Today we identify service articles published in Marketing, Management, Operations, Productions, Information Systems & Practioner-oriented Journals in the last month.
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Consiglio, I. and S. M. J. v. Osselaer (2019): The Devil You Know: Self-Esteem and Switching Responses to Poor Service, Journal of Consumer Research, 46(3), pp.590-605
We investigate a psychological factor regulating consumers’ switching in response to poor service quality: chronic global self-esteem. Whereas high-self-esteem consumers tend to switch to other providers in response to poor service quality, low-self-esteem consumers often do not. This happens because low-self-esteem consumers who experience poor service become risk-averse, and therefore reluctant to engage in new committed service relationships. Indeed, low-self-esteem consumers’ likelihood to switch to an alternative provider in response to poor service quality increases when this provider offers a less risky, low commitment (vs. more risky, high commitment) contract. Moreover, experimentally reducing low-self-esteem consumers’ risk aversion increases their likelihood to switch to alternative providers in response to poor service quality. Finally, low-self-esteem consumers’ risk aversion mediates their reluctance to switch in response to poor service. We rule out failure severity perceptions, power, autonomy, affect, and action orientation as alternative explanations. The implication of this research for public policy makers is that promoting competition (by offering consumers options and by reducing switching costs) may not be enough to protect the welfare of low-self-esteem consumers. We also suggest ways in which firms can untie vulnerable consumers from negative service relationships.
Link: http://dx.doi.org/10.1093/jcr/ucz001 [Google]
Guo, Y., X. Li and X. Zeng (2019): Platform Competition in the Sharing Economy: Understanding How Ride-Hailing Services Influence New Car Purchases, Journal of Management Information Systems, 36(4), pp.1043-1070
Ride-hailing services provide not only alternative transportation for passengers but also job opportunities for potential drivers, resulting in both negative and positive effects on new car purchases. Our study assesses the impact of ride-hailing platforms’ market entry on new car purchases in the presence of platform competition. Our data is a monthly panel data on new car registration plates from 2013 to 2015, during which two leading ride-hailing platforms (Didi Chuxing and Uber) rolled out their services across select cities in China. We find that, while the entry of a single ride-hailing platform led to a decline in new car purchases, platform competition mitigated the negative impacts of platform entries. Our explanation is that the two competing platforms may have provided subsidies to drivers such that more people purchased new cars in order to sign up as drivers. By leveraging brand heterogeneity, our analysis finds supporting evidence that platform competition has resulted in increased sales of those car brands that are commonly adopted by ride-hailing drivers. Our study contributes to the literature on pricing strategies and subsidy allocation for two-sided markets by providing empirical evidence from the ride-hailing market. It suggests that companies’ competitive strategies need to account for consumer expectations and learning in the presence of strong network effects.
Link: http://dx.doi.org/10.1080/07421222.2019.1661087 [Google]
Saifee, D. H., I. R. Bardhan, A. Lahiri and Z. Zheng (2019): Adherence to Clinical Guidelines, Electronic Health Record Use, and Online Reviews, Journal of Management Information Systems, 36(4), pp.1071-1104
To increase transparency of healthcare quality, the Centers for Medicare and Medicaid Services (CMS) initiated the Physician Quality Reporting System (PQRS). However, the impact of PQRS on physicians is unclear, particularly as related to their online reputation. Is there an association between a physician’s online reputation and her adherence to clinical guidelines stipulated in the PQRS? Is online reputation associated with use of electronic health records (EHR)? To investigate these questions, we combine data on online physician reviews with the PQRS data on clinical guideline adherence and EHR use. Unlike prior research, which primarily uses clinical outcomes as proxies for care quality, our study uses adherence to clinical guidelines, a process measure that reflects physician conformance with evidence-based clinical practices. In addition, we focus on EHR use at the physician level, in contrast to the usual approach of examining it at the aggregate institutional level. Consistent with the economic theory of credence goods, we observe no significant relationship between physicians’ adherence to clinical guidelines and their online reviews. Although there is some evidence of association between EHR use and their overall rating, similar relationships are not consistently observed for individual dimensional ratings. Overall, the online reputation of a physician exhibits minimal association with her actual clinical activities — and is mostly driven by latent topics in the textual reviews — implying that the ability of online reviews to inform prospective patients of care quality might be quite limited. Therefore, patients should be cautious when using online physician reviews, and policymakers should increase the accessibility of PQRS and other similar data to help patients make informed physician choices.
