Author Archives: support

Having more does not necessarily mean having better

In the logistics industry, multiple delivery routes to the same destination enhance reliability. Similarly, in the realm of network-dependent consumerism, the resilience and efficiency of digital consumption rely on the presence of multiple interconnected networks operating harmoniously.

The shift towards digital platforms as the standard business model underscores the perils of depending solely on a single network and a limited number of operators.

A team of researchers, including members from Kyoto University, has delved into the dynamics between consumers who use only one platform (single-homing) and those who engage with multiple platforms (multi-homing). What sets this study apart is the development of a novel analytical framework, a unique tool to assess whether a greater proportion of multi-homing consumers could significantly improve efficiency by merging two business platforms.

Takanori Adachi, from Kyoto University’s Graduate School of Management and Economics, highlighted the study’s connection to the economics of imperfect competition. This area of study, increasingly vital with the progression of information and communication technology, delves into various market-related challenges.

In scenarios where consumers opt for single-homing, the chosen platform invariably assumes a dominant position. However, as the trend towards multi-homing gains traction, it becomes imperative to steer policy directions towards the complexities of digital regulation. This shift is driven by a larger share of consumers embracing multiple platforms, a trend that this study aims to shed light on.

Moreover, Mark Trembley from the University of Nevada, Las Vegas, pointed out that the growing prevalence of multi-homing necessitates more significant reductions in consolidation costs for businesses. It also elevates entry barriers for new entrants in the platform market.

As the prevalence of multi-homing increases, Susumu Sato from Hitotsubashi University underscores the need for competition regulators to be particularly vigilant. In multi-homing contexts, they must be alert to the potential negative impacts of platform mergers and the creation of entry barriers, a challenge that this study aims to address.

The research community often needs help with the challenge of limited data on platform-based businesses.

Takanori Adachi expressed satisfaction with how the study, leveraging economic theoretical models and public databases, succeeded in providing a more lucid understanding of platform economics’ functioning in real-world scenarios. This approach underscores the critical role of theoretical and empirical research in navigating and understanding the complexities of modern digital marketplaces.

More information: Takanori Adachi et al, Platform Oligopoly with Endogenous Homing: Implications for Mergers and Free Entry, Journal of Industrial Economics. DOI: 10.1111/joie.12345

Journal information: Journal of Industrial Economics Provided by Kyoto University

What amount are you prepared to spend on a product or service? The answer varies based on the alternatives available to you and the specific circumstances

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A recent study, soon to be published in the Journal of Marketing by researchers at Concordia University and Northwestern University, introduces a novel approach, the Comparative Method of Valuation (CMV), for accurately gauging customers’ willingness to pay for goods or services. This groundbreaking research, titled “Measuring Willingness to Pay: A Comparative Method of Valuation” and authored by Sharlene He, Eric T. Anderson, and Derek D. Rucker, provides a fresh perspective on understanding consumer behaviour in pricing contexts.

The study draws attention to everyday scenarios, such as a shopper’s willingness to purchase a bottle of Riesling over a Chardonnay based on their prices and perceived value. It highlights how this decision can be influenced by the introduction of discounts or the absence of a purchase. These examples underline the complexities of determining what a customer is prepared to spend. This question has long perplexed marketers across sectors dealing with consumer packaged goods, durable goods, or services.

Sharlene elaborates on the dilemma marketers face when pricing their offerings: pricing too low may forfeit potential profits if customers’ willingness to pay (WTP) is underestimated. In contrast, high prices can dampen demand for an otherwise desirable product or service. The imperative to accurately measure WTP is thus not only an academic interest but a practical necessity for optimising market strategies and enhancing profitability.

Traditional methodologies for assessing WTP, such as surveys with open-ended questions or choice-based conjoint analysis, are criticised in the study for their need for more specificity regarding the context or comparison points relevant to the consumer’s decision-making process. These conventional approaches, the researchers argue, often yield ambiguous or inaccurate results due to their failure to account for the full spectrum of factors influencing consumer valuations.

The Comparative Method of Valuation addresses these shortcomings by incorporating comparison and context into the evaluation of WTP, thereby enhancing the precision and depth of insights garnered. The research illustrates how situational factors and comparative options play a crucial role in shaping a customer’s valuation, using examples from various scenarios, such as a customer’s preference for different beer brands at a beachside vendor versus a hotel bar. By acknowledging that the comparative option can change with the situation, CMV enables a more nuanced understanding of WTP that accounts for direct and indirect consumer valuation influences.

