Social Media and Value Creation: The Role of Interaction Satisfaction and Interaction Immersion

This research examines the effects of social media brand–consumer interactions on three types of customer value: customer lifetime value (CLV), customer influencer value (CIV) and customer knowledge value (CKV). By examining the differential effects of consumers' satisfaction and immersion with social-media brand interactions on CLV, CIV and CKV, the authors identify conditions under which interaction satisfaction and interaction immersion create value for brands. Results suggest that whereas interaction satisfaction positively influences both CLV and CIV, interaction immersion impacts both CIV and CKV. The authors identify social media strategies for brands related to interaction satisfaction and immersion that are based on the three types of customer value studied. The findings reported offer important managerial and theoretical implications with respect to the effects of discrete social media interactions on customer value creation.     

Customized Targeting Strategies for Category Coupons to Maximize CLV and Minimize Cost

It is standard procedure to use short-term measures for designing customized marketing campaigns and evaluating their success. We consider the integration of customer lifetime value (CLV) thinking into the category selection problem for targeted coupons. This problem involves two primary considerations: should the coupon be a category-specific one? – and, if so, should short-term or rather long-term objectives govern the choice of category? Our paper is the first to address these questions by analyzing the effects of different customized targeting strategies for category coupons on short-term marketing costs and long-term CLV using an analytical model. We develop these targeting strategies with the help of a data-driven customer segmentation framework based on the dimensions of churn, frequency, and loyalty. Using data from a German hypermarket chain, we identify four refined targeting strategies that enable multi-category retailers to exploit the full potential of customized marketing by optimizing the trade-off between marketing cost and CLV considerations. Our analysis reveals that the targeting strategy most likely to be employed by retail practice – as compared with the one most commonly used – can yield a substantially higher CLV even as it reduces wasteful marketing costs.     

Modelling the Extensive Margin of World Trade: New Evidence on GATT and WTO Membership

Recent literature has argued that, contrary to the results of a seminal paper by Rose (2004), General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO) membership does promote bilateral trade, at least for developed economies and if membership includes non‐formal compliance. We review the literature to identify open issues. We then develop a simple extension of the gravity model that gives rise to an extensive country margin of trade separating positive trade from zero trade country pairs. The model is used to identify WTO membership effects at both the intensive and the extensive margins. Empirical estimation of this model, based on Poisson pseudo‐maximum likelihood methods with exporter and importer fixed effects, allows us to readdress the empirical issue of whether GATT/WTO membership does or does not promote trade. We find that GATT membership was successful on the extensive margin of world trade but not on the intensive margin. For the recent WTO episode (1995–2008), we find consistent and robust evidence for a substantial trade‐creating role of membership which is driven primarily by the intensive margin. WTO membership results in higher bilateral trade of about 40 per cent.     

For New Customers Only: A Study on the Effect of Acquisition Campaigns on a Service Company's Existing Customers' CLV

This study examines the effect of attractively priced acquisition campaigns on retention intention, and subsequently CLV, of existing customers. The main finding is that customers who are aware of the acquisition campaigns both have a significantly higher intention to stay and do actually stay longer than do customers who are unaware of these campaigns. However, since CLV is not only influenced by retention intention but also by revenues and costs, it is found that aware customers do not have a significantly different CLV than do unaware customers. The inclusion of attractiveness of the offer as an additional explanatory variable results in a positive effect of campaign attractiveness on retention intention, i.e. if the customer thinks the acquisition campaign is attractive, the retention intention will be higher. However, the effect that is found for intention cannot be directly translated in actual behavior.     

An Investigation of Children's Ability to Identify Sponsors and Understand Sponsorship Intentions

Sponsorship has become an important tool for companies that target children with their market offerings. Despite growing firm interest in assessing sponsorship effectiveness and public concern about the effects on children, research to date has not investigated how sponsorship functions for children. This article addresses both issues by examining children's perceptions of sponsors (i.e., ability to identify sponsors in different conditions) and their perceptions of sponsorship (i.e., ability to understand sponsorship intentions). Because prior research on these issues is scarce, the conceptual reasoning relies on findings from advertising literature pertaining to children and sponsorship literature. An empirical study features sponsorships in a theme park for children. The results reveal implications for managers and public policymakers, as well as avenues for further research.     

Customer Divestment

SUMMARY

Customer lifetime value (CLV) models are designed to identify high-value customers to be retained. By implication, the remaining customers must be divested. This aspect of CLV management, customer divestment, has not been addressed in research. In this paper we describe the process of customer divestment, report a framework enabling firms to implement customer divestment (Mittal, Sarkees, and Murshed, 2006), and identify key issues associated with the customer divestment process. In doing so, we formulate some key research questions and an agenda for future research.     

Startup Size and Pre‐Entry Experience: New Evidence from Italian New Manufacturing Ventures

The paper studies the nonlinear effects of the different types of founders' pre‐entry experience on startup size. Our empirical data consists of 3,456 Italian new ventures in 20 industries. We find that the presence of industry‐specific experience and entrepreneurial experience have a positive effect on startup size while generic experience does not exert any effect on startup size. Moreover, we find that industry‐specific experience has positive but diminishing returns on startup size up to a point where additional amounts of experience have negative effects on startup size (inversed U‐shaped relationship).     

