1. Study suggests willingness to support corporate social responsibility initiatives contingent on perception of boss’ ethics

    November 14, 2017 by Ashley

    From the University of Vermont press release:

    A new study shows that people who perceive their employer as committed to environmental and community-based causes will, in turn, engage in green behavior and local volunteerism, with one caveat: their boss must display similarly ethical behavior.

    The forthcoming study in the Journal of Business Ethics by Kenneth De Roeck, assistant professor at the University of Vermont, and Omer Farooq of UAE University, shows that people who work for socially and environmentally responsible companies tend to identify more strongly with their employer, and as a result, increase their engagement in green and socially responsible behaviors like community volunteerism.

    “When you identify with a group, you tend to adopt its values and goals as your own,” says De Roeck. “For example, if you are a fan who identifies with the New England Patriots, their objective to win the Super Bowl becomes your objective too. If they win it, you will say ‘we,’ rather than ‘they,’ won the Super Bowl, because being a fan of the New England Patriots became part of your own identity.”

    That loyalty goes out the window, however, if employees don’t perceive their immediate supervisor as ethical, defined as conduct that shows concern for how their decisions affect others’ well-being. Results show that the propensity for the company’s environmental initiatives to foster employees’ green behaviors disappears if they think their boss has poor ethics. Employees’ engagement in volunteer efforts in support of their company’s community-based initiatives also declines if they believe their boss is not ethical, though not as dramatically.

    “When morally loaded cues stemming from the organization and its leaders are inconsistent, employees become skeptical about the organization’s ethical stance, integrity, and overall character,” says De Roeck. “Consequently, employees refrain from identifying with their employers, and as a result, significantly diminish their engagement in creating social and environmental good.”

    Companies as engines for positive social change

    Findings of the study, based on surveys of 359 employees at 35 companies in the manufacturing industry (consumer goods, automobile, and textile), could provide insight for companies failing to reap the substantial societal benefits of CSR.

    “This isn’t another story about how I can get my employees to work better to increase the bottom line, it’s more about how I can get employees to create social good,” says De Roeck, whose research focuses on the psychological mechanisms explaining employees’ reactions to, and engagement in, CSR. “Moreover, our measure of employees’ volunteer efforts consists of actions that extend well beyond the work environment, showing that organizations can be a strong engine for positive social change by fostering, through the mechanism of identification, a new and more sustainable way of life to their employees.”

    De Roeck says organizations wanting to boost their social performance by encouraging employee engagement in socially responsible behaviors need to ensure that employees perceive their ethical stance and societal engagement as authentic. To do so, and avoid any perception of greenwashing – the promotion of green-based initiatives despite not practicing them fully – organizations should strive to ensure consistency between CSR engagement and leaders’ ethical stance by training supervisors about social and ethical responsibility. Organizations should also be cautious in hiring and promoting individuals to leadership positions who fit with the company CSR strategy and ethical culture.

    “Organizations should not treat CSR as an add-on activity to their traditional business models, but rather as something that should be carefully planned and integrated into the company strategy, culture, and DNA,” says De Roeck. “Only then will employees positively perceive CSR as a strong identity cue that will trigger their identification with the organization and, as a result, foster their engagement in such activities through socially responsible behaviors.”


  2. Study suggests workers may ‘choke’ under pressure of non-monetary incentives

    October 22, 2017 by Ashley

    From the University of Arkansas, Fayetteville press release:

    Competition for non-monetary awards can have adverse effects on performance and may cause employees to “choke” under pressure, according to a new study by a University of Arkansas economist.

    Raja Kali, professor of economics in the Sam M. Walton College of Business, and colleagues at HEC Montreal, a business school in Canada, examined the performance of elite U.S. golfers between 2006 and 2012 and found that players underperformed when trying to qualify for the U.S. Ryder Cup team, which does not compensate them for participating.

    The findings, published in the Journal of Economics & Management Strategy, challenge historical findings indicating that non-monetary incentives like plaques, rings and “employee-of-the-year” competitions motivate employees to perform better.

    “In terms of broader impact or relevance to the way firms do business, these findings are important, because managers and firms in general probably do not realize that some non-monetary efforts to build morale or boost performance may not be helping,” Kali said. “In fact, they may be counterproductive.”

