How to develop a customer satisfaction scale with optimal construct validity

In this article, we investigate how to construct a customer satisfaction (CS) scale which yields optimally valid measurements of the construct of interest. For this purpose we compare three alternative methodologies for scale development and construct validation. Furthermore, we discuss a satisfaction measurement application which is consistent with Messick’s (in: Linn (ed.) Educational measurement, 1989) construct validity theory. Following the deductive design for test development and construct validation, a multi-item measure for CS with a retail bank was developed. The measure was applied in survey research ( \(N\)  = 1,689) within a Dutch retail bank. The items constituted a unidimensional scale, allowing the computation of scale scores. The tests of 11 hypotheses about scale-score characteristics demonstrated that the scale score represented the construct of CS well. Furthermore, the one-factor theory (e.g. Yi, in: Zeithaml (ed.) Review of marketing, 1990) of satisfaction/dissatisfaction was confirmed. An implication of this result is that satisfaction/dissatisfaction can be measured on one scale instead of two scales, one for satisfaction and one for dissatisfaction. The results demonstrate that the deductive design is an appropriate methodology for measure development and construct validation in applied psychological research. The article concludes that the multi-item measure is well-suited for CS measurement in retail banking and that customized satisfaction scales have advantages but also disadvantages compared to standardized scales.     

Multi-store competition: Market segmentation or interlacing?

This paper develops a model for multi-store competition between firms. Using the fact that different firms have different outlets and produce horizontally differentiated goods, we obtain a pure strategy equilibrium where firms choose a different location for each outlet and firms' locations are interlaced. The location decisions of multi-store firms are completely independent of each other. Firms choose locations that minimize transportation costs of consumers. Moreover, generically, the subgame perfect equilibrium is unique and when the firms have an equal number of outlets, prices are independent of the number of outlets.     

Evolution of market shares with repeated purchases and heterogeneous network externalities

We investigate how market shares change when a new, superior technology exhibiting network externalities is introduced in a market initially dominated by an old technology. This is done under the assumption that consumers are heterogeneous in their valuation of technology quality and network externalities and that goods are not (perfectly) durable and thus have to be bought repeatedly. When both technologies are unsponsored, the old technology dominates when the quality difference is small, and it disappears when the quality difference is large. When the new technology is sponsored, the relationship between the quality difference and the long-run market share of the new technology is non-monotonic and the old technology always continues to exist.

Flexicurity – a European Approach to Labour Market Policy

Although linguistically somewhat strange, “flexicurity”, the combination of labour market flexibility and security for employees, has become a much praised cornerstone of European labour market policies. Obviously, in an environment with rapid technical progress and frequently changing market conditions, employers need to manage their labour force flexibly. In order to achieve this flexibility without creating an unbearable situation for employees, security is the second pillar of the concept. Security refers, however, to “employability” rather than safety from dismissal. As such, the concept looks like an innovative European way of consolidating economic and social interests, although some argue that much flexibility is gained while the security aspect is being neglected. The concept has been successfully adopted in some European countries, notably Denmark and the Netherlands. However, each country has to find its own concept of “flexicurity” using a distinct combination of instruments that fit the national institutional, social and civic context.     

Managing temporary workers: work identity,diversity and operational HR choices

Strategic HRM theory argues that organisations should distinguish different types of employees according to their value and availability. We argue that this has resulted in an underestimation of the importance of specific HRM practices in relation to temporary employees. Building on theoretical work that discusses the employment relationship for temporary employees, the process of identification with the organisation and different ways of managing diversity, we distinguish three approaches to the operational management of temporary employees. We explore two cases that reflect opposite ends of the scale. They illustrate the value of the theoretical framework and substantiate the claim that, even after the strategic choice for a lean, distanced and uninvolved temporary ‘employment mode’ is made, different operational HRM practices lead to differences in performance.     

Export Specialisation and Local Economic Growth

This paper aims to provide empirical evidence on whether export specialization or diversification is better for local economic growth. Using export data from 354 magisterial districts of South Africa for 1996 and 2001 we estimate spatial growth regressions that include measures of the degree of export specialization and diversification. Overall, exporting regions outperform other (less or non‐) exporting regions. Also, we find that export specialisation, rather than export diversification, has been associated with local economic growth; with specialization in mining and agriculture being especially beneficial. Our results support the view that specialization in a locality’s area of comparative advantage is good for local economic development. We also find that localities with higher initial levels of human capital, and higher subsequent population growth, performed better. This is consistent with the belief that policies aimed at strengthening human capital and improving agglomeration economies, will enhance local economic development.     

The price of land and the process of expropriation

Summary The price of land and the process of expropriation This paper applies a game theoretic model to situations in which the Dutch government expropriates land from some farmers in order to create a new public project. The model is a version of a finite period bargaining model with asymmetric information and one-sided offers. It is shown that the model can explain some casual observations as the fact that usually, but not always, the government and the farmers settle by agreement.This article springs from a paper that was written for the course Non-cooperative Game Theory and its Applications, Erasmus University, Spring 1994. We would like to thank two anonymous referees for their very helpful comments on an earlier draft of this paper.     

Illinois Walls: how barring indirect purchaser suits facilitates collusion

In its landmark ruling in Illinois Brick Co. v. Illinois in 1977, the U.S. Supreme Court restricted standing to sue for recovery of antitrust damages to direct purchasers. However, antitrust damages are typically (in part) passed on to intermediaries lower in the chain of production and ultimately to consumers. We show that the Illinois Brick rule facilitates collusion. It allows an upstream cartel to shield itself from private damage claims by forwarding a share of cartel profits to its direct purchasers. These benefits dissuade the direct purchasers from exercising their exclusive right to sue for private damages. The cartel can achieve this by rationing inputs at low prices. Several U.S. antitrust cases show symptoms of “Illinois Walls.”