The Role of Local Context in Headquarters–Subsidiaries Relationships: A Global Analysis of the Literature

This study reviews the literature on multinational corporations’ headquarters–subsidiaries relationships, focusing on the role of the local context and its influence on subsidiaries in developed and emerging markets or countries. The author searched the literature using several terms directly related to these issues. The findings demonstrate that subsidiaries can only operate successfully in foreign locations by adjusting their policies to fit into the local environment because there are multiple contexts. Multinational corporations manage the local context by integrating their home behavior and that of the subsidiaries’ operating environments. A framework for identifying and managing different local contexts is proposed.     

The Effect of Dissolution Intention on Buyer–Seller Relationships

While relationships dissolve for a variety of reasons, many dissolve due to issues with the relationship itself. However, much of the research in marketing focuses on the bright side of relationships and neglects its dark side. In this article we focus on one aspect of the dark side—the effects of the intent of a party to exit from a relationship. Research on dissolution has primarily examined it as an outcome variable. Thus, the question of how dissolution intent, once formed, affects subsequent behavior has not been given much attention. We investigate the consequences of dissolution intention, such as increasing opportunism and decreasing cooperation and the mediating effects of transaction-specific investments. The model is tested using a sample survey of newspaper agents in Korea. Results indicate that dissolution intention increases opportunism and negatively affects cooperation. Transaction-specific investments diminish the effect of dissolution intention on opportunism and cooperation.     

A Commentary on “Undergraduate Education: The Implications of Cross-Functional Relationships in Business Marketing–The Skills of High-Performing Managers”

ABSTRACT

This commentary reinforces the importance and need for developing the student's knowledge, abilities, and understanding of what is required to collaborate with the firm's internal and external constituencies, in the context of B2B marketing environment. It is an important goal to be achieved in the B2B marketing course. The new era of business marketing is built around achieving “collaborative advantage” with the new breed of customers who demand relatively more complex product and services arrangements as well as nature of relationships from their vendors. Today's customers also expect intellectual input and consultative selling approaches from group of diverse and independent marketing entities, whom they expect to work together to meet their requirements. The firm's success or failure in the market place may indeed be predicated on their ability to achieve this “collaborative advantage”. The commentary also expands the authors' suggestions in the areas of course pedagogy and design for building the student's know-how and capability for practicing the art-of-collaboration.     

The Power of Innovativeness in Manufacturer–Retailer Relationships

ABSTRACT

Purpose: Retailers often challenge manufacturers through aggressive store brand policies and severe listing constraints. This study investigates manufacturer innovativeness as a managerial lever to shift the power balance between manufacturers and retailers.

Methodology/approach: Using data from 277 senior managers of Swiss and German consumer goods manufacturers and analyzing these data with structural equation modelling, the authors test hypotheses about the impact of manufacturer innovativeness on manufacturer–retailer relationship characteristics (i.e., retailer dependency, store brand aggressiveness, and listing constraints).

Findings: The study demonstrates that manufacturer innovativeness enhances retailer dependency, which in turn positively affects overall manufacturer performance. This relationship can be explained further: By increasing retailer dependency, manufacturers suppress retailers’ store brand aggressiveness and attenuate retailers’ listing constraints. Store brand aggressiveness affects overall manufacturer performance through listing constraints.

Research implications: Identifying levers such as innovativeness that assist manufacturers in fostering their power over retailers provides a new mode for understanding how manufacturers can influence the balance of power between manufacturers and retailers. The study provides support for the approach/inhibition theory of power on the inter-organizational level. Organizations with increased power are assumed to have approach-related tendencies and act in goal-consistent manner, whereas organizations with reduced power are assumed to develop the tendency to pursue inhibition-related actions, e.g., attending to threats. Furthermore, this study identifies channel relationship characteristics such as retailer dependency as a mediating path between manufacturer innovativeness and performance.

Practical implications: Managers need to strengthen the firm’s innovative capacity to enhance the performance of their companies. By developing the capability to provide radical innovations, manufacturers are able to enhance their performance not only directly but also indirectly by strengthening the manufacturer’s position with regard to retailers. This study underscores the relevance of innovativeness for strengthening the manufacturer’s position in its relationship with retailers that avoids problems with aggressive store brands and constrained listing conditions.