The CMV approach represents a significant advancement in market research techniques, offering marketers a more refined tool for measuring WTP that incorporates essential variables of comparison and context. This methodology promises to improve the accuracy of WTP measurements and provide marketers with actionable insights for pricing decisions, product positioning, and the development of marketing strategies. Through detailed guidance and practical applications of CMV, the researchers demonstrate its utility in addressing common managerial challenges, such as pricing premium products relative to basic versions or determining the optimal level of product attributes to offer.

In conclusion, the introduction of the Comparative Method of Valuation marks a pivotal development in marketing research. It addresses the long-standing challenge of accurately measuring consumers’ willingness to pay. By integrating critical factors of comparison and context, CMV offers marketers a powerful tool for refining their pricing strategies and better-understanding consumer preferences, ultimately leading to more informed decisions and potentially greater market success.

More information: Sharlene He et al, Measuring Willingness to Pay: A Comparative Method of Valuation, Journal of Marketing. DOI: 10.1177/00222429231195564

Journal information: Journal of Marketing Provided by American Marketing Association

Exploring the impact of marketing in evolving health care sectors: A shift from traditional approaches is essential to accommodate emerging participants, functions, and interactions

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In an editorial published by the Journal of Marketing, a group of scholars from Duke University, the University of New South Wales, the University of Wisconsin, and the University of Washington has called for the marketing field to adapt to the evolving landscape of healthcare markets. This call to action, which forms the introduction to a particular issue titled “Marketing in the Health Care Sector: Disrupted Exchanges and New Research Directions,” is spearheaded by authors Christine Moorman, Harald J. van Heerde, C. Page Moreau, and Robert W. Palmatier. Within this particular issue, the editors curate articles that not only shed light on marketing’s pivotal role within the healthcare sector but also chart a path for future research. This path explores how these changing market dynamics can enhance health outcomes, empower consumer choice, and stimulate competitive practices.

The healthcare industry, a crucial pillar of our global society, has undergone significant transformations over the past decade, influenced by shifts in demand and supply. These transformations have altered how healthcare services and products are developed, delivered, and consumed, highlighting the urgent need for a comprehensive understanding of marketing’s role in this new context. Traditional marketing strategies in the healthcare industry have predominantly focused on direct engagements, such as business-to-business interactions with health professionals and direct-to-consumer advertising. However, this approach overlooks the emergence of new players and the evolution of market structures in the face of ongoing disruptions.

Central to the editorial’s discussion is the concept of disrupted exchanges, which involve traditional and novel entities in the healthcare production and delivery chain. This includes conventional healthcare producers like pharmaceutical and medical device companies alongside new entrants such as tech and diagnostic firms. Similarly, the provider landscape has expanded to include traditional professionals and institutions as well as retail, alternative, and digital health influencers. Consumers, too, have evolved from passive healthcare recipients to active participants and creators of value within the health ecosystem.

The editorial delves into the consequences of these disrupted exchanges, mainly focusing on their potential to improve health outcomes, empower consumer decision-making, and foster a competitive environment that could enhance access, reduce costs, and improve service quality. However, it also raises concerns about the real impact of these changes, questioning whether they will genuinely lead to better health management, more apparent consumer choices, and meaningful competition that benefits societal welfare.

Emphasizing the need for further research, the editorial highlights the significant opportunity for the marketing discipline to unravel the complexities introduced by these rapid changes. By investigating the roles and impacts of new market actors, marketing scholars can contribute to a deeper understanding of the evolving healthcare landscape. This understanding, in turn, can inform strategies that leverage these disruptions for positive outcomes in health, consumer empowerment, and market competition.

The editorial team’s call to action clearly invites more scholarly engagement with these pressing issues. It underscores the importance of exploring how marketing can play a transformative role in navigating the challenges and seizing the opportunities presented by the dynamic healthcare sector.

More information: Christine Moorman et al, Marketing in the Health Care Sector: Disrupted Exchanges and New Research Directions, Journal of Marketing. DOI: 10.1177/00222429231213154

Journal information: Journal of Marketing Provided by American Marketing Association

Greater value in influencer marketing: Prioritise influencers with smaller audiences

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A newly published study in the Journal of Marketing, conducted by researchers from the University of Mannheim, Erasmus University Rotterdam, Reichman University, and the University of Basel, delves into the efficacy of paid influencer endorsements, especially for Direct-to-Consumer (DTC) companies. Entitled “Revenue Generation through Influencer Marketing,” the paper is the collaborative effort of Maximilian Beichert, Andreas Bayerl, Jacob Goldenberg, and Andreas Lanz. It arrives at a time when influencer marketing has burgeoned into a $17.4 billion industry, with over 80% of U.S. businesses now utilizing influencers for marketing endeavours. This surge in influencer marketing’s popularity is further accentuated by Instagram’s introduction of enhanced analytical tools for influencers and brands in 2023, solidifying Instagram’s status as the leading platform for user-generated content for brands and influencers alike, boasting 3.8 billion sponsored posts annually.

