a successful opposition to perceived organizational wrongdoing? The potential influence of co-worker pressures to conform on whistle-blowing activity or the likely effects of whistle-blowing on the group have not been addressed. This paper presents a preliminary model of whistle-blowing as an act of nonconformity. One implication is that the success of an opposition will depend on the characteristics of the whistle-blower and how the complaint is pursued. Specific hypotheses and general suggestions for future research and practice are offered.