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Journal Article

Strategic experimentation with private payoffs

Journal of Economic Theory 159 (5): 531–551
Paul Heidhues, Sven Rady, Philipp Strack (2015)
Subject(s)
Economics, politics and business environment
Keyword(s)
Strategic experimentation, Bayesian learning, cheap talk, two-armed bandit, information externality
JEL Code(s)
C73, D83
We consider two players facing identical discrete-time bandit problems with a safe and a risky arm. In any period, the risky arm yields either a success or a failure, and the first success reveals the risky arm to dominate the safe one. When payoffs are public information, the ensuing free-rider problem is so severe that the equilibrium number of experiments is at most one plus the number of experiments that a single agent would perform. When payoffs are private information and players can communicate via cheap talk, the socially optimal symmetric experimentation profile can be supported as a perfect Bayesian equilibrium for sufficiently optimistic prior beliefs. These results generalize to more than two players whenever the success probability per period is not too high. In particular, this is the case when successes occur at the jump times of a Poisson process and the period length is sufficiently small.
With permission of Elsevier
Volume
159
Journal Pages
531–551
Journal Article

Potential, value, and the multilinear extension

Economics Letters 135: 28–30
André Casajus, Frank Huettner (2015)
Subject(s)
Management sciences, decision sciences and quantitative methods
Keyword(s)
Shapley value, potential, random partition, concentration of power
JEL Code(s)
C71
We provide new formulae for the potential of the Shapley value that use the multilinear extension of coalitional games with transferable utility.
With permission of Elsevier
Volume
135
Journal Pages
28–30
Journal Article

Don't try harder: Using customer inoculation to build resistance against service failures

Journal of the Academy of Marketing Science 43 (4): 512–527
Sven Mikolon, Benjamin Quaiser, Jan Wieseke (2015)
Subject(s)
Marketing
Keyword(s)
Customer inoculation, customer satisfaction, services marketing, service failure
Capitalizing on a large-scale field experimental dataset involving 1,254 airline customers, this study introduces customer inoculation as a new, proactive strategy for mitigating the negative consequences that service failures have on customer satisfaction. Results confirm that customer inoculation eases the decrease in satisfaction when customers experience a service failure. Additional analyses indicate that customer inoculation does not harm customer satisfaction if no service failure occurs. This finding sets inoculation apart from expectation management and underscores the potential inoculation has for marketing practice. Furthermore, contrary to traditional recovery strategies for addressing service failures, customer inoculation operates in advance of a service failure and thereby circumvents potential drawbacks of traditional strategies. In sum, customer inoculation represents a novel strategy for addressing service failures with respect to existing marketing literature and expands the scope of action for companies when they cannot avoid offering occasionally flawed services.
© Academy of Marketing Science 2014 With permission of Springer
Volume
43
Journal Pages
512–527
Journal Article

Distant search, narrow attention: How crowding alters organizations' filtering of suggestions in crowdsourcing

Academy of Management Journal 58 (3): 856–880
2016 Highly cited paper (Web of Knowledge) , 2015 Best Paper Award
Henning Piezunka, Linus Dahlander (2015)
Subject(s)
Technology, R&D management
Keyword(s)
Selection, evaluation, user-based innovation, crowd sourcing
When organizations reach out to their users for ideas, users take on a considerable role in the innovation process. Including users expands the number of participants and potential ideas from which an organization can select. But how do organizations select some user suggestions while rejecting or ignoring others? We analyze the selection processes at 24,067 organizations that collectively received 702,729 suggestions. Our findings suggest that organizations filter the suggestions they receive by focusing on suggestions that inspire feedback from the user community. Despite receiving contributions from a diverse pool of users, organizations quickly settle into a pattern of attending to only a few. To our surprise, collective user preferences only matter as a filter mechanism when crowding is high. In contrast, the debate among users about a suggestion strongly increases the likelihood of it being selected by the organization. Our illustration of the screening criteria organizations use to winnow suggestions has broad implications for the selection literature. We also bring insight to the literature on user-driven innovation processes by studying all suggestions that were considered, rather than only those organizations select and implement.
With permission of the Academy of Management
As of May/June 2016, this highly cited paper received enough citations to place it in the top 1% of the academic field of Economics & Business based on a highly cited threshold for the field and publication year. – Data from Essential Science Indicators℠
Volume
58
Journal Pages
856–880
Journal Article

Primary status, complementary status, and organizational survival in the U.S. venture capital industry

