Let the evidence speak again! Financial incentives are more effective than we thought

In this essay, the authors rejoin the debate about financial incentive effectiveness. They (a) briefly review the state of the literature in 1998, (b) highlight new meta‐analytic findings and update conclusions regarding the financial incentives–performance relationship, (c) address the myth that financial incentives erode intrinsic motivation, (d) provide explanations for the presumed failure of financial incentives and (e) offer some concluding thoughts and suggestions for future research.     

Choice and the Internet: From Clickstream to Research Stream

The authors discuss research progress and future opportunities for modeling consumer choice on the Internet using clickstream data (the electronic records of Internet usage recorded by company web servers and syndicated data services). The authors compare the nature of Internet choice (as captured by clickstream data) with supermarket choice (as captured by UPC scanner panel data), highlighting the differences relevant to choice modelers. Though the application of choice models to clickstream data is relatively new, the authors review existing early work and provide a two-by-two categorization of the applications studied to date (delineating search versus purchase on the one hand and within-site versus across-site choices on the other). The paper offers directions for further research in these areas and discusses additional opportunities afforded by clickstream information, including personalization, data mining, automation, and customer valuation. Notwithstanding the numerous challenges associated with clickstream data research, the authors conclude that the detailed nature of the information tracked about Internet usage and e-commerce transactions presents an enormous opportunity for empirical modelers to enhance the understanding and prediction of choice behavior.     

A Framework for Understanding Corporate Social Responsibility Programs as a Continuum: An Exploratory Study

Corporate Social Responsibility (CSR) programs are increasingly popular corporate marketing strategies. This paper argues that CSR programs can fall along a continuum between two endpoints: Institutionalized programs and Promotional programs. This classification is based on an exploratory study examining the variance of four responses from the consumer stakeholder group toward these two categories of CSR. Institutionalized CSR programs are argued to be most effective at increasing customer loyalty, enhancing attitude toward the company, and decreasing consumer skepticism. Promotional CSR programs are argued to be more effective at generating purchase intent. Ethical and managerial implications of these preliminary findings are discussed. Julie Pirsch, Ph.D., is an Assistant Professor of Marketing at Villanova University. She researches in the areas of cause-related marketing, corporate social responsibility, and new product development. Shruti Gupta, Ph.D., is an Assistant Professor of Management at The Pennsylvania State University at Abington, in Abington, Pennsylvania. Dr. Gupta’s research interests lie in the area of corporate social responsibility, cause-related marketing, environmental consumerism, and social marketing issues. Stacy Landreth, Ph.D., is an Assistant Professor of Marketing at the University of North Texas. She researches in the areas of cause-related marketing and social marketing alliances, as well as advertising source effects.     

Customer satisfaction and customer behavior: The differential role of brand and category expectations

Previous research has suggested that consumers use multiple strands to evaluate their satisfaction with a product and to establish postpurchase behavioral intention. However, prior empirical research has focused on which individual standard best predicts satisfaction. In contrast, this article develops and tests a model of consumer satisfaction and postpurchase behavioral intention in which consumers simultaneously use multiple standards—perceptions of performance, brand expectations, and category expectations. The results of an experiment for a simulated service encounter provide support for the proposition that consumers use multiple standards and that these standards have differential effects on such postpurchase outcomes as satisfaction, repurchase intention, and willingness to recommend. Brand expectations are shown to be better predictors of affective outcomes (such as satisfaction), while category expectations are shown to be better predictors of behavioral outcomes (repurchase and recommendation). Consistent with prior research, perceived performance is shown to have a strong effect on both satisfaction and behavioral intention.     

Prospects and problems in modeling group decisions

This paper summarizes some of the major issues related to group decision modeling. We briefly review the existing work on group choice models in marketing and consumer research. We draw some generalizations about which models work well when and use those generalizations to provide guidelines for future research.     