    The researchers focused on performances of elite golfers in PGA of America tournaments that qualified them for the Ryder Cup, the competition between U.S. and European golfers. Being part of an elite group of golfers and the opportunity to represent one’s country were identified as primary incentives for participating in the Ryder Cup.

    The Ryder Cup qualifying point system allocates a number of points to each PGA Tour tournament. During the qualifying period, which is typically two years, two editions of the same PGA Tour have a different value of Ryder Cup points. One year — the year previous to the Ryder Cup — there are few points, and the next year — the year of the Ryder Cup — there are many points, while all other aspects of the tournament are the same.

    The researchers’ strategy was to compare the performance of players across the same tournament in two subsequent years. By focusing on blocks of the PGA Tour tournament with similar economic incentives (prize money) but different glory incentives (Ryder Cup points), they could measure the effect of the latter.

    “We found significant evidence that the desire to attain glory — which, in this case, we defined as the effects of status, social esteem and respect — was a burden for player performance,” Kali said. “Furthermore, the players who underperformed the most were those who were in more desperate need of Ryder Cup points.”

    The researchers wanted to understand and add to the literature on non-monetary incentives, which are widely used by firms and are generally assumed to have a positive impact on worker performance. The new study is the first to examine non-monetary incentives in a competitive, entrepreneurial setting.

    It is also the first study to find evidence of diminished performance or failure — popularly referred to as “choking,” especially in the context of sports — when explicitly competing for non-monetary incentives.

    Choking under pressure, rather than risk-taking or intimidation by superstars, seems to be the reason behind underperformance, especially when the competitive pressure intensifies,” Kali said.


  3. Study links testosterone to stock market instability

    October 14, 2017 by Ashley

    From the Institute for Operations Research and the Management Sciences press release:

    In the U.S. today, the majority of professional stock market traders are young males and new evidence suggests biology strongly influences their trading behavior. According to a new study in the INFORMS journal Management Science, this could be a significant contributor to fluctuations in the market, as high testosterone levels can cause these traders to overestimate future stock values and change their trading behavior, leading to dangerous prices bubbles and subsequent crashes.

    The study, “The Bull of Wall Street: Experimental Analysis of Testosterone and Asset Trading,” was conducted by Amos Nadler of the Ivey Business School at Western University, Peiran Jiao of the University of Oxford, Paul Zak and Veronika Alexander of the Center for Neuroeconomics Studies at Claremont Graduate University, and Cameron Johnson at the Behavioral Health Institute at Loma Linda.

    The double blind study involved 140 young males, each of whom received a topical gel containing either testosterone or a placebo, prior to participating in an experimental asset market in which they were able to post bid and ask prices, as well as buy and sell financial assets to earn real money.

    The authors found that among groups that received testosterone relative to those who received a placebo, larger price bubbles formed, mispricing lasted longer, market dynamics changed to reflect increasing bidding and selling volume, and their perception of a stock’s value changed despite its being displayed throughout the study. While the traders who received the placebo displayed “buy low to sell high” behavior, those who had received testosterone adhered to “buy high to sell higher.”

    “This research suggests the need to consider hormonal influences on decision-making in professional settings, because biological factors can exacerbate capital risk,” said Nadler. “Perhaps the simplest recommendation is to implement ‘cool down’ periods to interrupt exceptionally positive feedback cycles and return the focus to assets’ fundamental valuations to reduce the possibility of biased decision-making.”

    “Based on our findings, professional traders, investment advisories, and hedge funds should limit the risk taken by young male traders,” continued Nadler. “This is the first study to have shown that testosterone changes the way the brain calculates value and returns in the stock market and therefore — testosterone’s neurologic influence will cause traders to make suboptimal decisions unless systems prevent them from occurring.”


  4. Study assesses effectiveness of deep promotional discounts

    October 5, 2017 by Ashley

    From the University of Arkansas, Fayetteville press release:

    Many retailers employ discounts to attract customers, but it can be difficult for businesses to know what effect these discounts have on overall store performance, and few studies have analyzed store-level data to know for sure whether this strategy works.

    A new study published in the Journal of Retailing shows that promotional discounts increase store traffic and lead to higher overall profits, especially if the advertised products are staples — items such as meat and produce that are purchased frequently and by many customers.

