Today we identify service articles published in Marketing, Management, Operations, Productions, Information Systems & Practioner-oriented Journals in the last months.

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Ge, R., Z. Zheng, X. Tian and L. Liao (2021): Human–Robot Interaction: When Investors Adjust the Usage of Robo-Advisors in Peer-to-Peer Lending, Information Systems Research, 32(2426), pp.774-785

We study the human–robot interaction of financial-advising services in peer-to-peer lending (P2P). Many crowdfunding platforms have started using robo-advisors to help lenders augment their intelligence in P2P loan investments. Collaborating with one of the leading P2P companies, we examine how investors use robo-advisors and how the human adjustment of robo-advisor usage affects investment performance. Our analyses show that, somewhat surprisingly, investors who need more help from robo-advisors—that is, those encountered more defaults in their manual investing—are less likely to adopt such services. Investors tend to adjust their usage of the service in reaction to recent robo-advisor performance. However, interestingly, these human-in-the-loop interferences often lead to inferior performance.

Link: http://dx.doi.org/10.1287/isre.2021.1009 [Google]

 

Schanke, S., G. Burtch and G. Ray (2021): Estimating the Impact of “Humanizing” Customer Service Chatbots, Information Systems Research, 32(2426), pp.736-751

In this work, we investigate how applying human-like characteristics to customer service chatbots can influence retail outcomes. This is an important managerial question as creating effective chatbot experiences through messaging platforms has proven difficult for organizations. Often, chatbot developers apply characteristics such as giving a chatbot a human name, adding humor, and so on, without knowing how these features influence end user behavior. Implementing a field experiment in collaboration with a dual channel clothing retailer based in the United States, we automate a used clothing buy-back process, such that individuals engage with the retailer’s autonomous chatbot to describe the used clothes they wish to sell, obtain a cash offer, and (if they accept) print a shipping label to finalize the transaction. We provide evidence that, in this retail setting, anthropomorphism is beneficial for transaction outcomes, but that it also leads to significant increases in consumers’ sensitivity to the offer amount. We argue that the latter effect occurs because, as a chatbot becomes more human-like, consumers shift to a fairness evaluation or negotiating mindset. We study the impacts of “humanizing” artificial intelligence (AI)-enabled autonomous customer service agents (chatbots). Implementing a field experiment in collaboration with a dual channel clothing retailer based in the United States, we automate a used clothing buy-back process, such that individuals engage with the retailer’s autonomous chatbot to describe the used clothes they wish to sell, obtain a cash offer, and (if they accept the offer) print a shipping label to finalize the transaction. We causally estimate the impact of chatbot anthropomorphism on transaction conversion by randomly exposing consumers to exogenously varied levels of chatbot anthropomorphism, operationalized by incorporating a random draw from a set of three anthropomorphic features: humor, communication delays, and social presence. We provide evidence that, in this retail setting, anthropomorphism is beneficial for transaction outcomes, but that it also leads to significant increases in offer sensitivity. We argue that the latter effect occurs because, as a chatbot becomes more human-like, consumers shift to a fairness evaluation or negotiating mindset. We also provide descriptive evidence suggesting that the benefits of anthropomorphism for transaction conversion may derive, at least in part, from consumers’ increased willingness to disclose personal information necessary to complete the transaction.

Link: http://dx.doi.org/10.1287/isre.2021.1015 [Google]

 

Zhu, F., X. Li, E. Valavi and M. Iansiti (2021): Network Interconnectivity and Entry into Platform Markets, Information Systems Research, 32(2426), pp.1009-1024

Digital technologies have led to the emergence of many platforms in our economy today. In certain platform networks, buyers in one market purchase services from providers in many other markets, whereas in others, buyers primarily purchase services from providers within the same market. Accordingly, network interconnectivity—which measures the degree to which consumers in one market purchase services from service providers in a different market—varies across different industries. We examine how network interconnectivity affects interactions between an incumbent platform serving multiple markets and an entrant platform seeking to enter one of these markets. Our model yields several interesting results. First, even if the entrant can advertise at no cost, it still may not want to make every user in a local market aware of its service, as doing so may trigger a competitive response from the incumbent. Second, having more mobile buyers, which increases interconnectivity between markets, can reduce the incumbent’s incentive to fight and, thus, increase the entrant’s incentive to expand. Third, stronger interconnectivity between markets may or may not make the incumbent more defensible: when advertising is not costly and mobile buyers consume in both their local markets and the markets they visit, a large number of mobile buyers will increase the entrant’s profitability, thereby making it difficult for the incumbent to deter entry. However, when advertising is costly or mobile buyers only consume in the markets they travel to, a large number of mobile buyers will help the incumbent deter entry. When advertising cost is at an intermediate level, the entrant prefers a market with moderate interconnectivity between markets. Fourth, we find that even if advanced targeting technologies can enable the entrant to also advertise to mobile buyers, the entrant may choose not to do so in order to avoid triggering the incumbent’s competitive response. Finally, we find that the presence of network effects is likely to decrease the entrant’s profit. Our results offer managerial implications for platform firms and help understand their performance heterogeneity.

Link: http://dx.doi.org/10.1287/isre.2021.1010 [Google]

 

Arsenovic, J., A. De Keyser, B. Edvardsson, B. Tronvoll and T. Gruber (2021): Justice (is not the same) for all: The role of relationship activity for post-recovery outcomes, Journal of Business Research, 134(2426), pp.342-351

Despite the widespread adoption of the justice framework in service recovery literature, research findings vary as to what dimension – distributive, interactional, procedural – is most important. This paper contributes to this debate by considering how an easily accessible variable like relationship activity (i.e., the frequency of visiting and purchasing from a company) moderates the impact of the justice dimensions on post-recovery customer outcomes. Findings show that distributive justice is the only dimension impacting word-of-mouth (WOM) and repurchase behavior for low- and medium-relationship-activity customer segments. For a high-relationship-activity segment, all justice dimensions have a positive and balanced impact on WOM and/or repurchase behavior. This research demonstrates the potential of a segmented approach for recovery, while also providing managers with valuable insights into how they can use readily available information to adapt their service recovery efforts.

