Monthly Archives: October 2024

Reasons Why Employing Brand Nicknames in Marketing Strategies Can Be Problematic

Researchers from Western University, Stockton University, and the University of Massachusetts Amherst co-authored an article in the Journal of Marketing, exploring whether firms benefit from incorporating popular nicknames into their branding strategies.

Zhe Zhang, Ning Ye, and Matthew Thomson have written the paper, “BMW is Powerful, Beemer is Not: Nickname Branding Impairs Brand Performance,” which will soon be published. It delves into the phenomenon of brand nicknames that have seamlessly woven themselves into everyday language—such as BMW becoming “Beemer,” Bloomingdale’s shortened to “Bloomie’s,” Rolex to “Rollie,” Walmart to “WallyWorld,” and Starbucks to “Starbies.”

Despite their widespread use and consumer affection, the study suggests that officially adopting these nicknames in marketing efforts might harm a brand’s strength. For instance, in 2021, Bloomingdale’s embraced the moniker “Bloomie’s” for a new store in Fairfax, Virginia; Target revived its “Fall for Tarzhay All Over Again” campaign in 2018; and the Howard Johnson hotels have been marketed under the slogan “Go Happy. Go HoJo.”

The research highlights that brand nicknames are typically consumer-generated, and by adopting them, brands might inadvertently signal that they are ceding control to their customers, thereby diminishing their authority and power. Zhang notes that embracing a consumer-generated nickname can be seen as acknowledging that consumers hold sway over the brand’s identity, potentially undermining the brand’s perceived strength.

The study differentiates between nicknames used by customers and those used by marketers. Brands often monitor consumer language closely, especially on social media, aiming to gain insights rather than merely mimicking consumer expressions. While nicknames can endear a brand to consumers when used organically by them, marketer adoption of these nicknames can make the brand appear weaker, as it might seem to infringe on what could be considered consumers’ “intellectual property.”

The authors argue that marketers must distinguish between consumer-driven nickname usage, which does not imply submission to consumer influence, and marketer-driven usage, which might. Prior studies have suggested that nicknames used by consumers can have positive effects, but these benefits do not translate when the nicknames are used in marketing. Thomson emphasizes that while marketers should not discourage nickname usage within the consumer community, they should be cautious about adopting them for marketing purposes.

The context in which nicknames are used also matters significantly. For example, a small, family-owned restaurant in a local community might benefit from adopting a well-loved local nickname when raising funds for community projects, as this can strengthen regional ties and support. Here, the nickname enhances the communal identity and engagement rather than diluting the brand’s power.

Moreover, before deciding to adopt a nickname, marketers must thoughtfully consider their brand’s archetype (competent versus warm) and the nature of their messaging (transactional versus communal). The study points out that meaningful brand name changes—like Apple Computer’s shortening to Apple, IHOP’s temporary rebrand to IHOb, and Dunkin’ Donuts’ shift to Dunkin’—reflect strategic repositioning that communicates a new brand identity clearly to consumers, unlike superficial nickname adoptions.

Thomson remarks that without significant alterations to a brand’s core identity, nickname branding may seem like a mere superficial attempt to win consumer favour. This can backfire, as seen in Radioshack’s rebranding as “The Shack,” which was perceived as a desperate bid for relevance and is believed to have accelerated its decline.

More information: Zhe Zhang et al, BMW Is Powerful, Beemer Is Not: Nickname Branding Impairs Brand Performance, Journal of Marketing. DOI: 10.1177/00222429241266586

Journal information: Journal of Marketing Provided by American Marketing Association

Craft Beer Enthusiasts Abandon Brands Following Corporate Takeovers

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According to recent research on brand loyalty within the craft beer sector, local craft beer consumers appear to be disenchanted when their favourite brands are acquired, and their dissatisfaction becomes apparent through their purchasing behaviours.

The study, published in the INFORMS journal Marketing Science under the title “Local Market Reaction to Brand Acquisitions: Evidence from the Craft Beer Industry,” was conducted by a team of scholars comprising Ali Umut Guler from Koç University in Istanbul, Turkey; Kanishka Misra of the University of California, San Diego; and Vishal Singh of New York University.

Researchers discovered a significant decline in product demand—by approximately 15%—in local craft beer markets following larger entities’ acquisition of these breweries.

Guler explains that the bond between consumers and their preferred brands is deeply emotional, often fostering a sense of psychological ownership over the brand. “Consumers regard the brand as an extension of themselves,” Guler notes. “Therefore, when a beloved local craft beer brand is acquired, it can disrupt this personal connection, impacting the consumer’s perceived ownership.”

