Generic Advertising; and the Structural Heterogeneity Hypothesis

This paper adduces and tests the hypothesis that generic advertising responses are dynamic, i.e., are subject to change over time due to changes in target audiences, managerial expertise, copy quality or other time-related factors. Specifically, the authors consider the structural heterogeneity hypothesis from the perspective of three alternative econometric models that permit random and systematic time-varying response: the Prescott-Cooley model, the return-to-normality model, and the stochastic-trend model. A distinguishing characteristic of the models is the presence or absence of heteroscedasticity. Based on pretests, which failed to detect heteroscedasticity, a modified version of the stochastic-trend model is selected for hypothesis testing. Results based on data of the first 15 years of the Ontario fluid milk campaign suggest advertising responses are dynamic. Estimated advertising elasticities decline more or less monotonically over this sample period, from a high of 0.020-o.031 in the initial 1973–74 theme period, to a low of 0.0004-0.009 in the final 1986–87 theme period. The apparent declining effectiveness of the Ontario fluid milk campaign is consistent with wearout theory, and suggests that program managers may want to reassess marketing strategies to identify possible ways to improve performance. Given the importance of advertising elasticities in normative decision models and the growing evidence of structural heterogeneity, models that permit parameters to change over time should provide an improved basis for program assessment and resource allocation.     

The determinants and effects of CEO–employee pay ratios

We study the determinants and effects of the relative compensation of top executives and lower-level employees. First, we show that CEO–employee pay ratios depend on the balance of power between the CEO (relative to the board) and ordinary employees (relative to management). Second, our results suggest that employees do not perceive higher pay ratios as an inequitable outcome to be redressed via costly behaviors that lower productivity. We do not find a negative relation between relative pay and employee productivity, either in our full sample or in subsamples where employees are well-informed about executive pay and are protected against career retributions. Rather, we find that productivity increases with relative pay when the firm has fewer employees who are well-informed, and when promotion decisions are predominantly merit-based. We also find that firm value and operating performance both increase with relative pay. We conclude that ordinary employees appear to perceive an opportunity in higher pay ratios but the extent to which such perception incentivizes them depends on the likelihood of success in a series of sequential promotion tournaments.     

Taboo in consumption: Social structure,gender and sustainable menstrual products

Although consumption taboos are prevalent in everyday life, consumer research interest in the topic remains scant and focuses mostly on taboo products. This research moves by focusing on taboo persons and explores how barriers are presented in consumption choices for such individuals. A qualitative research design was used in the study and in‐depth interviews were conducted with 31 women from middle and upper income classes who showed an inclination to purchase sustainable menstrual products (SMPs). This study analyses how the intimate and private consumption of SMPs gets transformed into a complex socially embedded consumption choice. The study explores how and why a social structure steeped in symbolic violence towards menstruating women constrains the consumption of SMPs. Disillusioned by patriarchal subordination, the women preferred to respect boundaries and maintain stability in their life. Despite their socialization and engagement in several sustainable consumption decisions prior to the consideration of SMPs, these women exhibited a lack of agency as they could not transgress orthodox gender boundaries even as their choice reinforced prevailing social inequalities. They sought to conform to the gendered habitus instead of engaging in an act of defiance. This act of self‐restraint, however, results in tensions as the women try to legitimize a consumption choice which is inconsistent with their attitude towards sustainable consumption. The study discusses the consequences of the new restrictions faced by the women as they reframe concerns about the environment and justify their choice.     

Technological innovations in the Indian banking industry: the late bloomer

Given that technological innovations in the banking sector in industrialised countries have been shown to increase productivity of this industry around the world, then why did India shy away from adopting this technology until the 1990s? Why has India been a late adopter of technology in the banking industry when it could have reaped the benefits from the existing R&D expertise developed by innovators and early adopters? This article charts out the path of technological innovation in the Indian banking industry post-economic liberalisation (1991-2) and identifies initial conditions in terms of competitive environment and regulatory pressures that have contributed to the diffusion of these innovations. The article highlights the role of labour unions in public sector banks and their initial opposition to technological adoption. The empirical analysis demonstrates the superior performance of the early adopters of technology (private sector and foreign banks) as measured by productivity, returns on equity, and market share, as compared to the late or passive adopters (public sector banks).     