This research specifically targets the effectiveness of paid endorsements by influencers for DTC companies. It navigates through the entire influencer marketing funnel, from Instagram followers to the audience reached, engagement with the sponsored posts, and, ultimately, the revenue generated. The researchers need to find a notable disconnect in understanding these campaigns’ actual Return on Investment (ROI), pinpointing the identification of influencers who can generate positive ROI as a primary challenge for DTC firms.

A fascinating aspect of their findings is the spotlight on nano-influencers, who, despite having smaller followings, demonstrate greater cost-effectiveness in generating revenue compared to their macro counterparts with larger audiences. This contradicts the industry’s prevailing notion that more followers equate to more incredible value. The study underscores the importance of engagement and the personal connection between nano-influencers and their audience, contributing to more effective marketing results.

Employing a combination of secondary revenue data and field studies, the researchers analyzed data from one of Europe’s leading DTC companies. This data, linked to nearly 1.9 million product sales and over €17 million in revenue, was garnered from influencer-specific discount codes shared on Instagram. The study’s outcomes were further validated on platforms like YouTube and TikTok through three field studies involving 319 paid nano- and macro-influencers on Instagram, offering valuable insights into macro versus nano-influencers’ comparative reach and persuasion in purchasing decisions.

The research not only contests but also builds upon previous studies that favoured macro-influencers, suggesting that the rapid expansion of social media and the consequent growth in follower counts have led to a reclassification of what defines a macro-influencer. A novel aspect of this study is its focus on the level of engagement before a sponsored post, with findings indicating that nano-influencers tend to have a communication style more closely aligned with their followers, enhancing their relatability and effectiveness in influencer marketing campaigns.

For DTC firms and marketers, this study offers several key takeaways:

– The potential of nano-influencers to provide higher ROIs and forge authentic connections with audiences should be considered.

– Influencer marketing platforms allow for the efficient management of multiple low-followership influencers, offering a cost-effective alternative to engaging a single influencer with a large following.

– A comprehensive view of the influencer marketing funnel, from follower engagement to revenue generation, is crucial, with nano-influencers consistently outperforming their macro counterparts across ROI metrics.

– The study introduces the concept of Return on Influencer Spend (ROIS), highlighting the significantly higher efficiency of nano-influencers compared to macro-influencers in terms of both revenue generation and associated costs.

This research heralds a paradigm shift in digital marketing strategies, advocating for a more discerning approach to influencer selection. It emphasizes the impactful role nano-influencers can play in enhancing audience engagement, urging DTC firms and marketers to reassess their influencer marketing strategies to maximize returns on investment.

More information: Maximilian Beichert et al, Revenue Generation Through Influencer Marketing, Journal of Marketing. DOI: 10.1177/0022242923121

Journal information: Journal of Marketing Provided by American Marketing Association

Marketing research is overly specialized: The necessity for evolution in the discipline to continue generating pertinent, timely insights

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A recent publication in the Journal of Marketing by academics from TU Dortmund University and RWTH Aachen University has sparked a conversation about the trajectory of marketing knowledge. The article, titled “Conceptual Contributions in Marketing Scholarship: Patterns, Mechanisms, and Rebalancing Options,” authored by Bastian Kindermann, Daniel Wentzel, David Antons, and Torsten-Oliver Salge, delves into the evolution of marketing knowledge contributions over the last few decades and proposes a shift towards more impactful, broad-spectrum theories.

The discourse around the stagnation of theoretical progress in marketing research has been lively. Critics focus on the fragmentation of knowledge, the diminishing practical impact, a trend towards unnecessary complexity, and the overlooking of indigenous theories. These critiques highlight significant issues but fail to unravel the perceived stagnation’s complexities fully.

Through a comprehensive analysis spanning 32 years, the authors offer a nuanced perspective on the evolution of knowledge contributions within marketing research. Their findings reveal a dual trend: while there’s an increasing emphasis on identifying new phenomena and solving specific problems, there’s a noticeable decline in efforts to develop overarching theories and initiate critical discussions. According to Kindermann and his team, this imbalance may hinder the field’s ability to address intricate marketing challenges effectively.