Customer Lifetime Value as the Basis of Customer Segmentation

SUMMARY

In this article, we examine current trends in customer life-time value and customer segmentation models and identify key issues for future research. CLV-based segmentation is a segmentation approach that groups customers into meaningful segments based upon customer lifetime value and (potentially) other factors. In the article, we discuss the extent to which CLV-based segmentation meets the criteria for effective segmentation. We also identify six areas for future research: (1) models and management of “micro-segments,” (2) using CLV-based segmentation to improve the efficiency of marketing programs, (3) the need for more dynamic CLV-based segmentation models, (4) applying CLV-based customer segmentation to new products and new customers, (5) challenges associated with implementing CLV-based segmentation, and (6) the need for new models that enable firms to segment customers by response to marketing activities and CLV at different points in the customer decision process.     

The Climate for Service

SUMMARY

We develop a framework in which internal employees' diagnoses of their firm's service climate determine their role behavior towards customers and, ultimately, customer satisfaction, loyalty, retention and shareholder value. Elements of the framework include: (1) foun dation issues (fundamental human behavior issues like the presence of necessary resources and the quality of leadership), (2) internal service (the quality of service employees report they receive internally from others), (3) service climate (the degree to which management emphasizes service quality in all of its activities), and (4) customer-focused service behavior. How this research is done is reviewed and research supporting elements of the framework is described. How the approach can be adapted for promoting CLV goals is explicated and answers to some frequently asked questions about change to an organization with a service quality and CLV focus are described.     

Complements or substitutes? A meta-analysis of the role of integration mechanisms for knowledge transfer in the MNE network

The MNE integration literature lacks coherence in the use and effectiveness of different integration mechanisms. In this study, we use meta-analytic techniques to quantitatively synthesize and evaluate the impact of centralization, formalization and socialization on knowledge transfer. Our analysis of 89 independent samples, including 15,506 subsidiaries, shows that socialization facilitates knowledge transfer more strongly than centralization and formalization. Socialization substitutes for formalization’s positive impact, and mitigates centralization’s negative impact on knowledge transfer. We further identify that directionality of knowledge flows is key in explaining the impact of centralization mechanisms. Finally, we point out important systemic problems in current empirical research.     

Product Placement in Mass Media: A Review and Bibliometric Analysis

This article provides a comprehensive and systematic review of the product placement literature in order to map the thematic development of product placement research, help researchers understand the current research status, and suggest directions for future research. A pool of 874 publications related to product placement in mass media was retrieved from the Web of Science, Scopus, EBSCOhost, and Google Scholar databases. Bibliometric and network analyses were used to identify the leading journals, scholars, and publications to capture information about emerging issues and to map the development of product placement research. Three major clusters of product placement research were identified: (1) basic concepts, fundamental research frameworks, and empirical studies on product placement in movies and television programs; (2) empirical studies on product placement in games, especially focusing on children and food product placements; and (3) empirical studies on the effects and underlying mechanisms of product placement disclosures. This article concludes by suggesting a future research agenda for product placement research.     

Natural resources,multinational enterprises and sustainable development

The natural resources sectors have not been prominent in the recent international business (IB) or management literature. We argue that the natural resources sectors, if not unique, are certainly characterized by a set of features that make them different, and raise issues that are central to international business. We identify two broad areas: the theory of FDI and the MNE, and the link between MNEs and sustainable development. We survey the relevant literature, much of it from outside IB, and identify a rich menu of research opportunities for IB scholars, many of which are addressed in the papers in this Special Issue.     

Trade Openness and Income: A Tale of Two Regions

In this paper, we present evidence of the long‐run effect of trade openness on income per worker for two regions that have followed different liberalisation strategies, namely Asia and Latin America. A model that re‐examines these questions is estimated for two panels of Asian and Latin American countries over the 1980–2008 period using a novel empirical approach that accounts for endogeneity as well as for the time series properties of the variables involved. From an econometric point of view, we apply recent panel co‐integration techniques based on factor models that account for two additional elements usually neglected in previous empirical literature: cross‐dependence and structural breaks. The results point to a positive impact of trade openness in both Asia and Latin America although the size is smaller in the second region. We associate this finding with the degree to which trade was managed in both regions of the developing world.     

Career paths of global managers: Towards future research

The aim of this paper is to identify potentially productive areas where future research on global managers’ careers is warranted. Approaching career as a path, we conceptualize a global career path as an intersection of three domains: an individual, an organizational and a global environment domain. To identify, within each domain, the most important factors influencing a global career, we first conducted a review of the literature on boundaryless careers and global managers. This review allowed us to identify those factors that are most relevant to the changing nature of careers and global assignments. We then reviewed past empirical research on international careers to map how previous studies have addressed those factors, further guiding us to formulate directions for future research on global careers. As well as indicating these specific research implications, we propose a contextualized research approach that facilitates understanding of different career moves over time as well as the overall direction of a global career path.     

