Factors influencing the likelihood of customer defection: The role of consumer knowledge

Customer satisfaction is the predominant metric firms use for detecting and managing customers' likelihood to defect. But while satisfaction and defection are related, satisfaction is only a weak predictor of whether a customer will defect. This article suggests that for repurchase decisions that involve an information-based evaluation of alternatives to the incumbent, likelihood of defection will be influenced by “how much” customers know about those alternatives. The relationship between level of knowledge about alternatives and defection is examined in the context of actual health insurance choices. Results suggest that the level of objective and subjective knowledge about alternatives has a direct effect on likelihood of defection—above and beyond satisfaction level. The view of defection forwarded in this article suggests that managers may be able to gain additional control over customer defection through actions aimed at influencing how much customers know (or come to know) about alternative vendors. Anthony J. Capraro (tcapraro@unca.edu), an assistant professor at the University of North Carolina at Asheville, earned his Ph.D. in marketing in 1999 from the University of Texas after having spent 20 years in industry in marketing and marketing management positions. His current research interest focuses on developing and enhancing the value of a firm's customer base. Susan Broniarczyk (Susan.Broniarczyk@bus.utexas.edu), an associate professor at the University of Texas at Austin, earned her Ph.D. in marketing from the University of Florida. She serves on the editorial boards of theJournal of Consumer Research and theJournal of Marketing Research and the advisory board for the Association for Consumer Research. Her research, which examines consumer decision making and how consumers' knowledge structures affect their reaction to missing or conflicting product information, appears in theJournal of Consumer Research, theJournal of Marketing Research, andOrganizational Behavior and Human Decision Processes. Rajendra K. Srivastava (Rajendra.Srivastava@bus.utexas.edu) is the Jack R. Crosby Regent's Chair in Business and a professor of marketing and management science and information systems (MSIS) in the McCombs School of Business at the University Texas at Austin. He is also the Daniel J. Jordan Research Scholar at Emory University. He earned his doctorate from the University of Pittsburgh. His research, which spans marketing and finance, has been published in theJournal of Marketing, theJournal of Marketing Research, Marketing Science, and theJournal of Banking and Finance. His current research interests focus on the impact of marketing strategy and market-based assets on corporate financial performance, particularly in the context of technology-intensive products and services.     

Lunacy in the Stock Market—What is the Evidence?

Popular culture and folklore have long recognized the influence of the lunar cycle on plant, animal, and human behavior. Many of the effects have been validated in the physical and biological sciences. However, until recently such effects have been largely, if not completely ignored in the academic literature of financial economics. This study aims to contribute to answering whether there is, as some claim, a lunar influence on stock prices or volatility. The findings of this work support the Efficient Markets Hypothesis—no consistent, predictable lunar influence is found on either daily returns or daily price volatility in the Dow Jones Industrial Average, for either new or full moons. Some effects are found, but not consistent or predictable with lunar and calendar information alone.      

A Model of Product Recalls with Asymmetric Information

This paper presents a model of involuntary product recall in which a firm has private information on its ability to produce safety. The ex post regulation of safety is motivated through a parametric imperfection in the product liability system which results in a firm under internalizing expected liability expenses. We treat the problem as one of mechanism design, where the regulator designs a recall procedure. This framework illuminates the point that recall is an interesting blend of ex ante and ex post regulation. We characterize a perfect recall procedure, contrast this with real world imperfect procedures, and study the interaction of the recall and the liability systems. Further, we analyze the interaction between optimal recall policy and product market structure.     

Regulation of product safety characteristics under imperfect observability

In this paper, we consider the problem of setting minimum safety standards for observable safety characteristics and the proper amount of effort in the production of safety for a product which has some unobservable safety attributes. We formulate a second-best optimum for a regulator, examine the interplay between safety effort and a minimum safety standard, and study how the internalization of excess costs or benefits by a self interested regulator affects the minimum safety standard and the safety effort level. Finally, we present two examples using a utility function which is widely used in the law and economics literature.     