To delve deeper into these trends, the research team conducted extensive interviews with 48 leading figures in the marketing field, including journal editors and department heads. The insights from these interviews shed light on the prevailing thought patterns in marketing scholarship and the inclination to sideline ideas that don’t conform to specific criteria of novelty, clarity, and quantifiability. Antons points out that the issue isn’t a lack of innovative ideas but rather a narrow focus on exploring specific ideas, limiting the field’s potential to challenge and evolve existing knowledge.

The article also outlines several strategies for broadening the scope of marketing research to serve better the needs of practitioners facing contemporary challenges:

– Rethinking doctoral training programs to enhance critical thinking and theoretical skills necessary for engaging in meaningful debates.

– Adjust editorial policies and encourage the publication of research that aims to provide comprehensive insights and theories.

– Promoting interdisciplinary collaboration, starting from the doctoral training level and extending to joint research and publication efforts.

– Enhancing engagement between scholars and practitioners, including consumer activists and policymakers, to foster a deeper understanding of real-world marketing problems and develop relevant and impactful research.

The need for a collective effort to revitalize marketing research is clear. The study underscores that while the field lacks theoretical exploration, there has been a significant shift towards certain types of contributions, impacting the overall development of marketing knowledge and its citation impact. The marketing research community can achieve greater relevance and impact by embracing broader, more critical frameworks and fostering collaboration across disciplines and with practitioners.

This call to action is not just for scholars but extends to practitioners, consumer activists, and policymakers, encouraging them to be open to collaborations with research institutions. Such partnerships, especially those that are long-term, allow for a more profound exchange of ideas and can yield substantial benefits, both financially and in terms of knowledge advancement. It highlights the reciprocal value of closer cooperation between the academic and practical realms of marketing.

More information: Bastian Kindermann et al, Conceptual Contributions in Marketing Scholarship: Patterns, Mechanisms, and Rebalancing Options, Journal of Marketing. DOI: 10.1177/00222429231196122

Journal information: Journal of Marketing Provided by American Marketing Association

Creating excitement around new products can impact their success

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How companies unveil new products or generate anticipation can significantly impact their success once launched, as evidenced by recent findings from Binghamton University, State University of New York. This research highlights the strategic advantages companies like Coca-Cola or Apple may gain through preannouncement marketing, whether for a highly anticipated movie or a new product release.

Have you ever found yourself eagerly awaiting a movie’s release after watching its trailer, thinking, “I can’t wait tosee that,”? It’s common, mainly when movies like “Barbie” or “Oppenheimer,” exceed box office expectations, often attributed to the early excitement built around them.

Associate Professor Debi Mishra from Binghamton University’s School of Management, along with a fellow researcher, conducted a study demonstrating how preannouncement marketing could play a crucial role in a product’s market success. This marketing strategy impacts shareholder value—with investors looking for appreciation in their investments—and plays a significant role in how companies communicate with consumers about upcoming products. Mishra points out the delicate balance companies must strike in deciding when and how much information to release about new products, with the timing of such disclosures potentially creating market surprises that could benefit the company.

The study, which analyzed 149 product launches and their preannouncements as reported by The Wall Street Journal between 2005 and 2018, examined the types of information released up to a year before a product’s launch and the financial implications of these announcements. It was found that non-costly preannouncements generally led to positive stock market reactions. This suggests that not all investments in hype before a product release are necessary for achieving post-launch compensation.

The study’s examples include Coca-Cola’s vague beverage announcement, which did not commit to a release date or investment amount, and IBM’s announcement regarding its $1 billion investment in artificial intelligence for data analysis and visualization. These cases illustrate different approaches to preannouncement marketing and their implications for shareholder expectations and market reactions.

Mishra’s research further reveals that the market is adept at discerning the credibility of a company’s commitments, such as significant investments in manufacturing a new product. This discernment influences stock market reactions to product announcements, with guaranteed investments being more credible and thus more likely to impact stock values positively.

Moreover, the study points to a “surprise effect” where market reactions can be significantly influenced by how much commitment a company visibly puts behind a new product announcement. A strategy of withholding information until closer to the product release can create a more significant impact on the market, akin to a surprise reveal.

In summary, Mishra’s findings underscore the nuanced role of preannouncement marketing in the success of new products. By carefully managing the timing and content of announcements, companies can strategically create market surprises that enhance the anticipation and eventual reception of new products, thereby contributing to their success and the company’s growth. This research offers valuable insights for businesses looking to leverage preannouncement marketing to its fullest potential, highlighting the importance of strategic communication in the competitive market landscape.