As of 2019, the beer industry in the United States recorded sales of around $120 billion annually, with over 6,400 breweries in operation. The study’s authors analysed data about roughly 40 regional breweries acquisitions between 2006 and 2016.

Misra points out that brand loyalty erosion commences immediately after an acquisition, reflected in dwindling sales and lower product ratings. “Our findings also suggest a more pronounced negative reaction when the acquiring entity is seen as ‘big business,'” Misra adds. This situation typically benefits competing brands that are still locally owned.”

Singh elaborates on the unique appeal of local craft beer brands, noting, “The local identity of craft beer brands significantly contributes to their allure. Removing this element can detract from the very attributes that initially drew consumers to the brand.”

In their methodological approach, the researchers examined news coverage across local and regional media outlets and consumer responses on social media following announcements of such acquisitions. They utilised SerpAPI to aid their analysis, alongside evaluations of Google searches and activity on Twitter/X correlating with times of acquisition news.

Guler further shares intriguing insights from their in-depth analysis of sentiments expressed in tweets and posts during the acquisition phase, revealing that “the predominant sentiment expressed was overwhelmingly negative, showcasing the consumer’s adverse reaction to these corporate takeovers.”

More information: Ali Umut Guler et al, Local Market Reaction to Brand Acquisitions: Evidence from the Craft Beer Industry, Marketing Science. DOI: 10.1287/mksc.2022.0383

Journal information: Marketing Science Provided by Institute for Operations Research and the Management Sciences

Strategies to Persuade Managers of the Benefits of Teleworking

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Amazon has declared that starting January 2025, it will terminate its remote work policy for office personnel, which defies the ongoing trend as the post-pandemic era has increasingly embraced digitalisation, signalling a significant shift towards teleworking. Before the health crisis of 2020, the concept of remote working was nearly unthinkable for numerous firms; however, it has grown significantly in its implementation. The Adecco Employment Opportunities and Satisfaction Monitor, a study conducted by The Adecco Group Institute, indicates that in 2023 alone, teleworking in Spain saw a 19% increase, with over 3 million individuals working from home—more than twice the figure before the Covid-19 outbreak.

Despite its significant growth and stabilisation post-pandemic, working remotely has yet to be uniformly accepted. Various companies have hesitated to adopt teleworking, confronted by challenges including the suitability of roles for remote work, the deployment of technological resources, and maintaining communication across team members. A major obstacle lies in the leadership teams, whose role is pivotal in deciding whether teleworking aligns with the company’s operational strategies. The Universitat Oberta de Catalunya (UOC) conducted a study involving 186 participants, predominantly over 45 years old and nearly 45% female, from various European countries to determine what influences managerial decisions regarding the adoption of teleworking in their organisations.

This study, accessible in open format, suggests that managers’ perspectives on teleworking can significantly influence its acceptance within companies. Conducted by Josep Lladós, Prof. Antoni Meseguer, Eva Rimbau, and Mar Sabadell of the UOC’s Faculty of Economics and Business and the Digital Business Research Group (DigiBiz), the research highlights the essential skills managers must possess to create an environment conducive to remote working and the factors that should be considered to facilitate this change.

The research underscores managers’ pivotal role in promoting teleworking, suggesting that their positive perceptions and belief in their ability to manage remote teams are crucial. Managers’ willingness to adopt teleworking largely stems from their belief in its utility and ease of implementation. A critical organisation of their perception is the expected impact on work performance, gauged through various indicators such as task completion, goal achievement, quality of output, and absenteeism rates. Though it’s challenging to measure the effects of teleworking on efficiency and productivity objectively, managers’ positive views on how remote working benefits these aspects play a significant role in their overall perception of its utility, as highlighted by Eva Rimbau.

The UOC study reveals that the adoption of teleworking depends not only on managers’ views of their employees and the perceived benefits or performance outcomes but also on their self-perception—their confidence in their ability to manage this type of work arrangement—and their relationship with their teams. Rimbau stresses the importance of managers trusting their employees and managing based on outcomes or objectives rather than physical presence or hours logged. This approach fosters a “virtuous circle” where increased trust leads to better outcomes and, conversely, employees are more proactive in taking on responsibilities to meet demands. This stress on trust can reassure managers about the effectiveness of remote team management.

The challenges of teleworking, such as lack of face-to-face interaction and coordination difficulties, are significant. Yet, managers’ confidence in their ability to lead and supervise remotely is crucial. Rimbau points out that managers must develop skills to effectively build, motivate, recognise, and hold accountable in remote work, utilising digital tools to improve effective communication and interaction. Leaders should strive to avoid professional isolation, encourage collaboration and trust, and adapt their leadership and supervisory practices to fit the digital context, ensuring they act not merely as bosses but as leaders who can nurture teamwork in any work scenario.