    “Our results validate the widespread use of price promotions supported by feature advertising, such as those found in newspaper circulars,” said Dinesh Gauri, professor of marketing in the Sam M. Walton College of Business. “These featured promotions provided a beneficial impact on several key performance metrics, including store traffic, sales and profits.”

    Over a 49-week period, Gauri and co-authors Brian Ratchford at the University of Texas at Dallas, Joseph Pancras at the University of Connecticut, and Debabrata Talukdar at the University of Buffalo analyzed data on 27 product categories from 24 branches of a popular Northeastern grocery chain. Each week, the authors compiled data on overall traffic, sales per transaction, and profit margin for each store.

    They examined the impact of so-called “loss leader” strategies — the practice of deep promotional discounts to attract customers who will buy other items — on several product categories, including penetration (items bought by many people), frequency (frequently purchased items), storability (items that can be stored, such as paper napkins or plates), impulse items and national brand items.

    Their analysis of about 677,000 transactions, with an average value of $15.44 per transaction, showed that deep discounting, accompanied by a blitz of advertising promotions, achieved retailers’ goal of attracting more customers into stores and increasing overall profits. But the researchers’ main finding came with several caveats, Gauri said.

    Promotional discounts on both high-penetration, high-frequency items (staples such as meat and produce) and low-penetration, low-frequency items (beer and condiments) led to increased traffic but lower sales per transaction.

    “This suggests that these promotional discounts tend to attract small-basket customers,” Gauri said.

    However, discounts in these same categories were associated with higher overall profit margins, especially in the low-penetration, low-frequency category. Gauri said this suggests that the smaller transactions generated by the discounts contained an above average number of high-margin items, in addition to the discounted items.

    “We think this result was driven mainly by beer, which was featured almost every week,” Gauri said.

    These other findings can also give retailers an edge, the researchers said:

    • Broad discounting in one category may lead to diminishing returns.
    • On average, discounts on national brand items had a stronger impact on per-transaction sales than discounts on non-brands.
    • Consumers who took advantage of deep discount promotions on impulse products tended to buy products in more profitable categories.

  5. Lively tunes boost sales in crowded stores

    September 11, 2017 by Ashley

    From the Journal of Retailing at New York University press release:

    If a store is crowded, people tend to buy more if the sound system is playing a fast-paced song rather than a ballad. That’s what a team of researchers found in a field experiment across a chain of grocery convenience stores in Northern Europe.

    The researchers — Klemens M. Knoeferle of the BI Norwegian Business School in Oslo; Vilhelm Camillus Paus, of Saatchi & Saatchi in Oslo; and Alexander Vossen of the University of Siegen, in Germany — conducted a longitudinal experiment to determine whether and to what extent music played a role in influencing shoppers when stores were more or less crowded. The authors noted that customer spending tracked an inverted U-shape as stores became more crowded. They found that when stores weren’t crowded, music had little effect, but as social density increased, music with an up-tempo beat spurred spending.

    In “An Upbeat Crowd: Fast In-store Music Alleviates Negative Effects of High Social Density on Customers’ Spending,” appearing in the September issue of The Journal of Retailing, the authors describe a six-week field experiment in 2014 that tested the interaction between manipulated music tempo and measured social density. The sample included 460 small stores and recorded a total of 43,676 observations about shopping basket value (SBV) and the number of purchased items. Compared with no music, as a store became more crowded, the average SBV was roughly 8 percent greater. The authors also observed that SBV was higher due to shoppers’ buying more items rather than more expensive ones.

    Managerial implications were clear: first, the authors say, retail managers should be aware of crowding’s effect on spending patterns and find ways to control it; second, ambient music is a relatively easy tool for retailers to mitigate crowding effects; and third, the authors provide a metric for measuring when social density demands some lively tunes. In addition, when customers are few, retailers might save royalty fees by not playing music, and because fast music in crowded stores motivated customers to buy more low-priced items, managers should prepare for a run on impulse purchases.


  6. Study suggests way to success for sales newbies

    September 5, 2017 by Ashley

    From the Michigan State University press release:

    Good news for novice salespeople worried about becoming successful: Expressing your gratitude to customers by going above and beyond your job description may be as effective as developing long-term relationships with them, indicates a first-of-its-kind study.

