Putting one-to-one marketing to work: Personalization, customization, and choice

The tailoring of a firm’s marketing mix to the individual customer is the essence of one-to-one marketing. In this paper, we distinguish between two forms of one-to-one marketing: personalization and customization. Personalization occurs when the firm decides what marketing mix is suitable for the individual. It is usually based on previously collected customer data. Customization occurs when the customer proactively specifies one or more elements of his or her marketing mix. We summarize key challenges and knowledge gaps in understanding both firm and customer choices in one-to-one markets. We conclude with a summary of research opportunities.     

Flexible employment practices in Europe: country versus culture

Abstract This paper examines extent to which variances in flexible employment practices across fourteen European countries may be attributed to cultural variances. Data were gathered through a survey of human resource practices in 4,876 companies. The results indicate that national differences between flexible employment practices were explained by cultural differences. Specifically, we find use of part-time work is related to power distance and individualism; contract work is related to uncertainty avoidance and individualism; shift work is related to uncertainty avoidance, power distance and individualism; and telework is related to femininity.     

Has Finance Made the World Riskier?

Developments in the financial sector have led to an expansion in its ability to spread risks. The increase in the risk bearing capacity of economies, as well as in actual risk taking, has led to a range of financial transactions that hitherto were not possible, and has created much greater access to finance for firms and households. On net, this has made the world much better off. Concurrently, however, we have also seen the emergence of a whole range of intermediaries, whose size and appetite for risk may expand over the cycle. Not only can these intermediaries accentuate real fluctuations, they can also leave themselves exposed to certain small probability risks that their own collective behaviour makes more likely. As a result, under some conditions, economies may be more exposed to financial‐sector‐induced turmoil than in the past. The paper discusses the implications for monetary policy and prudential supervision. In particular, it suggests market‐friendly policies that would reduce the incentive of intermediary managers to take excessive risk.     

Telecommuting and the role of supervisory power in China

This paper examines the relationship between supervisory power and telecommuting intensity in China. Telecommuting, where individuals carry out their work from distributed locations, is one of the many Western human resource management practices that multinationals are introducing in China. This work mode potentially reduces the degree of influence and control supervisors can exert over the subordinates. This is a consequence of the inherent physical distance, use of lean communication media, and increased self reliance of telecommuters. Supervisory power is valued in China both by supervisors and subordinates for cultural reasons such as high power distance, paternalism, and high context communication. As a result, telecommuting may be viewed as a counter-normative work practice. We propose that subordinates are likely to balance telecommuting flexibility with supervisory power. In a study carried out in China, we find that telecommuting intensity is high when the subordinates perceive that their supervisors’ power (legitimate and reward) is high and also when the supervisors themselves telecommute. Further, the positive relationship between reward power and telecommuting intensity becomes exaggerated when supervisors themselves telecommute. Research and managerial implications are discussed.     

Price discrimination in service industries

This article outlines recent methods and applications directed at understanding the profit and consumer welfare implications of increasingly prevalent price discrimination strategies in the service sector. These industries are typically characterized by heterogeneity in consumers?? valuation and usage of the service, resale constraints, and a focus on price as the service??s key attribute. The article focuses on how firms use nonlinear pricing or bundling strategies to benefit from the heterogeneity in consumer demand. We describe the basic economic model commonly used in the literature to analyze such strategic choices and present recent methodological improvements to this benchmark. A discussion of existing applications and future research opportunities concludes the article.     

Pricing of commodities in a mixed economy

Capital theory of the Cambridge School has, during the last three decades, cast doubts on the neoclassical methods of determining prices. The Sraffa analysis, on the one hand, and Neumann analysis, on the other, independently applied to the determination of properties of a Robinsonian golden age, supplied alternative modes of determining prices. The questions is often asked as to why so much stress is put on correct valuation of capital when the real problem is correct allocation of resources to industry.The author examines the system whereby the solution of the Sraffa-Neumann input-output system for prices yields corresponding equations which determine allocations as the dual. Hence, he concludes that unless the system is so posed as to give the correct price equations, it cannot give the correct allocations equations. Thus the insistence on correct theory of valuation of capital stems from a desire to achieve an optimal allocation vector for any planned economy, especially for a mixed economy where a private sector exists and follows price signals.     

Aligning Incentives at Systemically Important Financial Institutions: A Proposal by the Squam Lake Group

To address the moral hazard problem that can motivate bank executives to take excessive risks and to fail to raise capital when needed, a group of 13 distinguished financial economists recommends that systemically important financial institutions be required to issue contingent convertible debt (CoCos) and to hold back a substantial share—as much as 20%—of the compensation of employees who can have a meaningful impact on the survival of the firm. This holdback should be forfeited if the firm's capital ratio falls below a specified threshold. The deferral period should be long enough—the authors suggest five years—to allow much of the uncertainty about managers' activities to be resolved before the bonds mature. Except for forfeiture, the payoff on the bonds should not depend on the firm's performance, nor should managers be permitted to hedge the risk of forfeiture. The threshold for forfeiture should be crossed well before a firm violates its regulatory capital requirements and well before its contingent convertible securities convert into equity. The Swiss Bank UBS has paid bonuses to its top 6,500 executives that have been structured in exactly this way. Management forfeits its deferred compensation if the bank's regulatory capital ratio falls below 7.5%, and its contingent convertible debt is set up to convert into equity if the bank's capital ratio falls below 5%.     

Can soft power help the IMF make the world more stable?

In an integrated world, one of the more intractable problems we have to deal with is how to ensure all countries undertake macroeconomic policies that are in the global interest even when these go against short-term domestic political compulsions. It is unlikely that countries will sign up to a common set of policy rules, nor is it probable that peer pressure alone will convince countries to co-operate. This paper argues that multilateral institutions have to do more to sell the global policy consensus to the influential public in each country, so that leaders are pushed by domestic constituencies to internalize the global good. Rather than solely a top down process of global policy-making, where grand summits make little progress, we also need a bottom up approach, where the summiteers will feel the pressure for global deals from their primary domestic constituencies.