Ex post vs. ex ante pricing: Optional calling plans and tapered tariffs

We study optimal nonuniform pricing in a setting where a customer's demand at the start of a billing period contains a random variable whose realization becomes known by the end of the billing period. In this context, an optional calling plan is a tariff which the consumer must select based on his/her expectations about the random variable, whereas, under a tapered tariff, the consumer's choice of usage charge is made after he/she knows the realization of the random variable. We show that for low to moderate levels of uncertainty about the random variable entering the demand function, the optional calling plan approach to nonuniform pricing yields higher expected profit than does the tapered tariff approach, given risk-neutral consumers. We illustrate this finding with a case study and argue that it is consistent with the historical evolution of tariffs in the interexchange telecommunications market.     

Fueling Innovation through Information Technology in SMEs*

This paper describes a study that investigates the mediating effects of information technology (IT) on the relationships among product and process innovations and firm performance (measured in multiple profitability and growth rate metrics). Using structural equation modeling on a sample of 397 small and medium‐sized enterprises (SMEs), we find evidence that (1) increases on the strategic emphasis placed on innovation, both product and process, positively impact the prominence managers place on IT; (2) the impact of innovation (both product and process) on performance (both profitability and growth) is primarily indirect, felt via the mechanism of the importance managers place on IT; and (3) an increased emphasis on IT abets managers' perception of their firms' performance, as compared with that observed among peer firms (other SMEs).     

Investigating the Impacts of Organizational Factors on Employees’ Unethical Behavior Within Organization in the Context of Chinese Firms

Unethical behavior is under-examined in the workplace. To date, few studies have attempted to explore the antecedents of an employee’s ethical decisions, particularly with respect to unethical behavior and its effects. To capture an employee’s psychological perception of unethical behavior in the workplace, this paper integrates organizational factors (codes of conduct, likelihood of detection, and performance pressure) into the Theory of Reasoned Action. By conducting an empirical study in a Chinese firm, we found that codes of conduct and performance pressure have a significant influence on an employee’s attitude toward and social beliefs about unethical behavior. We also demonstrated that employees’ unethical behaviors affect the firm performance of an entrepreneurial venture. The insights gleaned from the findings on this Chinese company have a number of important implications for both research and practice.     

Coevolutionary Dynamics of Automotive Competition: Product Innovation,Change, and Marketplace Survival

Innovation and new model development have been paramount in the U.S. automotive industry. The industry has invested around $16–18 billion annually to launch new models and improve existing ones in response to incessant evolution of consumer preferences, competitive pressures, and changes in safety and emission regulations. Although these investments have significantly reduced cycle time and increased efficiency (e.g., through platform communization), it still costs around $1 billion to develop and launch a new model from scratch. Therefore, the strategic focus in the U.S. automotive industry is rapidly shifting away from manufacturing efficiency to product development and innovation as firms engage in an “arms race” to develop innovative new products ahead of the competition. The outcome of this new focus manifests itself in the total development time for a new platform vehicle, which is expected to drop from roughly four years in 1998 to two years in 2014. As development cycles continue to shorten, competition in the industry intensifies, and a new insight is needed to better understand how increased competition can affect the gains from innovations. The need for research to fill this gap is especially critical as executives continue to grow more cynical about returns offered by increases in research and development (R&D) expenditures and see no statistically significant relationship between R&D expenditures and firm performance. This study attempts to address this gap by adopting a coevolutionary perspective that analyzes the relationship between innovations and firm performance by accounting for the impact of competitive forces in the industry. First, this study explicitly models competitive interactions between firms, known in the ecology literature as the Red Queen competition, in which gains from innovations are relative and impermanent. Second, hypotheses are tested using a comprehensive data set comprising all automobile manufacturers ever known to compete in the U.S. automobile market at any time between 1891 and 2000. Complete coverage of 110 years enables precise analysis of the link between innovations and firm performance as well as the coevolution in the U.S. automobile industry. The results suggest that although extensiveness of an innovation is relevant, a firm's ability to keep up with the competition in the innovation arms race is a more significant driver of survival in the market. Thus, firms cannot simply evaluate their innovation efforts in a silo but must constantly assess their efforts versus the innovation launches of their key competitors. Based on the findings, automotive manufacturers must develop a structured product development program that allows for continual and steady new product introductions; otherwise, even momentary setbacks can have a damaging impact on a firm's ability to survive in the automotive marketplace.     

