The effects of the external environment on marketing decision-maker uncertainty

Abstract

An important contribution to the literature on perceived environmental uncertainty (PEU) is Milliken’s distinction between state uncertainty, effect uncertainty and response uncertainty. Although much is known about their conceptual underpinnings and measurement, there has been no empirical investigation of their antecedents. This is the focus of this study, which examines relationships between two environmental characteristics and perceptions of state, effect and response uncertainty, and the moderating role of marketing decision-maker locus of control. Both instability of change and environmental complexity are associated with marketing decision-maker uncertainty, with the former having the larger effect. Locus of control moderates the relationships between environmental characteristics and effect and response uncertainty. The findings have implications for theory, managerial practice and research methodology.     

The Heckscher-Ohlin and Travis-Vanek theorems under uncertainty

The Heckscher-Ohlin theorem is valid under uncertainty of the special benchmark sort modelled by Helpman-Razin. Their pessimism over its validity is vanquished by more structure: rational expectations are imposed on consumers and identical and constant relative aversion to income risk is assumed. Under these circumstances, with free commodity trade, the Heckscher-Ohlin theorem holds for the international exchange of equities.     

The asymmetric effects of tariffs on intra-firm trade and offshoring decisions

This paper studies the effects of tariffs on intra-firm trade. Building on the Antràs and Helpman (2004) North–South theoretical framework, I show that higher Northern tariffs reduce the incentives for outsourcing and offshoring, while higher Southern tariffs have the opposite effects. I also show that increased offshoring and outsourcing imply a decrease in the ratio of Northern intra-firm imports to total imports, an empirically testable prediction. Using a highly disaggregated dataset of U.S. (the North) imports and relevant U.S. and foreign tariffs, I find robust evidence to support the model's predictions.     

The effects of in-store themed events on consumer store choice decisions

Retailers are increasingly using in-store events to provide shoppers with unique experiences that will enhance shopping value and help differentiate their stores from competitors. However, relatively little is known about how consumers respond to experiential retail events in terms of their store choice decisions. The purpose of this research was to find out how in-store retail events affect consumers in terms of their store choice decisions. The paper presents findings from a discrete choice experiment that manipulated the presence of different types of in-store themed events in a do-it-yourself (DIY) category. Participants were 312 randomly recruited residents of Melbourne, Australia, who had recently shopped at a hardware store. The experiment was implemented as a mail-back survey. Using logit models the authors assess the effects of the in-store events along with those of various traditional store attributes, including store appearance, price image and distance, on consumer store choice decisions.     

The theorems of international trade under generalized uncertainty

A number of authors have extended the theorems of international trade to the case where the output of the various production processes (for pre-set inputs) is random. But they limited their analysis to a very special type of technological randomness known in the financial literature as ‘scalar uncertainty’. The purpose of the present paper is to extend the theorems to a much wider class of random neoclassical production functions. It is assumed that there exists a unified stock market worldwide.     

The gain from free trade under conditions of uncertainty

It is argued that recent attempts to demonstrate that free trade may be harmful under some kinds of uncertainty are based on implausible assumptions. It is shown also that standard proofs of the gainfulness of free trade can be adapted to accommodate uncertainty.     

The effects of relationship quality on customer retaliation

This research examines the effects of relationship quality (RQ) on customers' desires to retaliate after service failures. We posit that the effects of RQ are contingent upon the attributions customers make about the firm’s controllability over a service failure. Two competing hypotheses are examined and reconciled. The “love is blind” hypothesis posits that when low controllability is inferred, high RQ customers experience a lesser desire for retaliation than low RQ customers. On the other hand, the “love becomes hate” hypothesis specifies that when high controllability is inferred, high RQ customers experience a greater desire for retaliation than low RQ customers. The hypotheses are tested with a survey-based design and a partial least squares (PLS) model that incorporates a multiplicative latent construct.     

Gender specific effects of exports on work decisions in Indonesia

This paper proposes a new household panel data approach to study the gender specific effects of exports on labor force participation and household work.We construct a novel measure, the Export Exposure index, by combining information about exports and the respondent's location. The index enables us to address a key identification issue, which is to estimate the effect of exports that is unconfounded by unobserved household characteristics and macroeconomic shocks. We construct a simple model to show that if women have a comparative disadvantage in market work relative to men, and if an increase in exports increases the gender wage gap, Labor force participation of the women would be negatively related to exports. We find that in Indonesia, exports encourage women to substitute their time away from paid labor participation towards unpaid house or family work, but have no statistically significant effect on men, as predicted by our model.     

The optimal policy rule under rational expectations and multiplier uncertainty

This paper shows the role of macro policy under multiplier uncertainty when expectations are rational and the supply structure is affected by price level variance. Policy less is a function of price level variance and possibly of the expected price level. If the letter argument is omitted from the less function, optimal policy simply minimizes the horizontal variance of the aggregate demand curve. If it is not omitted, the level of policy depends on the responsiveness of the supply structure to price level variance, and there may be multiple local policy optima.     