More information: Debi P. Mishra et al, Does the economic value of new product announcements depend upon preannouncement signals? An empirical test of information asymmetry theories, Journal of Product & Brand Management. DOI: 10.1108/JPBM-09-2022-4161

Journal information: Journal of Product & Brand Management Provided by Binghamton University

Researchers have devised a novel approach aimed at assisting investors in forecasting the decision-making processes of companies, optimising portfolios, and achieving higher returns

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At the helm of most companies, top management teams are responsible for enhancing shareholder wealth. Any deviation from this objective squarely falls under their purview. Yet, these teams frequently need more time to deviate from standard business conventions to achieve short-term earnings goals. A common tactic involves myopic marketing spending—curtailing funds allocated to marketing, research, and development efforts to inflate short-term earnings, detrimentally affecting long-term company performance.

Groundbreaking research from the University of Notre Dame has unveiled an innovative approach that empowers investors to anticipate instances of myopic marketing spending up to a year before they occur. This foresight allows for the strategic adjustment of investment portfolios and holds the potential for significantly improved financial returns, sparking a new era of informed decision-making.

A collaborative survey conducted by Focusing Capital on the Long Term and McKinsey involving 500 global executives revealed a pervasive trend among top management teams: the compulsion to achieve immediate earnings targets often at the sacrifice of pursuing long-term strategic objectives. This short-sighted decision-making is particularly prevalent in scenarios leading up to significant financial activities such as capital increases, initial public offerings, and before critical executive retirements.

McKinsey’s findings indicate a troubling trend: top management teams are willing to reduce investments critical for long-term growth by an average of 17 per cent when faced with a 15 per cent revenue shortfall. This propensity for short-termism disadvantages key stakeholders, including investors, customers, and board members. It is also linked to poorer stock market performance over time, manifesting in market share erosion and innovation delays, painting a grim picture of the consequences of myopic marketing spending.

Traditionally, investors have been able to identify myopic spending practices only retrospectively by analyzing publicly available financial statements. However, a forthcoming study titled “Can Words Speak Louder than Actions? Using Top Management Teams’ Language to Predict Myopic Marketing Spending,” to be published in the Journal of Marketing, proposes a predictive model that promises significant benefits over traditional methods, heralding a new era of proactive decision-making.

Lead author Andre Martin, assistant professor of marketing at Notre Dame’s Mendoza College of Business, and Tarun Kushwaha from the University of Wisconsin have pioneered this approach by examining the language used by management teams during earnings calls. By focusing specifically on the emphasis placed on marketing and earnings, their research predicts future myopic marketing spending. Analyzing 11 million sentences from nearly 25,000 quarterly earnings call transcripts across 1,197 companies from 2008 to 2019 demonstrates that this method can foresee such spending every quarter, up to a year in advance.

Drawing on his background as a former software engineer and program manager for Xerox and SRC Inc., Martin highlights the predictive power of analyzing management discourse. The study found that an increase in earnings emphasis is correlated with a substantial rise in the likelihood of myopic marketing spending in the future.

Furthermore, the research juxtaposed the financial outcomes of companies engaging in myopic marketing spending against those that abstained, revealing that avoiding investment in the former could result in an additional 6.44 per cent return over four years, equating to an annual abnormal return of 1.61 per cent above existing prediction methods.

Beyond financial implications, Martin underscores the significance of their findings regarding governance. The study equips boards of directors with an early warning system to detect executive actions that could detrimentally impact long-term company value, facilitating timely intervention.

Additionally, this predictive tool empowers individual investors with deeper insights into executive strategies and intentions. It offers stakeholders, regulatory bodies, and competitors a clearer understanding of potential management actions that could influence not just the long-term value of the company but the broader market landscape. By lowering the informational barriers surrounding executive decisions, this approach enhances monitoring capabilities through the early identification of myopic practices.

More information: Andre Martin et al, EXPRESS: Can Words Speak Louder than Actions? Using Top Management Teams’ Language to Predict Myopic Marketing Spending, Journal of Marketing. DOI: 10.1177/00222429241244804

Journal information: Journal of Marketing Provided by University of Notre Dame

The perils of misaligned product co-development agreements and their potential to obstruct innovation within high-tech companies

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A recent study conducted by researchers from Mansoura University and the University of Guelph, soon to be published in the Journal of Marketing, delves into the negative impact misaligned contracts can have on the innovative output of high-tech companies. This study, entitled “Collaborating to Innovate: Balancing Strategy Dividend and Transactional Efficiencies,” was contributed to by Nehal Elhelaly and Sourav Ray.