Breakeven Time on New Product Launches: An Investigation of the Drivers and Impact on Firm Performance

The ability to break even faster on new product projects is becoming increasingly critical for firms in fast‐moving industries where continually reinvesting in research and development efforts matters greatly for survival. However, most research to date has focused on studying the impact of two primary innovation outcomes: sales and profits. The exclusive emphasis on sales and profit may be warranted for certain types of goods such as durable goods, but when examining the effects of new products in fast‐moving consumer goods or in the entrepreneurial sphere, where cash to cash matters greatly for survival, it is critical for both researchers and practitioners to not only consider the profits and sales generated by the new product but also the time to breakeven. This paper develops a theoretical framework using the competency‐based literature to examine the effects of innovation drivers (customer idea source, speed to market, product quality, and product newness) on breakeven time (BET) and project profits, and their subsequent impact on firm performance. A three‐stage least square estimation method was employed using longitudinal data on 945 new product development projects and launches in the morning (breakfast) foods category. The results clearly pinpoint that for successful product innovation, managers need to consider the time taken to breakeven on new product development. Specifically, the results demonstrate that speed to market and product quality shorten BET, but customer idea source extends BET. Second, the analysis also empirically demonstrates that BET is an equally effective predictor of firm performance as project profits in the short run, but significantly a stronger predictor of firm performance in the long run (t + four years), suggesting that BET should be regarded as a superior leading indicator of firm performance versus product profitability for fast‐moving consumer goods segment. This is an important finding that suggests firms that recoup their cash investments more quickly experience greater short‐term and significantly more long‐term success.     

Is Your Banker Leaking Your Personal Information? The Roles of Ethics and Individual-Level Cultural Characteristics in Predicting Organizational Computer Abuse

Computer abuse (CA) by employees is a critical concern for managers. Misuse of an organization’s information assets leads to costly damage to an organization’s reputation, decreases in sales, and impositions of fines. We use this opportunity to introduce and expand the theoretic framework proffered by Thong and Yap (1998) to better understand the factors that lead individuals to commit CA in organizations. The study uses a survey of 449 respondents from the banking, financial, and insurance industries. Our results indicate that individuals who adhere to a formalist ethical perspective are significantly less likely to engage in CA activities than those following a utilitarian ethical framework. In addition, the results provide evidence that employees with individualistic natures are linked to increased CA incidents, whereas collectivist tendencies are associated with decreases in CA behaviors. Our results also show that collectivism acts as a strong moderator that further decreases the relationships between formalism and CA, and utilitarianism and CA. Finally, we offer detailed suggestions on how organizations and researchers can leverage our findings to decrease CA occurrences.     

Beyond Adoption Intention: Online Communities and Member Motivation to Contribute Longitudinally

As online communities become increasingly relevant to business, it is critical to understand how to support contributors' motivation to contribute content longitudinally. In this article, we draw on existing literature on motivation and technology characteristics to conceptualize a model of longitudinal content contribution. We view longitudinal content contribution as a recursive process of interaction between contributors, other participants, and the IT artifacts of online communities. Our study has several important theoretical contributions: first, our study argues that different types of motivation exist and we need to understand how to support contributors' autonomous motivation; second, our study adds the time dimension to content contribution; third, our study clarifies the path from content contribution to motivation; forth, our study helps explain why some rewards can be detrimental to contributors' motivation. Future studies are needed to extend our model and test the propositions from our model.     

Modeling service alliances: an exploratory investigation of spillover effects in service partnerships

The objective of the current study is to provide a preliminary look at the process by which consumers evaluate alliances between service providers. Specifically, the study demonstrates how the service quality of one partner can impact, or ‘spill over’ onto, consumers' evaluations of their transactions with a second partner, and how the performances of partners can have differing effects on customers' intentions to reuse a service partnership. The study tests hypotheses related to the quality, value, and reuse intentions of customers relative to the partnered service through a sample of 334 customers utilizing a seamless service alliance. Our results suggest that spillover effects of service partnerships can either result in beneficial gains for service partners or produce grave consequences when partner providers' service quality is substandard. Copyright © 2007 John Wiley & Sons, Ltd.