Scott A. Thompson, James M. Loveland and Katherine E. Loveland
The purpose of this paper is to investigate the competing effects of brand community participation, which should enhance loyalty to both the brand and to already-owned products…
Abstract
Purpose
The purpose of this paper is to investigate the competing effects of brand community participation, which should enhance loyalty to both the brand and to already-owned products, against switching costs, which should make consumers sensitive about the financial costs associated with new products.
Design/methodology/approach
Using the participation and weekly adoption data from 7,411 members in two brand communities and one product category forum over a six-month period, switching costs were computed for each member using 10 years of product release and pricing data.
Findings
Consistent with prior research, switching costs had a significant effect on reducing product adoption. Brand community participation also had a significant effect on overcoming switching costs. However, these main effects were qualified by an interaction, such that the most active participants were more likely to buy the new product when switching costs were higher.
Originality/value
Most importantly, these findings provide unique insights into financial switching costs and demonstrate ways in which brand community participation provides a way to mitigate switching costs for consumers who would most be affected by them.
Details
Keywords
Scott A. Thompson, James M. Loveland and Iana A. Castro
This paper aims to investigate the impact of product release on word of mouth (WOM) behavior within and across rival online brand communities for technology products and evaluate…
Abstract
Purpose
This paper aims to investigate the impact of product release on word of mouth (WOM) behavior within and across rival online brand communities for technology products and evaluate competing predictions made by social identity theory and the group problem solving perspective of rumors.
Design/methodology/approach
In Study 1, 72,749 messages posted by 5,777 users over a 13-month period on two rival online brand forums were content analyzed using linguistic inquiry and word count, a linguistic content analysis program. In Study 2, two experiments were conducted to verify the theoretical explanation offered.
Findings
Marked differences were found as WOM transitioned from pre-release rumor to post-release facts. Prior to release, brand loyalists show an increased willingness to spread positive WOM about rival brands’ products. However, this willingness dissipated upon product release. This is in noted contrast to predictions made for experience goods.
Research limitations/implications
This study examines the uncertainty generated by a rival brand’s upcoming new product within a brand community. While centered on a technologically oriented consumer group, this study addresses a longstanding theoretical conundrum and provides interesting areas for future research.
Practical implications
Surprisingly, it is the most active and ostensibly loyal brand supporters who spread pre-release rumors about rival brands. Managers should not assume that “loyalists” will not seriously discuss the potential offerings of rival brands. Product rumors thus present rival marketers with a unique “move it or lose it” opportunity to spread positive buzz among rival brand loyalists. However, this window of opportunity closes rapidly upon product release.
Originality/value
This is the first paper to examine the nature of new product rumors at this scale, including both pre- and post-release WOM.
Details
Keywords
Scott A. Thompson, Andrew M. Kaikati and James M. Loveland
The purpose of this study is to investigate the effect of brand community participation on new product adoption when the new product is the one which clearly under-performed…
Abstract
Purpose
The purpose of this study is to investigate the effect of brand community participation on new product adoption when the new product is the one which clearly under-performed compared to industry standards.
Design/methodology/approach
The data on participation behavior, membership duration and adoption behavior of 5,893 members of three different online communities (two brand forums, one general product forum) were gathered and assessed using a Cox PH model.
Findings
Results show that higher participation in a brand community leads to a greater likelihood of adopting objectively under-performing products, while also reducing the likelihood of purchasing rivals’ products. This occurs despite the higher levels of product knowledge possessed by these consumers. The findings also identify a key limiting condition for oppositional loyalty, that it is driven by membership duration, rather than by active participation in the brand community.
Originality/value
Prior research on the impact of brand community participation on product adoption has tended to focus on the adoption of products that are objectively superior to competing products. Unfortunately, only one product can be the performance leader in a given market at any time. Thus, managers do not know if brand communities are powerful enough to enhance the likelihood of adopting objectively under-performing products. This manuscript thus provides important insights for managers wishing to launch new products in categories where there are active brand communities.