Originality/value/contribution: This study proposes manufacturer innovativeness as a managerial lever to shift the power balance between manufacturers and retailers.     

The Impact of Relational Variables on Value Creation in Buyer–Seller Business Relationships

Purpose: This research was aimed at attaining a deeper knowledge of how customer value creation can be improved in business markets. Although trust and commitment (as relational governance mechanisms) appear to have a positive effect on customer value creation, limited empirical evidence exists about the combined effect of the aforementioned variables on improving customer value creation. This article studies why trust and commitment are key precursors to improving customer value creation in commercial relationships among companies.

Methodology: Following a review of the literature, we introduce and contrast a conceptual model on a sample of 181 manufacturing companies located in Spain by means of a structural equation system.

Originality: The study of these causal relationships is relevant because it provides greater knowledge of the role played by the key relational variables of trust and commitment on improving customer value creation in business markets. These variables also have an important influence on the development and maintenance of a relationship in the long term and have been the focus of recent marketing research.

Findings: The empirical results reveal that: (1) distributor commitment is a direct and positive antecedent of value creation in a relationship, understood from a functionalist perspective; (2) distributor trust, the other relational variable, has an indirect effect on value creation through the distributor's commitment; and (3) this research does not tie in with previous studies that found that direct value-creating functions have a multiple-component nature representing a second-order factor.     

The Effect of the World Wide Web on Agency—Advertiser Relationships: Towards A Strategic Framework

Buffeted by the fragmentation of media and markets, the World Wide Web has started transforming the competitive landscape in the advertising industry. Increasingly, advertising agencies are forced to compete with in-house CIS/MIS departments, public relations agencies and computer graphic studios and boutiques for Web-related accounts. Vis-à-vis the immediacy of the challenge, agencies are forced to either broaden their business horizon to include all aspects of communications or to stay focused on their core business-making advertisements for traditional media. This article examines the possible effects of the World Wide Web on the blurring of boundaries in advertiser- agency performed promotional activities, analyses the similarities in the strategies adopted in the transition from radio to television, and appraises the options which agencies face in adopting the Web.     

Conflict and Confluence: The Multidimensionality of Opportunism in Principal–Agent Relationships

This comparative study explores 499 corporate social responsibility (CSR) initiatives implemented by 178 corporations in five distinct, institutionally consistent European clusters. This study provides an empirically grounded response to calls to develop comprehensive, nuanced pictures of CSR in the composite European business environment. In so doing, the article stresses three distinct, non-exclusive approaches that characterize the embedding of CSR considerations in corporations’ strategies across Europe and the CSR challenges for corporations operating in different socio-political contexts. Furthermore, the study reaffirms the CSR notion as a contextualized concept, shaped by socio-political drivers, and contributes by bridging macro-level, socio-political facets of CSR with its meso-level, organizational implications.     

Undergraduate Education: The Implications of Cross-Functional,Relationships in Business Marketing–The Skills of High-Performing Managers

ABSTRACT

Like other specialty areas in the business school curriculum, marketing management classes emphasize an analytical perspective and provide students with a valuable set of strategy tools, but fail to come to grips with other facets of the managerial work of marketing-namely, the relational skills that are required for managing across functions, reconciling diverse interests, and creating integrated strategies and customer solutions. By serving as an advocate for the customer at various levels of the organizational hierarchy and across functions, the business marketer must initiate, develop, nurture, and sustain a rich network of relationships with multiple constituencies within the firm and within customer organizations. To effectively perform this challenging interdisciplinary role, a unique set of relationship management skills are required. This article explores the collaborative skills that high-performing managers have mastered and examines the resulting implications for the business marketing course. Recent research is examined that reveals the characteristics of reputationally effective managers, isolates the factors that define effective cross-functional exchange episodes, and details the specific behavior that top-performing account managers employ. By exploring the relational competencies that are instrumental to the work of marketing managers, the business marketing course can fill an important gap in the marketing curriculum.     