Link: http://dx.doi.org/10.1016/j.jbusres.2021.05.031 [Google]

 

Brengman, M., L. De Gauquier, K. Willems and B. Vanderborght (2021): From stopping to shopping: An observational study comparing a humanoid service robot with a tablet service kiosk to attract and convert shoppers, Journal of Business Research, 134(2426), pp.263-274

• The POS conversion funnel is introduced to examine the effectiveness of POS communication tools. • The impact of a humanoid service robot (HSR) is compared to a tablet service kiosk (TSK). • An observational study is performed to examine actual shopper behavior and real sales data. • The HSR proved to engender 26 times more stopping power and to elicit more engagement. • The HSR was also able to attract more shoppers into the store and prompted more spending. This study investigates the effectiveness of a humanoid service robot (HSR) versus a tablet service kiosk (TSK) along the stages of the point-of-sale (POS) conversion funnel. The observational data gathered by means of a field experiment show that the HSR elicited 26 times more interactions (i.e., passersby touching the screen) than the TSK and that these interactions lasted almost +50% as long. Moreover, more people looked at the store and consequently entered it when the HSR was deployed. Furthermore, more unique transactions were registered, and a higher amount was spent during the days when the HSR was present in front of the store. This study proves that implementing an HSR in the store environment is more effective than a TSK in attracting passersby and converting them into buyers.

Link: http://dx.doi.org/10.1016/j.jbusres.2021.05.025 [Google]

 

Bretas, V. P. G. and I. Alon (2021): Franchising research on emerging markets: Bibliometric and content analyses, Journal of Business Research, 133(2426), pp.51-65

• Two main clusters were revealed: international franchising and social franchising. • Most of the articles deal with developed countries’ franchisors in emerging markets. • International expansion topics, as entry modes and market selection, are common. • Social franchising is an emerging theme, but most articles are descriptive. • Social franchising studies approach health services, technology and development. This study reviews the franchising literature on emerging markets. We used the Bibliometrix R-package and VOSviewer software to perform a bibliometric analysis of 297 articles between 1989 and 2020 obtained from the Scopus database. We combined bibliometric coupling, historiographic citation, keyword co-occurrence, and conceptual thematic analysis, with a content analysis of the most cited articles based on total global and local citations. We identified two main research clusters: international franchising and social franchising. This article provides a deep understanding of the intellectual and conceptual structure of the academic field. It complements existing qualitative reviews and attempts at characterizations, and suggests future research directions.

Link: http://dx.doi.org/10.1016/j.jbusres.2021.04.067 [Google]

 

de Jong, A., J. J. L. Schepers, C. R. Lages and S. Kadić-Maglajlić (2021): The role of the service manager’s perceived career success in frontline employees’ learning processes and service improvement, Journal of Business Research, 134(2426), pp.601-617

Previous literature fails to offer firms consistent guidelines on how successful managers may enhance or reduce the potential to learn from frontline service encounters. In addressing this research gap, this study contributes to the frontline employee (FLE) literature by 1) investigating the contingency role of managers’ perceived career success in FLEs’ personal learning process, 2) distinguishing between FLEs’ service-related and context-related personal learning, and 3) accounting for both exploratory and exploitative learning. This study uses two datasets: an exploratory dataset on 253 FLEs and a multilevel and multisource dataset on 444 FLEs and 55 service managers. Findings reveal that managers who are unsuccessful in their careers still stimulate frontline learning processes, but their subordinates generally use only their service-related personal learning to generate ideas for service improvement. Successful managers are better able to guide their FLEs in how to turn context-related learning into service improvement.

Link: http://dx.doi.org/10.1016/j.jbusres.2021.05.051 [Google]

 

Gallan, A. S., S. Kabadayi, F. Ali, A. Helkkula, L. Wu and Y. Zhang (2021): Transformative hospitality services: A conceptualization and development of organizational dimensions, Journal of Business Research, 134(2426), pp.171-183

The hospitality industry increasingly adopted well-being practices. However, academic literature has neglected to understand how hospitality organizations design services to improve well-being for customers, employees, communities, and societal and environmental well-being. This paper develops a novel concept, Transformative Hospitality Services (THS), which emanates from an ecosystem view and considers hospitality services as holding the possibility to transform the well-being of various constituents. Building on insights from in-depth interviews with industry experts, this paper identifies organizational dimensions that foster hospitality organizations’ transformative services offerings. Data also reveal facilitators and barriers for hospitality organizations to consider when developing THS offerings. A four-stage journey map is proposed to assess hospitality organizations’ journey towards becoming more transformative. As a result, this research presents contributions to transformative service research by advancing the concept of THS. Additionally, this research offers practical guidance for hospitality organizations through the development of the THS dimensions and journey map.

Link: http://dx.doi.org/10.1016/j.jbusres.2021.05.028 [Google]

 

Gross, H. P., S. Ingerfurth and J. Willems (2021): Employees as reputation advocates: Dimensions of employee job satisfaction explaining employees’ recommendation intention, Journal of Business Research, 134(2426), pp.405-413

Reputation is a crucial asset for service organizations, in particular when actual service quality is hard to assess, e.g. in the context of hospitals. Employees and their recommendation intentions to other professionals and potential patients are crucial in the reputation building process. Against this background, we test with a quantitative-exploratory approach, for 1,022 employees in two German hospitals, how eleven dimensions of employees’ job satisfaction explain their recommendation intention on behalf of the hospital they work. Moreover, we explore this for different employee groups. Our results show that there are different employee job satisfaction dimensions explaining recommendation intention for different employee groups such as nurses, doctors, or employees in the administrative field. We frame our findings against the broad but scattered management literature that is relevant for job satisfaction and organizational reputation, and discuss implications for practice and further research.

Link: http://dx.doi.org/10.1016/j.jbusres.2021.05.021 [Google]

 

Ma, R. and W. Wang (2021): Smile or pity? Examine the impact of emoticon valence on customer satisfaction and purchase intention, Journal of Business Research, 134(2426), pp.443-456

Emoticons are pictorial/textual depictions of facial expressions used in marketing communications. Little is known about how customers interpret positive or negative emoticons used by customer service employees in service failure contexts. We investigate the impact of emoticon type on customer satisfaction and re-purchasing intention, and examine the sequential mediating role of perceived sincerity and willingness to forgive. Results show that the use of a negative emoticon in a response leads to a higher level of customer satisfaction and re-purchasing intention than responses with a positive emoticon. We further demonstrate that customers perceive that the presence of a negative emoticon in a response is more sincere and generates a higher level of forgiveness than those responses that use positive emoticons, but only when the communal relationship is salient in the customer’s mind. Our findings offer important theoretical and practical implications in service failure contexts.