Details
Keywords
Travis L. Jones and Marcus T. Allen
The purpose of this paper is to focus on issues of corporate control around the announcement of the decision of Hertz Global Holdings to relocate its corporate headquarters from…
Abstract
Purpose
The purpose of this paper is to focus on issues of corporate control around the announcement of the decision of Hertz Global Holdings to relocate its corporate headquarters from New Jersey to Florida in 2013. The relocation decision and accounting irregularities discovered after the announcement raised interest from activist investors. The firm responded by enacting a “poison pill,” but control was eventually wrestled away and the CEO was replaced. Examining these events gives students insights into corporate control issues facing a major US corporation.
Design/methodology/approach
This case study presents a history of the firm from its founding in 1918 through 2017, with an emphasis on key events from 2012 through 2017. These events include acquisition of a competing firm (Dollar Thrifty), relocation of corporate headquarters, accounting irregularities, restatement of financials, activist investor responses, issuance of a “poison pill,” and turnover in the CEO position.
Findings
The case is intentionally written to “tell the story” of events that relate to issues involving control of the company around the decision to relocate its corporate headquarters. The case highlights potential agency problems between management and shareholders and the market’s response to those problems.
Originality/value
No prior case study considers the topic of corporate control from the perspective of Hertz Global Holdings. This case study can be used by instructors in graduate and undergraduate courses to examine corporate control issues from a “real world” perspective.
Details
Keywords
James M Loveland, Scott A Thompson, John W Lounsbury and Danilo Dantas
Increasingly, scholars and analysts are urging firms to transition from a model in which marketing is a discrete function to a diffused approach in which marketing is everyone’s…
Abstract
Purpose
Increasingly, scholars and analysts are urging firms to transition from a model in which marketing is a discrete function to a diffused approach in which marketing is everyone’s job. Prior research has examined differences in firm level performance. However, this firm level focus has overlooked what effects this transition might have on the managers who perform the marketing role. The purpose of this paper is to investigate manager level consequences of transitioning between these approaches by evaluating differences in person-environment (P-E) fit between marketers and non-marketers.
Design/methodology/approach
The authors identify core marketing functions and relevant personality traits of marketing managers, based on the marketing literature. The authors then compare personality and career satisfaction data from 465 marketing managers against a larger, general employment sample of 3,100 employees. Finally, the authors examine the relationship of career satisfaction to each of these traits and investigate how these relationships differ across the two groups.
Findings
The authors find important differences between marketers and non-marketers. Most importantly, the authors found that the relationships between personality and career satisfaction were significantly different for traits suggested by the research literature as important to the marketing function. In particular, customer orientation, visionary leadership, optimism, and assertiveness were all associated with higher career satisfaction for the marketing sample than for the general sample.
Originality/value
This paper is among the first to examine manager level differences relevant to transitioning between firm level marketing approaches. For firms considering adopting the “everyone is a marketer” diffused approach, the findings reveal pitfalls that can lead to reduced career satisfaction, reduced manager performance, and increased turnover. As a result, the performance of firms that have already adopted a diffused approach may be misleading for those firms who have not. At a minimum, firms contemplating a transition to a diffused approach should conduct an assessment of P-E fit similar to that illustrated in this paper to assess the potential risks.
Details
Keywords
Burnt by the foibles of celebrity spokespeople, more and more companies are turning their corporate images (and fortunes) over to animated characters. Is that a good strategic…
Abstract
Burnt by the foibles of celebrity spokespeople, more and more companies are turning their corporate images (and fortunes) over to animated characters. Is that a good strategic move? Tony, for one, thinks it's G‐G‐G‐G‐Great!