Corporate Autonomy and Buyer–Supplier Relationships: The Case of Unsafe Mattel Toys

This article analyses supplier–buyer relationships where the suppliers adapt to the buyers’ needs and expectations to gain mutual advantages. In some cases, such closely knit relationships lead to violations of the autonomy of one or both partners. A concept of corporate autonomy (CA) is developed to analyze this problem. Three different facets can be distinguished: rule autonomy, executive autonomy, and control autonomy. A case study of Mattel’s problems with lead-contaminated toys produced in China shows that the CA of buyer and supplier can be restricted as a result of a dysfunctional partnership involving a moral dilemma.     

The effects of online negative word-of-mouth on dissatisfied customers: A frustration–aggression perspective

Conceptualizing how customers construe online negative word-of-mouth (nWOM) following failure experiences remains unsettled, leaving providers with inconclusive recovery strategy programmes. This empirical study recognizes online nWOM as a co-created encounter between the complainant (i.e., the initiator of the online nWOM) and the recipient (i.e., the consumer who engages with the online nWOM), examining their idiosyncrasies to discern their understanding of the experience. It introduces frustration–aggression theory to online WOM literature, recognizing that it can support a higher-order understanding of phenomena. Through phenomenological hermeneutics, interviews and focus groups, data were collected from millennials in Albania and Kosovo that provided accounts of nuanced and distinctive online nWOM realities. The emerged insights extended extant theory to a three-fold online nWOM typology (i.e., lenient online nWOM, moderate online nWOM and severe online nWOM) recognizing the negative impact customers have on a provider, which is controlled by frustration–aggression tags. Frustration–aggression variations across online nWOM led to the construct of three types of customers that engage in online nWOM, namely tolerable online nWOM customers, rigorous online nWOM customers and confrontational online nWOM customers. Findings culminated with satisfactory recovery strategies aligned to customer inferences regardless of the nWOM context.     

Fostering Consumer–Brand Relationships in Social Media Environments: The Role of Parasocial Interaction

As brands solidify their place in social media environments, consumers' expectations have amplified, thus spurring the development of technologies to assist with the engagement process. Understanding the ways in which brands can preserve the one-to-one characteristics and intimate relationship qualities offered by social media while still meeting consumer expectations amidst the escalating volume of interactions has become essential. Drawing on the communications literature, this research proposes that parasocial interaction (PSI) theory may be used as a theoretical lens for designing successful social media strategies. Three studies, using a multi-method approach, provide evidence of PSI's role in the development of positive relationship outcomes. Mediation analysis reveals that this sense of feeling connected with the brand goes beyond the interaction itself and drives increased feelings of loyalty intentions and willingness to provide information to the brand. Evidence from this research suggests that these effects may not hold when consumers are aware of the possibility that the brand's social media response may be automated. These findings offer marketers theoretical guidance for fostering relationships in social media environments.     

What's Behind CRM Research? A Bibliometric Analysis of Publications in the CRM Research Field

The diversity of approaches to customer relationship management (CRM) brings about the need for systematic reviews. The objective of this article is to identify and categorize the most used publications in the CRM field. We conducted a bibliometric analysis using the Web of Science database. To identify and categorize the subfields, we conducted an exploratory factor analysis. The most used publications were categorized into: (1) methodology in the CRM research field; (2) relationship marketing; (3) service quality and customer loyalty; (4) implications of market-oriented strategy; (5) CRM theory and its practical implications; (6) strategic management; and (7) customer value.     

A new perspective on the third-country effect: The case of Malaysia–US industry-level trade

Cushman suggested that impact of exchange rate volatility declines after the inclusion of the third-country effect. Like Cushman, when we use a linear analysis, we confirm his results. However, when we engage in asymmetric effects of exchange rate volatility which requires including nonlinear adjustment of volatility measures, the findings show more support to both exchange rate volatility influence and the third-country effect. Therefore, we propose that in examining exchange rate volatility effect on trade, consideration must be given to not just asymmetric effects of exchange rate volatility but also asymmetric effects of the third-country effect. We demonstrate these findings using monthly data from 54 Malaysian industries that export to the US and 63 Malaysian industries that import from the US.     

