Venkataraman, S., Sarasvathy, S. D., Dew, N. and Forster, W. (2012). Whither the promise? Moving forward with entrepreneurship as a science of the artificial. Academy of Management Review37(1): 21-33.
In this article we speak of roads taken and paths yet to be traversed. Over the past decade, entrepreneurship researchers have accumulated considerable work related to opportunities. Here we outline new possibilities opened up by that work and seek to recast entrepreneurship as a science of the artificial in three ways: understanding opportunities as made as well as found, moving beyond new combinations to transformations, and developing a new nexus around actions and interactions.
Ovchinnikov, Anton and Joseph Milner. (2012). Revenue Management with End-of-Period Discounts in the Presence of Customer Learning. Production and Operations Management21(1): 69-84.
Consider a firm that sells identical products over a series of selling periods (e.g., weekly all-inclusive vacations at the same resort). To stimulate demand and enhance revenue, in some periods, the firm may choose to offer a part of its available inventory at a discount. As customers learn to expect such discounts, a fraction may wait rather than purchase at a regular price. A problem the firm faces is how to incorporate this waiting and learning into its revenue management decisions. To address this problem we summarize two types of learning behaviors and propose a general model that allows for both stochastic consumer demand and stochastic waiting. For the case with two customer classes, we develop a novel solution approach to the resulting dynamic program. We then examine two simplified models, where either the demand or the waiting behavior are deterministic, and present the solution in a closed form. We extend the model to incorporate three customer classes and discuss the effects of overselling the capacity and bumping customers. Through numerical simulations we study the value of offering end-of-period deals optimally and analyze how this value changes under different consumer behavior and demand scenarios.
Venkatesan, Rajkumar and Paul W. Farris. (2012). Measuring and Managing Returns from Retailer-Customized Coupon Campaigns. Journal of Marketing 76(1): 76-94.
The authors assess how and why retailer-customized coupon campaigns affect customer purchases. The conceptual model proposes effects on trip incidence and revenues through the mere exposure to campaigns (exposure effect) and the redemption of coupons (redemption effect). The authors propose monetary savings of the coupons, regularity of the campaigns, and coupon fit with customer preferences as moderators. Analysis of data from a group of regional grocery chains that were part of a quasi experiment demonstrates that retailer-customized coupon campaigns have a positive exposure and redemption effect on customer purchases. Mere exposure to customized coupon campaigns contributes more than coupon redemption to campaign returns. Consistent with theoretical expectations, customized coupon campaigns are more effective if they provide more discounts, are unexpected, and are positioned as specially selected for and customized to consumer preferences. The substantial exposure effects suggest that managers should look beyond redemption rates and also consider sales lift from nonredeemers when measuring the effectiveness of customized coupon campaigns.
Martin, Kirsten and Bidhan Parmar. (2012). Assumptions in Decision Making Scholarship: Implications for Business Ethics. Journal of Business Ethics 105(3): 289-306.
While decision making scholarship in management has specifically addressed the objectivist assumptions within the rational choice model, a similar move within business ethics has only begun to occur. Business ethics scholarship remains primarily based on rational choice assumptions. In this article, we examine the managerial decision making literature in order to illustrate equivocality within the rational choice model. We identify four key assumptions in the decision making literature and illustrate how these assumptions affect decision making theory, research, and practice within the purview of business ethics. Given the breadth of disciplines and approaches within management decision making scholarship, a content analysis of management decision making scholarship produces a greater range of assumptions with finer granularity than similar scholarship within business ethics. By identifying the core assumptions within decision making scholarship, we start a conversation about why, how, and to what effect we make assumptions about decision making in business ethics theory, research, and practice. Examining the range of possible assumptions underlying current scholarship will hopefully clarify the conversation and provide a platform for future business ethics research.
Wicks, Andrew C., Adrian Keevil, Bobby Parmar. (2012). Sustainable Business Development and Management Theories: A Mindset Approach. Business and Professional Ethics Journal 31 (3) & (4): 375-398.
There is growing appreciation of the challenges posed by our current economic activity in terms of the natural environment. Increasingly, people have come to appreciate that business must not only be more aware of its environmental impact, but also must be more environmentally sustainable in its core operations. Academic theories of management influence managerial practice. They clarify what is important to the corporation, and where managers and employees should direct their attention. The focus of this paper is to explore the extent to which three possible managerial mindsets—shareholder value maximization, stakeholder value maximization, and the triple bottom line—may either enhance or inhibit the ability of corporations to manage in an environmentally sustainable way. We discuss the implications of each of these mindsets and highlight their relative strengths and weaknesses, noting that all three hold promise, but each has limitations in enabling managers to operate sustainably.
Jill Avery, Thomas J. Steenburgh, John Deighton, Mary Caravella. (2012). Adding Bricks to Clicks: Predicting the Patterns of Cross-Channel Elasticities Over Time.Journal of Marketing 76(3): 96-111.
