Conference Sessions - Jesse H. Jones Graduate School of ...

TD07 MARKETING SCIENCE CONFERENCE – 2011
2 - A Structural Analysis on Service Quality and Pricing
Tradeoff in Airlines
Chen Zhou, Doctoral Candidate, Pennsylvania State University,
Smeal College of Business, University Park, PA, 16802,
United States of America, cxz159@psu.edu, Rajdeep Grewal
Aside from price, service quality plays a prominent role in customer acquisition and
retention for services firms such as those in airlines and hotel industries. Recognizing
the importance of service quality, we reason that a formal model of competitive
pricing behaviors of service firms should consider service quality as a managerial
decision variable. For the purpose, we develop and estimate a structural model that
treats both pricing and service quality as endogenous such that (1) both the variables
are important in determining demand and (2) service quality also influence the
production function. Thus, in our structural model we estimate systematically
estimate demand, production, and profit functions. We test our model in the context
of the US Airlines industry, where we conceptualize a route as a market. The data
comes from multiple secondary sources, typically records maintained by the US
Department of Transportation. Specifically, we obtain data on the 21 airlines on
which Airline Quality Rating Reports provided by Purdue University maintains
service quality measures. For these airlines, as is typical with structural models in the
airlines industry, we obtain pricing and other data (e.g., capacity offered and utilized)
on routes where origin and destination cities have population greater than 850,000.
The results from the Generalized Method of Moment estimation of the structural
model suggest heterogeneity in demand sensitivity of service quality and price across
airlines, thereby having important implications for these two strategic resource
allocation decisions.
3 - Hedonic Quality Differentiation and Channel Choice
S. Chan Choi, Professor, Rutgers Business School,
1 Washington Park, Newark, NJ, 07102, United States of America,
chanchoi@rci.rutgers.edu
Quality is a multidimensional construct. In the literature, the quality concept has
been used to describe either a whole product or an individual attribute. We employ a
more holistic view of quality, in which quality dimensions are classified into either
hedonic or utilitarian. Utilitarian qualities included attributes that are useful,
practical, and necessary. Hedonic qualities are associated with fantasy, fun, and
pleasure. Previous studies show that hedonic attributes have a dominant influence
over utilitarian attributes when price information is present. This paper models price
competition between two channels when companies are differentiated in hedonic
quality. We employ a demand function that is derived from representative consumer
utility that captures both horizontal and quality differentiations. We examine the way
differentiation in hedonic quality alters the optimal channel choice decisions when
companies compete in price when the products are also horizontally differentiated.
■ TD07
Founders I
Services
Contributed Session
Chair: Kimmy Wa Chan, Assistant Professor in Marketing, Hong Kong
Polytechnic University, Department of Marketing and Management,
Li Ka Shing Tower, Hung Hom, Kowloon, Hong Kong - PRC,
mskimmy@inet.polyu.edu.hk
1 - Service Worker Role in Encouraging Customer Equity:
Dyadic Analysis
Yu-Li Lin, Assistant Professor, Southern Taiwan University,
1, Nan-Tai Street, Yung-Kang City, Tainan, Taiwan - ROC,
bookigen@gmail.com, Hsiu-Wen Liu
The primary focus of this paper is assessment of the role of the service worker
behaviors in encouraging customer equity. The researchers investigate this topic
utilizes a dyadic sampling design. The sample includes 398 customer and service
provider dyads. The findings of this research support our hypotheses. Customer
orientation affects trust toward service provider. Trust toward service provider affect
customer equity. Further, trust to the service worker serves as a mediator of the
effects of customer orientation and customer equity. Finally, theoretical, managerial
and future research implications are included.
2 - Perceptions of Service Failures: A Test and Extension of Affective
Forecasting Theory
Muyu Wei, Lingnan University, Dept of Marketing and Int’l Business,
Tuen Mun, Hong Kong - PRC, mwei@ln.edu.hk, Geng Cui
Service failure occurs when a service provider fails to meet customer expectations.
