A Service Perspective on IBM’s Brand

Today, global conditions challenge traditional views of management, marketing, and economics. The goods-dominant view, centered on the notion of production and consumption, is being subsumed by the service-dominant view, centered on the notion that business value is cocreated by interaction of economic entities. Here, we consider IBM and its brand, showing that it reflects - and always has reflected — the service-dominant view of value cocreation.     

Political Connectedness and Firm Performance: Evidence from Germany

Abstract. This paper investigates politically connected firms in Germany. With the introduction of a new transparency law in 2007, information on additional income sources for all members of the German parliament became publicly available. We find that members of the conservative party (CDU/CSU) and the liberal party (FDP) are more likely to work for firms than members of left‐wing parties (SPD and The Left) or the green party (Alliance 90/The Greens). Politically connected firms are larger, less risky and have lower market valuations than unconnected firms. They also have fewer growth opportunities, but slightly better accounting performance. On the stock market, connected firms significantly outperformed unconnected firms in 2006, i.e. before the publication of the data on political connections. Differences in stock market performance were much smaller in 2007.     

Elektroautos in einer von erneuerbaren Energien geprägten Energiewirtschaft

The German Federal Government wants to establish Germany as a leading market for electric mobility. Potential environmental benefits and changes in the economic framework conditions of the energy sector are described in this paper. In order to quantify the electricity split which is actually used for charging electric vehicles, two economic models for the energy sector, a model for the market penetration of electric vehicles, a vehicle model and an LCA model are brought together. Based on an assumed dynamic increase of electric vehicles to 12 million in 2030, an additional electricity demand of about 18 TWh is calculated. If the vehicles are charged directly after their last daily trip, the peak load increases by 12%—despite the small increase in electricity demand. First model calculations for the development of the European power generation system show that the direct impact on the construction of new power plants remains low even until 2030. An impact of electric mobility on CO₂ certificate prices can only be seen from 2025 onwards and is limited to an increase in certificate prices by a maximum of 8 % in 2030. An optimisation is possible with intelligent charging strategies: The peak load without demand side management can be reduced by 5 GW and about 600 GWh of additional wind energy can used which would otherwise have been throttled due to feed-in management—about 3.5 % of the total electricity demand of electric vehicles. On the other hand, demand side management leads to more coal power plants instead of gas power plants being used to meet the additional electricity demand. If additional renewable sources are installed along with demand side management, the electricity for electric vehicles is almost carbon free. This is also reflected in the life cycle balance of electric vehicles which also includes vehicle and battery production: With today’s average electricity split in Germany, the greenhouse gas emissions of electric vehicles are about comparable to vehicles with conventional combustion engines. However, the electricity split in 2030 or the use of additional renewable energy sources lead to a significant advantage in the greenhouse gas balance.     

The manager's dilemma: a conceptualization of online review manipulation strategies

Online evaluations are one of the most important innovations in tourism in recent years, often combining a review/rating (business-specific evaluation) and a ranking (inter-business comparison). As online reputation determines economic success, tourism managers may be tempted to manipulate online content. This paper presents the results from a qualitative study involving 20 hotel managers in southern Sweden, and their perspectives on manipulation. Results confirm that there exists a wide range of review manipulation strategies, many of which are difficult to control. Even though only few managers appear to systematically manipulate, online evaluations represent a significant challenge for businesses, as they introduce direct competition and foster consumer judgement cultures. It is postulated that managers will increasingly find themselves in a Prisoner's dilemma, representing a situation where engaging in manipulation is the most rational choice in an increasingly competitive market situation.     

What’s in the news? The ambiguity of the information content of index reconstitutions in Germany

We analyze stock price behavior around reconstitutions of the German DAX index family from 1990 to 2013. The strong price run-up of added stocks in the 2 months preceding the announcement date remains robust until 2 months after the effective date (ED), and is fully reversed 5 months later. Conversely, stock prices of deleted firms are under pressure until 10 months after the ED. Unlike most previous studies, we find that outright entries and exits have temporary price effects, as do additions to and deletions from better-known indices; however, promotions and demotions related to lesser-known indices command permanent stock price responses. Rather surprisingly, deleted stocks consistently earn higher abnormal returns than added stocks in the 5-year post-event period. Specifically, the return differential levels out at 77.3%. We establish that this differential in permanent stock prices is attributable to differences in operating performance and media coverage. In practice, index reconstitutions do not appear to give unambiguous signals about the long-run investment appeal of affected firms. However, index fund managers not constrained by tracking error minimization would be better off holding deleted stocks for 5 years after the ED.     

Insurance customer behavior: Lessons from behavioral economics

In economics it has traditionally been assumed that people make all their decisions like the so‐called homo oeconomicus – that is, maximizing (expected) utility of total wealth. In recent years, economics increasingly recognized that people often exhibit behavioral patterns which are incompatible with the idea of the homo oeconomicus. The field of behavioral economics incorporates insights from the field of psychology to explain discrepancies between predictions of traditional economic theory and actual observed behavior. In this paper, we summarize a selection of well‐established behavioral patterns observed in reality and discuss their relevance for the insurance industry when it comes to better understanding and predicting customer behavior. We also explain that people are not always risk‐averse and give a brief overview over Prospect Theory (probably the most popular behavioral economics alternative to Expected Utility Theory), its shortcomings for predicting behavior over a long time horizon, and its extensions. In total, we point out that, since dealing with risks and insurance products requires complex decision making processes, a deep understanding of the impacts of behavioral factors is essential to better assess and explain costumer behavior.     

Return dynamics during periods of high speculation in a thinly traded commodity market

This article studies the effects of speculation in a thinly traded commodity futures market, paying particular attention to periods characterized by high-speculative activity of long–short speculators. Using the speculation ratio as a daily measure for long–short speculation, we employ generalized autoregressive conditional heteroscedasticity regressions to study its impact on return dynamics. Our results for the Chicago Mercantile Exchange feeder cattle futures market suggest that futures returns are predominantly explained by fundamentals, but their volatility is significantly driven by the speculation ratio. This relationship holds for periods of high- and low-speculative activity alike.     

Enhancing food security through diet quality: The role of nonfarm work in rural India

India has achieved food security at the macro level. However, at the micro level, the country still struggles with extensive problems of food nutrition insecurity. In this paper, we assess the impact of nonfarm income and nonfarm work status (casual and full-time nonfarm work) of operator, spouses, and couples on the diet quality of smallholder households in India. We find that nonfarm income decreases the likelihood of farming household being in the poor-diet quality group by 31% and the medium-diet quality group by 3%. Full-time nonfarm work by operators and spouses decreases the likelihood of farming households being in the poor-diet quality group by 3% and 9%, respectively. Finally, national programs like public food distribution programs increase the probability of rural farming households in the poor-diet quality group. Findings from this study underscore the importance of nonfarm income and full-time nonfarm work in improving diet quality of rural Indian households.