The price of freedom: A Fama–French freedom factor

Economic institutions in-part explain cross-country variation in levels of investment and capital market characteristics. Here, country-level equity returns are related to cross-country differences in economic institutions as measured by an index of economic freedom. The ex-ante level and ex-post change in economic freedom are observed to be country-level equity return factors exhibiting Sharpe ratios greater than that of the value, momentum, and size factors, factors to which change in economic freedom has a low correlation. Fama–MacBeth regressions confirm the economic freedom factor. Finally, the excess return earned from investing in countries with low economic freedom is the price of freedom.     

Strategic Trade Policies Under Monopsony and Uncertainty: The Exporter’s Non-Linear Responses Based on the Organization of Its Industry

Players’ access to information, their market power, and the timing and rationale of their decisions are important but often neglected in the making of strategic trade policies. I examine optimal decisions in a monopsonistic market with asymmetric information to determine an exporting country’s policy strategies. The large importing country first sets a producer subsidy and later imposes an import tariff after learning about the welfare-maximizing exporter’s reactions to the subsidy. I assume that at the time of their decisions, the n exporting firms have incomplete information and rely only on noisy signals from their own domestic market to account for the uncertainty in the international market. I find that import tariff and producer subsidy can be substitute rather than exclusively independent policies. Results also show that the exporting country’s optimal reaction is non-linear and is based on the structure of its export industry; the exporting country’s government facing a large importer subsidizes (or taxes) its export when the number of exporting firms is low (or high) relative to a threshold number of firms. More important, before giving out subsidies, the exporting country’s government requires more collusion of its firms especially when the large importer targets a fixed domestic price.     

The Effect of CEO Risk Appetite on Firm Volatility: An Empirical Analysis of Financial Firms☆

This paper examines the effect of CEO risk appetite on the return volatility of a sample of large, listed financial firms over the period 2000–2008. After controlling for firm specific characteristics, the results give strong evidence that the CEO risk appetite has an important effect on firm volatility. The biographical measures for CEO risk appetite are significant explanatory variables of all measures of firm volatility employed in this study. The effect of CEO age is significant and positive for all four volatility measures, while CEO education and current job tenure are negative and significant for all four measures. Executive experience with other firm boards has a negative and significant effect on total and idiosyncratic volatility. Interestingly, CEO wealth is complementary to the other biographical variables with a positive effect on all but the default volatility measure. Our results carry implications for shareholders, financial regulators, governments, and managers.     

The Mismeasure of Psychopathy: A Commentary on Boddy’s PM-MRV

Boddy and his colleagues have published several articles on “corporate psychopathy” using what they refer to as a Psychopathy Measure—Management Research Version (PM-MRV). They based this measure on the items that comprise the Interpersonal and Affective dimensions (Factor 1) of the Hare Psychopathy Checklist-Revised (PCL-R), a widely used copyrighted and controlled instrument. The PM-MRV not only misspecifies the construct of psychopathy, but also serves as an example of the problems associated with an attempt to form a “new” scale by adapting items from a proprietary scale. The PCL-R measures a superordinate construct underpinned by four correlated dimensions or first-order factors, not just the two in the PM-MRV. The other two dimensions are Lifestyle and Antisocial, which together form Factor 2 of the PCL-R. As defined by the PCL-R, psychopathy requires high scores on both Factor 1 and Factor 2. Lack of validity aside, even if the PM-MRV were to be a useful measure of Factor 1, it would not discriminate between psychopathy and other “dark personalities,” such as Machiavellianism and narcissism, which, along with psychopathy, form the Dark Triad. This lack of discrimination stems from the fact that each of these personalities shares features measured by Factor 1 and, by implication, by the PM-MRV. Research findings based on the PM-MRV may have some meaning with respect to dark personalities in general, but their relevance to psychopathy, as measured with the PCL-R, is tenuous at best.     

The effect of outward foreign direct investment on home country's export: A case study on Taiwan, 1989–2006

The purpose of this study is to examine the effect of outward foreign direct investment (FDI) on home country's export in Taiwan since the late 1980s. By pooling the time series and cross-section data in a modified gravity model, the study analyzes the effect of outward FDI, both country by country and host groups as a whole, on Taiwan's exports. It is concluded that outward FDI has a complementary effect on home country's export in Taiwan, most significantly evidenced in China-bound investment, which accounted for most FDIs after the 1990s.