    The scientific investigation into both customer and salesperson gratitude, led by Michigan State University business scholar Stephanie Mangus, is particularly relevant as Millennials enter the workforce and become major consumers. Substantial evidence shows that Millennials, or those born between about 1980 and 2000, are emotionally driven buyers.

    Salespeople who control the emotional tone of their buyer-seller relationship tend to have an upper hand, Mangus said. And one way of controlling that emotional tone is for salespeople to express their gratitude to the customer in positive ways, which in turn can foster customer gratitude and loyalty.

    “We’re not saying you have to go out and hug your customer,” said Mangus, an assistant professor of marketing and an expert in business relationships. “All we’re saying is that you should take action on that emotion in a positive way, to put that emotion into practice. Maybe that’s one extra phone call to share a piece of information with your customer, or maybe that’s one extra call to the service department to make sure that customer doesn’t fall to the end of the list.”

    Mangus and colleagues studied salesperson and customer surveys in a business-to-business setting from a large transportation logistics firm. The study found that when salespeople did not go above and beyond, customer gratitude was low overall – and even lower in new relationships between salesperson and client (compared with long-term relationships).

    But when the salesperson did go above and beyond by expressing their gratitude through action, which the researchers call “extra-role behaviors,” customer gratitude shot up to the same high level for both new and long-term relationships.

    “There’s a general acceptance that the longer you’ve been in a business relationship, the more loyal that customer is to you and the more they’re going to buy from you,” Mangus said. “But what we found is that extra-role behaviors can sometimes take the place of that. So if you’re going above and beyond, it may not matter that it’s a newer or developing relationship.”

    And that’s great news for new and aspiring salespeople.

    “One of the big fears of our sales students is that, ‘Oh man, sales jobs are scary because I’m going to go out there and not have customers and not be able to make any money,” Mangus said. “But what new salespeople have is excitement, energy and passion to prove themselves. So if they are grateful for someone just willing to let them come in the door, and they engage in these extra-role behaviors, they can potentially get over the fact that they haven’t been a salesperson for 20 years and that they don’t have an ongoing relationship with this customer.”


  7. Personifying places can boost travel intentions

    September 3, 2017 by Ashley

    From the Queensland University of Technology press release:

    People who see animals as people and assign human traits to non-human objects are more likely to travel to destinations that are presented as being human-like, according to Queensland University of Technology (QUT) research.

    Dr Kate Letheren, Professor Brett Martin and Dr Hyun Seung Jin, from QUT Business School, found that writing about a destination as if it were human could boost its appeal as a travel destination.

    The research, published in Tourism Management, looked at personality dimensions and the impact on destination choices.

    Participants were shown a travel advertisement for either Paris or Rome. Half of the participants saw an ad where the destination was personified, referring to the city as “she,” while the other half saw an ad that referred to the city as “it.”

    “One of the ads used typical copy for a travel destination advertisement, for example, facts about the city and its attractions. The other used language that humanised the destination, like ‘Paris welcomes you’,” Dr Letheren said.

    “We found people higher in anthropomorphic traits were more likely to respond with feel-good emotions and have a positive view of the destination after reading the personified ad.

    “This suggests people with this trait who see human characteristics in tourism destinations are more likely to want to visit those destinations.”

    The researchers said that levels of anthropomorphic traits varied by person, but some common examples of anthropomorphism at work include people assigning human emotions to a pet dog or referring to a car or ship as “she.”

    Professor Martin said it was a normal tactic for destination and major event marketers to try to make a connection with consumers.

    “Humanising a destination or event can help place it in a positive light and give the audience a warm, fuzzy feeling. This is why cute cartoon animals are often chosen as mascots for the Olympics, for example.

    “Large sums of money are spent on campaigns to try to attract tourists and destinations need to appear warm and welcoming.

    “Tourism campaigns often focus on attracting specific demographics, for example Chinese tourists or luxury holiday-makers, and our research shows that if you have a tourist who naturally humanises, you can tailor the message to appeal to this aspect of their personality.

    “If you can successfully identify what traits people have, you can send them customised messages. Ten to 20 years ago that wasn’t possible, but now it is.”


