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PurposeIn responding to competitors' strategic choices, firms must choose whether to allocate their customer relationship management (CRM) resources primarily to retaining existing customers or to acquiring new customers. To address this critical but understudied question, the authors examine the strategic choices of two competing firms between retention- and acquisition-focused strategies in consideration of switching costs, technological advancement level, and market share.Design/methodology/approachThe authors develop and analyze a game-theoretic model to investigate the strategic choices of two competing firms between retention- and acquisition-focused strategies.FindingsWhen switching costs are high, findings show that when the degree of technological advancement is high (low), both firms should employ acquisition-focused (retention-focused) strategies to maximize their profits. When switching costs are low and there are a low degree of technological advancement and asymmetric market shares, the firms choose retention-focused strategies in equilibrium, but only the firm with the higher market share can maximize its profit. When switching costs are low, technological advancement levels are high, and the market shares are asymmetric, the firm with the higher market share chooses a retention-focused CRM strategy, while the rival with lower market share adopts an acquisition-focused strategy in equilibrium. However, neither firm can maximize its profits.Originality/valuePrior research focused on a single firm's price discrimination decision without considering a competitor's strategic choice. To address this research gap, the authors examine where firms should assign their CRM resources (retention vs. acquisition) in response to a competitor's CRM strategy. This study provides guidance for optimal decision-making regarding a firm's CRM resource allocation in a duopoly market.

The notion that customers provide distinct inputs that help tackle unique tasks in each new product development (NPD) phase leads firms to engage customers concurrently in various NPD stages rather than involving them only in one NPD stage. Involving customers in diverse NPD stages is based on the belief that the constructive effects of customer participation in each NPD phase could be supplementary. However, little is known about the joint effects of embracing customers in multiple NPD stages such as whether customer participation in a certain NPD stage enlarges or undermines the returns of customer participation in another NPD stage, and whether customer participation throughout the entire NPD process is really beneficial. Drawing upon the knowledge management perspective, this research investigates in which combination of NPD stages (ideation, development, and launch) engaging customers creates a synergistic or destructive impact on new product market performance. The results reveal that involving customers in both ideation and development stages and in both development and launch stages yields synergistic returns, whereas customer participation in both ideation and launch stages does not create any additional gains. Furthermore, customer participation across all three NPD stages does not improve new product market performance beyond the sole and joint effects of customer participation in two NPD stages. These noteworthy findings imply that the joint effects of customer participation do not always lead to synergistic impacts and depend on the value of customer knowledge and the difficulty of knowledge management of transferring and integrating customer knowledge gathered in various NPD stages. In a certain combination of NPD stages, where the difficulty of knowledge management becomes higher, customer participation cannot generate supplementary returns, and thus, firms can achieve a similar level of new product market performance with customer participation in limited NPD stages.

PurposeThis paper aims to investigate how to design a firm’s customer demotion policy and communication styles differently for customers demoted from top-tier and bottom-tier to promote their willingness to restore lost status and loyalty intentions.Design/methodology/approachFour scenario-based experiments were conducted in the customer demotion context of an airline’s hierarchical loyalty program. A total of 796 customers recruited from a survey panel participated in the study.FindingsThe results reveal that customers in top-tier demotion significantly increase their willingness to restore lost status and loyalty intentions when a short evaluation period (vs a long evaluation period) is given. Further, customers in bottom-tier demotion improve their willingness to restore and, in turn, their loyalty intentions more with a gain-focused communication style than with a loss-focused communication style. Willingness to restore lost status plays a mediating role in the process by which an appropriate match between demotion type and evaluation period type/communication styles leads to higher loyalty intentions.Research limitations/implicationsThis study extends the research stream on customer demotion by examining how to execute customer demotion to mitigate its detrimental effects and facilitate demoted customers’ approach motivation and behavioral intentions, a critical but understudied topic that has been ignored by researchers.Practical implicationsManagers are advised to offer customized customer status evaluation periods and communication styles for top-tier and bottom-tier demoted customers to effectively promote their willingness to restore lost status and loyalty intentions.Originality/valueThis study is among the first to explore the possible varying effects of differential demotion policy and communication style on different tiers of customers.

