List of Abstracts

Fri, May 3, 2024

(1) 10:30 – 11:15 – Yuanchen Su (Minnesota):

The Effect of Windfalls on Salesforce Performance

Yuanchen Su, Madhu Visvanathan and George John

Abstract:

Various technological platforms leverage randomized rewards, often implemented as games, as a way to engage and motivate individuals through these windfalls. Drawing on the long-standing laboratory literature on the power of variable reinforcement to predict beneficial effects, such programs have come into widespread use, Nevertheless, their effects in the field remain under-studied, particularly when the incremental rewards are minor relative to overall compensation income. Data from a randomized rewards program aimed at salespeople at an automobile dealer enable us to examine this question rigorously. We find that larger windfalls paradoxically, demotivate salespeople in comparison to smaller windfalls in the short run. We organize these results with a model featuring beliefs of correlated draws. Additionally, this effect is quite heterogeneous, with a smaller performance reduction among higher productivity salespeople. We close with a discussion of refining randomized rewards programs to better harness their motivational potential.

(2) 11:15 – 12:00 – Iman Sadeghi (McMaster):

Noisy measures of quality in the sharing economy: A study of Airbnb’s use of badges

Iman Sadeghi, Sourav Ray

Abstract:

In many sharing economy contexts, the platform owners offer information on behalf of their members to signal the latter’s quality.  In this paper we aim to understand the design and effectiveness of quality signalling by sharing economy platforms such as Airbnb, in a context where quality measures can be noisy.  For example, Airbnb assigns discretionary “badges” to properties/ owners who list themselves with the platform.  The consumers look at this signal to assess quality and decide on their consumption.  When it is difficult for the principal to monitor or observe agent effort, as in the case of Airbnb property owners, these quality signalling can also serve to incentivize compliance and control moral hazard.  When a “badge” is a signal of quality, the property owner has the incentive to put in the effort to retain the badge.  A typical assumption in such cases is that a transacting party knows their quality but are only imperfectly able to communicate it (e.g. quality is unobserved ex ante and only apparent post consumption), hence the dependence on the quality signal.  Nevertheless, in most practical cases, the assumption of being able to measure quality accurately, is violated.  Quality is also often a perceptual attribute that can differ based on different consumers/ consumption occasions.  Noisy measures of quality impose costs on both parties and may not succeed either as a signalling device, or as a mechanism to mitigate moral hazard.  Not surprisingly, platforms like Airbnb use multiple types of “badges” to measure and communicate property/ owner quality.  We examine the complexities imposed by noisy measures of quality, generating insights into the effectiveness of such measures.  We illustrate our insights by comparing two badges used by Airbnb – “superhost” and “plus.”

(3) 1:45 – 2:30 – Desmond Lo (Santa Clara)

The Management of Knowledge Work

Wouter Dessein, Desmond Lo, Ruo Shangguan, and Hideo Owan

Abstract:

We explore the role of management in knowledge-intensive work. Our theory posits that the manager’s function in a project mainly consists of ex ante coordination, specifying and delegating tasks to her team, and ex post coordination of the team’s execution of those tasks as the project unfolds. Consistent with the predictions generated from this view, our micro-level data from architectural design teams show a clear pattern of coordinated time use: (i) the involvement of both the manager and her team is significantly higher ex ante than ex post; notably, this time pattern is more potent for more knowledge-intensive projects and projects subject to more information frictions, and (ii) the timing of the peak hours of the manager precedes those of her team. We also find that the team takes up the slack when the manager reduces ex-ante hours because of a heavier workload. Finally, projects with managerial attention deviating from our predicted involvement have higher team hours and lower profitability. Our study highlights the importance of managerial coordination and rational inattention in organizing knowledge workers.

(4) 2:30 – 3:15 – Kelli Frias (American)

Relationship Building in Self-Constructed Service Delivery Networks:  Pseudo-Relational Service Relationships

Kelli Frias, Deidre Popovich, and Ronald Hill

Abstract:

In the marketing literature, it is commonly posited that consumers co-create value within service delivery networks. However, in scenarios where essential resources are financially prohibitive or absent in one market, consumers may seek alternatives elsewhere. This dynamic is particularly prevalent among consumers residing in the southern U.S. border towns who navigate healthcare affordability. Owing to their geographic advantage near the U.S. and Mexico border, these consumers fabricate personalized service delivery networks (CC-SDNs) to increase accessibility and cost-effectiveness. Yet, the industry’s understanding is limited regarding the ramifications of consumers assembling their own SDN in contrast to networks managed by service firms, such as a physician’s coordinated care and referrals. Moreover, the implications of consumer responsibility in deciphering conflicting guidance across diverse SDNs are underexplored. To address this knowledge gap, we conducted a two-year empirical investigation of “insured” consumers who routinely engage with healthcare services across the U.S. and Mexico. Employing depth interviews, online diaries, and participant observations, we delineate the emergence of CC-SDNs, elucidate their attributes, and interrogate their consequences. Our analysis extends to the pseudo-relationships that often form between patients and service providers within these networks. Such relationships, characterized by their informal and ad hoc nature, significantly influence the service experience and outcomes, revealing an intricate interplay between trust, loyalty, and perceived value. The study culminates in strategic recommendations for marketing practices, public policy initiatives, and offers a pioneering perspective on cross-market integration.