Inter-firm learning and knowledge-sharing in multinational networks: An outsourced organization's perspective

This research provides insights into how learning and knowledge are exchanged multinationally between customer firms and their outsourced suppliers who provide non-core, yet essential, services. The paper seeks to understand: (1) how information is exchanged in these networks; (2) how cumulative knowledge adds value in these networks; and (3) how boundary-spanners assist in the dissemination of knowledge and learning within the network. Based on a pharmaceutical industry case, the results suggest that: (a) multinational firms operate more effectively and interact by sharing knowledge with outsourced firms which reflect the customers' structure and fit; (b) networked firms benefit from interactions through economies of scope, but knowledge is not necessarily shared equally among partners; (c) learning and knowledge-sharing interactions are tightly coupled at the product development stage; and (d) outsourced firms interact with external boundary-spanners as needed. The research provides insights for managers of multinational organizations and managers of firms from where essential services are outsourced.     

The historical roots of India’s service-led development: A sectoral analysis of Anglo-Indian productivity differences, 1870-2000

India fell further behind the UK in terms of GDP per capita and overall labour productivity between the 1870s and the 1970s, but has been catching-up since. This paper offers a sectoral analysis of these trends. Comparative India/UK labour productivity in agriculture has declined continuously, and agriculture still accounts for around two-thirds of employment in India. Agriculture thus played a key role in India’s falling behind and has subsequently slowed down the process of catching up. Although there have been substantial fluctuations in comparative India/UK labour productivity in industry, this sector has exhibited no long run trend. The only sector to exhibit an upward trend in comparative India/UK labour productivity is services. India’s recent emergence as a dynamic service-led economy thus appears to have long historical roots. Although India has been characterised by relatively low levels of physical and human capital formation overall, its education provision has historically been unusually skewed towards secondary and tertiary levels. This has provided a limited supply of high productivity workers who have been employed predominantly in services.     

Investigating Customer Resistance to Change in Transaction Relationship with an Internet Vendor

Many academics and practitioners have reiterated the importance of online customer retention to ensure long‐term profitability. Consequently, a number of studies have identified various means of customer retention. These studies lay significant emphasis on creating customer loyalty. However, retaining customers, especially in the context of Internet shopping, is very difficult because of the low costs in comparison and switching. Most of the loyalty programs have also shown disappointing results. This study suggests that by tapping on an individual customer's inclination to resist changes in a transaction relationship, an Internet vendor can achieve customer retention. Using status quo bias theory, this study examines customer resistance to change (CRC) as a means of retaining customers in a transaction relationship with the Internet vendor. The empirical study of an Internet bookstore reveals that trust, relative attractiveness, and switching costs together influence CRC. The empirical results also show that CRC and switching costs have positive effects on willingness to pay more. Implications for theory and practice are discussed.     

Customer-Based Valuation

Customer lifetime value (CLV) has emerged as an important metric to manage and grow customers. Marketing scholars have written many books and articles on this topic. However, most of this research has focused on tactical marketing decisions. While this is important, it is not enough to gain attention of senior managers who are concerned about firm level metrics such as stock price. To have greater impact marketing needs to go beyond brand-level profits to show the impact of marketing actions on firm profitability. In this paper we focus on customer lifetime value and its link to firm value. We discuss research that provides customer-based valuation of firms and suggest directions for future research.     

Structural breaks and GARCH models of stock return volatility: The case of South Africa

This paper investigates the empirical relevance of structural breaks in forecasting stock return volatility using both in-sample and out-of-sample tests applied to daily returns of the Johannesburg Stock Exchange (JSE) All Share Index from 07/02/1995 to 08/25/2010. We find evidence of structural breaks in the unconditional variance of the stock returns series over the period, with high levels of persistence and variability in the parameter estimates of the GARCH(1,1) model across the sub-samples defined by the structural breaks. This indicates that structural breaks are empirically relevant to stock return volatility in South Africa. However, based on the out-of-sample forecasting exercise, we find that even though there structural breaks in the volatility, there are no statistical gains from using competing models that explicitly accounts for structural breaks, relative to a GARCH(1,1) model with expanding window. This could be because of the fact that the two identified structural breaks occurred in our out-of-sample, and recursive estimation of the GARCH(1,1) model is perhaps sufficient to account for the effect of the breaks on the parameter estimates. Finally, we highlight that, given the point of the breaks, perhaps what seems more important in South Africa, is accounting for leverage effects, especially in terms of long-horizon forecasting of stock return volatility.