Lee B. Boyar and Paquita Davis-Friday
Financial accounting to assess stewardship: the case requires students to evaluate Thompson’s stewardship of McDonald’s, in part based on the company’s financial accounting…
Abstract
Theoretical basis
Financial accounting to assess stewardship: the case requires students to evaluate Thompson’s stewardship of McDonald’s, in part based on the company’s financial accounting information. Financial reporting performs an important societal role by helping control agency problems that arise from the separation of ownership and management. Since external stakeholders cannot “observe directly the extent and quality of managerial effort on their behalf […] the manager may be tempted to shirk […] blaming any deterioration of firm performance on factors beyond his/her control” (Scott, 2014, p. 23). However, although financial reporting helps hold managers accountable to shareholders, accounting information is not fully informative about managerial effort. For example, while net income provides useful information regarding the CEO’s stewardship, it is also “noisy,” due to recognition lags and other factors (Scott, 2014, p. 364). Efforts undertaken by Thompson in a particular period, such as marketing expenditures, might reduce current earnings, yet boost future profitability. Additionally, Thompson’s predecessor’s past efforts might have positive or negative effects on current earnings. Evaluating stewardship effectively involves considerable judgment, in addition to knowledge of financial accounting. The implication of poor firm performance is that the CEO is ineffective at formulating and implementing strategies and policies to enhance firm value (Dikolli et al., 2014). Specifically, it appears that missing earnings benchmarks matter more for relatively inexperienced CEOs. Don Thompson’s tenure of 33 months at McDonalds is 42 percent lower than median CEO tenure documented in academic research, where the median tenure of chief executives documented in large sample empirical studies is about 57 months (Dikolli et al., 2014). The evidence suggests that the longer a CEO serves, the less likely he is to be dismissed for performance-related reasons. This appears to be the result of the resolution of uncertainty about CEO’s ability and leads to subsequent declines in the level of monitoring by the Board of Directors. Performance evaluation and bias: a significant body of research explores the extent to which female managers are assessed differently than their male counterparts (Powell and Butterfield, 2002). For example, female CEOs face more threats from activist investors than male CEOs. Therefore, even after women achieve the highest managerial rank, they experience more professional challenges than their male counterparts (Gupta et al., 2018). However, the question of whether black CEOs are assessed differently is more challenging to answer empirically as a result of a smaller sample size (only one percent of S&P 500 companies are run by black CEOs). Our case attempts to develop the inference that if female CEOs are subject to bias, analogous forces are likely at work when black CEOs are assessed. Recent evidence further suggests that business students sometimes demonstrate bias in making assessments (Mengel et al., 2018). The authors discuss these findings – as well as strategies for including them in the case discussion – in the “Teaching Strategy” section herein below.
Research methodology
The case was written from the public record surrounding the appointment of Don Thompson and McDonald’s company filings. The record includes articles from The New York Times and The Wall Street Journal, as well as local and industry publications.
Case overview/synopsis
The case examines the role of financial accounting in evaluating CEO performance in the context of the appointment of McDonald’s first African-American chief executive and his subsequent two-and-a-half years on the job. The case deepens students’ understanding of the link between financial reporting and stewardship, while highlighting the subjectivity inherent in assessing managerial performance, particularly over relatively short time periods. As students analyze the case, they must consider the extent to which a firm’s results are attributable to luck vs skill. We use “skill” to refer to CEO effort and other controllable factors, while “luck” refers to exogenous factors, such as macroeconomic conditions. Assessing stewardship is of practical significance. It allows pay to be better aligned with performance and empowers stakeholders to identify when a change of leadership may be warranted. The case may also be used to spur reflection, in an applied context, on the importance of being alert to unconscious bias, even when evaluating seemingly objective financial reporting data. Recent research, discussed herein, suggests that business students sometimes exhibit bias when making assessments.
Complexity academic level
The case should be included in discussions of corporate governance, executive compensation and the role of accounting information in efficient contracting. It is appropriate in intermediate financial accounting courses for undergraduates, introductory graduate accounting courses, or other courses with an element of financial statement analysis. Standard introductory accounting textbooks offer helpful supplementary reading for students. Horngren et al.’s (2014) book, Introduction to Financial Accounting (12th ed.), Pearson, London, provides an overview of the income statement and its role in assessing performance (see Chapter 2) as well as a useful discussion on evaluating the components and trends of a business (see Chapter 12). More advanced students may benefit from the in-depth discussion of earnings quality, operating income and non-operating income found in Chapter 4 of Intermediate Accounting (9th ed.), McGraw Hill Education, New York by Spiceland et al. (2018).
Details
Keywords
Purpose – The integration of librarians and technologists to deliver information services represents a new and costly organizational challenge for many library administrators. To…
Abstract
Purpose – The integration of librarians and technologists to deliver information services represents a new and costly organizational challenge for many library administrators. To understand how to control the costs of integration, this study uses structural contingency theory to study the coordination of librarians and technologists within the information commons.
