A Meta-analysis of Loss Aversion in Product Choice

Loss aversion is a behavioral phenomenon with game-changing implications for economic theory and practice. We conduct a meta-analysis of 33 studies (providing 109 observations) investigating loss aversion in random utility models of brand choice. Specifically, we use multilevel modeling techniques to examine potential moderators of preference asymmetries as well as the variability of loss-aversion effects within and between studies. We find that loss aversion is manifest in product choice, but that it exhibits substantial variation across research contexts. Product-related variables (e.g., the category type), consumer characteristics (e.g., reference-point mechanisms), and particularly methodological decisions (e.g., model specifications) determine the observed degree of loss–gain disparity. Practical implications of the specific findings and opportunities for future research are discussed.     

‘Beautiful Serbia’ ‐ objective and subjective outcomes of active labour market policy in a transition economy

This paper studies the causal impact of participation in the Beautiful Serbia programme providing training and temporary work in the construction sector in Serbia on labour market outcomes as well as on measures of subjective well‐being approximating individual welfare. According to our estimates, the positive impact of this particular programme appears much stronger when judged by subjective well‐being than when judged by the immediate labour market effect.     

The complexity of the business network context and its effect on subsidiary relational (over-) embeddedness

Many studies have focused on the effects of MNC subsidiaries’ external relational embeddedness. Little attention has been given to its antecedents and especially to the potential effect that the business network context might have. We try to fill this gap and attempt to explain variation among subsidiaries’ degree of relational embeddedness. Our results show a strong and robust effect of the business network context – i.e. the network context in which the direct business relationships between the subsidiary and its partners are embedded – on the degree of relational embeddedness. However, contrary to previous literature, we find an inverted u-shaped relationship. We discuss our findings with regard to the issue of over-embeddedness and the literature on the strength of weak vs. strong ties.     

Research on Fair Trade Consumption—A Review

An overview and assessment of the current state of research on individual consumption of Fair Trade (FT) products is given on the basis of 51 journal publications. Arranging this field of ethical consumption research according to key research objectives, theoretical approaches, methods, and study population, the review suggests that most studies apply social psychological approaches focusing mainly on consumer attitudes. Fewer studies draw on economic approaches focusing on consumers’ willingness to pay ethical premia for FT products or sociological approaches relying on the concept of consumer identity. Experimental, qualitative and conventional survey methods are used approximately equally often. Almost all studies draw on convenience or purposive samples and most studies are conducted in the USA or the United Kingdom. Several problems in current research are identified: amongst others, studies’ rather narrow theoretical focus, potential hypothetical and social desirability bias of conventional survey data, and a lack of generalizability of empirical findings. In turn, we suggest that research would benefit from both a multiple-motives and a multiple-methods perspective. Considering competing theories can help to single out key behavioral determinants of individual FT consumption. The combination of different methods such as conventional surveys and field experiments contributes to uncovering respondents’ truthful answers and improves generalizability of results. Scholars in the field of ethical consumption research should use experiments to detect causal relations proposed by theories and conduct cross-country surveys to gather insights as to how differences in market structures, cultural traits, and other path dependencies affect patterns of individual FT consumption.     

Cultural distance or cultural positions? Analysing the effect of culture on the HQ–subsidiary relationship

We develop a model of cultural positions in relationships that should be considered in addition to the more conventional cultural distance. We empirically analyse relationships between headquarters and foreign subsidiaries in multinational corporations and how high or low acceptance of power differences at both sides of the relationship is associated with headquarters influence on subsidiary competence development. ANCOVA analyses of 1529 subsidiaries in six European countries, headquartered in 28 countries, provide new insights. We find that relationships with low cultural distance, differ significantly in terms of headquarters influence depending on whether headquarters and subsidiaries agree on accepting or rejecting power differences. Similarly, relationships with high cultural distance differ depending on whether it is headquarters or the subsidiary that is from a high-power-distance culture: we find that headquarters influence is particularly dependent on great acceptance of power differences by the subsidiary.     

Exploring store format development and its influence on store image and store clientele – the case of IKEA’s development of an inner-city store format

Abstract

A changed technological landscape and radically changed consumer behavior are forcing retailers to rethink their business models, retail formats, and retail offerings. The global retailer IKEA is no exception in this development. Recently, the traditional IKEA format, which has been so successfully duplicated across the world over the years, has been complemented with other formats that are new and innovative for IKEA. Based on an empirical investigation of consumer perceptions of the store format development in Hamburg-Altona, Germany, the present study explores format development and its influence on store image and clientele, considering also the purpose of visiting IKEA and how this seems to have changed with the introduction of the new format. We also discuss the core aspects of the IKEA formats, and the fact that although some things have changed, others have stayed the same to preserve the IKEA image.     