The research highlights a scenario where a large multinational corporation, such as Unilever, enters into a partnership with a critical supplier like Novozyme, a producer of industrial enzymes. This collaboration is designed to accelerate innovation and enhance overall business performance. Combining the expertise, technologies, and resources of both entities to develop new products, services, or solutions, collaboration is seen as a vital tool for innovation by up to 85% of companies, according to industry reports.

Bristol-Myers Squibb, a global pharmaceutical giant, has publicly acknowledged the significant role external innovation and partnerships play in their strategy. This approach has achieved commercial success and expanded its product pipeline, with twelve of its twenty blockbuster medicines being products of such collaborations. Moreover, over sixty per cent of their development pipeline comes from external sources, enhancing their internal innovation capabilities.

Despite the apparent benefits, these partnerships come with challenges, including potential knowledge leaks and opportunistic behaviours. Firms might be disadvantaged if they fail to align their strategic and functional capabilities with their innovation collaboration contracts. This misalignment can hinder a company’s ability to reap long-term benefits from its marketing strategies.

Elhelaly suggests that companies should critically assess whether their contracts will support their strategic goals, emphasizing the need for a synergy between a firm’s strategic positioning, functional capabilities, and the governance structures of co-development initiatives.

The study also examines the role of Joint Venture (JV) partnerships, particularly during economic downturns, highlighting that such partnerships are most beneficial when firms possess solid technological capabilities. Technological prowess is linked to a 5.2% increase in innovation performance in JVs for companies with similar efficiency goals, a trend not observed with technology licensing contracts and joint development agreements.

Conversely, strong marketing capabilities in the same scenario are tied to a 17.9% decrease in innovation performance for JVs. However, in firms oriented towards high differentiation, marketing capabilities positively impact joint development agreements, boosting innovation performance by 7.8%.

The study points out the critical concept of ‘fit’ in co-development collaborations and misalignment costs, underscoring the importance of a company’s strategic positioning in innovation partnerships. As the research suggests, misalignments can lead to inefficiencies and a gradual erosion of innovation outcomes.

For Chief Marketing Officers (CMOs), the research offers several insights:

– Choosing the correct form of collaboration is essential to encouraging partners to share expertise, ensuring efficient knowledge transfer, and protecting against opportunistic threats.

– Developing the appropriate functional capabilities is critical to maximizing the benefits of innovation collaborations. For instance, companies focused on differentiation should enhance their marketing capabilities and opt for more distant arrangements like joint development agreements with suppliers. Meanwhile, efficiency-driven firms should bolster their technological capabilities, particularly when considering joint ventures.

– Firms are advised to consider their strategic positioning and capabilities before unquestioningly adopting industry practices. The effectiveness of contracts depends significantly on these factors, and what works for one company during economic downturns, such as joint ventures, may not be suitable for another.

This study underscores the complex dynamics of innovation collaborations in high-tech industries and provides a roadmap for companies looking to navigate these partnerships successfully.

More information: Nehal Elhelaly et al, Collaborating to Innovate: Balancing Strategy Dividend and Transactional Efficiencies, Journal of Marketing. DOI: 10.1177/00222429231222269

Journal information: Journal of Marketing Provided by American Marketing Association

Firms need to invest in particular types of IT to enhance working capital management: automate or informate?

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The efficient management of working capital, defined as a firm’s current assets minus its current liabilities, is crucial for organizations to utilize their existing assets and enhance cash flow effectively.

Efficient working capital management and its impact on a firm’s performance can present a multifaceted challenge. This complexity arises from factors such as the global dispersion of supply chains, the diversity in supplier bases and product varieties, and the uncertainties associated with technology.

Recent findings from the University of Notre Dame underscore the importance of information technology as a pivotal investment for companies aiming to make well-informed, objective, and tailored decisions regarding working capital, which, in turn, could bolster performance.

The research, titled “Impact of working capital on firm performance: Does IT matter?” and set to be published in the Journal of Operations Management, is authored by Sarv Devaraj, the Fred V. Duda Professor of Management at Notre Dame’s Mendoza College of Business. This study delves into the investment in IT infrastructure, such as expenditure on servers and hardware, and IT personnel investment, which includes the recruitment and training of IT staff across 1,054 manufacturing firms in the US over 2011-2013.