Modeling CLV: A test of competing models in the insurance industry

Customer Lifetime Value (CLV) is one of the key metrics in marketing and is considered an important segmentation base. This paper studies the capabilities of a range of models to predict CLV in the insurance industry. The simplest models can be constructed at the customer relationship level, i.e. aggregated across all services. The more complex models focus on the individual services, paying explicit attention to cross buying, but also retention. The models build on a plethora of approaches used in the existing literature and include a status quo model, a Tobit II model, univariate and multivariate choice models, and duration models. For all models, CLV for each customer is computed for a four-year time horizon. We find that the simple models perform well. The more complex models are expected to better capture the richness of relationship development. Surprisingly, this does not lead to substantially better CLV predictions.

Transmission channels matter: Identifying spillovers from FDI

The empirical literature on the spillovers of foreign direct investment (FDI) has so far not analysed the well-established theoretical transmission channels through which FDI impacts on domestic firms. This paper shows how channels of transmission matter for productivity spillovers from FDI by providing more fuller and nuanced picture of the effects. We analyse a panel of eight sub-Saharan Africa countries spanning the period 2006–2014 and demonstrate the empirical relevance of distinguishing three channels – demonstration, labour mobility, and competition. We provide measures of these effects and also show that the size, significance, and sign of spillover effects depend on the local absorptive capacity, technology levels, geographical proximity, and foreign ownership structure. Overall, results suggest that demonstration spillovers are large and economically significant, whereas the patterns of labour mobility and competition spillovers are not stable across the various specifications and measures. Finally, the analysis involves several measures of further investigations and robustness checks. Results are robust to the construction of spillover and outcome variables, the introduction of additional explanatory variables and an alternative estimation method.     

Psychic distance,marketing strategy and performance in export ventures of Brazilian firms

Compared to other issues examined in the exporting literature, less attention has been paid to the performance implications of following a standardisation or adaptation strategy. In addition, despite the interest in the psychic distance construct in the international marketing literature, there has been also little empirical research on the effect of managers' psychic distance on the international marketing strategies of the firm. To address these issues the present study offers an empirical investigation of the relationship among psychic distance, international marketing strategies, and export performance of Brazilian firms. A sample of senior managers of industrial firms in Brazil is used to test the hypotheses. The results reported here indicate that the degree of international marketing strategy adaptation is affected by the manager's psychic distance towards the foreign markets. Product and promotion adaptation were found to have a positive effect on export performance while surprisingly, distribution and price adaptation were found to influence export performance negatively. Contrary to expectations, the results also confirm that psychic distance has a positive effect on the export performance of the firm. Implications of these findings along with the limitations of the study are discussed.     

The mitigating effects of uncertainty on ‘e’ innovation propensity: some service sector evidence

This paper reports the findings of a study that sought to explore a range of technical, financial and social issues that the literature suggests influences e-innovation propensity. The research was conducted on a sample of knowledge-intensive business service SMEs in Northern Ireland, Republic of Ireland and New Zealand within a business-to-consumer context. Qualitative methodologies (in-depth interviews and projective techniques) were employed to investigate the research problem. The findings highlight a number of specific issues that call into question the value of an e-business strategy, such as uncertainties surrounding knowledge acquisition, disintermediation effects and sustainability of an e-business. These issues continue to negate e-innovation propensity. The paper proposes practical suggestions to alleviate the mitigating effects of uncertainty that are impacting on e-innovation propensity. The conclusions derived from this research, along with the modelling of the uncertainty factors extend existing knowledge and also set the precedent for further empirical research in other country and industry settings.     

Estimating the effect of brand beliefs on brand evaluations when beliefs are measured with error

We consider the internal validity of estimates of the effects of brand beliefs on brand evaluations when beliefs are measured with error. Consumer research suggests numerous errors that may impact belief measures. However, the literature has not determined precisely why and how myriad types of error matter for the evaluation-belief relationship. Furthermore, the literature has not explicitly considered what is necessary and sufficient to control for different types of belief error when using the latent general factor approach. We show that the important distinction for empirical research is not the origin of the error per se but its relationship to affective evaluation. Error related to brand evaluation has an inflationary effect on estimates of the evaluation-belief relationship while error unrelated to brand evaluation has an attenuating effect. We use a bifactor structural equations model to decompose belief measures into general and specific dimensions. The model uses bias free variation in specific beliefs to identify effects on brand evaluation while controlling for a general belief dimension correlated with evaluation. Compared to models that do not adjust for the bias, estimates of the bias corrected marginal effects are smaller but positive and significant.     

Entrepreneurship,Agglomeration and Technological Change

A growing body of literature suggests that variations across countries, in entrepreneurial activity and the spatial structure of economies could potentially be the source of different efficiencies in knowledge spillovers, and ultimately in economic growth. We develop an empirical model that endogenizes both entrepreneurial activity and agglomeration effects on knowledge spillovers within a Romerian framework. The model is tested using the GEM cross-national data to measure the level of entrepreneurship in each particular economy. We find that after controlling for the stock of knowledge and research and development expenditures, both entrepreneurial activity and agglomeration have a positive and statistically significant effect on technological change in the European Union. JEL CLASSIFICATION: O3, R1, J24, M13