Optimal generic and brand advertising efforts in a decentralized supply chain considering customer surplus

While the previous researches of advertising efforts decisions focus on only the firms' profit target, no literature introduces corporation social responsibility target into advertising efforts decisions of a supply chain (SC). To fill this gap, we consider a two-stage SC with a manufacturer and a retailer where the SC members consider the customer surplus. Both the retailer and the manufacturer can invest in generic advertising efforts to influence and increase the products' sales volumes. This paper investigates the following four scenarios: (1) The retailer cares the customer surplus (Model I); (2) The manufacturer cares the customer surplus (Model II); (3) Both the retailer and the manufacturer care the customer surplus (Model III); (4) We then extend the model III to the case that the manufacturer invests in both the generic and brand advertising efforts (Model IV). The objective of this paper is to determine the optimal retail price, the optimal advertising efforts, and the optimal profits of SC members, and find the influence of customer concern level on the SC performance. Finally, numerical examples are conducted to investigate the influence of the customer concern levels of the retailer or the manufacturer on the profits of the SC members and the entire SC. We also study the joint impacts of the customer concern levels of the retailer and the manufacturer on the SC performance. We find that the SC obtains the highest profits when the retailer's customer concern level and the manufacturer's customer concern level are relatively high, and the best cooperative strategy for the retailer and the manufacturer is that they improve customer concern level simultaneously.     

Information and channel profits

New marketing information technologies, associated with point-of-purchase scanner systems, have increased the potential information available to manufacturers and retailers. In this paper, we explore the pricing and profit implications of this technology within a channel setting. We find that improved information about demand always results in greater absolute profits, as well as a claim on greater division of channel profits for the informed channel member. The greater profitability is due to the informed channel member's ability to “fine tune” prices in response to changes in demand conditions. However, total channel profits are highest when only one channel member acquires information. We also show that fine-tuning of price has the effect of smoothing sales, as informed firms charge higher prices during high demand periods and charge lower prices during low demand periods. Lastly, we show that an equilibrium where both channel members acquire information does not lead to a prisoners' dilemma.     

Fairness,trade, and inequality

We develop a model of international trade between two symmetric countries that features inter-group inequality between managers and workers, and also intra-group inequality within each of those two groups. Individuals are heterogeneous with respect to their managerial ability, and firms run by more able managers have a higher productivity level and make higher profits. There is rent sharing at the firm level due to fair wage preferences of workers, and hence firms with higher profits pay higher wages in equilibrium in order to elicit their workers' full effort. We show that in this framework international trade leads to a self-selection of the best firms into export status, with exporting firms having to pay a wage premium. Aggregate welfare increases, but there is also larger inequality along multiple dimensions: Involuntary unemployment and income inequality between managers and workers increase, and so does inequality within these two subgroups of individuals, as measured by the respective Gini coefficients.     

Satisfying Individual Desires or Moral Standards? Preferential Treatment and Group Members’ Self-Worth, Affect, and Behavior

We investigate how social comparison processes in leader treatment quality impact group members’ self-worth, affect, and behavior. Evidences from the field and the laboratory suggest that employees who are treated kinder and more considerate than their fellow group members experience more self-worth and positive affect. Moreover, the greater positive self-implications of preferentially treated group members motivate them more strongly to comply with norms and to engage in tasks that benefit the group. These findings suggest that leaders face an ethical trade-off between satisfying the moral standard of treating everybody equally well and satisfying individual group members’ desire to be treated better than others.     

Direct Election of Group Decision-Makers Can Facilitate Cooperation in the Public Goods Game

Research on social dilemma has shown that the delegation of decision-making to group leaders can increase cooperation in the collective action problem. In this paper, we show that the voting scheme used for the election of leaders could make a difference to the emergence of cooperation. We design a public goods game experiment in which actors elect leaders to make decisions on their behalf in the contribution to public goods. In particular, we compare the leadership elected from direct and indirect election systems. In direct election, a leader is elected directly by majority-votes from a group, whereas in indirect election the group is divided into smaller subgroups and a leader is elected from the elected subgroup leaders. We run a simulation model to show that direct election would choose a more cooperative leader than indirect election when voters’ preferences of leadership are not homogenous. A laboratory experiment with human subjects further indicates that people hold stronger preferences for cooperators as leaders in direct election than in indirect election, suggesting that the voting scheme has an effect not only on the processing of actors’ preferences, but also on the shaping of their preferences of leadership in the public goods dilemma.     