Link: http://dx.doi.org/10.1016/j.jbusres.2021.05.057 [Google]

 

Paiola, M., F. Schiavone, R. Grandinetti and J. Chen (2021): Digital servitization and sustainability through networking: Some evidences from IoT-based business models, Journal of Business Research, 132(2426), pp.507-516

In the last few years, the widespread of digital technologies, such as the Internet of Things, in manufacturing industries and servitization became so strong that, recently, a growing research stream has begun to focus on how digital technologies enable service development, ushering in digital servitization as a specific research stream. Notwithstanding the prospective academic and managerial importance of explaining how digital servitization leads to sustainability, this research direction is still poorly investigated in the literature. The present article aims to fill such research gaps by answering the following research question: How do digitally based business model innovation and networking in manufacturing servitization impact sustainability? In order to answer this research question, we performed a multiple case study about technology-driven business model innovation and networking that has been implemented over the last few years by four small and medium manufacturing Italian companies.

Link: http://dx.doi.org/10.1016/j.jbusres.2021.04.047 [Google]

 

Ratten, V., V. L. da Silva Braga and C. S. da Encarnação Marques (2021): Sport entrepreneurship and value co-creation in times of crisis: The covid-19 pandemic, Journal of Business Research, 133(2426), pp.265-274

Drawing on sport entrepreneurship and service-dominated logic theory, this paper explores the association between networks, value co-creation and crises in the articulation of sport entrepreneurial ecosystems. Recently the sport industry has had to rapidly innovate due to the COVID-19 pandemic, so the aim of this study is to understand how it affects the dynamism of an entrepreneurial ecosystem. This means focusing on the opportunities for value co-creation necessitated in times of crisis through the creation of entrepreneurial opportunities. The data was collected through semi-structured interviews of sport managers within the sport entrepreneurial ecosystem during the COVID-19 crisis. This enabled detailed data to be obtained on how sport entrepreneurs were responding to change based on altering contextual conditions. The paper offers a way to understand the unique nature of the sport industry and the intricate nature of sport entrepreneurial ecosystems in times of crisis. Thereby the findings provide important insights into how the sport industry has responded to the COVID-19 pandemic through the existence of entrepreneurial ecosystems. This highlights that in times of crisis, the sport industry can utilise their unique entrepreneurial ecosystem in order to encourage proactive collaboration leading to value co-creation.

Link: http://dx.doi.org/10.1016/j.jbusres.2021.05.001 [Google]

 

Siaw, C. A. and D. Sarpong (2021): Dynamic exchange capabilities for value co-creation in ecosystems, Journal of Business Research, 134(2426), pp.493-506

Open sources and digital platforms offer significant opportunities for knowledge-intensive entrepreneurship (KIE) firms to participate on the platforms of existing firms while enabling the existing firms to develop dynamic capabilities (DC). However, the processes through which KIE and existing firms co-create and co-capture value from each other in ecosystems remain less understood. Synthesizing the diverse streams of literature on DC development in ecosystems, entrepreneurial ecosystems development by KIE firms, and service-centred views of value co-creation, we develop what we refer to as a ‘dynamic exchange capabilities (DEC) framework’ to delineate the processes through which firms co-create and co-capture value in ecosystems. Emphasizing the transience and potential trajectory of exchanges in ecosystems, we highlight how potential benefits of exchanges in ecosystems may affect the relationships and resource integration of both existing and KIE firms. The implications for the theory and practice of dynamic exchange capabilities for value co-creation are outlined.

Link: http://dx.doi.org/10.1016/j.jbusres.2021.05.060 [Google]

 

Simone, C., S. Barile and R. Grandinetti (2021): The emergence of new market spaces: Brokerage and firm cognitive endowment, Journal of Business Research, 134(2426), pp.457-466

Framing within the service-dominant logic view, this paper deals with the emergence of new market spaces conceptualized as new contexts of use. This work aims to describe the emergence of a new value cocreation context from brokerage and exaptation strategies. By filling a literature gap, the paper describes why and how the service-dominant logic and brokerage strategy, i.e., a strategy brokering different cultural domains and contexts of use, and their variant exaptation, i.e., a strategy brokering a technological domain featured by a specific use with a completely different context of use, are useful for framing the emergence of a new market space. The paper’s second aim is to draw the configuration of firm cognitive endowment—the T-shaped model—potentially enabling brokerage/exaptation strategies. The paper highlights the features a firm cognitive endowment should possess in terms of in-depth competencies and dynamic capabilities to trigger new and potentially valuable contexts of use.

Link: http://dx.doi.org/10.1016/j.jbusres.2021.05.061 [Google]

 

Surachartkumtonkun, J., D. Grace and M. Ross (2021): Unfair customer reviews: Third-party perceptions and managerial responses, Journal of Business Research, 132(2426), pp.631-640

This research examines third-party perceptions of unfair reviews and effects of managerial responses. Using an experimental research design, this research reports the findings of two studies involving 1115 US consumers. Study 1 examines third-party perceptions (i.e., severity of incident, attribution of blame and opportunistic intentions) after reading reviews. Study 2 examines the moderating influence of the managerial response strategies. The findings provide significant insight for service providers in scripting their responses to unfair reviews. To protect their reputation, a defensive managerial response strategy is found to be best when (1) severity of the reported incident is high and (2) review content indicates possible opportunistic intentions of the complainant. Alternatively, when attribution of blame lies strongly with the service provider, then an accommodative strategy is more effective. Our findings contribute to the unfair review and managerial response literature by highlighting the benefits of both the accommodative and the defensive strategies.