Design/methodology/approach – This study tests the structural contingency theory expectation that an organization will achieve higher levels of performance when there is a positive relationship between the degree of workflow interdependence and the complexity of coordinative structures necessary to integrate these workflows. This expectation was tested by (a) identifying and collecting a sample of information common; (b) developing and validating survey instruments to test the proposition; and (c) quantitatively analyzing the data to test the proposed contingency theory relationship.
Findings – The contingency theory expectations were confirmed by finding both a positive relationship between coordination and interdependence and a positive relationship between perceptions of performance and degree of congruency between interdependence and coordination.
Limitations – The findings of this study are limited to both the context of an information common and the structures tested. Future research should seek to both broaden the context in which these findings are applicable, and test additional structural relationships as proposed by contingency theory
Practical implications – This study contributes to the library profession in a number of ways. First, it suggests that managers can improve IC performance by matching coordination structures to the degree of interdependence. For instance, when librarians and technologists are strictly co-located, managers should coordinate workflows using less resource-intensive policies rather than meetings. Second, the instruments developed in this study will improve the library manager's ability to measure and report unit interdependence and coordination in a valid and reliable manner. Lastly, it also contributes to the study of structural contingency theory by presenting one of the first empirical confirmations of a positive relationship between interdependence and coordination.
Originality/value – This study represents one of the first empirical confirmations of the structural contingency theory expectations of both a positive relationship between workflow interdependence and coordination, and a positive relationship between performance and coordination's fit to workflow interdependence. These findings are of value to both organizational theorists and to administrators of information commons.
Details
Keywords
Eric J. Arnould and Craig J. Thompson
This paper reflects on the development of Consumer Culture Theory, both as a field of research and as an institutional classification, since the publication of Arnould and Thompson…
Abstract
Purpose
This paper reflects on the development of Consumer Culture Theory, both as a field of research and as an institutional classification, since the publication of Arnould and Thompson (2005).
Methodology/approach
This paper takes a conceptual/historical orientation that is based upon the authors’ experiences over the course of the 10-year CCT initiative (including numerous conversations with fellow CCT colleagues).
Findings
The authors first discuss key benchmarks in the development of the CCT community as an organization. Next, the authors highlight key intellectual trends in CCT research that have arisen since the publication of their 2005 review and discuss their implications for the future trajectories of CCT research.
Originality/value
The paper by Arnould and Thompson (2005) has proven to be influential in terms of systematizing and placing a widely accepted disciplinary brand upon an extensive body of culturally oriented consumer research. The CCT designation has also provided an important impetus for institution building. The 10-year anniversary of this article (and not incidentally the CCT conference from which the papers in this volume hail) provides a unique opportunity for the authors to comment upon the broader ramifications of their original proposals.
Details
Keywords
Frank Dobbin and Claudia Bird Schoonhoven
In 1981, W. Richard (Dick) Scott of Stanford's sociology department described a paradigmatic revolution in organizational sociology that had occurred in the preceding decade. In…
Abstract
In 1981, W. Richard (Dick) Scott of Stanford's sociology department described a paradigmatic revolution in organizational sociology that had occurred in the preceding decade. In Organizations: Rational, Natural, and Open Systems (Scott, 1981), he depicted the first wave of organizational theory as based in rational models of human action that focused on the internal dynamics of the organization. He described the second wave, found in human relations theory and early institutional theory, as based in natural social system models of human action but still focused on the internal “closed system.” A sea change occurred in organizational theory in the 1970s as several camps began to explore environmental causes of organizational behavior. The open-systems approaches that Scott sketched in 1981 were still seedlings, but all would mature. What they shared was an emphasis on relations between the organization and the world outside of it. The roots of these new paradigms can be traced to innovations of the 1960s. Contingency theorists Paul Lawrence and Jay Lorsch (1967) had argued that firms add new practices and programs largely in response to external social demands and not simply to internal functional needs. James Thompson (1967) argued that organizations come to reflect the wider environment and particularly the regulatory environment.