It elucidates the distinct functions of IT infrastructure and IT labour in automating (leveraging technology to enhance process efficiency and precision) and informing (employing technology to generate new insights), thus influencing the relationship between working capital management and firm performance.

Devaraj points out that investments in IT infrastructure significantly bolster the positive correlation between working capital management and firm performance, more so than investments in IT personnel. This is attributed mainly to the structured and transaction-oriented nature of data involved in working capital processes.

The study identifies three key metrics influencing a firm’s working capital performance: Days Inventory Outstanding (DIO), Days Payables Outstanding (DPO), and Days Sales Outstanding (DSO). These metrics relate to the company’s inventory management, supplier payment, and sales revenue collection.

Strategic working capital management, by minimizing DIO and DSO and maximizing DPO, can enhance firm performance. Yet, overly aggressive strategies in extending payables, reducing inventories, or curtailing receivables can expose the supply chain to risks and adversely affect performance.

The research demonstrates that spending on IT infrastructure can amplify the positive impacts of DPO while mitigating the adverse effects of DIO and DSO on firm performance. While IT personnel investments also improve DPO’s positive impacts and lessen DIO’s adverse effects, they do not significantly affect the DSO-firm performance relationship.

The study suggests that IT infrastructure investments enhance the efficiency of working capital processes due to the structured nature of the underlying data. IT personnel also play a crucial role in this dynamic. For example, IT business analysts can interpret working capital data, assess key cash flow metrics, understand the implications of supply chain changes on working capital management, and communicate these insights to senior management and other stakeholders. They can also develop new processes to meet the needs of these stakeholders.

Devaraj emphasizes the importance of managers responsible for working capital management securing support from senior management for new IT investments. This study’s findings provide a strong case for such managers to advocate for increased investment in IT, especially in IT infrastructure, to enhance the management of working capital processes.

More information: Palash Deb, Suvendu Naskar, Sarv Devaraj et al, Impact of working capital on firm performance: Does IT matter?, Journal of Operations Management. DOI: 10.1002/joom.1244

Journal information: Journal of Operations Management Provided by University of Notre Dame

Studies indicate that the effectiveness of remote work is contingent upon the well-being of the organisation

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As transitioning to remote work gains momentum among numerous companies, confident prominent CEOs oppose this shift. Naresh Khatri, who is an Associate Professor of Health Management and Informatics at the University of Missouri’s School of Medicine, has emphasised that the success of adopting remote work largely hinges on an organisation’s capacity to adapt to the unique needs of its employees and the technological resources at its disposal.

Khatri, a seasoned expert with over 60 published research articles and book chapters focusing on organisational structure and management within healthcare settings, posits that offering the option of remote work can act as a compelling incentive for recruitment. This strategy is feasible for organisations equipped with robust Human Resources (HR) and Information Technology (IT) departments, which are crucial for maintaining a productive workforce, irrespective of the employees’ location. Their role in supporting remote work is not just beneficial but essential.

In a recent guest editorial for Personnel Review, Khatri and his colleagues highlight that businesses adopting remote work access a broader talent pool, potentially enhancing their competitiveness. His analysis of various studies revealed that companies with efficient HR and IT support systems tend to thrive when offering flexible working arrangements, including remote work. The quality and quantity of work produced by home-based employees were comparable to those of their in-office counterparts, challenging the notion that remote work compromises collaboration or productivity.

Khatri also notes past research indicating no significant performance disparity between remote and on-site workers, even in tasks requiring team collaboration. This finding dispels concerns over the potential decline in collaborative efficiency among remote workers.

According to Khatri, investment in HR and IT infrastructure is crucial for addressing challenges such as motivation and technical issues faced by home-based employees. Tailored motivational strategies developed by HR professionals can mitigate burnout and enhance productivity, benefiting employees and the organisation. Continuous innovation in HR practices aimed at inspiring employees has fostered positive attitudes and potentially prevented burnout, leading to better-individualised strategies for employee efficiency.

Khatri advocates for recognising employees’ diverse preferences and efficiencies, whether they work better from home or in an office environment. He emphasises that companies resistant to the remote work model risk missing out on opportunities to maintain and enhance their profitability, expand their workforce, and improve overall organisational health. The evolving landscape of the workforce and industries, according to Khatri, calls for a reevaluation of remote work policies to leverage the benefits they offer to both employees and employers, paving the way for growth and expansion.