  8. How taste and sound affect when you buy

    August 21, 2017 by Ashley

    From the Brigham Young University press release:

    There’s a reason marketers make appeals to our senses; the “snap, crackle and pop” of Rice Krispies makes us want to buy the cereal and eat it. But as savvy as marketers are, they may be missing a key ingredient in their campaigns.

    New research finds the type of sensory experience an advertisement conjures up in our mind — taste and touch vs. sight and sound — has a fascinating effect on when we make purchases.

    The study led by marketing professors at Brigham Young University and the University of Washington finds that advertisements highlighting more distal sensory experiences (sight/sound) lead people to delay purchasing, while highlighting more proximal sensory experiences (touch/taste) lead to earlier purchases.

    “Advertisers are increasingly aware of the influence sensory cues can play,” said lead author Ryan Elder, associate professor of marketing at BYU. “Our research dives into which specific sensory experiences will be most effective in an advertisement, and why.”

    Elder, with fellow lead author Ann Schlosser, a professor of marketing at the University of Washington, Morgan Poor, assistant professor of marketing at San Diego State University, and Lidan Xu, a doctoral student at the University of Illinois, carried out four lab studies and a pilot study involving more than 1,100 study subjects for the research, published in the Journal of Consumer Research.

    Time and time again, their experiments found that people caught up in the taste or touch of a product or event were more likely to be interested at an earlier time.

    In one experiment, subjects read one of two reviews for a fictional restaurant: One focused on taste/touch, the other emphasized sound/vision. Participants were then asked to make a reservation to the restaurant on a six-month interactive calendar. Those who read the review focusing on the more proximal senses (taste and touch) were significantly more likely to make a reservation closer to the present date.

    In another experiment, study subjects read ad copy for a summer festival taking place either this weekend or next year. Two versions of the ad copy existed: one emphasizing taste (“You will taste the amazing flavors…”) and one emphasizing sound (“You will listen to the amazing sounds…”).

    When subjects were asked when they would like to attend, those who read the ad copy about taste had a higher interest in attending a festival this weekend. Those who read ads emphasizing sounds were more likely to have interest in attending the festival next year.

    If an advertised event is coming up soon, it would be better to highlight the more proximal senses of taste or touch — such as the food served at the event — than the more distal senses of sound and sight,” Schlosser said. “This finding has important implications for marketers, especially those of products that are multi-sensory.”

    As part of the study, researchers also learned an interesting insight into making restaurant reviews more helpful. In their field study, the authors analyzed 31,889 Yelp reviews to see if they could find connections between the sensory elements of a reviewer’s experience and the usefulness of a review.

    They found reviews from people who emphasized a more distal sense (such as sight) were rated more useful when the review used the past tense (“We ate here last week and…”), while people emphasizing a proximal sense (touch) had more useful reviews when they used the present tense (“I’m eating this right now and it is so good!”).

    “Sensory marketing is increasingly important in today’s competitive landscape. Our research suggests new ways for marketers to differentiate their products and service, and ultimately influence consumer behavior,” Elder said. “Marketers need to pay closer attention to which sensory experiences, both imagined and actual, are being used.”


  9. Study suggests managers often overestimate customer satisfaction

    by Ashley

    From the Indiana University press release:

    Despite the millions companies spend to gather information about customer satisfaction, senior managers often fail to understand those customers’ expectations.

    Neil A. Morgan, professor and PetSmart Distinguished Chair of Marketing at Indiana University’s Kelley School of Business, and four co-authors of a recent journal article present a huge disconnect between managers and customers in terms of understanding what drives customer satisfaction and loyalty.

    The researchers used data from 70,000 American Customer Satisfaction Index surveys and compared it with responses to the same questions posed to 1,068 marketing managers and those in customer-facing roles at the American Customer Satisfaction Index-measured companies, predominately Fortune 500 firms.

    Their results show that managers in a wide cross-section of industries often overestimate their customers’ satisfaction. This leads them to rely on unrealistic expectations when making marketing decisions and allocating resources to address marketplace issues.

    “Clearly there’s been a communication breakdown,” Morgan said. “Either the messages aren’t being disseminated, or they aren’t being understood within organizations. Otherwise, managers would have a better understanding of both the level and drivers of dissatisfaction among customers.