Link: http://dx.doi.org/10.1016/j.jbusres.2020.09.071 [Google]

 

von Richthofen, G. and F. von Wangenheim (2021): Managing service providers in the sharing economy: Insights from Airbnb’s host management, Journal of Business Research, 134(2426), pp.765-777

• Identifies strategies and tactics that platforms can use to manage service providers. • Strategies include orienting, enabling, and incentivizing and controlling providers. • Orienting involves exemplifying, mythologizing, and valorizing. • Enabling involves circulating best practices, tool providing, and peer education. • Incentivizing and controlling involves using algorithms, peer and formal control. Platforms in the sharing economy match service providers and consumers. The service providers control most of the customer experience. Nevertheless, platforms have to provide a distinctive customer experience to differentiate their brands in the marketplace. This study examines the tactics platform leaders can use to align the services the providers offer with the desired customer experience. Our inductive qualitative analysis of Airbnb’s efforts to shape the Airbnb experience revealed nine tactics that are associated with three strategies, namely, orienting, enabling, and incentivizing and controlling. Our findings contribute to the literature on the management of service providers in the sharing economy.

Link: http://dx.doi.org/10.1016/j.jbusres.2021.06.049 [Google]

 

Llewellyn, N. (2021): The Embodiment of Consumer Knowledge, Journal of Consumer Research, 48(2426), pp.212-234

An investigation into the embodiment of consumer knowledge is presented, drawing on ethnomethodology and the allied field of conversation analysis. Analyzing video recordings of 189 service encounters at the ticket desk of an art gallery, the study explores the embodiment of consumer knowledge, how consumer knowledge is witnessable from quotidian details of customers’ embodied conduct, how they talk, move their bodies, gesture, handle objects, and cast their gaze. Consumer knowledge is shown to be socially organized, with social considerations informing what customer should know, and how customers’ faulty assertions and claims should be treated. In the way firms approach consumer knowledge, the article describes how they might create or undermine interactive value. This article breaks new ground by demonstrating that consumer knowledge is relevant for understanding the actions of consumers, not only as a result of cognitive processes but also as it is embodied.

Link: http://dx.doi.org/10.1093/jcr/ucab003 [Google]

 

Zhou, Q., B. J. Allen, R. T. Gretz and M. B. Houston (2021): Platform Exploitation: When Service Agents Defect with Customers from Online Service Platforms, Journal of Marketing, (2426), pp.1

Online, pure-labor service platforms (e.g., Zeel, Amazon Home Services, Freelancer.com) represent a multibillion-dollar market. An increasing managerial concern in such markets is the opportunistic behavior of service agents who defect with customers off platform for future transactions. Using multiple methods across studies, the authors explain this platform exploitation phenomenon. In Study 1, they utilize a theories-in-use approach to clarify why and when platform exploitation occurs and derive some hypotheses. Study 2 empirically tests these hypotheses using data from a health care platform that connects nurses and patients. The results indicate that high-quality, long-tenured service agents may enhance platform usage, but customers also are more likely to defect with such agents. Platform exploitation also increases with greater customer–agent interaction frequency (i.e., building stronger relationships). This phenomenon decreases agents’ platform usage due to capacity constraints caused by serving more customers off platform. These effects are stronger as service price increases (because higher prices equate to more fee savings), as service repetitiveness increases, and as the agent’s on-platform customer pool comprises more repeat and more proximal customers. Finally, the authors use two scenario-based experiments to establish some managerial strategies to combat platform exploitation.

Link: http://dx.doi.org/10.1177/00222429211001311 [Google]

 

Sok, P., T. S. Danaher and K. M. Sok (2021): Matching the Personal Initiative Capabilities of FLEs to Their Self-Regulatory Processes and the Firm’s Initiative Climate, Journal of Retailing, 97(2426), pp.319-335

[Display omitted] • To meet satisfy customer needs frontline employees need to demonstrate personal initiative. • Personal initiative mediates the relationship among customer orientation and FLE performance. • Initiative-taking must be closely aligned with an employee’s internal self-regulatory processes. • Initiative climate moderates frontline employee’s self-regulatory processes. • The “fit” between FLEs, their roles, and the work climate must be “right” to optimize performance. Frontline employees (FLEs) — the people behind the counter, on the phone, or walking the shop floor — can profoundly affect the customer experience. Harnessing the capability of FLEs to positively shape customer experiences is critical for service firms. However, placing the right employee in the right frontline role is not an easy task. To deliver positive service experiences, FLEs must be customer-oriented, placing customers’ interests first. In addition, FLEs need to demonstrate personal initiative by going beyond prescribed job roles to find solutions to customer problems. We propose that personal initiative is an important mediating variable in the relationship between customer orientation and FLE performance. Further, we examine whether this relationship is strengthened or weakened when a firm’s climate encourages initiative-taking behavior and FLEs have a prove or avoid orientation, or engage in deep or surface acting. We test the model across two studies using a multi-respondent data collection procedure within the retail banking sector. Our findings demonstrate that personal initiative mediates the relationship between customer orientation and FLE performance. Notably, this effect is stronger when a firm’s climate encourages initiative-taking and when FLEs have a prove orientation or engage in deep acting, and that the effect is weaker when FLEs have an avoid orientation or engage in surface acting. Our findings underscore that it is only when the fit between FLEs, their roles, and the work climate is right that firms will get the best out of their employees (c.f., Arthur et al. 2006; Kristof-Brown et al., 2005).

Link: http://dx.doi.org/10.1016/j.jretai.2020.11.010 [Google]

 

Bolton, R. N., A. Gustafsson, C. O. Tarasi and L. Witell (2021): Designing satisfying service encounters: website versus store touchpoints, Journal of the Academy of Marketing Science, (2426), pp.1-23

This study investigated how touchpoints moderate the antecedents of customer satisfaction with service encounters by comparing online and in-store encounters. Construal level theory was used within the Touchpoint, Context, Qualities (TCQ) Framework (De Keyser et al., 2020) to integrate a comprehensive model of how touchpoints—websites or stores—influence the magnitude of customer responses to qualities of service encounters. A hierarchical linear model (HLM) was estimated using survey data describing the service encounters of 2.4 million customers with a global retailer. Online customers weighed cognitive and behavioral qualities more heavily than in-store customers, whereas they weighed emotional and sensorial qualities less heavily. Moreover, random effects in the HLM model indicated that each country and store would have unique clientele effects for specific qualities. Since each firm has limited resources, this research offers guidance on key qualities in designing satisfying service encounters for each touchpoint and how qualities should be standardized and customized in global omnichannel environments.