Supply chain integration (SCI) is recognized as strategic process management that can be instrumental for creating positional advantages associated with improved firm performance. However, despite rigorous execution, recent meta-analyses derive different conclusions about the benefits of SCI. We propose that these inconsistencies may be associated with selection bias, failure to consider the mediating routes by which SCI affects financial performance, and lack of investigation of moderators. To address these issues, we apply positional advantage theory and the resource-based view, and focus on mitigating the potential selection bias by aggregating findings from 170 previous investigations in a comprehensive meta-analysis, to examine how discrete dimensions of SCI enhance firm financial performance through three types of intermediate firm performance. The moderating effects of time, relationship quality, and national culture are also assessed. The findings confirm that each dimension of SCI indeed improves financial performance. However, contrary to expectations, relational and strategic types of intermediate performance associated with superior customer value positional advantage have stronger mediating effects than operational performance associated with lower cost positional advantage. In addition, time, relationship quality, and collectivist national culture strengthen the associations between some dimensions of SCI and firm performance. Our study findings are reconciled with those from recent meta-analytic studies, and implications arising from our conclusions that may inform practice about how to effectively leverage SCI are presented.

The issue of insurance fraud by consumers continues to perplex insurance firms, costing billions of dollars per year in the United States alone. Some analysts report that 10 per cent or more of property/casualty insurance claims are fraudulent, while less than 20 per cent of fraudulent claims being detected. Consumer attitudes are becoming more tolerant of insurance fraud in recent years. Recognizing that not all insurance fraud situations are created equal, we investigate variability in perceptions of moral intensity in dissimilar insurance padding situations in a 2 (to help others versus to profit self) × 2 (a small credit union versus a large online insurer) model and compared the results between two independent samples (college students/Millennials and an older adult population). We also investigated the impact of ethical predispositions (formalism and utilitarianism) on moral awareness and moral judgment using these four scenarios. The results suggest that the Millennials may exhibit more situationalism and more lenient judgments of collaborative versus unilateral ethical violations. In particular, ‘for self’ versus ‘for others’ comparisons show striking differences between the two age groups. The results add to the growing literature in explaining intra-personal variability in moral decision making.

Observing others receive preferential treatment has been found to provoke bystanders' negative reactions. However, seeing others treated better may also inspire bystanders to increase their repatronize intentions. Drawing upon theories of social comparison and goal-setting, this study investigates the condition when watching another's preferential treatment acts as a catalyst to enhance bystanders' repatronize intentions and the mechanism by which the constructive effect appears. The results indicate that when bystanders witness similar others' preferential treatment and believe that they can attain comparable treatment, their goal-setting motivation is more activated and consequently they are more committed to goal-relevant behavior (i.e., repatronize intentions).

Although the returns of customer participation on new product development (NPD) performance can vary substantially, the current literature lacks a systematic conceptual and empirical integration showing when customer participation is valuable in enhancing NPD performance. Building on knowledge management theory, the authors present a conceptual framework that synthesizes a variety of contingency factors. A meta-analysis empirically examines the moderating effects of contextual factors between customer participation and NPD performance. The analysis reveals that involving customers in the ideation and launch stages of NPD improves new product financial performance directly as well as indirectly through acceleration of time to market, whereas customer participation in the development phase slows down time to market, deteriorating new product financial performance. Furthermore, the benefits of customer participation on NPD performance are greater in technologically turbulent NPD projects, in emerging countries, in low-tech industries, for business customers, and for small firms. The authors discuss several theoretical and managerial implications about when to engage customers in the innovation process.

Purpose – As global supply networks proliferate, the strategic significance of supply chain risk management (SCRM) – defined as the identification, evaluation, and management of supply chain-related risks to reduce overall supply chain vulnerability – also increases. Yet, despite consistent evidence that firm performance is enhanced by appropriate fit between strategy and context, extant SCRM research focusses more on identifying sources of supply chain risk, types of SCRM strategy, and performance implications associated with SCRM than on the relative efficacy of alternative primary supply chain risk mitigation strategies in different risk contexts. Drawing on contingency theory, a conceptual framework is proposed that aligns well-established aspects of SCRM to present a rubric for matching primary alternative supply chain risk mitigation strategies (redundancy and flexibility) with particular risk contexts (severity and probability of risk occurrence). The paper aims to discuss these issues. Design/methodology/approach – Conceptual paper. Findings – The proposed framework addresses supply chain managers’ need for a basic rubric to help them choose and implement risk mitigation approaches. The framework may also prove helpful for introducing business students to the fundamentals of SCRM. Originality/value – The framework and associated research propositions provide a theoretically grounded basis for managing the firm’s portfolio of potential supply chain risks by applying appropriate primary risk mitigation strategies based on the specific context of each risk rather than taking a “one size fits all” approach to risk mitigation. An agenda for progressing research on contingency-based approaches to SCRM is also presented.