More information: Naresh Khatri et al, Guest editorial: Work from anywhere: implications for employees and organizations, Personnel Review. DOI: 10.1108/PR-11-2022-913

Journal information: Personnel Review Provided by University of Missouri – Columbia

The most nutritious lunch option in the workplace

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A study conducted in Tokyo, Japan, discovered that employees who eat lunch at their company’s cafeteria or bring lunch from home tend to make healthier nutritional choices than their counterparts who prefer take-out or dining at restaurants.

The impact of dietary habits on long-term health cannot be overstated; choosing where and what to eat for lunch is a significant consideration for workplace individuals. Despite this, there is a need for more research focused on the nutritional quality of lunches consumed by employees. To fill this gap, a team led by Dr. Minami Sugimoto, Prof. Keiko Asakura, and Prof. Yuji Nishiwaki from the Faculty of Medicine at Toho University embarked on a study. They conducted a questionnaire survey among staff members at eight office locations in southeast Tokyo. The purpose was to explore the nutritional differences in the lunches of working adults. The survey included questions about who typically prepares the lunch, the location of lunch consumption, the cost of lunch, the timing of the lunch break, and the work patterns of the respondents. Additionally, participants provided information about their typical food and nutrient intake at lunch over the previous month, which was assessed using a validated diet history questionnaire.

The study categorized 620 participants, aged between 20 and 75 years, into four distinct groups: those who brought homemade lunches (n=190), those who ate at the staff canteen (n=77), those who dined at restaurants (n=109), and those who opted for takeaways (n=244). The research team calculated the Healthy Eating Index-2015 score for each participant to evaluate the quality of their nutritional intake. This score allowed for comparing the nutritional quality of lunches across the different groups.

The findings revealed that individuals who primarily eat homemade lunches or meals from the company cafeteria have a higher nutritional intake in their lunches than those who regularly consume restaurant meals or takeaways.

Dr Sugimoto, the study’s lead author, highlighted the significance of their research, stating, “This study is the first of its kind to assess the nutritional aspects of lunches among Japanese workers. We aim for our findings to encourage better eating habits among office workers, particularly those who face difficulties in preparing lunches at home.” This initiative sheds light on the importance of making informed lunch choices at work and the positive impact of such decisions on one’s health over time.

More information: Sugimoto, Minami et al, The Nutritional Characteristics of Usual Lunches Consumed Among Japanese Workers
Comparison Between Different Lunch-Type Groups, Journal of Occupational and Environmental Medicine. DOI: 10.1097/JOM.0000000000002989

Journal information: Journal of Occupational and Environmental Medicine Provided by Toho University

A chair equipped with smart sensors might assist office workers in alleviating their back pain issues

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Low back pain (LBP) is a common affliction among office workers. In Japan, it’s estimated that one in every ten otherwise healthy office employees experiences LBP. While stretching and exercise are known remedies, these measures are often employed reactively rather than proactively. Imagine, however, if our very chairs could preemptively warn us, helping to prevent the pain from escalating.

To address this issue, a team from Tohoku University has introduced an innovative prediction technique that leverages pressure sensors affixed to standard office chairs. These “smart chairs” are designed to monitor the user’s movements in real time, providing both dynamic and quantitative data.

This technology was tested in a practical environment, not just within the confines of a laboratory. Data was collected from 22 participants over three months, allowing the research team to delve into the intricacies of sitting habits and identify patterns indicative of LBP development.

The researchers employed various machine learning algorithms to identify a recurring pattern in the participants’ sitting behaviour. They noted minor adjustments in the body’s trunk that help prevent the locking of vertebral joints, thereby staving off the progression of LBP. The occurrence rate of these movements serves as a predictive measure for the potential worsening of LBP as the day progresses, using the individual’s state in the morning as a baseline for comparison.

Looking forward, the research team is enthusiastic about extending the application of this technology to encompass other parts of the body. “While our current focus has been on LBP, we are keen on gathering data related to the head and neck areas. This could potentially enable us to predict and prevent conditions such as stiff necks and headaches,” mentioned Ryoichi Nagatomi, a coauthor of the study. This innovative approach represents a significant step forward in our ongoing battle against the physical strains associated with office work, offering a glimpse into a future where technology plays a crucial role in our health and well-being.

More information: Ryoichi Nagatomi et al, Low Back Pain Exacerbation Is Predictable Through Motif Identification in Center of Pressure Time Series Recorded During Dynamic Sitting, Frontiers in Physiology. DOI: 10.3389/fphys.2021.696077

Journal information: Frontiers in Physiology Provided by Tohoku University