Efficient replenishment in the distribution channel

Efficient replenishment (ER), a business process that involves the reduction of order cost to facilitate deliveries of goods from the manufacturer to the retailer, is becoming increasingly important in distribution channel management. While a well-executed ER program is expected to lower total channel costs and increase channel profit, very little is known about how this incremental channel profit is distributed between the manufacturer and the retailer and how it varies across the two common channel relationship structures, retailer price leadership and manufacturer price leadership.In this paper, we develop the conditions under which the manufacturer and the retailer gain more or less from the adoption of ER based on a game theoretic channel model of bilateral monopoly under the two channel relationship structures. We develop analytic results on the impact of ER on purchase quantity, price and the distribution of profits in three cases, namely, (1) when only the retailer adopts ER, (2) when both the manufacturer and the retailer adopt ER, and (3) when the manufacturer and the retailer are vertically integrated in the distribution channel, which adopts ER.The results, which can be generalized for all demand functions, show that the manufacturer benefits from the retailer's adoption of ER only when the manufacturer's holding cost relative to the retailer's is sufficiently large, relative to its order cost relative to the retailer's. By adopting ER, the retailer gains more than what the manufacturer gains even if the manufacturer is the price leader. Both the parties are likely to gain more if they both adopt ER than if only the retailer adopts ER. The incremental channel profit due to the retailer's ER adoption is highest in a vertically integrated distribution channel and is greater in a retailer-led channel relationship than in a manufacturer-led relationship.     

Will the frog change into a prince? Predicting future customer profitability

More and more companies have customer databases that enable them to analyze customer profitability over time. These companies often seek to determine the most important customers as indicated by their current or historical profitability and focus attention on them. Focusing on profitable customers can result in more efficient use of marketing resources, but this approach neglects the fact that customers can evolve over time. Some customers begin as low-profit customers but eventually develop into high-profit customers. Others may start out as high-profit customers but become unprofitable over time. Previous efforts to predict future profitability have been relatively unsuccessful, with relatively simple, naïve models often performing just as well as or better than more sophisticated ones. Our paper presents a new approach to predicting customer profitability in future periods that performs significantly better than naïve models. We estimate the models on data from a high-tech company in a business-to-business context and validate the models' predictive ability on a holdout sample.We show that a model based on simulation of customer futures provides large improvements over naïve extrapolation of average profits. By using the simulation model to select customers, ROI from marketing efforts is projected to increase by 58%.     

Tactical use of rewards to enhance loyalty program effectiveness

A key member benefit for participating in a loyalty program (LP) is the rewards earned for points accrued. One popular reward structure is a catalog of many diverse items. The rewards among this broad selection are likely to differ in their appeal due to their intrinsic differences and customer heterogeneity. Prior research has shown that after redeeming a reward, LP members are more motivated to increase their purchase volume/frequency and share-of-wallet within the program, thereby becoming more active. In this study, we fit a hidden Markov model to a 4½ year longitudinal data set of points accrual and reward redemption activity for about 4500 members of a large coalition LP. Our analysis reveals three latent states — active, hyperactive and inactive. We then investigate the likelihood of LP members transitioning between these states across successive time periods, and examine the reward categories and marketing effort associated with these transitions. Subsequently, we use our model to optimally promote particular reward categories to encourage LP member migration to managerially desirable states or prevent them sliding into a less desirable state. Our proposed optimal reward strategy potentially increases the estimated proportion of LP members in the hyperactive latent state from 35.7% to 40.1%, with a resultant increase in sales revenue for retailers and service providers in the LP of 7.7%. We find that rewards which are more fungible have the strongest influence on increasing points accrual activity.     

Joint ventures in patent contests with spillovers and the role of strategic budgeting

We consider an R&D contest between n firms in the presence of external spillovers. Our analysis focuses on the effects of these spillovers on joint venture activities between firms. In particular, we are interested in how different budget responsibilities within the research joint venture (RJV) affect profits of firms taking part in the joint venture and profits of their non-cooperating rival firms. Three arrangements for RJVs are analyzed: First, cooperation, in which the firms participating in the joint venture completely share the research they create in the innovation process and each firm has a sovereign budget responsibility. Second, a collusive arrangement in which the participating firms not only share their research but have joint budget responsibilities in the sense that they make all strategic choices cooperatively and maximize joint profits. Third, a hierarchical form, in which the cooperating firms establish joint headquarters which have strategic budget responsibility in the sense that it can strategically subsidize R&D efforts of its member firms so as to maximize overall RJV profits. We show that the first two arrangements can be mimiced in the hierarchical structure and that a hierarchical structure is optimal if it completely subsidizes its members’ R&D activities. In this case all rival firms are driven out of the contest.     