Link: http://dx.doi.org/10.1007/s11747-021-00808-9 [Google]

 

Abhishek, V., M. Dogan and A. Jacquillat (2021): Strategic Timing and Dynamic Pricing for Online Resource Allocation, Management Science, 67(2426), pp.4880-4907

This paper optimizes dynamic pricing and real-time resource allocation policies for a platform facing nontransferable capacity, stochastic demand-capacity imbalances, and strategic customers with heterogenous price and time sensitivities. We characterize the optimal mechanism, which specifies a dynamic menu of prices and allocations. Service timing and pricing are used strategically to: (i) dynamically manage demand-capacity imbalances, and (ii) provide discriminated service levels. The balance between these two objectives depends on customer heterogeneity and customers’ time sensitivities. The optimal policy may feature strategic idlenexss (deliberately rejecting incoming requests for discrimination), late service prioritization (clearing the queue of delayed customers), and deliberate late-service rejection (focusing on incoming demand by rationing capacity for delayed customers). Surprisingly, the price charged to time-sensitive customers is not increasing with demand—high demand may trigger lower prices. By dynamically adjusting a menu of prices and service levels, the optimal mechanism increases profits significantly, as compared with dynamic pricing and static screening benchmarks. We also suggest a less information-intensive mechanism that is history-independent but fine-tunes the menu with incoming demand; this easier-to-implement mechanism yields close-to-optimal outcomes. This paper was accepted by Gabriel Weintraub, revenue management and market analytics.

Link: http://dx.doi.org/10.1287/mnsc.2020.3756 [Google]

 

Dixon, J., B. Hong and L. Wu (2021): The Robot Revolution: Managerial and Employment Consequences for Firms, Management Science, 67(2426), pp.5586-5605

As a new general-purpose technology, robots have the potential to radically transform employment and organizations. In contrast to prior studies that predict dramatic employment declines, we find that investments in robotics are associated with increases in total firm employment but decreases in the total number of managers. Similarly, we find that robots are associated with an increase in the span of control for supervisors remaining within the organization. We also provide evidence that robot adoption is not motivated by the desire to reduce labor costs but is instead related to improving product and service quality. Our findings are consistent with the notion that robots reduce variance in production processes, diminishing the need for managers to monitor worker activities to ensure production quality. As additional evidence, we also find that robot investments predict improved performance measurement and increased adoption of incentive pay based on individual employee performance. With respect to changes in skill composition within the organization, robots predict decreases in employment for middle-skilled workers but increases in employment for low- and high-skilled workers. We also find that robots predict not only changes in employment but also corresponding adaptations in organizational structure. Robot investments are associated with both centralization and decentralization of decision-making authority depending on the task, but decision rights in either case are reassigned away from the managerial level of the hierarchy. Overall, our results suggest that robots have distinct and profound effects on employment and organizations that require fundamental changes in firm practices and organizational design. This paper was accepted by Lamar Pierce, organizations.

Link: http://dx.doi.org/10.1287/mnsc.2020.3812 [Google]

 

Elmachtoub, A. N. and M. L. Hamilton (2021): The Power of Opaque Products in Pricing, Management Science, 67(2426), pp.4686-4702

We study the power of selling opaque products, that is, products where a feature (such as color) is hidden from the customer until after purchase. Opaque products, which are sold with a price discount, have emerged as a powerful vehicle to increase revenue for many online retailers and service providers that offer horizontally differentiated items. In the opaque selling models we consider, all of the items are sold at a single common price alongside opaque products that may correspond to various subsets of the items. We consider two types of customers, risk-neutral ones, who assume they will receive a truly random item of the opaque product, and pessimistic ones, who assume they will receive their least favorite item of the opaque product. We benchmark opaque selling against two common selling strategies: discriminatory pricing, where one explicitly charges different prices for each item, and single pricing, where a single price is charged for all the items. We give a sharp characterization of when opaque selling outperforms discriminatory pricing; namely, this result holds for situations where all customers are pessimistic or the item valuations are supported on two points. In the latter case, we also show that opaque selling with just one opaque product guarantees at least 71.9% of the revenue from discriminatory pricing. We then provide upper bounds on the potential revenue increase from opaque selling strategies over single pricing and describe cases where the increase can be significantly more than that of discriminatory pricing. Finally, we provide pricing algorithms and conduct an extensive numerical study to assess the power of opaque selling for a variety valuation distributions and model extensions. This paper was accepted by Gabriel Weintraub, revenue management and market analytics.

Link: http://dx.doi.org/10.1287/mnsc.2020.3750 [Google]

 

Jin, R., D. Simchi-Levi, L. Wang, X. Wang and S. Yang (2021): Shrinking the Upper Confidence Bound: A Dynamic Product Selection Problem for Urban Warehouses, Management Science, 67(2426), pp.4756-4771

The recent rising popularity of ultrafast delivery services on retail platforms fuels the increasing use of urban warehouses, whose proximity to customers makes fast deliveries viable. The space limit in urban warehouses poses a problem for such online retailers: the number of stock keeping units (SKUs) they carry is no longer “the more, the better,” yet it can still be significantly large, reaching hundreds or thousands in a product category. In this paper, we study algorithms for dynamically selecting a large number of products (i.e., SKUs) with top customer purchase probabilities on the fly, from an ocean of potential products to offer on retailers’ ultrafast delivery platforms. We distill the product selection problem into a semibandit model with linear generalization. There are in total N arms corresponding to N products, each with a feature vector of dimension d. The player pulls K arms in each period and observes the bandit feedback from each of the pulled arms. We focus on the setting where K is much greater than the number of total time periods T or the dimension of product features d. We first analyze a standard Upper Confidence Bound (UCB) algorithm and show its regret bound can be expressed as the sum of a T-independent part and a T-dependent part, which we refer to as “fixed cost” and “variable cost,” respectively. To reduce the fixed cost for large K values, we propose a novel online learning algorithm, which iteratively shrinks the upper confidence bounds within each period, and show its fixed cost is reduced by a factor of d. Moreover, we test the algorithms on an industrial data set from Alibaba Group. Experimental results show that our new algorithm reduces the total regret of the standard UCB algorithm by at least 10%. This paper was accepted by J. George Shanthikumar, big data analytics.