The retailer's brand promotion strategy under competition: The impact of supply uncertainty

While retailers are committed to promoting product brands to increase sales quantity and brand visibility, retailers are exposed to supply uncertainty. Therefore, we explore the brand promotion strategies of retailers in a competitive model. We then investigate the decision model under three different brand strategies and explore the equilibrium outcomes of stakeholders under supply uncertainty. In addition, we analyze and discuss social welfare under different scenarios. The results show that when the promotion cost is high (i.e., the cost effect dominates the market expansion effect), neither retailer promotes the product brand. When the promotion cost is low (i.e., the market expansion effect dominates the cost effect), both retailers tend to promote the product brands. When the promotion cost and market expansion match each other, only one retailer promotes the product brand becomes the equilibrium strategy. It is worth noting that when both retailers promote the product brand, the retailer falls into a prisoner's dilemma. In addition, we find that the supply uncertainty level diminishes the cost affordability and the motivation of retailers to promote the product brands. Interestingly, the supply uncertainty level reduces the possibility of retailers being in a prisoner's dilemma. Besides, market expansion (supply uncertainty) contributes to improving (diminishing) social welfare.     

Some characterizations of stockpiling behavior under uncertainty

The objective of this note is to gain new theoretical insights into stockpiling phenomena. The model used to derive our results envisions consumers as responding optimally to uncertainties in the promotion environment. We show that, all else being equal, consumers will stockpile a promoted product more intensely: (i) the lower the availability of deal opportunities, (ii) the smaller the expected deal discount, and (iii) the lower the uncertainty about the deal/regular price, provided that dealing occurs with high/low frequency.     

The (non)equivalence of optimal tariffs and quotas under uncertainty

Tariffs and quotas are compared as instruments for restricting imports to improve the terms of trade in a world in which domestic and/or foreign supply and demand conditions are stochastic. The two instruments are not generally equivalent in their welfare effects, and furthermore there is no general presumption in favour of one instrument over the other. In a particular model, characterized by linear supply and demand curves for imports, quotas are more likely to be superior when the predominant source of uncertainty is with respect to foreign supply conditions and when the supply of imports is inelastic.     

Interaction effects of restructuring decisions on operating profit following performance shocks

This paper examines the interaction effects of restructuring activities for a sample of Australian firms experiencing significant declines in operating performance. Our sample firms respond to performance shocks with both financial and corporate restructuring and they achieve significant improvements in operating profits in each of the first 3 years following the shocks. We find that financial and corporate restructuring have both contemporaneous and lagged impact on operating performance. Most importantly, we show that the interaction of restructuring events has a strong influence on the corporate recovery process. We conclude that financial and corporate restructuring play complementary as well as interactive role in reversing a declining trend in operating profits.     

Optimal pricing, production rate, and quality under learning effects

This study investigates the marketing and production problem for a monopolist firm where price, quality and production rate are simultaneous dynamic decision variables under the condition of a dynamic demand that depends on price, quality and cumulative sales. The formulated continuous profit maximization model follows the steps for dynamic optimization to derive optimal price, quality and production policies, wherein a unit production cost that decreases with cumulative production reflects the cost learning effect. Through the differentiable multiplicatively separable demand function, this study analyzes optimal trajectories for determining price, quality, and production rate. The results specify several optimal policies and policy makers would gain insight into the consequence of their decisions that otherwise might have been obscured by sub-optimal analysis.     

Adjustment costs and theory of investment under uncertainty

It is shown that the stochastic investment rule for the price-setting monopolist facing random demand differs from the deterministic rule, due to the presence of the covariance of the marginal utility of profits and the MRTS between capital and labor. For the risk-neutral quantity-setting monopolist, the optimal current investment under random demand is shown to be greater than that under deterministic conditions, given that production technology is of the Cobb-Douglas type with constant returns to scale. When random wages and prices follow first-order autoregressive schemes, the risk-neutral competitive firm's current investment level is shown to be at least equal to that under certainty.     

The effects of document language quality on consumer perceptions and intentions

This article establishes a link between language quality in the documentation accompanying a product and consumers' evaluations of, and behavioural intentions towards, both the product and the manufacturer. In a laboratory experiment, 116 participants assembled a product using assembly guides with different language quality levels. Results show that language quality affects document evaluation, which spills over to the evaluations of both the product and the manufacturer. Findings also indicate that the documentation accompanying a product is a vital extrinsic cue used by consumers to evaluate both the product and the manufacturer, which implies that these documents are secondary products that add value to the primary product. Theoretical and managerial implications of these findings are discussed. Copyright © 2010 ASAC. Published by John Wiley & Sons, Ltd.