Social Science Research 52 (4): 588–601
Matthew S. Bothner, Young-Kyu Kim, Wonjae Lee (2015)
Subject(s)
Human resources management/organizational behavior
Keyword(s)
Status, US venture capital industry
This article introduces a distinction between two kinds of status and investigates their effects empirically on the life chances of U.S. venture capital organizations. Using recent research on status-based competition as our starting point, we first describe primary status as a network-related signal of an organization’s quality in a leadership role, and measure primary status as the degree to which a focal organization leads others that are themselves well regarded as lead-organizations in the context of investment syndicates. We then introduce complementary status as an affiliation-based indicator of an organization’s quality in a supporting role, measuring complementary status as the extent to which a focal organization is invited into syndicates by well-regarded lead-organizations—that is, by organizations possessing high levels of primary status. Findings show that both kinds of status negatively affect the rate at which venture capital organizations exit the industry. In addition, consistent with the proposition that primary status and complementary status correspond to distinct market roles and different market identities, primary status and complementary status attenuate each other’s favorable main effects on survival for dedicated venture capital organizations. Theoretically and methodologically oriented scope conditions as well as implications for future research are discussed.
With permission of Elsevier
Volume
52
Journal Pages
588–601
Journal Article

Identification and attachment in consumer-brand relationships

Review of Marketing Research 12: 151–174
Sankar Sen, Allison R. Johnson, CB Bhattacharya, Juan Wang (2015)
Subject(s)
Ethics and social responsibility; Marketing
Keyword(s)
Attachment, identification, social identity, consumer-brand relationships, brand loyalty
We examine two conceptualizations of consumer-brand relationships: identification, as identity-based relationships between a consumer and a brand, and the related construct of attachment as a bond based on security and personal history with the brand.Predictions emanating from the two constructs’ disparate theoretical traditions regarding the relative antecedents and outcomes of these brand relationship constructs are tested in a survey of real consumer-brand relationships, where the two are likely to co-occur. Identification is more socially motivated, wherein the brand is used for “identity building” and impression management, such as through public endorsement. In contrast, attachment is more personally motivated; it is more likely to be founded on an intimate history with the brand and feelings of security inspired by the brand. This is the first work in marketing to explicitly compare identification with attachment in contexts where they co-occur. In doing so, it underscores the validity and usefulness of these two related but distinct relationship constructs.
With permission of Emerald
Volume
12
Journal Pages
151–174
Journal Article

Streams of thought: Knowledge flows and intellectual cohesion in a multidisciplinary era

Social Forces 93 (4): 1687–1722
Craig Rawlings, Daniel A. McFarland, Linus Dahlander, Dan Wang (2015)
Subject(s)
Technology, R&D management
Keyword(s)
social networks
Volume
93
Journal Pages
1687–1722
Journal Article

Show me the money: Improving our understanding of how organizations generate return from technology-led marketing change

European Journal of Marketing 49 (3–4): 561–595
Stan Maklan, Joe Peppard, Philipp Klaus (2015)
Subject(s)
Information technology and systems; Marketing
Keyword(s)
ROI, CRM, benefits realization, performance improvement, social media, big data
Marketing practice is increasingly shaped through the application of new technology, including customer relationship marketing (CRM) software, social media, analytics and search, with organisations investing heavily in these technologies. Yet, surprisingly, research by marketing scholars continues to question the profitability of IT-led marketing initiatives. If this is true, why do companies continue to make such investments? To explore this question, we examined research that has looked at the return on investments in IT-led marketing change. Analysing the findings of leading studies of the impact of CRM spend on financial and market performance, we suggest that marketing scholars make untested assumptions as to how expected payoffs are realized and thus generate incommensurate conclusions. Moreover, we found that marketing scholars adopt a very limited epistemology that is unsuited to the nature of the phenomenon being studied. For comparison, we explore how similar phenomena are studied by the information systems discipline. We conclude with implications for both marketing practice and research.
With permission of Emerald
Volume
49
Journal Pages
561–595
Journal Article

Joining forces or going it alone? On the interplay between external collaboration partner types, inter-firm governance modes and internal R&D

Journal of Product Innovation Management 32 (3): 424–440
Judith Gesing, David Antons, Erk P. Piening, Mario Rese, Torsten Oliver Salge (2015)
Subject(s)
Marketing
© 2014 Product Development & Management Association
Volume
32
Journal Pages
424–440
Journal Article

Linear social interactions models

Journal of Political Economy 123 (2): 444–496
Lawrence E. Blume, William A. Brock, Steven N. Durlauf, Rajshri Jayaraman (2015)
Subject(s)
Economics, politics and business environment
Keyword(s)
Social interactions, identification, incomplete information games
JEL Code(s)
C21, C23, C31, C35, C72, Z13
This paper provides a systematic analysis of identification in linear social interactions models. This is both a theoretical and an econometric exercise as the analysis is linked to a rigorously delineated model of interdependent decisions. We develop an incomplete information game that describes individual choices in the presence of social interactions. The equilibrium strategy profiles are linear. Standard models in the empirical social interactions literature are shown to be exact or approximate special cases of our general framework, which in turn provides a basis for understanding the microeconomic foundations of those models. We consider identification of both endogenous (peer) and contextual social effects under alternative assumptions on a priori information about network structure available to an analyst, and contrast the informational content of individual-level and aggregated data. Finally, we discuss potential ramifications for identification of endogenous group selection and differences between the information sets of analysts and agents.
With permission of the University of Chicago Press
Volume
123
Journal Pages
444–496