Link: http://dx.doi.org/10.1287/mnsc.2020.3773 [Google]

 

Liu, M., E. Brynjolfsson and J. Dowlatabadi (2021): Do Digital Platforms Reduce Moral Hazard? The Case of Uber and Taxis, Management Science, 67(2426), pp.4665-4685

Digital platforms provide a variety of technology-enabled tools that enhance market transparency, such as real-time monitoring, ratings of buyers and sellers, and low-cost complaint channels. How do these innovations affect moral hazard and service quality? We investigate this problem by comparing driver routing choices and efficiency on a large digital platform, Uber, with traditional taxis. The identification is enabled by matching taxi and Uber trips at the origin-destination-time level so they are subject to the same underlying optimal route, by exploiting characteristics of the pricing schemes that differentially affect the incentives of taxi and Uber drivers in various circumstances, and by examining changes in behavior when drivers switch from taxis to Uber. We find that (1) taxi drivers route longer in distance than matched Uber drivers on metered airport routes by an average of 8%, with nonlocal passengers on airport routes experiencing even longer routing; (2) no such long routing is found for short trips in dense markets (e.g., within-Manhattan trips) or airport trips with a flat fare; and (3) long routing in general leads to longer travel time, instead of saving passengers time. These findings are consistent with digital platform designs reducing driver moral hazard, but not with competing explanations such as driver selection or differences in driver navigation technologies. We also find evidence of Uber drivers’ long routing on airport trips in times of surge pricing, suggesting that the tech-enabled market designs may not be binding in our setting. This paper was accepted by Chris Forman, information systems.

Link: http://dx.doi.org/10.1287/mnsc.2020.3721 [Google]

 

Fan, X., Y.-J. Chen and C. S. Tang (2021): Mechanism Design for Managing Hidden Rebates and Inflated Quotes of a Procurement Service Provider, Manufacturing & Service Operations Management, 23(2426), pp.1275-1296

Problem definition: When sourcing through a procurement service provider (PSP), the PSP often collects rebates from unethical manufacturers in developing countries (as referral fees) that are “hidden” from the retailers. Recognizing that a PSP has a strong incentive to solicit quotes from unethical manufacturers, we examine a situation in which the retailer insists on soliciting a quote from a manufacturer designated by the retailer and a separate quote from an unethical manufacturer selected by the PSP. However, when the designated manufacturer is ethical, the PSP has an incentive to inflate the quote from this ethical manufacturer in order to help the unethical manufacturer to win. Facing this situation, is there a mechanism for the retailer to control hidden rebates? Academic/practical relevance: The issue of hidden rebates is a “known secret” in global supply chain practice. Also, hidden rebates increase the customs duty for U.S. importers because of the first sales rule for customs valuation of U.S. imports. Therefore, there is a need to understand the implications of hidden rebates and to control this unethical practice. Methodology: To circumvent the issue of hidden rebates and quote inflations, we develop a deterministic, incentive-compatible mechanism that is based on a simple selection rule (for selecting a manufacturer) and a contingent service fee (as a reward for the service provided by the PSP). Results: Our optimal mechanism creates incentives to (1) deter the PSP from inflating the quote submitted from the ethical manufacturer, (2) reduce the incidence of hidden rebates, and (3) reduce the retailer’s procurement cost and the corresponding import tax significantly. More importantly, relative to the “lowest quote wins” selection rule, the optimal mechanism is Pareto-improving for the retailer and the service provider when the hidden rebate is below a certain threshold. Furthermore, we extend our analysis to the case in which (1) the retailer is not sure whether the designated manufacturer is ethical or not, (2) the retailer does not know the exact value of hidden rebate (but it follows a two-point distribution), and (3) the retailer may verify the quote with its designated manufacturer before a formal contract. We also explore the stochastic incentive-compatible mechanism for the cases in which the penalty is unenforceable or enforceable. Managerial implications: When law enforcement is inconsistent in developing countries, retailers should beware of the existence and implications of hidden rebates. We provide a simple mechanism that a retailer can consider as a practical way to deter the PSP from inflating certain quotes and put hidden rebates under control.

Link: http://dx.doi.org/10.1287/msom.2020.0885 [Google]

 

Feng, G., G. Kong and Z. Wang (2021): We Are on the Way: Analysis of On-Demand Ride-Hailing Systems, Manufacturing & Service Operations Management, 23(2426), pp.1237-1256

Problem definition: Recently, there has been a rapid rise of on-demand ride-hailing platforms, such as Uber and Didi, which allow passengers with smartphones to submit trip requests and match them to drivers based on their locations and drivers’ availability. This increased demand has raised questions about how such a new matching mechanism will affect the efficiency of the transportation system—in particular, whether it will help reduce passengers’ average waiting time compared with traditional street-hailing systems. Academic/practical relevance: The on-demand ride-hailing problem has gained much academic interest recently. The results we find in the ride-hailing system have a significant deviation from classic queueing theory where en route time does not play a role. Methodology: In this paper, we shed light on this question by building a stylized model of a circular road and comparing the average waiting times of passengers under various matching mechanisms. Results: We discover the inefficiency in the on-demand ride-hailing system when the en route time is long, which may result in nonmonotonicity of passengers’ average waiting time as the passenger arrival rate increases. After identifying key trade-offs between different mechanisms, we find that the on-demand matching mechanism could result in lower efficiency than the traditional street-hailing mechanism when the system utilization level is medium and the road length is long. Managerial implications: To overcome the disadvantage of both systems, we further propose adding response caps to the on-demand ride-hailing mechanism and develop a heuristic method to calculate a near-optimal cap. We also examine the impact of passenger abandonments, idle time strategies of taxis, and traffic congestion on the performance of the ride-hailing systems. The results of this research would be instrumental for understanding the trade-offs of the new service paradigm and thus enable policy makers to make more informed decisions when enacting regulations for this emerging service paradigm.