Link: http://dx.doi.org/10.1080/07421222.2019.1661093 [Google]
Wang, H. S. and C. K. Yim (2019): Effects of dominance transitions on advice adherence in professional service conversations, Journal of the Academy of Marketing Science, 47(5), pp.919-938
For many professional services, advice adherence is a necessary condition for achieving service success for both customers and service providers. Despite their pivotal roles in value co-creation, typical conversational interactions often lead to low adherence. We propose that enabling a “dominance transition,” from provider dominance in the pre-advice stage to customer dominance in the post-advice stage, enhances advice adherence because it increases customers’ perceived common ground. Furthermore, providers’ consultation focus, customers’ prior knowledge, and customers’ perceived adherence effort moderate this process. Using mixed methods, including both empirical modeling and controlled and field experiments, we validate the proposed model in various contexts (healthcare, financial services, and fitness and wellness counseling). The findings establish several theoretical contributions and offer managerial implications for improving advice adherence by managing dominance transitions in conversational interactions more effectively through training service providers or even programming AI chatbots.
Link: http://dx.doi.org/10.1007/s11747-019-00664-8 [Google]
Hu, M. M., S. Yang and D. Y. Xu (2019): Understanding the Social Learning Effect in Contagious Switching Behavior, Management Science, 65(10), pp.4771-4794
We study the contagious switching behavior related to a consumer’s choice of wireless carriers, that is, that a consumer is more likely to switch wireless carriers if more of their contacts from the same carrier have switched. Contagious switching (or a positive network effect) can be driven by information-based social learning, as well as other mechanisms related to network size. Although previous marketing literature has documented the social-learning effect, most of the applications studied involve products in which consumers usually do not enjoy any direct benefits from a large network other than from information-based social learning. We explore the importance of the social-learning effect relative to other mechanisms that may also lead to the network effect. We propose a dynamic structural model with interpersonal interactions. To model the social-learning effect, a consumer uses feedback from his or her contacts who have switched from a focal carrier to update his or her quality expectations of alternative carriers. Our model further accounts for two unique aspects of consumer strategic learning: (i) the individual’s perception on the signal of alternative carriers from contacts who switch is systematically different according to whether the signal comes from a loyal contact; and (ii) that the perceived noisiness of the signal on alternative carriers from a contact who has switched depends on the strength of the relationship between the individual and the contact. The remaining network effect not captured through social learning is modeled as a function of the size of the network. We solve the model with a two-step dynamic programming algorithm, with the assumption that a consumer is forward-looking and decides whether to stay with the same service carrier in each period by maximizing the total utility received from that day onward. We apply the proposed model to the data set of a mobile network operator in a European country. We find that churning/switching behavior is contagious in the network context and that one-third of general network effects can be attributed to social learning. We also detect strategic learning by consumers from their contacts in two ways: the experience signal on alternative carriers from a more loyal contact who has switched from the focal carrier is perceived to be more positive than that from a less loyal contact; and the social-learning effect is stronger from an individual’s closest contacts. The simulation analysis demonstrates the value of our model in helping a company prioritize its customer relationship management effort. This paper was accepted by Matthew Shum, marketing.
Link: http://dx.doi.org/10.1287/mnsc.2018.3173 [Google]
Wang, R., M. Dada and O. Sahin (2019): Pricing Ancillary Service Subscriptions, Management Science, 65(10), pp.4712-4732
We investigate heterogeneous customer choice behavior in the presence of main products—ancillary services with options of pay-per-use and subscription—and outside option. The willingness to pay for a service subscription is derived as a closed-form expression, which enables us to characterize the optimal pricing strategy and the impact of service subscriptions on customer surplus. Analytical results and numerical experiments show that offering service subscriptions may result in “win-win,” “win-win-win,” “win-win-lose,” or “lose-lose-win” scenarios or in other situations for the firm, competitors, and customers in a variety of monopolistic and duopolistic scenarios. The advantages of service subscription still remain with heterogeneous customers differing on multiple dimensions including the nominal utility, uncertainty in the need of ancillary service, and purchase frequency. We find that if the product quality for both firms, measured by nominal utility, is not significantly different, more fierce price competition by offering a service subscription may result in a higher customer surplus, compared with that without a service subscription. Ancillary service subscription can help firms to better price-discriminate heterogeneous customers through different subscription decisions and subsequent purchase behavior. This paper was accepted by Gad Allon, operations management.
