Information Frictions in Uncertain Regulatory Environments: Evidence from U.S. Commercial Banks

Information frictions between firms and regulators are typically seen as a means by which firms evade enforcement. In contrast, we argue that information frictions between firms and regulators can reduce the efficiency of firms’ compliance efforts when the interpretation of regulatory standards is uncertain. We exploit plausibly exogenous variation in distance between firms and their regulators to demonstrate this for a panel of community banks in the US. We find that banks located at greater distance from regulatory field offices face significantly higher administrative costs, at a rate of 20% of administrative costs per hour of travel time. These differences do not come with reduced compliance, are not driven by endogenous regulator choice, and are stable over time. Further, the costs borne by distant firms are negatively related to the scale of the jurisdiction in which they operate, suggesting that information spillovers between firms limit uncertainty about regulatory expectations.     

Return on marketing investments in B2B customer relationships: A decision-making and optimization approach

The basic notion of relationship marketing entails that firms should strive for mutually beneficial customer relationships. By combining relationship marketing theory and operations research methods, this paper aims to develop and demonstrate a managerial decision-making model that business market managers can use to optimize and evaluate marketing investments in both a customer-oriented and economically feasible manner. The intended contributions of our work are as follows. First, we add to the return on marketing literature by providing a first decision-making approach that explicitly assesses the optimization of marketing investments in terms of profitability, effort, and resource allocation. Second, we show how the risk of marketing investments can be assessed using sensitivity analysis. By means of an empirical study the versatility of our decision-making approach is demonstrated by assessing various critical decision making issues for business marketing managers in detail.     

Limit pricing,conjectural variation and entry

The paper investigates the relationship of the degree of tacit collusion among existing sellers on industry price when a threat of entry exists. A general model is developed which allows comparison of two seemingly unrelated strands of the limit pricing literature.     

Technology and policy in cable TV development in the UK

Although cable TV is often viewed in an entertainment context, its importance for technology policy rests with its relation to future national broadband network development. The authors argue that it could provide a means of assessing the benefits and technical direction of this greater project and government support for early cable ventures is advised for this purpose. Government policy should stress incremental technical advance and address the development problems likely to be encountered by cable TV as an infant technology.     

Theory and Tests of Generalized Purchasing-Power Parity: Common Trends and Real Exchange Rates In the Pacific Rim

The paper develops the theory of generalized purchasing-power parity (G-PPP) to explain the “stylized facts” of real exchange-rate behavior. the fundamental economic variables determining real exchange rates are nonstationary; thus, real rates are nonstationary. If the fundamentals are sufficiently integrated, as in a currency area, the real rates will share common trends. the theory is tested using the Pacific Rim nations. It is shown that G-PPP holds between each of the Pacific Rim nations and the large industrialized countries. There is only mild evidence that G-PPP holds among the Pacific Rim nations as a group.     

Book reviews

Louviere, Jordan. 1988. Analyzing decision making: Metric conjoint measurement. Newbury Park, CA: Sage. ISBN 080397576. 95 pp. Paper $6.95.

DiGiulio, Robert C. 1989. Beyond widowhood—from bereavement to emergence and hope. New York: The Free Press. ISBN 0–02–907882–2. 240 pp. Cloth, $19.95

Ewert, Alan W. 1989. Outdoor adventure pursuits: Foundations, models, and theories. Worthington, Ohio: Publishing Horizons, Inc. ISBN 0–942280–50–4. 234 pp. Hardcover, $20.00.     

The relative importance of project success dimensions

Traditionally, the success of a project is assessed using internal measures such as technical and operational goals, and meeting schedule and budget. More recently, it has been recognized that several other measures should be used to define project success. These measures reflect external effectiveness: the project's impact on its customers, and on the developing organization itself.
In our study of 110 defense projects performed by Israeli industry, we used a multidimensional approach to measure the success of defense projects. Based on previous studies, we defined four dimensions of success: meeting design goals ; benefits to the customer ; benefits to the developing organization ; and benefits to the defense and national infrastructure . For each project, we asked three different stakeholders (the customer, the developing organization, and the coordinating office within the Ministry of Defense) for their views on the relative importance of these dimensions of success. Analysis of the data revealed that the dimension benefits to the customer is by far the most important success dimension. The second in importance is meeting design goals . The other two dimensions are relatively unimportant.     

Customer satisfaction and consumer expenditure in selected European countries

The relationship between customer satisfaction and company performance has been extensively researched at both the consumer and firm levels. However, little is known about the impact of customer satisfaction at the economy-wide level, especially in Europe. This study aims to link customer satisfaction to personal consumption expenditure using panel data collected from 1999 to 2011 and covering nine European countries. Our findings suggest a significant relationship between customer satisfaction and consumer expenditure in these countries. In addition, economic structure, culture, political economy and socio-economic factors have been examined to understand the impact of cross-country differences on this relationship. The results reflect the importance of satisfied consumers on the economy as a whole; thus, efforts at boosting customer satisfaction should become a national agenda.     

Exploring Postconsumption Guilt and Pride in the Context of Sustainability

This research explores the feelings of guilt and pride experienced by consumers after a purchase decision that involves issues of environmental and social sustainability. Through a multi‐method design, the authors examine key dimensions that influence the process of emotional appraisal, illustrate the characteristics of appraisals of guilt/pride and investigate the consequences that emotions have on future choices. In this exploratory research, when a purchase decision includes an ethical dilemma, consumers were found to express guilt or pride even when the purchase is not intentional, i.e. forced by circumstances. Moreover, the study explores how emotions experienced after decisions may have a positive influence on the future purchase of sustainable alternatives. Finally, the paper proposes a new model that describes the process of emotional appraisal and reports on a number of dimensions that were found to lead to guilt and pride. The insights presented extend knowledge of two key consumer emotions and present important implications for practitioners promoting ethical products.