Furthermore, the readiness of managers to implement teleworking is influenced by external factors such as peer pressure, superior directives, and compatibility with the organisational knowledge that managers are more likely to adopt if senior management or leading firms in the industry advocate for teleworking. Another decisive factor is managers’ ability to lead change. The digital and knowledge intensity of a company’s activities significantly affects how easily teleworking can be broadly and successfully implemented. Technological barriers also play a role, underscoring the need for employees and the company to have the necessary resources and digitise their processes and workplace practices to adapt effectively to teleworking.

More information: Josep Llados-Masllore et al, Telework and new work practices: The role of managers, Human Resources Management and Services. DOI: 10.1007/s00394-023-03123-x

Journal information: Human Resources Management and Services Provided by Universitat Oberta de Catalunya (UOC)

Seeking to Boost Sustainable Practices Among Consumers? Develop Prosocial Representatives

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A new article in the Journal of Marketing authored by researchers from the University of Kentucky, Arizona State University, and Pennsylvania University sheds light on how an ambassador role to advocate for a cause impacts one’s prosocial behaviours. The paper, set to be published under the title “The Prosocial Ambassador Effect: Adopting an Ambassador Role Increases Sustainable Behavior”, explores the dynamic wherein individuals support a cause through ambassadorship and the subsequent enhancement of their prosocial actions.

This research emerges against increasing corporate responsibility initiatives, such as those by the apparel company Tentree, which has launched an ambassador program to rally consumers dedicated to a more sustainable future. Tentree’s initiative encourages participants to inspire others to adopt greener practices. In a parallel initiative, the 5 Gyres Institute promotes a program where global ambassadors commit to a plastic-free existence, advocating for a culture of reusability and raising awareness about the enduring harms of plastic use.

Amidst a broader corporate shift towards sustainability, exemplified by moves to cut down on single-use plastic bags, this study delves into the mechanics of ambassadorship in fostering cause support. It specifically examines how personal commitment to prosocial behaviour—such as opting for reusable shopping bags—and its promotion to others further individual practices and motivate others towards similar behavioural shifts.

The researchers address two primary questions: what does it take for a consumer to become a prosocial ambassador, and how does this role affect their future prosocial behaviour? Corinne M.K. Hassler elaborates on the concept, distinguishing these ambassadors from traditional brand ambassadors and influencers. These prosocial ambassadors are not directly affiliated with the brands they support and are not necessarily compensated. Their influence is rooted in genuine personal commitment and promoting sustainable behaviours amongst their peers.

Through a series of four experiments, the research team observed that grocery shoppers who embraced the ambassador role were more likely to continue using reusable shopping bags compared to those who did not promote the behaviour interpersonally. The findings underscore an “ambassador effect” that not only promotes a collective identity among consumers but also boosts prosocial behaviour beyond individual efforts alone.

Key insights from the study include the recognition that combining personal commitment with promoting prosocial actions significantly amplifies sustainable behaviours. It also highlights that fostering a collective identity among consumers, transitioning their self-conception from “I” to “we”, can drive further prosocial activities. Notably, the study notes that such ambassadorship does not require financial incentives, sharply distinguishing it from referral programs that often rely on such incentives.

The study offers several takeaways for marketing leaders and stakeholders. Maura L. Scott points out that understanding the contexts in which such interventions are effective is crucial for designing successful ambassadorship programs. The cost of inducing such roles is relatively low, requiring minimal time and financial investment while potentially generating additional revenue through related product sales.

Furthermore, the potential longevity of these effects suggests that organisations could use ambassador programs strategically to maintain engagement with consumers over time, deepening relationships and enhancing brand loyalty and reputation.

The research presents a pioneering approach to utilising marketing strategies for societal benefit. It demonstrates that by acting as prosocial ambassadors, consumers elevate their sustainable behaviours and contribute to a broader positive impact, creating a synergistic benefit that supports both the individual and the community. This innovative model offers a practical yet impactful way for organisations to engage with and sustain consumer interest in prosocial activities, ultimately fostering a more sustainable society.

More information: Corinne M.K. Hassler et al, The Prosocial Ambassador Effect: Adopting an Ambassador Role Increases Sustainable Behavior, Journal of Marketing. DOI: 10.1177/00222429241265000

Journal information: Journal of Marketing Provided by American Marketing Association

How a Well-Known Economic Principle Could Aid in the Conservation of Threatened Frog Species

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A prevalent financial investment strategy might also be crucial for protecting an endangered frog species in Puerto Rico. A recent study has implemented modern portfolio theory to pinpoint future “investments” in natural resource management. This approach could help managers make informed decisions to conserve the populations of coquí llanero frogs on the island. Known for their distinctive high-pitched chirps, the 17 species of coquí frogs serve as informal symbols of Puerto Rico. The coquí llanero, notably the smallest and most at risk, is confined to just three small freshwater wetlands on the northern coast. This geographic limitation exposes them to significant risks from severe storms, rising sea levels, and other climatic shifts.