Link: http://dx.doi.org/10.1287/msom.2020.0880 [Google]

 

Legros, B., O. Jouini and G. Koole (2021): Should We Wait Before Outsourcing? Analysis of a Revenue-Generating Blended Contact Center, Manufacturing & Service Operations Management, 23(2426), pp.1118-1138

Problem definition: We consider a revenue-generating call center with inbound and outbound calls, where service and sales activities are blended. For maximizing the call center’s revenue, the call center manager exercises two levels of control: agent reservation for inbound calls and call outsourcing. Given the influence of waits on purchase probability, we investigate the strategy of outsourcing customers who have waited already as opposed to outsourcing customers directly at arrival. Academic/practical relevance: The main novelty of this article arises from the use of a single framework to investigate both the combination of agent reservation with outsourcing decisions, and a waiting time–based outsourcing strategy. The existing literature only considers these two strategies in isolation and is restricted to quantity-based decisions. From a practical viewpoint, our results aim to provide decision support tools that are directly implementable in a call center’s routing software. Methodology: We apply a Markov decision process approach to optimize the manager’s decisions. The particularity of our approach is that we use the experienced waiting time as a decision variable. Results: We prove that the optimal policy for reservation and outsourcing is of threshold type. Our main conclusion is that outsourcing customers after letting them wait in-house generates higher revenue than outsourcing calls at arrival. However, it is also detrimental to service quality. In addition, we identify contexts in which the difference between the two outsourcing strategies is significant. Managerial implications: Contrary to standard call center practices, which either consist of specialized teams for one type of call or only exercise one specific level of decision-making (reservation or outsourcing), we demonstrate the potential of partial outsourcing with partial reservation. Our study shows that the benefits of implementing our results are greatest in small congested call centers.

Link: http://dx.doi.org/10.1287/msom.2019.0859 [Google]

 

Yom-Tov, G. B., L. Yedidsion and Y. Xie (2021): An Invitation Control Policy for Proactive Service Systems: Balancing Efficiency, Value, and Service Level, Manufacturing & Service Operations Management, 23(2426), pp.1077-1095

Problem definition: We study the problem of designing a dynamic invitation policy for proactive service systems with finite customer patience under scarce capacity. In such systems, prior knowledge regarding customer value or importance is used to decide whether the company should offer service or not. Academic/practical relevance: Proactive service systems are becoming more popular, as data availability and machine-learning techniques are developed to forecast customer needs. However, very little is known about the efficient use of such tools to promote and manage service systems. Methodology: We use fluid approximation and the Filippov convex method to analyze system dynamics and develop approximations for important performance measures. Results: We show that whereas prioritizing customers in descending order of their r-μ ranking (as long as there are idle servers in the system) is optimal on the fluid level, refinements are necessary in the presence of abandonment on the stochastic level. We propose an r-μ-N policy to account for customer patience. Managerial implications: Our policy can be used to promote service effectivenes and allow decision makers the means to trade off service level against costs in such systems explicitly. Using a case study of a transportation service provider, we show that such a policy can triple revenue compared with random arrivals (nonproactive policy).

Link: http://dx.doi.org/10.1287/msom.2019.0852 [Google]

 

Puranam, D., V. Kadiyali and V. Narayan (2021): The Impact of Increase in Minimum Wages on Consumer Perceptions of Service: A Transformer Model of Online Restaurant Reviews, Marketing Science, 40(2426), pp.985-1004

We study the impact of an increase in minimum wages on consumer perceptions of service quality in the restaurant industry. We study the impact of a mandated increase in minimum wages on consumer perceptions of multiple dimensions of service quality in the restaurant industry. When faced with higher minimum wages, firms might reduce the number of employees, resulting in poorer consumer service. Alternatively, higher-paid workers might be more motivated to improve consumer service. Using a combination of human annotation and several transformer models, we estimate the incidence of discussion of several service quality attributes (and their valence) in a textual data set of 97,242 online reviews of 1,752 restaurants posted over two years. We exploit a natural experiment in the County of Santa Clara, California, wherein only the city of San Jose legislated a 25% minimum wage increase in 2013. By comparing restaurant reviews in San Jose with those of synthetic controls, we find an improvement in the perceived service quality of San Jose restaurants. Specifically, we find reduced negative discussion of the courtesy and friendliness of workers. This decrease is present in independent restaurants and not in chains. This finding appears to be consistent with agency theory–based predictions of greater incentives to improve service in independent restaurants. We discuss alternative mechanisms for our results. We also discuss implications for consumers, restaurants, and policy makers.

Link: http://dx.doi.org/10.1287/mksc.2021.1294 [Google]

 

Wernerfelt, B., A. Silk and S. Yu (2021): Internalization of Advertising Services: Testing a Theory of the Firm, Marketing Science, 40(2426), pp.946-963

In 1956, a group of trade associations representing publishers and independent advertising agencies signed a consent decree aimed at ending a set of trade practices that for half a century effectively precluded advertisers from owning and operating in-house agencies. Since then, large firms have internalized more and more of the services formerly performed by external agencies, perhaps as many as half. We use this phenomenon to test a theory of the firm, thereby simultaneously offering an explanation for it. The theory suggests that firms should internalize activities for which their competitive position implies (1) that it is more important for human capital to be firm specific as opposed to function specific and (2) that frequent modifications are desirable. It also predicts (3) that these two effects reinforce each other. This is the first paper to report on a test of the specialization hypothesis, and we find that it is robustly significant in a cross-sectional data set covering nine different agency activities in 79 firms. In addition to the cross-sectional test, we informally present some time-series data suggesting that both specialization and frequency have grown over time along with the level of internalization.

Link: http://dx.doi.org/10.1287/mksc.2021.1290 [Google]

 

Berry, L. L., R. L. A. Awdish, S. Letchuman and K. D. Steffensen (2021): Trust-Based Partnerships Are Essential — and Achievable — in Health Care Service, Mayo Clinic Proceedings, 96(2426), pp.1896-1906

When people think about trust in the context of health care, they typically focus on whether patients trust the competence of doctors and other health professionals. But for health care to reach its full potential as a service, trust must also include the notion of partnership, whereby patients see their clinicians as reliable, caring, shared decision-makers who provide ongoing ?healing? in its broadest sense. Four interrelated service-quality concepts are central to fostering trust-based partnerships in health care: empathetic creativity, discretionary effort, seamless service, and fear mitigation. Health systems and institutions that prioritize trust-based partnerships with patients have put these concepts into practice using several concrete approaches: investing in organizational culture; hiring health professionals for their values, not just their skills; promoting continuous learning; attending to the power of language in all care interactions; offering patients ?go-to? sources for timely assistance; and creating systems and structures that have trust built into their very design. It is in the real-world implementation of trust-based partnership that health care can reclaim its core mission.