Bank monitoring, profit efficiency and the commercial lending business model

We build a bank-specific, fixed-effects regression model to develop proxies for a bank's monitoring effort. Our results show that banks that devote more resources to monitoring (based on these proxies) are more profit efficient and the effect is large. A very important theoretical literature in finance suggests that monitoring is value enhancing; we provide empirical evidence consistent with the theory. This research thus establishes an important link between the large literature on bank monitoring and the equally large literature on profit efficiency. Monitoring is a key technology in the commercial lending business model (e.g. Mester, Nakamura, & Renault, 2007). Thus, these results point to considerable strengths in the dominant business model used in the banking industry.     

Do We Really Want More Leaders in Business?

In this article, we focus on the concept of leadership ethics and make observations about transformational, transactional and servant leadership. We consider differences in how each definition of leadership outlines what the leader is supposed to achieve, and how the leader treats people in the organization while striving to achieve the organization's goals. We also consider which leadership styles are likely to be more popular in organizations that strive to maximize short run profits. Our paper does not tout or degrade any of these leadership theories. Instead, it points out which theories allow reason to play more than a minimal role in ethical decision-making, as well as those that are most consistent with a firm's desire to achieve efficiency in the short run. We explain our view that the way leadership is practiced in large, bureaucratic organizations suggests that ethics is often absent from the leader's decision-making process. Consequently, we suggest that before we engage in a meaningful dialogue about what kind of leaders we might really want in business, we must consider how much short-run profit we are willing to forego in exchange for more ethical corporate cultures.     

Digital coupon promotion and platform selection in the presence of delivery effort

In recent years, physical retailers have started selling products to consumers through either third-party or self-operated online platforms. Doing so, they face demand which depends on digital coupon promotions, delivery effort by the platform (i.e., deliver products from retailers to consumers), and channel preference. In this paper, we develop a game-theoretic model to examine the interactions between the physical retailer's distribution channel choices and coupon promotions. In normal operation, retailers prefer to pay lower fees to the third-party platform, but we find, counterintuitively, that when carrying on a digital coupon promotion, the retailer can be better off paying a higher participation fee to the third-party platform. We also identify the conditions under which the retailer prefers the third-party platform over the self-operated platform with and without coupon promotions. Furthermore, we show that digital coupon promotions and delivery effort boost the retailer's profits by price discriminating among consumers with differing purchase utilities.     

Are Relationally Transparent Leaders More Receptive to the Relational Transparency of Others? An Authentic Dialog Perspective

Journal of Business Ethics - Using a sample of 114 leaders (described by 516 team members), we show empirically that the association between leader relational transparency and leader receptiveness...     

Restorying a Culture of Ethical and Spiritual Values: A Role for Leader Storytelling

In this paper, we outline some of the connections between the literatures of organizational storytelling, spirituality in the workplace, organizational culture, and authentic leadership. We suggest that leader storytelling that integrates a moral and spiritual component can transform an organizational culture so members of the organization begin to feel connected to a larger community and a higher purpose. We specifically discuss how leader role modeling in authentic storytelling is essential in developing an ethically and spiritually based organizational culture. However, we also acknowledge a potential dark side to leader storytelling. Implications for authentic storytelling research and practice are discussed. An early draft of this paper was presented at the 2004 Academy of Management Conference in New Orleans. Cathy Driscoll received her Ph.D. in organizational behavior and marketing from Queen's University in 1994. Currently, she is an associate professor in the Department of Management in the Sobey School of Business at Saint Mary's University. Prior to coming to SMU, she worked as a project manager and policy advisor with the National Round Table on the Environment and the Economy in Ottawa. She has published articles in The Journal of Business Ethics and Business and Society. Margaret McKee is in her fourth year of doctoral studies at the Sobey School of Business. She was recently awarded a two year Doctoral Fellowship from the Social Sciences and Humanities Research Council of Canada (SSHRC) to conduct her dissertation research. She has taught a variety of management and communications courses at Mount Saint Vincent, Sobey School of Business, and Dalhousie University. Her research interests are leadership and values based organizational cultures.     

Leadership Dynamics in Partially Distributed Teams: an Exploratory Study of the Effects of Configuration and Distance

Despite the importance of leadership and the wealth of empirical studies focused on leadership effectiveness in traditional and computer-supported groups, there is little research examining leadership dynamics in partially distributed virtual teams (PDTs). Virtual teams are partially distributed when they are configured with one or more subgroups of collocated members and isolated members. This paper lays the groundwork for an in-depth study of leadership in PDTs that can be extended to other types of virtual team configurations. Using three dimensions of virtual distance (geographic, cultural and temporal), we analyze how the configuration of virtual teams interacts with leadership dynamics. We also summarize the results of an exploratory study using 12 student teams to examine the effects of distance and configuration on leadership in PDTs. Findings show significant differences in leadership dynamics (i.e., leader emergence vs. leader retention) which impacted team performance. From these results, we develop propositions on leadership and PDTs.     