Mitch Eaton, the study’s principal investigator and a research ecologist at the Southeast Climate Adaptation Science Center, emphasises these frogs’ vulnerability. “The coquí can only do so much by themselves to avoid climate-related risks. Thus, it’s crucial that we consider ways to manage and alleviate risks within this complex ecosystem.” Modern portfolio theory, a staple in economic strategies used commonly for building stable retirement investment portfolios, forms the basis of this approach. Investors typically create a portfolio of assets that react differently to market fluctuations, including high-risk, high-reward stocks and more stable, low-return bonds. The balance of these assets is tailored to the investor’s risk tolerance.

But what does investment strategy have to do with endangered frogs in Puerto Rico? Like financial investors, natural resource managers also deal with assets and make strategic investments under conditions of uncertainty. These investments involve purchasing land for conservation, restoring habitats, or relocating species to safer areas. The study explores the potential of using modern portfolio theory to identify such investment opportunities to aid the conservation of the coquí.

“Diversification of investments is kind of a magic bullet for stability under future market uncertainty,” says Eaton. He explains that using modern portfolio theory, managers can more effectively manage risk under the unpredictable conditions of future climates. The approach also encourages managers to consider their investments more judiciously, considering realistic variables like budget constraints. Researchers developed models incorporating current protected habitats, projected sea-level rises, and future climate scenarios. They also considered various future funding levels that could be available for investment.

The study conducted two portfolio analyses that weighed cost against risk. One strategy aimed to maximise conservation benefits within the constraints of available budgets. The other strategy, focused on minimising risks, proposed more conservative investments even if they came at a higher cost, such as buying new land parcels specifically for relocating the frogs, which would lead to a lower risk of extinction. This approach showed that merely relying on existing protected areas might not suffice to mitigate future climate risks and that investing in conserving additional habitats could be worthwhile.

Researchers were also surprised to find potential sites for the frogs on the eastern side of Puerto Rico, which expands the geographic options for protecting the coquí llanero. This could increase the species’ footprint and offer more robust protection options. “Ideally, modern portfolio theory acts as a handy tool for managers that gives them a new way of thinking about how to implement management actions over space,” Eaton adds. This means pooling investments to manage risk and achieve maximal benefits effectively.

While this study focused on the coquí llanero, the implications of applying modern portfolio theory extend beyond this particular species. However, it’s crucial to note the limitations: the current application considers only one species when assessing conservation actions and requires more detailed local condition analyses for implementing high-cost investments. Despite these challenges, modern portfolio theory could be adapted for various species, addressing broad resource management needs and preparing for uncertain futures.

More information: Mitchell Eaton et al, Applying portfolio theory to benefit endangered amphibians in coastal wetlands threatened by climate change, high uncertainty, and significant investment risk, Frontiers in Conservation Science. DOI: 10.3389/fcosc.2024.1444626

Journal information: Frontiers in Conservation Science Provided by North Carolina State University

Job Embeddedness Influences Voluntary Departure Amidst Employment Uncertainty

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During the period known as the Great Resignation, the United States witnessed a marked increase in voluntary employee resignations roughly a year into the COVID-19 pandemic, contrasting starkly with the high unemployment rates that characterized the pandemic’s early stages. This phenomenon prompted business leaders to delve deeper into the factors influencing an employee’s decision to voluntarily leave or stay in a position amidst prevalent job insecurity. Researchers from Hiroshima University, Texas Christian University, and the University of Warwick conducted two studies to explore how job embeddedness — elements that reinforce an employee’s commitment to their workplace — affects voluntary turnover under these conditions. They employed the conservation of resources (COR) theory as their conceptual framework, positing that individuals strive to acquire and safeguard valuable resources to avoid future losses.

Professor Vesa Peltokorpi of Hiroshima University explained their approach: using COR theory, they aimed to understand why some employees, faced with potential job loss, seek new employment opportunities and leave their organizations while others do not. The first study assessed the relationship between job insecurity and job search, predicting that job insecurity would be positively linked to voluntary job turnover. Using online surveys to measure respondents’ job insecurity and their degree of on-the-job embeddedness, the researchers conducted follow-up surveys three months and twenty-four months after the initial one to evaluate job search activities and voluntary turnover, respectively. Their findings supported their hypothesis, showing that job search mediates the relationship between job insecurity and voluntary turnover. Employees with higher on-the-job embeddedness are less likely to search for new jobs despite feeling insecure in their current positions.