Consumer Power: A Comparison of the Old Economy and the Internet Economy

From the very beginning of the Internet, a decisive shift from supplier power to consumer power was predicted by several authors and is still maintained in recent literature. Although the Internet has grown rapidly within the last years and electronic markets have evolved, a theoretical framework for consumer power on the Internet still cannot be identified. Few authors have taken efforts to apply common concepts of power theory to the characteristics of the Internet. Based on the concept of French and Raven, this paper analyses consumer power in traditional markets and then compares it to the situation on the Internet. This comparison shows that the Internet enables consumers (a) to overcome most information asymmetries that characterize traditional consumer markets and thus obtain high levels of market transparency, (b) to easily band together against companies and impose sanctions via exit and voice, and (c) to take on a more active role in the value chain and influence products and prices according to individual preferences. A broad literature review reveals that empirical findings confirm these hypotheses to a great extent. The authors conclude by summarizing the results and drawing implications from two different angles, namely from a marketing and a consumer policy perspective.     

Selective versus Random Moose Harvesting: Does it Pay to be a Prudent Predator?

Seeking to act as prudent predators in many biological systems, humans try to harvest in a sustainable manner. In Sweden, wildlife managers and moose hunters use information about the future contribution of individual moose to population growth (i.e., their reproductive value), in order to harvest low-and non-reproductive animals. This selective harvest strategy results in a significantly faster overall population growth rate. To investigate whether this selective harvest policy is economically beneficial, we calculated the present value of the selective moose hunting policy used in Sweden compared to the present value of a non-regulated (i.e. random) moose harvest. Present values of the moose hunting produced by the different hunting regimes were calculated for a period of ten years and at interest rates ranging between 1% and 10%. The difference in present value between the selective hunting policy and the average outcome of random harvesting was SEK 310 million ($ 36 million) and SEK 300 million ($ 34 million), or SEK 1 321 ($ 154) and SEK 1 279 ($ 149) for an average moose hunter, when using interest rates of 3% and 4%, respectively. To determine whether the current selective moose hunting policy is economically profitable or not, benefit estimates like these should be weighted against the costs of upholding the policy. Most of the costs probably lie in providing the hunters with information about the future harvesting prospects and reducing the risk of divergences from the policy. The welfare effects of a hunting policy will also be dependent on the individual hunter's preferences, for instance in terms of their attitudes towards risk. This revised version was published online in August 2006 with corrections to the Cover Date.     

Relationship development in Greenfield expansions

This paper investigates conceptually how new Greenfield subsidiaries develop relationships over time. We focus our analysis on the earliest start-up stage of new Greenfield subsidiaries, and on the dynamics of relationships development with five different groups of actors within the MNC and the local environment of the new Greenfield. We argue that relationship strength, or the intensity of interaction and resource exchange, depends on the new Greenfield's degree of dependence or interdependence within these relationships and develop propositions based on institutional theory, resource dependency theory and network approaches. In the concluding sections we suggest directions for future work to enhance understanding of the dynamics of relationship management in new Greenfield expansions.     

Preferences of Scotch malt whisky consumers for changes in pesticide use and origin of barley

In a case study related to Scotch malt whisky production, this study analyses consumers’ perceptions and preferences regarding two aspects that have emerged in the debate on sustainable production and consumption, and on environmentally responsible food choice, namely (i) the use of pesticides in agriculture, and (ii) the provenance of food ingredients. We carried out a choice experiment to investigate preferences and estimate Willingness to Pay of Scotch malt whisky consumers for pesticide use restrictions and the potential impact on the production of one of its essential ingredients, barley. Using latent class models, we find that about half of the respondents are non-demanders with respect to both attributes, and only a third of the sample population are willing to pay for further pesticide restrictions. Demand for more environmentally responsible production of Scotch malt whisky is therefore limited, indicating that in the case of Scotch malt whisky, consumers are not likely to be key to driving sustainable production. With respect to barley provenance, being able to claim a 100% Scottish product could be a plausible commercial option for some producers to pursue in a competitive market. Methodologically, the scale-adjusted latent class model proved to be successful in uncovering preference heterogeneity and its sources, in including non-demanders in the analysis and in accounting for differences in scale amongst respondents.