Given the predominant role of technology in customers’ shopping behavior and information acquisition, there is a need to reexamine the appropriate amount of attention given to customers at brick-and-mortar stores. Utilizing both qualitative and quantitative methods, this study finds that consumers do not always want an attentive salesperson but do want their autonomy respected while being seen as desirable by the salesperson. This examination of perceived salesperson attentiveness led to the identification of four possible shopping experiences: bonding, negligence, stalking, and autonomy. Understanding these experiences and when they apply can help managers reevaluate how salespeople can use insightful discretion to provide assistance to retail customers.

Research shows that innovation mediates the relationship between market orientation and firm performance. However, researchers disagree on whether market orientation leads to differential emphases on radical or incremental innovation, and how each type of innovation influences performance. Drawing on organizational learning theory, this study clarifies these relationships through structural analysis of meta-analytic correlations from 441 samples. The findings indicate that market orientation has similar effects on firm performance for both manufacturers and service firms, but that radical and incremental innovation play differential mediating roles across product types on the market orientation-performance relationship. The findings offer new insights for both marketing theory and practice.

Customer relationship management (CRM) technology has attracted significant attention from researchers and practitioners as a facilitator of organizational performance. Even though companies have made tremendous investments in CRM technology, empirical research offers inconsistent support that CRM technology enhances organizational performance. Given this equivocal effect and the increasing need for the generalization of CRM implementation research outside western context, the authors, using data from Korean companies, address the process concerning how CRM technology translates into business outcomes. The results highlight that marketing capability mediates the association between CRM technology use and performance. Moreover, a customer-centric organizational culture and management system facilitate CRM technology use. This study serves not only to clarify the mechanism between CRM technology use and organizational performance, but also to generalize the CRM results in the Korean context.

In a highly-cited paper on formative measurement, Jarvis et al. (2003; henceforth JMP) use simulation results to argue that “misspecification of even one formatively measured construct within a typical structural equation model can have very serious consequences for the theoretical conclusions drawn from that model” (JMP, p. 212). Aguirre-Urreta and Marakas (2012; henceforth AUM) extend JMP’s simulations to focus on differences in the standardized structural coefficients between the formative and reflective specifications. They conclude “that a lack of attention to the metric of latent variables is responsible for the posited bias [from reflective analyses of formative measures], and when considering the relationships in their standardized form neither the direction nor the magnitude of relationships are biased to the degree previously discussed” (AUM, p. 124). They further note that “the consequences [of alternative measurement specifications] might not be as bleak and dire as previously thought” (AUM, p. 137). Jarvis et al. (2012, p. 144) respond “that the consequences of measurement model misspecification are exactly as dire as previously thought. Those consequences simply never had anything to do with the standardized parameter estimates.”

As supply chain globalization accelerates, assessing and managing supply chain risk to secure global supply networks is a pressing concern for many firms. Previous literature provides typologies of supply chain risk mitigation strategy. However, relatively little is known about how firms can most effectively alleviate the negative impacts of supply chain risk occurrence for particular risk contexts. The purpose of this research is to propose a conceptual model that matches mitigation strategies with particular risk situations. Based on the extant literature supply chain risk characteristics that determine particular risk situations are synthesized and the two primary alternative supply chain mitigation strategies are articulated. Then, drawing on contingency theory, propositions that suggest optimal mitigation strategies for particular risk situations are provided.

Diamantopoulos and Winklhofer’s (2001) paper on formative index construction in the Journal of Marketing Research changed the perspective of many marketing researchers on construct measurement. Since 2001, a significant stream of literature has developed which explores the extent to which existing reflective measures should be specified as formative. This work raises the possibility of significant negative consequences arising from the so-called ‘incorrect’ specification of measures as reflective when they should be modeled as formative. For example, Jarvis, MacKenzie, and Podsakoff (2003, p. 212) suggest that if a formative measure is specified as reflective, “the structural parameter estimates within that model [may] exhibit very substantial biases that would result in erroneous inferences.” This paper examines the evidence for such claims, first by considering the nature of validity, then by conducting a simulation analysis of the effects of reflective treatment of formative indicators. The results demonstrate that despite their conceptual differences, and the results reported in prior empirical literature, formative and reflective specifications may reveal very similar substantive relationships between constructs when the comparisons are made appropriately.