The second study involved a new group of full-time employees and expanded the scope to include both on-the-job and off-the-job embeddedness, encompassing home and community ties. This study not only confirmed the findings of the first but also provided insights into how different types of embeddedness influence turnover intentions and actual turnover. Peltokorpi noted that while on-the-job embeddedness decreases the likelihood of employees considering quitting, off-the-job embeddedness has the opposite effect, exacerbating the link between job insecurity and turnover. This suggests that community-based resources, which offer social support and informational benefits, play a complex role for individuals experiencing job insecurity.

The research advances our understanding of why employees decide to stay or leave and underscores the nuanced roles that different forms of embeddedness play in these decisions. The cost implications of voluntary turnover are substantial for employers, with replacement expenses potentially reaching 200% of an employee’s annual salary.

While the studies shed considerable light on the dynamics of voluntary turnover, Peltokorpi admits that further research is needed. He advocates for more refined conceptual and empirical studies to better understand how on- and off-the-job embeddedness can mitigate or facilitate the effects of job insecurity on employment outcomes. Such research would provide deeper insights for business leaders and academics into the complex interplay of personal, organizational, and community factors that influence employee turnover.

More information: Vesa Peltokorpi et al, Job embeddedness and voluntary turnover in the face of job insecurity, Journal of Organizational Behavior. DOI: 10.1002/job.2728

Journal information: Journal of Organizational Behavior Provided by Hiroshima University

Boosting the Profitability of Remanufacturing

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Remanufacturing involves restoring end-of-life products to a condition as good as new, playing a pivotal role in the circular economy. However, its broader adoption by industrial companies hinges on its economic feasibility. Johan Vogt Duberg, in his doctoral research at Linköping University, explores strategies to make remanufacturing a viable business model.

Duberg argues that increasing environmental awareness can be a profitable avenue. Through remanufacturing, companies cannot only cut down on raw material costs but also reach out to new customer segments and create unique circular business models. In his thesis, Duberg delves into the allure of remanufacturing for industrial companies that manufacture a diverse range of products.

In practice, remanufacturing entails upgrading end-of-life products to function and appear new. These products, called cores, span a diverse range—from lawnmowers and trucks to computers and car parts. This process transcends mere repair, embodying an industrial-grade procedure that demands systematic operations akin to those in new production lines. A substantial volume of returned cores is essential to sustain an efficient, continuous production line.

Duberg highlights the sporadic nature of core returns as a significant hurdle to achieving scale and efficiency in remanufacturing. To mitigate this, he suggests several strategies, such as deposit schemes, buy-back initiatives, and leasing models. These approaches ensure a steady influx of cores, eliminating the need for companies to purchase them, thereby reducing costs and ensuring a reliable supply of materials for remanufacturing.

Despite these advantages, remanufacturing accounts for only about two per cent of the total manufacturing industry, primarily due to its complexities. Unlike standard manufacturing, where uniformity is typical, every returned core is unique, necessitating a highly adaptable process. This complexity requires companies to revamp their business models to effectively incorporate remanufacturing, thus enhancing profitability while yielding environmental benefits.

Duberg’s research also underscores the importance of aligning with increasing regulatory pressures for sustainable resource management, such as those potentially imposed by entities like the EU. His framework aids companies in transitioning to remanufacturing by outlining critical considerations and assessing economic impacts.

Duberg underlines the necessity of commitment and strategic planning for companies contemplating the shift to remanufacturing. It’s not an initiative that can be launched overnight; it requires a significant investment of time and resources. His insights and proposed framework serve as a solid guide for companies looking to integrate remanufacturing into their operations, ultimately benefiting both their bottom line and the environment.

More information: Johan Vogt Duberg et al, Remanufacturing Initiation for Original Equipment Manufacturers, Linköping Studies in Science and Technology. DOI: 10.3384/9789180756280

Journal information: Linköping Studies in Science and Technology Provided by Linköping University

Skilled and Influential Boards Required to Leverage the Potential of Overconfident CEOs for Groundbreaking Innovations

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C-suite executives are often characterised by their strong personalities, which can be pivotal in driving new and appealing offerings. However, when the focus shifts to significant technological innovations, recent research published in the Strategic Management Journal highlights the critical need for a balance between CEO overconfidence and a well-equipped board of directors.

This balance is vital, as earlier research has established that while overconfident CEOs tend to push for groundbreaking innovations, their propensity to overlook potential risks associated with these ventures can be problematic. The challenge of effectively utilising the attributes of overconfident CEOs was less explored until the new study conducted by Priscilla S. Kraft from WHU – Otto Beisheim School of Management, Teresa A. Dickler from IE University in Madrid and the University of Marburg, and Michael C. Withers from Texas A&M University. Their research emphasised the role of corporate boards as a fundamental component in achieving successful innovation breakthroughs.