Link: http://dx.doi.org/10.1287/mnsc.2018.3168 [Google]
Nishant, R., S. C. Srivastava and T. S. H. Teo (2019): USING POLYNOMIAL MODELING TO UNDERSTAND SERVICE QUALITY IN E-GOVERNMENT WEBSITES, MIS Quarterly, 43(3), pp.807-A807
As e-government websites grow in functionalities and capabilities, there is a need to better understand the nuanced role of service quality to enable governments to better address citizens’ online service needs. Such an understanding should help improve overall e-government use by citizens. Thus motivated, our paper investigates how users respond to the service quality perception-expectation gap in e-government websites. We draw on rational choice theory (RCT) to develop a theoretical model linking expected and perceived information systems (IS) service quality to continued e-government website use intentions. The proposed model is empirically tested using polynomial modeling and response surface analysis. The results indicate that, in contrast to the organizational context, for e-government websites, both agreement and disagreement between expected and perceived IS service quality are positively associated with continued use intention. In our sample, as high as 77 percent of respondents appear to be in the zone of tolerance, suggesting that users can tolerate wide variations in service quality before they consider seeking alternatives to e-government websites.
Link: http://dx.doi.org/10.25300/MISQ/2019/12349 [Google]
Susarla, A. and T. Mukhopadhyay (2019): CAN OUTSOURCING OF INFORMATION TECHNOLOGY FOSTER INNOVATIONS IN CLIENT ORGANIZATIONS? AN EMPIRICAL ANALYSIS, MIS Quarterly, 43(3), pp.929-A925
There is a substantial body of literature on information technology (IT) outsourcing. However, little is known about employing IT outsourcing to generate innovation. In this paper, we articulate the ex ante as well as ex post contracting challenges that could preclude firms from realizing such business value through outsourcing. We develop and test a model linking innovation in IT outsourcing (process innovation and service innovation) to two complementary solutions to the contractual problems: credible commitments and contingent control rights. Alternative empirical estimation approaches support the basic thesis that contractual solutions are complementary in their association with enhanced innovation performance. Our study suggests that portfolios of complementary contractual provisions need to simultaneously address ex ante and ex post hazards through contract design in the outsourcing of innovative tasks. Theoretical and practical implications are explicated.
Link: http://dx.doi.org/10.25300/MISQ/2019/13535 [Google]
Jiang, Y., C. Shi and S. Shen (2019): Service Level Constrained Inventory Systems, Production & Operations Management, 28(9), pp.2365-2389
Motivated by the importance of service quality in nowadays customer business environment, we focus on inventory optimization under probabilistic service level constraints, namely, the α service level (also known as the ready rate) or the β service level (also known as the fill rate). Under service level constraints, we consider two canonical stochastic inventory models: (i) the classical inventory control model with backlogging and (ii) the remanufacturing inventory control model with random product returns. The random demands could be non‐stationary, evolving and correlated over time. For each model, we first establish the optimality of generalized base‐stock policies, and then propose a new approximation algorithm that admits a worst‐case performance guarantee of 2. The core concept developed in this study is called the delayed forced holding and production cost, which is proven effective in dealing with service level constrained inventory systems. We also provide an efficient heuristic algorithm for the multi‐item inventory system. Our extensive computational experiments show that the proposed algorithms perform within 2% of optimality.