Overall, service providers are believed to have more accurate predictions of the
severity of service failures. However, researchers have seldom examined the accuracy
of consumer perceptions or the perceptual gaps between consumers and service
providers when analyzing service failure. In a 2 (group) x 2 (time) x 2 (surrogate
information) experimental study, we test and extend a theory from psychology –
affective forecasting – to examine the reactions of consumers and service providers to
service failures. Both groups were asked about their perceived severity of the problem
and their emotional reactions before and after a service failure. Due to the effect of
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self-enhancement, both consumers and service providers tend to over-estimate the
valence of their own reactions to service failures (anger vs. apology) given the
significant differences in their feelings before and after the event. The results also
indicate a significant gap in the perceived severity of the problem and emotional
reactions between the two groups. Thus the perceptual gap between consumers and
service providers is exacerbated and affect consumer expectations of the recovery
efforts and their re-purchase intention. However, past experiences and the use of
surrogate information, i.e., insight from others with similar experiences, serves as an
effective way to reduce the perceptual gap and can help service providers to minimize
consumer discontent. These findings have meaningful implications for understanding
consumer reactions to service failures and for improving the management of recovery
activities.
3 - Can I Do It? Can You Do It? Roles of Self-efficacy and
Other-efficacy of Customers and Employees
Kimmy Wa Chan, Assistant Professor in Marketing, Hong Kong
Polytechnic University, Department of Marketing and Management,
Li Ka Shing Tower, Hung Hom, Kowloon, Hong Kong - PRC,
mskimmy@inet.polyu.edu.hk, Bennett C. K. Yim, Simon Lam
Engaging customer participation (CP) in service production and delivery to cocreate
value is gaining credence in both academic writing as well as marketplace practices.
However, recent research shows that CP could be a double-edged sword; it could
improve service quality to customers and strengthen the relational bond between
customers and employees, yet, it could also pose problems for service employees (e.g.,
increase job stress). CP also could be a challenging endeavor for customers who not
only need to have the knowledge, but also the ability, to perform their roles in
specific service contexts. CP as a taxing situation for both customers and employees
would therefore suggest that appraisals of both parties’ capabilities may affect their
participation behaviors and emotional experience. This study examines the roles of
both self-efficacy (SE) and other-efficacy (OE) (perceived capabilities of the partner)
in the relationship between CP and enjoyment of participation for both customers
and employees in the context of professional financial services. Social cognitive and
role theories provide the foundations to support how (1) SE moderates the effect of
CP on the enjoyment of participation and (2) the synergic effect of SE and OE affects
the enjoyment of participation differentially for customers and employees. Empirical
results from 223 pairs of customers and service employees of financial services
suggest that efficacy perceptions determine the magnitude of CP effects. The match
and mismatch of SE and OE also moderates the effect of CP on participation
enjoyment, albeit differently for customers versus employees. Significant implications
on managing customer-employee collaboration in service participation derived from
the results are discussed.
■ TD08
Founders II
Innovation IV
Contributed Session
Chair: Anna S. Cui, Assistant Professor of Marketing, University of Illinois
at Chicago, 601 S Morgan Street, Chicago, IL, 60607,
United States of America, ascui@uic.edu
1 - Patent Rank and Firm Performance
Monte Shaffer, PhD Student, Washington State University,
821 Old Moscow, Pullman, WA, 99163, United States of America,
monte.shaffer@gmail.com, U.N. Umesh
Recently, top scholars in innovation rightfully assessed that traditional patent data is
old and tired (Tellis et al. 2009, p. 12): “Some researchers and policy makers consider
the registration of patents so important that they equate patents to innovation and
often measure the latter with the former. This line of thinking suggests that patents
would be an important driver of radical innovation. If markets value patents as highly
as many researchers do, patents should have a major influence on financial returns of
a firm.” In this manuscript, we intend to show how patents do indeed have a major
influence on financial returns of firms. To do so, however, requires new data and a
new perspective on patents and innovation. In a previous manuscript, we introduced
Patent Rank as an objective measure of radical innovation. Patent Rank is a logical
extension of WPC (weighted patent counts) introduced by Trajtenberg (1990). WPC
weights each patent by forward citations because each patent’s importance and
relevance is determined by how many other patents cite it as prior work. In other
words, if more important patents cite a patent then the one that is cited increases, in
turn, in its importance. Thus we specify a general model to define the network
formation and structure. A ‘local effects’ model is most appropriate when studying
financial returns using Fama/French or Carhart specifications. Another measure of
importance is how well a patent, and its citations, diffuse over time. Utilizing nonlinear
diffusion models, we identify which type of diffusion pattern best fit the
innovation, and utilized that model to estimate a patent’s lifetime value (PLV). In this
manuscript, we combine our findings to show how patents have a major influence on
financial returns of firms.