A supply chain coordination mechanism with suppliers’ effort performance level and fairness concern

The interest conflict is an important factor affecting the supply chain (SC) performance, so it is very important to set up a reasonable coordination mechanism to eliminate the SC conflicts. Considering the fact that suppliers' effort performance level and fairness concern behavior are important factors affecting SC performance, we can develop SC models to analyze and compare SC decisions under the centralized decision and decentralized decision, and then we design a SC coordination mechanism through cost sharing. The results show that the designed coordination mechanism can effectively solve the conflict problem of SC, mobilize SC members’ motivation and initiative without damaging their profits, and realize the long-term cooperation between the retailer and multi-suppliers. It also can achieve the Pareto improvement and the sustainable development of SC.     

A multi-category customer base analysis

Customer base analysis is an essential tool to measure and develop relationships with customers. While various models have been proposed in a noncontractual setting, they focus primarily on analyzing transactional patterns associated with a single product category or a firm-level activity, such as the times at which purchases are made at a particular retailer. This research proposes a modeling framework for customer base analysis in a multi-category context. Specifically, we model the time between a customer's purchases at the firm and the product categories that comprise her shopping basket arising from multi-category choice decisions. The proposed model uses a latent space approach that parsimoniously captures the dynamics of multi-category shopping behavior due to the interplay between purchase timing and shopping basket composition. We also account for interdependence among multiple categories, temporal dependence across category choices, and latent customer attrition. Using category-level transaction data, we show that the proposed model offers excellent fit and performance in predicting customer purchase patterns across multiple categories. The forecasts and inferences afforded by our model can assist managers in tailoring marketing efforts across categories.     

The Relationship Between Leaders’ Group-Oriented Values and Follower Identification with and Endorsement of Leaders: The Moderating Role of Leaders’ Group Membership

In this article, we hypothesize that leaders who display group-oriented values (i.e., values that focus on the welfare of the group rather than on the self-interest of the leader) will be evaluated more positively by their followers than leaders who do not display group-oriented values. Importantly, we expected these effects to be more pronounced for leaders who are ingroup members (i.e., stemming from the same social group as their followers) than for leaders who are outgroup members (i.e., leaders stemming from a different social group than their followers). We tested our hypotheses in two studies. Results of a field study (N = 95) showed the expected relationship between leaders’ group-oriented values and followers’ identification with their leaders. A scenario study (N = 137) replicated the results and extended it to followers’ endorsement of their leaders. Overall, these findings suggest that displaying group-oriented values pays off more for ingroup than for outgroup leaders.     

How category characteristics affect the number of store brands offered by the retailer: a model and empirical analysis

Our research examines why retailers offer, not one, but multiple store brands in some product categories. More specifically, we are interested in how certain product category characteristics affect the number of store brands. We model a product category consisting of two incumbent national brands that may differ in strength. The retailer may introduce one or two store brands depending on which maximizes category profits. Our analysis suggests that the retailer is likely to carry two store brands in categories where (i) the national brands are similar in strength; and (ii) the price sensitivity between the national brands is low. Interestingly, the conditions that support the introduction of more than one store brand are quite different than the conditions that would facilitate the introduction of additional national brands. We provide empirical evidence that support our model-based predictions.     

Omnichannel marketing: Are cross-channel effects symmetric?

The rapid growth in omnichannel (e.g., Web, call center, sales agent, store) shopping and the need to effectively allocate resources across channels are prompting managers and researchers to better understand cross-channel effects, that is, the effects of marketing efforts in one distribution channel on shopping outcomes in other channels. We develop a broad set of hypotheses about cross-channel effects based on channel richness and influence roles (informative, persuasive). To test the hypotheses, we model the effects (own and cross) of channel marketing efforts on shopping outcomes in different channels through a simultaneous equation system. We estimate these models using data from the auto insurance industry that comprises the exclusive agent, the independent agent, the Web, and the call center channels. Our results offer novel insights. They show that cross-channel effects and elasticities are significant and asymmetric. While the effect of marketing efforts in a channel on shopping outcomes in a dissimilar (with a different primary influence role) channel is positive (e.g., exclusive agent, the Web, and the call center channels are complementary), the magnitudes of the cross-channel effects are asymmetric. Similarly, while the effect of marketing efforts in a channel on shopping outcomes in a similar (with the same primary influence role) channel is negative (e.g., independent agent and exclusive agent channels are substitutional), they are also asymmetric. Exclusive agent efforts have a greater negative effect on the outcomes of independent agent efforts than vice versa. Based on the results, we develop a channel influence vs. influenceability analysis tool for managers to better plan their channel efforts. We also illustrate a resource allocation model that shows substantial incremental profits from the reallocation of marketing efforts based on our model with cross-channel effects relative to a model without cross-channel effects.