Us consumer product marketing in Saudi Arabia: Comparative perceptions

The period between 1970 and 1990 has seen a steady decline of the market share of US products in Saudi Arabia. This article deals with the differing perceptions of US exporters and Saudi importers regarding factors that might have contributed to this decline. These factors include the marketing environment, the product, the price, the distribution, US business practices, advertising, trade policies and the market situation in Saudi Arabia, and the role played by the US government. An analysis of these factors has led to a series of recommendations to respective governments and businesses.     

Feasibility Criteria in Monetary Trade

Consider the problem of how agents in a pure exchange competitive framework acquire their desired bundles of goods through a process of decentralized trade, i.e., in the absence of an auctioneer. Since the agents' wants are not mutually coincident, a medium of exchange is necessary to conduct trade. One relevant question to ask in this context is what property a commodity should possess in order for it to be eligible as a medium of exchange? This note discovers one such attribute, that the good be included in the final consumption vector of each agent. The condition is an improvement over an earlier one due to Ostroy and Starr (1974) which requires each agent to have large quantities of the medium of exchange in her/his initial endowment of commodities. JEL Classification Numbers: D50, E42.     

Setting the right prices for the wrong reasons

Nominal price adjustment is studied in an environment with firm-specific and aggregate shocks to economic fundamentals and incomplete, dispersed information. Firms update their expectations about fundamentals based on their own cash flows (revenues and wages). We show that in a model with realistic levels of product-level price dispersion, the firms’ inference about aggregate shocks is very gradual, yet in the aggregate prices adjust rapidly in response to aggregate nominal shocks. When an aggregate shock occurs, firms mistakenly attribute it to firm-specific shocks, but adjust prices nevertheless, since the exact nature of the shock matters little for their optimal pricing decision.     

Abandon Hofstede-based research? Not yet! A perspective from the philosophy of the social sciences

Hofstede’s framework has been immensely popular among practitioners and researchers because of its undeniable practicality. Despite several limitations, the framework has been widely adopted and in continued use. However, recent scholarly critiques have raised serious concerns, even calling for the rejection of the future use of the framework. A deeper analysis is necessary to understand the fundamental considerations in knowledge creation before contemplating an abandonment of a long research tradition. This article systematically examines Hofstede’s framework from a philosophy of science perspective by examining its ontological and epistemological considerations, and related issues, and presents important implications for researchers and managers.     

Search cost,trading strategies and optimal market structure

The theory of Walrasian equilibrium yields a set of prices at which the aggregate competitive demand for each commodity equals its aggregate competitive supply. However, even at equilibrium prices the theory of competitive equilibrium does not explicitly offer explanation regarding the manner in which trades are actually executed. This paper considers a model where trade takes place in a decentralized fashion and examines in a dynamic game-theoretic framework, the role of social institution of money and markets in facilitating exchange. The steady state Nash equilibrium derived in the paper demonstrates how, depending on the level of transaction costs associated with a market setup (synonymously, trading posts to exchange possible pairs of goods) appropriate monetary trade emerges, which like a hub and spoke network (Starr and Stinchcombe, 1999) makes some markets non-functioning and in equilibrium only the markets having trade through the medium of exchange continue to exist. However, despite the obvious advantages of a market setup in reducing search costs, pure random search for a complementary trading partner (as considered by Ostroy and Starr, 1974; Kiyotaki and Wright , 1989; and others) prevails in many economies, especially, in many developing economies. This paper models this feature of developing economies by introducing differences in transaction costs across agents and shows why sustainable equilibria might exist exhibiting random search for certain commodities even in the presence of established markets.     

Promoting entrepreneurship to alleviate poverty in India: An overview of government schemes,private‐sector programs,and initiatives in the citizens' sector

In recent years, entrepreneurship has achieved significance as a driver of economic growth and poverty alleviation. This article focuses on various initiatives and entities that promote capacity building and entrepreneurship development among the poor in India and pays special attention to examining the ways in which these entities can better coordinate their efforts. The article first reviews the general literature on entrepreneurship and poverty eradication followed by a conceptual framework that models the efforts of the Indian government, the private sector, and the citizens' sector in promoting entrepreneurship and capacity building. This conceptual framework is utilized to discuss efforts of social entrepreneurs and self‐help groups (SHGs) in India as well as to present a general sectoral assessment of the poverty‐alleviation schemes in the subcontinent. The article's conclusions emphasize that neither markets alone nor governments alone are enough to eradicate poverty, especially in the Indian context. Instead, a trisectoral approach that recognizes the complementarities between the government, the private sector, and the citizens' sector and encourages these sectors to collaborate may be vital to the common goal of capacity building among India's poor. © 2012 Wiley Periodicals, Inc.