To validate their hypotheses, the research team focused on selecting U.S. publicly listed companies within the S&P 1500, specifically those operating in high-tech sectors. Previous studies have demonstrated that revolutionary innovations — drastically altering or creating new markets — are particularly crucial in these sectors. The study centred on two pivotal aspects of board composition: expertise and authority. The value of knowledge, previously well-documented in contexts such as mergers and acquisitions, proved equally significant here. Boards that possess a thorough understanding of navigating breakthrough innovations can mitigate investment concerns more effectively.

The researchers also measured the board’s authority regarding its independence from the CEO. Indicators of a robust board included scenarios where the CEO does not serve as the chair, board members possess longer tenure than the CEO, or hold a significant stake in the company. These conditions typically enable the board to exert considerable pressure on the CEO to substantiate their ideas and ensure comprehensive information flow.

Kraft notes the indispensable role of a powerful board in correcting any misconceptions that might arise from CEO overconfidence. The aim is not to curb the CEOs’ innovative impulses but to steer them towards making better decisions about project selection, resource allocation, and incorporating new information as projects progress.

The study found a robust correlation between CEO overconfidence and the rate of breakthrough innovations in firms with boards that are both knowledgeable and authoritative. This relationship was quantified as a 113% increase in breakthrough innovations compared to the average. The findings underscore that expertise and authority are essential, revealing that mighty boards lacking in expertise could hinder the productive channelling of CEO overconfidence.

Kraft advises that firms aiming to excel in pioneering innovations should be meticulous in assembling their boards. It is crucial to select members who grasp the subject matter and provide valuable guidance. Furthermore, there must be an equilibrium of power between the CEO and the board to foster an environment conducive to innovation. This balance is fundamental to harnessing the potential of overconfident CEOs while mitigating associated risks and guiding the company towards successful and sustainable innovative outcomes.

More information: Priscilla S. Kraft et al, When do firms benefit from overconfident CEOs? The role of board expertise and power for technological breakthrough innovation, Strategic Management Journal. DOI: 10.1002/smj.3657

Journal information: Strategic Management Journal Provided by Strategic Management Society

Scholars Suggest a New Framework for Economic Efficiency and Sustainability

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An international, interdisciplinary team of researchers has developed a comprehensive proposal for reshaping economic performance and sustainability, focusing on cooperation and ethical behaviour as pivotal elements for economic prosperity. Led by Associate Professor Jan Pfister from the University of Turku in Finland, this team has introduced a forward-thinking strategy in performance management. Their publication in Qualitative Research in Accounting & Management details the “prosocial market economy,” a model that integrates cooperation, ethical behaviour, and sustainability into organisational operations.

This research, funded by the Research Council of Finland, challenges the traditional economic focus on self-interest and short-term gains. It presents a case for organisations that cultivate prosocial behaviours that emphasise teamwork and collective welfare as having a greater propensity for long-term success. The model posits ethical responsibility as crucial for achieving peak performance and enduring sustainability, offering a new blueprint for success that demonstrates why organisations emphasising cooperation and ethical conduct tend to surpass those driven solely by self-interest.

Drawing on evolutionary theory and insights from Nobel Prize-winning economist Elinor Ostrom, the researchers advocate integrating the core design principles of prosocial groups into performance measurement and management practices. This approach fosters economic success and highlights the role of sustainability: envisioning companies that achieve economic prosperity while positively contributing to environmental sustainability and societal welfare.

Associate Professor Pfister explains the significance of this model against the backdrop of global challenges such as climate change, inequality, and resource depletion. He suggests that the prosocial market economy offers an alternative to traditional frameworks focused on short-term profits, providing a system where business success and ethical responsibility coexist. This enables companies to navigate complex requirements while ensuring long-term viability and fostering positive social impacts.

The research represents a collaborative effort involving experts from various fields and institutions across Finland, the United Kingdom, the USA, and the United Arab Emirates. This collaboration underscores the importance of integrating behavioural science with management studies to foster a more sustainable and cooperative economic system.

From theory to practice, the prosocial market economy offers practical tools for organisations across industries. It equips business leaders with principles to design prosocial teams and promote collective success. According to Pfister, the research clarifies why and how prosocial groups prioritise shared success over individual gain and outperform groups driven purely by self-interest. This has profound implications for performance measurement, management, and how organisational behaviour is cultivated to nurture a sustainable future.