Link: http://dx.doi.org/10.1016/j.mayocp.2021.03.035 [Google]

 

Rahmati, P., A. Tafti, J. C. Westland and C. Hidalgo (2021): WHEN ALL PRODUCTS ARE DIGITAL: COMPLEXITY AND INTANGIBLE VALUE IN THE ECOSYSTEM OF DIGITIZING FIRM, MIS Quarterly, 45(2426), pp.1025-1058

During the last four decades, digital technologies have disrupted many industries. Car control systems have gone from mechanical to digital. Telephones have changed from sound boxes to portable computers. But have the firms that digitized their products and services become more valuable than firms that didn’t? Here we introduce the construct of digital proximity, which considers the interdependent activities of firms linked in an economic network. We then explore how the digitization of products and services affects a company’s Tobin’s q–the ratio of market value over assets–a measure of the intangible value of a firm. Our panel regression methods and robustness tests suggest the positive influence of a firm’s digital proximity on its Tobin’s q. This implies that firms able to come closer to the digital sector have increased their intangible value compared to those that have failed to do so. These findings contribute a new way of measuring digitization and its impact on firm performance that is complementary to traditional measures of information technology (IT) intensity.

Link: http://dx.doi.org/10.25300/MISQ/2021/15384 [Google]

 

Abouee‐Mehrizi, H., A. Ghareaghaji Zare and R. A. Konrad (2021): Pricing in Service Systems with Rational Balking and Abandonment of Time‐Sensitive Customers, Production & Operations Management, (2426), pp.1

The current literature on pricing in service systems with time‐sensitive customers predominately ignores the rational abandonment of customers with mixed‐risk attitude. The goal of this study is to address this gap. We consider an unobservable queueing system with a nonlinear waiting cost function, which is concave up to a certain point and then becomes convex, capturing the mixed‐risk attitude of customers observed in empirical studies. We assume that customers are sensitive with respect to waiting time (delay) and strategic regarding their balking and abandonment decisions. We characterize the optimal pricing policy that maximizes the service provider’s revenue. We show that the pricing policies studied in the literature, including the joint service and cancellation (entrance) fee policy, are suboptimal and cannot induce the socially optimal behavior. We demonstrate that while the cancellation fee can regulate a customer’s balking strategy, the service fee cannot effectively control a customer’s abandonment decision. We then provide conditions under which the joint service and cancellation fee policy is optimal. We finally prove that the service provider should compensate customers for their waiting in order to efficiently control the abandonment of customers. We propose a pricing policy, which includes entrance, service, and wait time (delay) fees, that maximizes the provider’s revenue. We derive the optimal fees and show that, under the proposed optimal pricing policy, customers pay service and cancellation fees while they are partially compensated for the time spent waiting for service.

Link: http://dx.doi.org/10.1111/poms.13555 [Google]

 

Cloarec, J., L. Meyer‐Waarden and A. Munzel (2021): The personalization–privacy paradox at the nexus of social exchange and construal level theories, Psychology & Marketing, (2426), pp.1

Marketing personalization requires firms to collect information that they can use to personalize their products or services, which might raise consumer privacy concerns. Prior studies on construal level theory suggest that happier Internet users would likely take future rewards in social exchanges (e.g., personalization–privacy trade‐offs) into greater consideration. Building on both social exchange and construal level theories, this article investigates the extent to which happiness with the Internet drives the personalization–privacy paradox, as well as the moderating role of experience sharing frequency as a proxy for reciprocity. An online survey administered to a representative sample of French consumers (n = 649) largely confirms the predictions. Happiness with the Internet is the strongest driver of willingness to disclose information in exchange for personalization, surpassing conventional privacy‐related constructs (e.g., trust and risk beliefs). In line with social exchange theory, reciprocity has an important influence on online social exchanges too.

Link: http://dx.doi.org/10.1002/mar.21587 [Google]

 

Letheren, K., J. Jetten, J. Roberts and J. Donovan (2021): Robots should be seen and not heard…sometimes: Anthropomorphism and AI service robot interactions, Psychology & Marketing, (2426), pp.1

There is a growing need to understand how consumers will interact with artificially intelligent (AI) domestic service robots, which are currently entering consumer homes at increasing rates, yet without a theoretical understanding of the consumer preferences influencing interaction roles such robots may play within the home. Guided by anthropomorphism theory, this study explores how different levels of robot humanness and social interaction opportunities affect consumers’ liking for service robots. A review of the extant literature is conducted, yielding three hypotheses that are tested via 953 responses to an online scenario‐based experiment. Findings indicate that while consumers prefer higher levels of humanness and moderate‐to‐high levels of social interaction opportunity, only some participants liked robots more when dialogue (high‐interaction opportunity) was offered. Resulting from this study is the proposed Humanized‐AI Social Interactivity Framework. The framework extends previous studies in marketing and consumer behavior literature by offering an increased understanding of how households will choose to interact with service robots in domestic environments based on humanness and social interaction. Guidelines for practitioners and two overarching themes for future research emerge from this study. This paper contributes to an increased understanding of potential interactions with service robots in domestic environments.

Link: http://dx.doi.org/10.1002/mar.21575 [Google]

 

Wang, K. L., H. Nguyen, A. Johnson and M. Groth (2021): Caught out! The role of customer emotional intelligence and dual thinking processes in perceptions of frontline service employees’ inauthentic positive displays, Psychology & Marketing, (2426), pp.1

Frontline service employees often feign positive displays during customer interactions to enhance service outcomes, but to what extent are customers aware of these inauthentic positive displays? The perception of inauthenticity involves a series of complex judgments, however, the influence of customers’ different thinking processes on these judgments and the role of customer individual differences in emotional intelligence are seldom investigated. This article investigates how customer emotional intelligence influences the processing of frontline employees’ inauthentic positive displays. Across three experimental studies, we find that experiential processes combine with high emotional intelligence to predict more accurate perceptions of frontline employees’ inauthentic positive displays (Study 1). In contrast, rational processes interact with low emotional intelligence to predict less accurate perceptions (Study 2). We also find that high emotional intelligence and high dual thinking processes (both experiential and rational) predict more accurate perceptions of frontline employees’ inauthentic positive displays (Study 3). These results extend knowledge of the important role of customers in detecting the frontline employee’s inauthentic displays. Our findings have important practical implications for service settings where there are strong expectations for frontline employees to provide “service with a smile.”

Link: http://dx.doi.org/10.1002/mar.21567 [Google]

 

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