(5) 3:15 – 4:00 – Kamran Eshghi (Laurentian)

Adapting to Channel Conflict: An Empirical Study

Kamran Eshghi, Sourav Ray

Abstract:

Channel conflict is endemic in marketing channels. Such conflict depletes efficiency in the short term and can have a long-term negative impact on firm performance. So, how do firms respond to such conflict? While the relationship marketing literature focuses on relational mechanisms to address such conflict, Transaction Cost Economics (TCE) suggests adaptations in governance structures when transaction-specific assets are at stake. TCE generally points to two key adaptations to safeguarding specific assets in response to manifest conflict and its consequent negative outcomes: a structural adaptation towards vertical integration and a bilateral adaptation by contractual changes. However, the empirical literature on this is sparse. So, in this paper, we draw upon the TCE literature to investigate how firms adapt their channel structure and bilateral governance to channel conflict. To control for relational mechanisms, we choose a channel context where the relational approach has evidently failed – that of formal litigations between franchisors and franchisees. Litigation results from intense conflict and where the informal or formal relational efforts have not succeeded, leaving only governance changes as residual options if the firm wants to adapt.

Our analyses use a unique unbalanced panel dataset manually created from publicly available sources (Franchise Disclosure Documents and various franchise rankings). This dataset has information on 277 franchisors over 12 years and includes data on litigated conflict, contract items, channel structure, and other firm characteristics. The analyses control for the dynamic nature of the panel data, endogeneity, and the constraints of limited dependent variables. In particular, we use the Conditional Mixed-Process (CMP) regression as our primary estimation model. Our results show that firms tend to make contractual changes (adding more items to the contract) over moving toward more structural vertical integration following litigation. Our main empirical contribution is to document how firms adapt to conflict, and thus, we build upon the literature on efficient governance through ex-post adaptations.

(6) 4:30 – 5:00 – TBD

Sat, May 4, 2024

(7) 8:30 – 9:15 – Andeas Kraft (Chicago)

Scratching the Surface: Choice under Uncertainty in a Real World Setting

Andreas Kraft, Avner Strulov Shlain

Abstract:

Microeconomic theories and experimental work in laboratories have significantly advanced our understanding of consumer choice behavior under uncertainty. Substantial bodies of literature within economics, behavioral economics, and marketing have been foundational in these advancements. However, the direct application of these insights to real-world behaviors often faces challenges due to the additional complexities encountered outside the laboratory setting. This paper seeks to bridge this gap by providing empirical evidence on millions of consumers’ choices among simple gambles.

Scratch-off lottery tickets, the focus of our study, are a common form of gambling that allows consumers to immediately discover if they have won a prize by scratching off a covering on the ticket to reveal symbols or numbers. Our analysis covers approximately 20% of all gas station convenience stores in the United States over a four-year period, during which over 100 million scratch-off lottery tickets were sold. This extensive dataset enables us to explore consumer preferences across various gambles, each differing in their distribution of potential outcomes.

In addition to financial attributes, we employ a large-language model-driven approach to identify and assess the impact of non-financial attributes—such as the color of the ticket, the language used, or the theme—on consumer demand for scratch-off tickets. Our findings highlight the significant role these attributes play in influencing consumer choice.

Furthermore, we estimate the marginal propensity to consume lottery winnings, discovering a trend of lottery winnings being reinvested in the purchase of more scratch-off tickets. This behavior suggests a cyclical pattern of consumption and investment within the context of lottery gambling, providing insights into the economic behaviors underpinning consumer decisions in the face of risk and uncertainty. Our study contributes to the broader understanding of choice under uncertainty in real-world settings, offering implications for policy-making and the design of lottery games. “

(8) 9:15 – 10:00 – Bharat Vaishnav (McMaster)

The Iceberg in the Path of Channel Integrations

Bharat Vaishnav, Sourav Ray

Abstract:

Retailers increasingly integrate their online and offline channels.  Often seen as key to evolving in the dynamic technology environment and an increasingly competitive landscape of current times, these are a key element of the retailers’ omnichannel strategy to create and offer differentiating value to their customers.  These digital transformations harbor mostly positive sentiments in practice.  Yet, the complexity of these endeavors in a fast-paced environment can be significant.  Such integrations involve more than just combining points of sale.  Mismatched consumer expectations and skepticism can blunt much of the presumed benefits.  There are also looming costs of operations, learning and coordination, and mistakes leave little time for adjustments.  Normal for early-stage industry evolution, many large retailers launched these digital transformations despite uncertain future payoffs, in the early 2000s.  Increasing calls to account for the returns on these investments have emerged in the later decades.  Yet, empirical evidence is scarce.  We examine data of 82 publicly traded U.S. chain retailers over a period from 2008 to 2019.  We find evidence suggesting that the benefits from channel integration can be dented by mismatched consumer expectations and that the coordination challenges can be significant enough to undermine the value proposition of channel integrations.  Retailers with greater potential for coordination efficiencies tend to benefit more from channel integration.