Amid increasing pressure from consumers, policymakers, and investors to embrace sustainable practices, this research moves beyond the conventional Environmental, Social, and Governance (ESG) debate. It focuses on transforming organisational cultures from within, embedding sustainability and cooperation into core values. This inside-out approach helps businesses foster genuine, lasting sustainability, avoiding greenwashing and the superficial compliance often associated with ESG measures.

Ultimately, the prosocial market economy lays out a route for organisations to be economically successful and environmentally responsible. It establishes a viable framework for the future of sustainable economic development, offering a pathway that aligns ethical responsibility with business success. This innovative approach promises to help companies address complex global demands while ensuring long-term viability and positive social impact.

More information: Jan Pfister et al, Performance management in the prosocial market economy: a new paradigm for economic performance and sustainability, Qualitative Research in Accounting & Management. DOI: 10.1108/QRAM-02-2024-0031

Journal information: Qualitative Research in Accounting & Management Provided by University of Turku

Recent Study Indicates Online Advertisements Have Minimal Effect on Consumer Valuations of Facebook

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Policymakers are engaging in an increasingly nuanced debate over the social costs and benefits associated with digital advertising. While advertisements typically generate revenue for platforms and marketers, the question remains: do they serve or undermine the interests of the consumers? A recent study delved into this issue by examining the impact of advertising on Facebook. By comparing consumer reactions to the presence or absence of ads, the researchers found no significant differences in how much users valued the platform, indicating that the adverse effects of ads might be minimal or balanced out by certain advantages.

A team from Carnegie Mellon University, Stanford University, Northwestern University, and Meta conducted this research, and the findings are detailed in a new working paper published by the National Bureau of Economic Research (NBER).

Avinash Collis, an assistant professor of management science and economics at Carnegie Mellon’s Heinz College and the study’s lead researcher, shared insights into the dual potential impacts of online ads. He noted that while ads might be a source of annoyance by bombarding users with irrelevant content, they also have the potential to direct consumers to products and services that could be of genuine interest.

The study capitalises on a unique long-term field experiment on Facebook’s advertising system that began in 2013 and is ongoing. In this experiment, a small random fraction (0.5%) of Facebook’s nearly 3 billion user base was selected to experience the platform without any ads. The remainder of the users encountered the usual advertisement frequency.

In 2022, the researchers gathered data from over 53,000 Facebook users from both the ad-viewing and non-ad-viewing groups. Participants engaged in a survey with an incentivised choice experiment to measure their Facebook valuation. The results showed no statistical difference in valuation between the two groups, suggesting that the current level of advertising on the platform does not substantially degrade user experience. This challenges the notion that a no-ads environment would significantly enhance consumer satisfaction, with any potential adverse effects of ads being less than 10% of the overall value users place on Facebook.

The researchers proposed that the lack of significant impact might be due to the compensatory nature of the benefits derived from targeted ads, which could neutralise the irritation caused by less relevant ads. Alternatively, they considered the possibility that both the beneficial and adverse effects were too minor to be statistically detectable. It was also noted that users in the ad-free group spent 9.4% less time on Facebook, which did not influence their overall platform valuation.

However, the study’s scope does have limitations; it focused solely on Facebook and did not consider other platforms. Furthermore, the ad-free group was still exposed to some residual advertising. Meta, Facebook’s parent company, employs more than half of the paper’s authors.

Erik Brynjolfsson, a professor at Stanford’s Institute for Human-centered AI and co-leader of the study, highlighted the relevance of this research to ongoing policy discussions in the United States and Europe. These discussions often revolve around the regulation of targeted advertising on online platforms. The findings from this comprehensive and prolonged experiment offer valuable insights into the balance of utility and disutility that ads provide to users on social media platforms.

More information: Erik Brynjolfsson et al, The Consumer Welfare Effects of Online Ads: Evidence from a 9-Year Experiment, NBER working paper. DOI: 10.3386/w32846

Journal information: NBER working paper Provided by Carnegie Mellon University

Recent Research: Does Sampling Healthy Foods Encourage Unhealthy Buying Habits?

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Large retail establishments often distribute free food samples to customers as they shop. These samples vary widely in nutritional value, from very healthy to less nutritious options. This raises an important question: How does the nature of a complimentary food sample—healthy or unhealthy—affect the subsequent purchasing decisions of consumers? Are shoppers influenced to buy more or less healthy products after sampling something good for them?

A recent paper published in the Journal of the Academy of Marketing Science, which is breaking new ground in the field, delves into this issue with rigorous scrutiny. The research, spearheaded by Dipayan Biswas, a Professor of Marketing at the University of South Florida, comprises a series of experiments conducted in real-world shopping environments. The study involved four distinct field studies, each designed to explore the relationship between the healthfulness of food samples and subsequent purchasing behaviour.