    “That means that there are customer satisfaction problems that are not being solved, because managers don’t know or don’t believe that they exist,” he added. “Even if they did, they try fixing the wrong things.”

    The paper, “Do Managers Know What Their Customers Think and Why,” appears in the Journal of the Academy of Marketing Science.

    Most of the large consumer-focused firms in the study sample have customer-satisfaction monitoring and feedback systems in place and invest heavily in them. Morgan believes that managers aren’t being exposed to the customer feedback data or they aren’t understanding it accurately.

    “These overly optimistic managers are likely to miss trouble signs when they appear,” the researchers wrote. “This is compounded by managers significantly underestimating the proportion of customers who have complained about the firm’s products or services in the recent past.

    Inaccurate understanding of what drives customers’ perceptions of products and services hampers a company’s ability to react to an issue. Even when managers recognize a need to improve customers’ perceptions, they may fail to do so in a way that leads to the desired outcomes.

    For example, the survey results indicate that managers are more likely to underinvest in raising customer quality perceptions as a way to enhance customer satisfaction.

    “Our findings may also provide an explanation for overemphasis on cost-cutting and efficiency observed in firms’ strategies relative to that on quality improvements or achieving differentiation,” the study said. “Where managers overestimate their own customer perception of the firm’s performance, cutbacks that undermine the quality of service, for example, may seem less dangerous than they really are.”

    “There seems to be a belief in lots of companies — and it’s kind of an urban myth — that most people who are unhappy won’t complain,” Morgan added. “Therefore, the complaints that you get are not representative of the level of satisfaction that exists among general customers. This data suggests that they shouldn’t be treating complaints as something different. They should be used as part of an overall customer feedback system.”

    Customer satisfaction is a significant factor on the bottom line, and previous studies have found that customer complaints impact stock returns.

    “For managers, the results of our study should serve as a wake-up call that all is not well with most firms’ customer satisfaction and complaint monitoring systems,” the researchers wrote. “Despite often being the single biggest line-item of most firms’ market research expenditures, existing customer feedback systems are not performing an effective management control role.”


  10. Study suggests overqualified employees experience psychological strain

    July 28, 2017 by Ashley

    From the Florida Atlantic University press release:

    Feel like you’re a big fish in a small pond? If you’re an employee who perceives you’re overqualified for your position, chances are you’re unsatisfied with your job, uncommitted to your organization and experience psychological strain, according to a study co-authored by a faculty member from Florida Atlantic University’s College of Business.

    Perceived overqualification — the belief that one has surplus skills compared to job requirements — can have negative implications for employees and employers alike, said Michael Harari, Ph.D., assistant professor in FAU’s Department of Management Programs. Harari, together with fellow researchers Archana Manapragada and Chockalingam Viswesvaran of Florida International University, carried out a meta-analysis of perceived overqualification synthesizing 25 years of research to clarify disparate and conflicting findings in the literature. Their findings were recently published in the Journal of Vocational Behavior.

    Perceived overqualification occurs when an employee is expecting a job that utilizes their qualifications but does not find themselves in such a position, leaving them feeling essentially deprived.

    “That deprivation is what is theorized to result in these negative job attitudes,” Harari said. “There’s a discrepancy between expectation and reality. Because of this, you’re angry, you’re frustrated and as a result you don’t much care for the job that you have and feel unsatisfied.”

    Psychological strain can stem from employees who don’t feel they’re being rewarded for their efforts because there is an imbalance between their efforts and the reward structure of work.

    “We invest effort at work and we expect rewards in return, such as esteem and career opportunities,” Harari said. “And for an overqualified employee, that expectation has been violated. This is a stressful experience for employees, which leads to poor psychological wellbeing, such as negative emotions and psychological strain.”

    Employees who feel overqualified are also more likely to engage in deviant behaviors, Harari said. This might range from coming in late or leaving early to theft or bullying co-workers. The more overqualified an employee feels, the more likely they are to engage in counterproductive behaviors that impair the effective functioning of organizations, Harari said. Employees who were younger, overeducated and narcissistic tended to report higher levels of perceived overqualification.

    “It seems to suggest that there is a need to take jobs below one’s skill level in order to gain entrance into the workforce,” Harari said. “We do see that, as people get older, they are less likely to report overqualification.”