(9) 10:30 – 11:15 – Liuyi Wang (Arizona)

Reconfiguring Firm’s Vertical Boundary in Response to Upstream Consolidation: A Perspective of Relationship History

Liuyi Wang, Mrinal Ghosh

Long Abstract:

Previous research on canonical “make versus buy” decision (ala vertical integration) based on theories of the firm has expanded the scope of this within-firm analysis to investigate the impact of such integration decisions in one part of the value chain on other parts of the value chain as well as the impact of firm-specific considerations (e.g., Novak and Stern 2017) on vertical integration or related vertical coordination decisions (e.g., Ghosh and John 2005). However, despite recognizing each firm in some ways connects to the market (and vice versa, markets to firms) as Coase (1937), there remains a gap in linking such firm-level integration decisions to competitive, or market level issues.

This research aims to bridge this gap by exploring how firms reconfigure their vertical boundary to manage the opportunities as well as challenges in changes brought by horizontal consolidations within their upstream industries. In addition, we believe that the starting point of a relationship largely influences the trajectory and ultimate destination of its development under the environmental changes. We thus emphasize the moderating role of the post-consolidation-shock relationship between focal firm and its supplier industry, as a crucial factor influencing the customers’ decision to modify their vertical boundaries under the shock. Although we have a group of hypotheses, they fundamentally focus on merely two aspects of the relationship- the length of the relationship, and the degree of coupling in the relationship. We develop hypotheses on how these relationship aspects moderate the impact of the supplier industry consolidation on the focal firm’s vertical decision, as well as consider several business nature factors that relate to this moderating process, to reveal the complex ways in which relationship basis and the nature of business shape the strategic choice in response to shifts to changing upstream market environment.

Utilizing a robust firm level dataset and applying difference-in-difference estimation models with control function results as robustness check, we investigate the frequency upstream industry consolidation activities influences client firms’ propensity towards vertical mergers with this upstream industry.

Our findings reveal a nuanced landscape where upstream consolidation drives firms towards vertical integration as a strategic response to mitigate increased uncertainty and potential hold-up problems. However, the strength of this drive is significantly moderated by the nature of the firm-supplier relationship history. Specifically, firms with long-term collaborative history, absence of pre-existing partnership but only transactional partnership, and high extent of contractability with their suppliers are less inclined to pursue vertical integration in the face of supplier industry consolidation. These inclinations change with the level of technological intensiveness thus the specificity of investments of the supplier industry. Our research contributes to the strategy literature by elucidating dynamics between vertical integration decisions and upstream consolidation, underscored by the critical role of pre-existing supply chain relationship basis and innovation intensiveness. This study not only broadens our understanding of how the consolidation decisions cascade but also offers managerial insights into restructuring vertical boundaries and supplier chain relationship management strategy under the systematic shock from upstream.

(10) 11:15 – 12:00 – Rehan Khan (McMaster)

TV Home Shopping (TVHS) Channels in Lower Tier Cities of Emerging Economies: Social Role of Marketing?

Rehan Khan, Sourav Ray

TV Home Shopping (TVHS) is an important channel through which consumers make purchase decisions.  While the role of distribution channels has often been discussed in textbooks and in the paradigmatic literature, much of the focus has been on the business impact.  Relatively less importance has been placed on how these channels could improve the lives of the consumers.  Nevertheless, in certain economies where consumers may not have ready choice of brands or products or may lack sufficient information to make a good consumption decisions, channels like TVHS can have an outsize impact on consumer welfare by improving their decision making.  For example, lower tier cities (so called T3 and T4 cities) in emerging economies may have relatively less choice and purchase opportunities than in higher tier cities (metropolis, T1 and T2), often times leading to less optimal decision making in cases where these are important.  TVHS can improve the consumer outcomes, not just by bringing products and information to the consumers but by also catering to the unique buying processes and benefits sought of the T3 and T4 city consumers.  For example, for some product types, the potentially more intimate and collaborative decision making (e.g. family consumption of TVHS) of lower tier city consumers, compared to higher tier cities, may be better and more directly catered to by TVHS.  We propose to explore these potential social improvement roles of TVHS with data from a large TVHS company in India.