The findings of this comprehensive study are both surprising and enlightening. One key takeaway is that sampling a healthy food item can, counterintuitively, lead to an increase in the purchase of unhealthy foods. This phenomenon is particularly evident when the healthful nature of the sample is in stark contrast to the other available food choices. This suggests that the relative healthiness of the sample compared to the usual diet or available options plays a critical role in influencing consumer behaviour.

On the other hand, when the sampled food and the other available choices are similar in terms of healthfulness, consumers are more likely to maintain a pattern of choosing healthy foods. This alignment reinforces healthy eating habits rather than disrupts them. Therefore, the consistency between sampled items and overall dietary choices is pivotal in guiding consumer decisions positively.

The study also introduces the concept of a “health halo” effect, where sampling a healthy item may impart a false sense of nutritional virtue to consumers. This perceived virtue can lead to subsequent indulgence in less nutritious food options, as consumers might feel justified in treating themselves after making a seemingly virtuous choice. To counteract this psychological trap, the researchers suggest that consumers should be mindful of how similar the sampled food is to their usual or intended purchases, recognizing the potential influence on their immediate food choices.

Professor Biswas summarized the implications of his team’s research: “Our study looked at whether a free, complimentary healthy food item can actually be bad for you. What we found was that receiving one at a store or restaurant can lead consumers to subsequently purchase more indulgent foods.” This insight challenges the intuitive belief that sampling healthy foods will invariably promote a more nutritious diet, highlighting the complex ways in which small, seemingly beneficial actions can influence consumer behaviour in unexpected ways.

More information: Dipayan Biswas et al, Effects of sampling healthy versus unhealthy foods on subsequent food purchases, Journal of the Academy of Marketing Science. DOI: 10.1007/s11747-024-01047-4

Journal information: Journal of the Academy of Marketing Science Provided by University of South Florida

Seven Years Later, INSEAD Report Uncovers Surprising Effects of the #MeToo Movement

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Seven years after actor Alyssa Milano’s tweet brought the #MeToo movement to the forefront of global consciousness, the societal outlook on sexual harassment and assault has undergone a seismic shift in many countries. This transformative movement has reshaped social attitudes and left an indelible mark on consumer behaviour. A recent study, conducted by INSEAD professors Frédéric Godart and David Dubois, along with Clément Bellet of Erasmus University Rotterdam, underscores this impact. The research reveals a significant decline in the sales of traditionally feminine footwear like high heels, particularly after the #MeToo movement gained extensive media coverage in October 2017.

The researchers analyzed sales data from a major fashion retailer across 32 OECD countries, focusing on January 2017 and December 2018. Compared to more neutral styles, they observed a 14.4 per cent decrease in stockouts for stereotypically feminine shoes, such as pink high-heeled pumps or red platforms. The effect was more pronounced in regions heavily exposed to the #MeToo discourse, notably the Nordic countries and France, where the reduction in stockouts of such products reached 25 per cent. Moreover, similar trends were evident across other women’s product categories, including lingerie, dresses, and handbags, showing consistent declines in pink or red items.

The researchers surveyed approximately 1,000 women in the United States to delve deeper into these changing consumer trends. Their findings revealed that exposure to #MeToo-related content significantly reduced the demand for high-heeled shoes. This shift reflects a move away from traditional gender stereotypes, with women increasingly rejecting products that starkly symbolize femininity. This trend suggests a rebellion against established norms rather than a reaction based on feelings of empowerment or threat.

The implications of this study are profound and extend far beyond the fashion industry, underscoring the broader influence of social movements on consumer markets. The findings prompt a reconsideration of marketing strategies, particularly those that rely on gender-based approaches like the “pink it or shrink it” tactic. Brands are encouraged to reassess their marketing strategies in light of these shifts, becoming more attuned to changing social values and norms, which can rapidly influence consumer preferences.

Companies are also advised to conduct thorough brand audits to assess how their products intersect with consumer identities and stereotypes and to consider the potential impact of social movements on their brand value. This approach is essential for maintaining relevance and competitiveness in a market where consumer identity is increasingly driving purchasing decisions.

As social movements like #MeToo continue to shape public discourse and consumer behavior, businesses that can swiftly adapt to these changes are not just likely, but are in fact, required to find themselves in a stronger position for long-term success. The research from INSEAD and Erasmus University Rotterdam offers valuable insights for any business operating in today’s dynamic market, highlighting the importance of responsive and informed brand management in the face of evolving social trends.

More information: Clément S. Bellet et al, Do Consumers Respond to Social Movements? Evidence from Gender-Stereotypical Purchases After #MeToo, Management Science. DOI: 10.1287/mnsc.2022.02352

Journal information: Management Science Provided by INSEAD Asia Campus