Link: http://dx.doi.org/10.1111/poms.13060 [Google]
Scott, A. (2019): Concurrent Business and Buyer–Supplier Behavior in B2B Auctions: Evidence from Truckload Transportation, Production & Operations Management, 28(10), pp.2609-2628
Buyers often procure distinct goods and services from the same supplier. Accordingly, business exchanged in one setting may affect exchanges between the buyer and supplier in other settings. We study how business procured via online business‐to‐business (B2B) auctions is affected by business exchanged between the buyer and supplier concurrent to the auctions (concurrent business). Using two transactional datasets, one with auctions held by a large buyer of transportation services over a 4‐year period and another with the buyer’s transactions with suppliers over the same time period but governed by long‐term contracts, we analyze whether the contractual business affects decisions made in the auctions. We find that the buyer’s auction–invitation decisions are affected by a supplier’s auction performance and the presence and magnitude of the concurrent business relationship, showing that relationships still matter when buyers use online B2B auctions for procurement. After the concurrent relationship ends, auction invitations eventually cease; this effect, however, is moderated by the supplier’s performance in the auctions. Concurrent business also affects supplier decisions in the form of reference prices. When a buyer and supplier have a preexisting price for the service up for auction, the supplier at times substitutes that for their bid price, with considerable heterogeneity explained by a supplier’s business model, market conditions, and the recent usage of the contract price in the concurrent relationship. The business relationship external to a B2B auction significantly affects the decisions made within an auction through multiple mechanisms.
Link: http://dx.doi.org/10.1111/poms.13078 [Google]
Wang, X., Q. Wu, G. Lai and A. Scheller‐Wolf (2019): Offering Discretionary Healthcare Services with Medical Consumption, Production & Operations Management, 28(9), pp.2291-2304
This study studies discretionary healthcare services with consumption of medical goods (e.g., tests, drugs). Specifically, we focus on a setting where the service provider obtains revenue from the medical consumption, and the perceived service value improves while the amount of medical consumption decreases in the service time (e.g., due to more thorough inquiry and examination). We find that the equilibrium service and demand rates both decrease if the service provider’s share of revenue from the medical consumption decreases, or if the medical goods become more expensive. Moreover, the consumption of goods can reverse some well‐known results in models without goods: the service provider may reduce the service time when the perceived service value depends more heavily on the service time. From a policy perspective, we find that service price caps—often put in place to control medical costs—can lead to shorter service times and increased medical consumption. This effect is more severe when the service provider retains less revenue from the medical goods or when they are less expensive. Furthermore, without service price caps, facing a smaller market size, the service provider generally offers a longer service time inducing less medical consumption; however, this can be reversed with service price caps. Thus, in discretionary healthcare services accompanied by medical goods, price regulations may lead to wasteful consumption; extra attention is needed for certain market scenarios.
Link: http://dx.doi.org/10.1111/poms.13051 [Google]
Danckwerts, S. and P. Kenning (2019): “It’s MY Service, it’s MY Music”: The role of psychological ownership in music streaming consumption, Psychology & Marketing, 36(9), pp.803-816
Music streaming services have become today’s most popular way of consuming music. These services give their users access to a comprehensive music library without providing legal ownership of that music. However, recent research suggests that music streaming users still continue to experience feelings of ownership. To advance our understanding, this study investigates the role of psychological ownership in music streaming consumption. In particular, based on the theory of psychological ownership, it is analyzed how service‐ and music‐based psychological ownership emerge. The study further investigates the relationship between these two targets of ownership and whether music‐based psychological ownership is positively related to users’ intention to switch from a music streaming service’s free version to its paid premium version. Using structural equation modeling, the results indicate that service‐based psychological ownership, stemming from users’ investment of self into the service, is positively related to music‐based psychological ownership, which is positively influenced by the sense of control over the music accessed. The results also show that music‐based psychological ownership is strongly related to users’ intention to switch from free to premium, which highlights the importance of psychological ownership for providers of music streaming services, particularly those operating a feature‐limited freemium model.
Link: http://dx.doi.org/10.1002/mar.21213 [Google]
Liu, X. Y., J. Wang and C. Zhao (2019): An examination of the congruence and incongruence between employee actual and customer perceived emotional labor, Psychology & Marketing, 36(9), pp.863-874
This study examines the effects of the congruence and incongruence between employee actual and customer perceived emotional labor on customer trust. Based on data collected from 510 service employee and customer dyads in restaurants, the results of response surface modeling indicate that customer trust is higher when employee deep acting and customer perceived deep acting are both high rather than both low. Customer trust is also higher when customer perceived deep acting is higher than employee actual deep acting rather than vice versa. The effects are different in surface acting: as employee surface acting and customer perceived surface acting increase, customer trust initially decreases, then increases, exhibiting a U‐shaped effect. Implications for both theory and practice are discussed.
Link: http://dx.doi.org/10.1002/mar.21241 [Google]