The authors propose a conceptual framework to explain whether and when the introduction of a new retail store channel helps or hurts sales in existing direct channels. A conceptual framework separates short- and long-term effects by analyzing the capabilities of a channel that help consumers accomplish their shopping goals. To test the theory, the authors analyze a unique data set from a high-end retailer using matching methods. The authors study the introduction of a retail store and find evidence of cross-channel cannibalization and synergy. The presence of a retail store decreases sales in the catalog but not the Internet channel in the short run but increases sales in both direct channels over time. Following the opening of the store, more first-time customers begin purchasing in the direct channels. These results suggest that adding a retail store to direct channels yields different results from adding an Internet channel to a retail store channel, as previous research has indicated.
Lichtendahl, K., Chao, R. and Bodily, S. (2012). Habit Formation from Correlation Aversion. Operations Research 60(3): 625-637.
Making plans about how much to consume and how much to invest in risky assets over an uncertain lifetime is a fundamental economic challenge. The leading models of this planning problem use either additive or habit-forming preferences. For the most part, these models assume an individual is either correlation neutral or correlation seeking in consumption, respectively. In this paper, we introduce two habit-forming, correlation-averse preference models. With these preferences, we find closed-form solutions to the classic consumption and portfolio planning problem. Our solutions recommend that a correlation-averse decision maker follow a habit in their consumption plans. While such habits traditionally have been associated with correlation-seeking preferences, our model leads to consumption habits from correlation-averse preferences.
Steenburgh, Thomas J., and Michael Ahearne. (2012). Motivating Salespeople: What Really Works. Harvard Business Review 90(7): 71-75.
No sales force consists entirely of stars; sales staffs are usually made up mainly of solid perfomers, with smaller groups of laggards and rainmakers. Though most compensation plans approach these three groups as if they were the same, research shows that each is motivated by something different. By accounting for those differences in their incentive programs, companies can coax better performance from all their salespeople. As the largest cadre, core performers typically represent the greatest opportunity, but they're often ignored by incentive plans. Contests with prizes that vary in nature and value (and don't all go to stars) will inspire them to ramp up their efforts, and tiered targets will guide them up the performance curve. Laggards need quarterly bonuses to stay on track; when they have only annual bonuses, their revenues will drop 10%, studies show. This group is also motivated by social pressure-especially from new talent on the sales bench. Stars tend to get the most attention in comp plans, but companies often go astray by capping their commissions to control costs. If firms instead remove commission ceilings and pay extra for overachievement, they'll see the sales needle really jump. The key is to treat sales compensation not as an expense to rein in but as a portfolio of investments to manage. Companies that do this will be rewarded with much higher returns.
L.J. Lynch and S. P. Williams. (2012). Does equity compensation compromise audit committee independence? Evidence from earnings management. Journal of Managerial Issues 24(3): 293-320.
This study examines whether the use of equity to compensate audit committee members is related to earnings management by the firm on whose board those members serve. The study is motivated by the enhanced role of the audit committee through recent regulatory initiatives, the focus on audit committee independence, and suggestions by some governance organizations for additional equity compensation and ownership targets for board members. Results suggest that the use of stock options in audit committee members' pay packages is associated with higher earnings management and the use of stock in those pay packages is associated with lower earnings management in firms on whose board those members serve. The findings regarding options are driven by vested options, consistent with audit committee members being sensitive to the potential short term price effects of earnings management. The findings regarding stock are driven by restricted stock grants, consistent with that form of compensation motivating a longer term view in alignment with shareholder interests. The results have important implications for allowing audit committee members to hold a financial interest in the firm on whose audit committee they serve, suggest that alternative forms of equity compensation may result in differing degrees of audit committee effectiveness, and suggest that board compensation committees should exercise caution in determining audit committee members' pay packages.
Kang, S.C., Snell, S.A., and Swart, J. (2012). Options-based HRM, intellectual capital, and exploratory and exploitative learning in law firms’ practice groups. Human Resource Management 51(4): 461–485.
The current study intends to uncover the strategic contribution of human resource management by introducing a unique construct of options-based (vis-à-vis project-based) HRM and examining its links to intellectual capital and exploratory and exploitative learning in the context of law firms' practice groups. Empirical results show that options-based HRM is positively related to the practice group's explorative and exploitative learning. The intellectual capital mediates the relationships between options-based HRM and the practice group's learning for exploration and exploitation. This study makes a valuable contribution to the HRM literature by establishing the mechanisms by which HRM enables organizational learning and extending the scope of HRM research to professional service firms. Our findings also provide valuable implications for the literature of organizational learning.
Avery, Jill,and Steenburgh, Thomas J. (2012). Target the Right Market. Harvard Business Review 90(10): 119–123.
SparkPlace is a two-year-old business with a hot new product: software that manages and measures the effectiveness of permission-based marketing campaigns for social media. The company is in the process of deciding on which of two customer segments to focus its strategy. Each segment has demonstrable advantages, but developing the product for and marketing to both segments simultaneously could pose big challenges. Is the argument against being "all things to all people" a valid one? If so, which customer segment should SparkPlace target? Or is there a single strategy that can capture the potential value of both types of customers without draining the company's resources?