Resolving questions about bias in real and hypothetical referenda

Despite 10 years of research on behavior in hypothetical referenda, conflict remains in the literature on whether or not the mechanism generates biased responses compared to real referenda, and the nature and source of any such bias. Almost all previous inquiry in respect of this issue has concentrated on bias at the aggregate level. This paper reports a series of three experiments which focuses on bias at the individual level and how this can translate to bias at the aggregate level. The authors argue that only an individual approach to hypothetical bias is consistent with the concept of incentive compatibility. The results of these experiments reflect these previous conflicting findings but go on to show that individual hypothetical bias is a robust result driven by the differing influence of pure self-interest and other- regarding preferences in real and hypothetical situations, rather than by a single behavioral theory such as free riding. In a hypothetical situation these preferences cause yea-saying and non-demand revealing voting. This suggests that investigation of individual respondents in other hypothetical one-shot binary choices may also provide us with insights into aggregate behavior in these situations. Alphabetical list of authors no seniority of authorship attributed.     

Under Performers and Over Achievers: A Quantile Regression Analysis of Growth

Numerous papers have searched for empirical linkages between long run economic growth and a myriad of economic, socio-political and environmental factors. Most of these studies use ordinary least-squares regression or panel regression analysis on a sample of countries and therefore consider the behaviour of growth around the mean of the conditional distribution. We extend the literature by using quantile regression to analyse long-term growth at a variety of points in the conditional distribution. By using this approach, we identify the determinants of growth for under performing countries relative to those for over achieving countries.     

A Framework for Making Quantitative Educational Research Articles More Reader-Friendly for Practitioners

The purpose of the present article is to demonstrate how quantitative research articles can be made much more reader-friendly. In particular, we illustrate how statistical language and research terminology can be simplified in reports. Moreover, using a published article, we demonstrate how quantitative reports could be re-structured to make them more reader-friendly, without sacrificing any important statistical information. We contend that by restructuring these reports, practitioners and stakeholders would be in a much better position to read quantitative research articles, whose findings could then be utilized to improve the quality of education. As such, not only would the divide between researchers and practitioners be reduced, but also educational research studies would have a much bigger impact on schools.     

Evaluating the FLQ and AFLQ formulae for estimating regional input coefficients: empirical evidence for the province of Córdoba,Argentina

This paper uses survey-based data of the Argentinian province of Córdoba to conduct an empirical test of the performance of the Flegg's location quotient (FLQ) and augmented FLQ (AFLQ) formulae for estimating regional input coefficients. A comparison is made with conventional methods based on location quotients. The possibility of using prior information about the extent of self-sufficiency of particular sectors is explored. The empirical work employs a range of statistical criteria with contrasting properties, and examines performance in terms of each method's ability to estimate regional input coefficients, output multipliers and imports. Particular attention is paid to the problem of choosing a value for the unknown parameter δ in the FLQ and AFLQ formulae. These formulae are found to give the best overall results of the non-survey methods considered in the paper. However, the AFLQ typically produces slightly more accurate results than the FLQ, in line with the findings of previous studies.     

Return-to-job during and after parental leave

Despite a rising career orientation among females and growing efforts of firms to alleviate work–family conflicts, female employees often find it difficult to combine career development with having children. Female careers appear more boundaryless than male careers, and gender differences in the sociological role model persist. Using exceptional longitudinal company data, this paper studies the return-to-job of female employees after first birth in the case of Germany with long Parental Leave coverage. Parental Leave durations often last for 3 years or longer. Our results show that more than 50% of those in Parental Leave do not return to their job afterwards. About 31% of female employees return to part-time work during Parental Leave, and among these, only 57% continue working in their job after the end of Parental Leave. And, having returned to their job after the end of Parental Leave, only 81% continue to work in their job one year after return. Furthermore, female employees have their first child, when their careers have been particularly successful. Overall, the evidence is consistent with the view that the birth of the first child and the experience of the subsequent work–life conflict can lead to a major reassessment of work preferences among female employees. Although a higher career orientation before birth is positively associated with a return-to-job, management must be aware that a sizeable share of female employees, even among the most career oriented and the most successful, may not return to their job after first birth.     

The unintended consequences of easy money: How access to finance impedes entrepreneurship

This paper investigates the manner in which economic policy promotes entrepreneurship, and how this relates to the monetary sources of the business cycle. Whilst access to finance is commonly seen as a crucial means to generate economic growth, efforts to expand the money supply beyond the stock of real savings leads to systemic crises. Therefore the admirable policy goal of promoting more credit for entrepreneurs—whether through access to finance, SME support or regional development—can lead to negative unintended consequences.