Functional forms of the satisfaction–loyalty relationship

The linear functional form of the effect of customer satisfaction on repurchase intentions may not be adequate under all circumstances; however, we lack a clear understanding of the factors that may drive variation in the functional forms of the satisfaction-loyalty relationship. Building on existing research, the authors consider how the functional form of the effect of satisfaction on repurchase intentions varies across segments formed at the intersection of product categories and customer economic and demographic variables. A comprehensive data set obtained from the sponsors of the Chinese Customer Satisfaction Index provides the input for a flexible cubic regression configuration to model the functional forms. The linear functional form emerges as the most prominent across 972 product-customer segments (51%), followed in frequency by the S-shaped and convex forms and, finally, the inverse S-shape and concave forms. Different product category characteristics, customer economic and demographic variables, and market characteristics moderate the effect of satisfaction on repurchase intentions differently for the linear, quadratic, and cubic terms. This research reveals key resource allocation implications based on the functional forms of the effect of satisfaction on repurchase intentions, as well as strategic segmentation implications related to the varying influence of product category characteristics, customer economic and demographic variables, and market characteristics.     

Booms, Busts, and Fraud

Firms sometimes commit fraud by altering publicly reported informationto be more favorable, and investors can monitor firms to obtainmore accurate information. We study equilibrium fraud and monitoringdecisions. Fraud is most likely to occur in relatively goodtimes, and the link between fraud and good times becomes strongeras monitoring costs decrease. Nevertheless, improving businessconditions may sometimes diminish fraud. We provide an explanationfor why fraud peaks towards the end of a boom and is then revealedin the ensuing bust. We also show that fraud can increase iffirms make more information available to the public.     

Crises in business markets: implications for interfirm linkages

In the global economy, firms link with customers and suppliers through a complex nexus of strategically critical interfirm relationships. Due to the diversity of environments and networks involved, these linkages are increasingly vulnerable to catastrophic disruptions, also referred to as “crises.” The authors offer an advanced conceptualization of crises and explicate the interplay of crises and interfirm relationships. On the basis of literature and qualitative data from 27 interviews with executives in 13 firms, the authors develop a process model of crisis that consists of five phases: (1) awareness and acknowledgment, (2) sensemaking, (3) response design, (4) response implementation, and (5) reconciliation in the aftermath. In discussing the model, the authors emphasize the influence of crisis on interfirm relationships and conversely highlight the role of the interfirm relationships in crisis management. The authors contributed equally and are listed alphabetically.     

Dynamic strategic groups: deriving spatial evolutionary paths

Recent theoretical developments in the domain of strategic groups, specifically those related to cognitive groups and strategic group identity, seem to suggest that strategic group membership is likely to be relatively stable over time and that firms in a strategic group co‐evolve. Yet appropriate data analytic approaches that use information about firms over time to identify stable strategic groups and their evolutionary paths have been lacking. To overcome such limitations, this research proposes a new clusterwise bilinear multidimensional scaling model that can simultaneously identify (1) the number of strategic groups, (2) the dimensions on which the strategic groups are based, and (3) the evolution of the strategy of these groups over time. Our discussion encompasses various alternative model specifications, together with model selection heuristics based on statistical information criteria. An illustration of the proposed methodology using data pertaining to strategic variables for a sample of public banks in the tristate area of New York, Ohio, and Pennsylvania across three time periods (1995, 1999, and 2003) identifies two underlying dimensions with five strategic groups that display very different evolutionary paths over time. Post hoc analysis shows pronounced differences in firm performance across the five derived strategic groups. This article concludes with a discussion of the implications of the findings, as well as potential future research directions. John Wiley & Sons, Ltd. Copyright © 2009 John Wiley & Sons, Ltd.     

Calculating,creating, and claiming value in business markets: Status and research agenda

A key challenge facing business marketers surrounds developing a deeper understanding of customer needs. We conceptualize that challenge as having three dimensions: calculating, creating, and claiming value. We discuss key problems, new developments and research challenges in each of these three domains and note the desirability for a deeper collaboration between academics and practitioners to address the research challenges.     

Modeling strategic group dynamics: A hidden Markov approach

With competition playing a critical role in market-based strategic planning and implementation, identifying and understanding competiton and competitive dynamics has become critical. In this vein, the strategic groups perspective has emerged as a powerful means to understand such competitive phenomena. Empirical approaches to model competitive dynamics within the strategic groups framework, however, have been piece meal as researchers typically resort to distinct sequential analysis by time period. To overcome the limitations of these simplistic approaches, we develop a hidden Markov model to study strategic group (competitive) dynamics. In this approach, we explicitly account for competitive dynamics over time by modeling strategic group memberships as latent states that follow a first-order Markov process. Thus, we explictly model the notion that firms adopt their strategy for the next time period based on their current strategy and respective outcomes. We illustrate the model with longitudinal data from COMPUSTAT on 63 public banks from the tri-state region of NY-OH-PA. The results show the proposed model to be superior to a number of viable alternative approaches that have been suggested in the literature. We find the existence of three strategic groups: the leveraged group has low current assets compared to current liabilities, high debt to equity, and high total borrowing to assets. The lending group consists of the largest banks that focus on lending with high ratios of gross loans to securities and gross loans to deposits. The balanced group has the largest number of banks where the values of the financial and product ratios are intermediate compared to the leveraged and lending groups. The asymmetries in the switching probabilites are also evident as there seems to be a higher probability of switching into the balanced group than switching out of this group. The switching probabilites are symmetric between the the leveraged and lending groups.     

Please,let's get an answer—any answer: Need for consumer cognitive closure

Conceptually, it is argued that individual differences in need for cognitive closure, which stem from Kruglanski's theory of lay epistemics, provides a framework for studying various aspects of consumer judgment and decision making. However, methodologically, the need for cognitive closure scale has not demonstrated good measurement properties and has generated controversy. To improve the measurement quality of the scale for individual differences in the need for cognitive closure, the authors carry out a large‐scale data collection and measure validation exercise. To demonstrate the usefulness of this individual difference variable in a consumer context, the authors test hypotheses concerning consumer search behavior for cars and televisions. The results are encouraging and provide initial support for the utility of this framework in consumer judgment and decision making. © 2000 John Wiley & Sons, Inc.     

Credit Scoring and Loan Default

A metric of credit score performance is developed to study the usage and performance of credit scoring in the loan origination process. We examine the performance of origination FICO scores as measures of ex ante borrower creditworthiness using loan‐level data on ex post performance of subprime mortgages. Parametric and nonparametric estimates of credit score performance reveal different trends, especially on originations with low credit scores. The data suggest a trend of increased emphasis on higher credit scores accompanying a trend of increased riskiness in other origination attributes. Over time, this increased emphasis on credit scoring coincided with deterioration in FICO performance largely because of the fact that higher credit score originations of later cohorts were more likely to have riskier attributes. However, controlling for other attributes on originations and changes in economic conditions, we find that, as measures of borrower ranking, FICO performance on subprime loans over the years remains fairly stable.     

Product recalls and the moderating role of brand commitment

We assess attenuating and augmenting effects of brand commitment on consumer responses when product recalls occur. Consistent with our theorization, results from a laboratory experiment and an event study show that high levels of brand commitment attenuate negative consumer responses in low-severity product recalls but augment them in high-severity product recalls. Thus, while brand commitment seems to provide a reservoir of goodwill in the former case, it acts as a liability in the latter. These findings add to the extant brand and product recall literature by demonstrating that brand commitment has a complex effect on consumer responses when product recalls occur. Because product recalls are widespread, these findings also have managerial relevance.