Timing of apology after service failure: the moderating role of future interaction expectation on customer satisfaction

Marketing Letters - When there is a service failure, it is often believed that employees should immediately apologize to customers before hearing their complaints. However, we argue that in certain...     

Nonstationarity and Stochastic Stability of Relative Income Clubs

The recent literature on “convergence” of cross‐country per capita incomes has been dominated by the two hypotheses of “global convergence” and “club‐convergence,” pertaining to limits of estimated income distribution dynamics. Utilizing a new measure of “stochastic stability,” we establish two stylized facts regarding short‐ and medium‐term distribution dynamics. The first is non‐stationarity of transition dynamics, in the sense of changing transition kernels, and the second is emergence, disappearance, and re‐emergence of a “stochastically stable” middle income group. This middle income group emerges as the gap between rich and poor clubs gets larger, and it changes the dynamics of transition to and from the rich and poor clubs, eventually narrowing the gap between the poor and rich as the middle club vanishes. Analyzing the stochastic stability of middle‐income groups is thus a first step toward understanding higher‐order dynamics of narrowing or widening of the gap between rich and poor countries.     

RETRACTED ARTICLE: Influence of restaurants' physical environments on emotion and behavioral intention

The purpose of this study is to add to the body of knowledge on customer loyalty in professional services in business-to-business markets. The authors build on the Industrial Marketing and Purchasing group constructs and relate them to affective commitment, relational benefits and, through these two, to customer loyalty. The results show that trust and social bonds positively influence affective commitment, while adaptation and knowledge transfers positively influence relational benefits. Although both affective commitment as a more emotional construct and relational benefits as a more rational construct positively influence customer loyalty, emotional motivation seems to be much stronger than rational motivation. Theoretical and managerial implications are discussed on the basis of the empirical findings.     

Volatile Environments and Interfirm Governance: Does Trust Matter?

Purpose: Manufacturers in volatile environments should rely on governance mechanisms to reduce the risks inherent in those environments. However, it remains to be determined which governance mechanism a given manufacturer will develop in volatile environments in order to manage the relationship with its supplier. The principal objective of this study is to explain circumstances in which different governance mechanisms function under volatile environmental conditions.

Methodology: The empirical test was conducted with manufacturing companies in the context of manufacturer-supplier relationships. Construct measures were based on existing measures and previous research. Measurement reliability and validity were established using exploratory and confirmatory factor analysis and an overall measurement model was assessed with structural equation modeling using LISREL 8.54.

Findings: The results of this study showed that manufacturers should consider the level of trust they bestow on their suppliers to select an appropriate governance mechanism to deal with environmental volatility. When a manufacturer does not trust its supplier under conditions of environmental volatility, the manufacturer should consider adopting unilateral governance. If a manufacturer trusts its supplier, it should consider bilateral governance to respond in a timely manner to changes in the resource market.

Contribution: This study introduced trust to explain governance mechanisms in an uncertain environment and showed that interorganizational trust is a condition for influencing a manufacturer's propensity toward a specific governance mechanism.     

Do Domestic Institutional Trades Exacerbate Information Asymmetry? Evidence from the Korean Stock Market

Asia-Pacific Financial Markets - We analyze a trading dataset from the Korean stock market, a representative and leading emerging equity market, to study the impact of domestic institutional trades...     

Monetary Policy Announcements,Communication, and Stock Market Liquidity

Using the high‐quality intraday transaction data from 2001–2012, we investigate changes in stock market liquidity in response to the monetary policy announcements of the Bank of Korea (BOK). We find that liquidity impairment associated with informed trading occurs prior to the announcements but it disappears subsequent to the global financial crisis. In addition, liquidity impairment appears to become more severe with insufficient experts' predictability and accuracy rather than with policy rate change itself and unscheduled announcements. Finally, the Federal Open Market Committee (FOMC) announcements, changes in the Volatility Index (VIX), and trading by foreign investors play a limited role in explaining stock market liquidity changes. Overall, results indicate that central bank communication plays a significant role in reducing liquidity impairment by enhancing the predictability of policy actions, and therefore, mitigating information asymmetry.     

Accumulation, Technical Progress, and Increasing Returns in the Economic Growth of East Asia

Adopting homothetic variable returns to scale functional specifications, this study identifies the returns to scale in the aggregate production functions of four East Asian newly industrialized economies–Hong Kong, Korea, Singapore, and Taiwan–and the Group of Five economies based on a maximum likelihood estimation. The study finds evidence of increasing returns in the early developmental stage of the East Asian economies. Separating out the scale contribution from the non-scale factor contributions, the decomposition of the sources of East Asian economic growth differs significantly from the conventional constant returns to scale results, indicating that the role of technical progress is overestimated when constant returns to scale is assumed.     

Receiver responses to rewarded referrals: the motive inferences framework

Referral reward programs have been shown in past research to stimulate referrals and also to contribute positively to customer lifetime value and firms’ profitability. In this paper we examine whether, how, and under what conditions providing a reward for a referral affects receivers’ responses to the referral. Based on a multiple motives inference framework, we propose that rewards adversely affect responses because they lead receiving consumers to infer ulterior motives for the referral. Using experiments and a survey, we find support for this hypothesis and show that this effect is stronger for unsolicited and weak tie referrals. We also demonstrate that rewarding both the referral provider and receiver or providing symbolic rewards can eliminate the negative effect of rewarded referrals. The paper makes conceptual contributions to the literature on referral reward programs, word-of-mouth, and motive inferences. The work has implications for managers considering ways to construct referral programs and design marketing activities to increase referrals.