Knowledge that Transforms

By allowing individuals to engage in remote relationships with foreign employers, online labor markets have the potential to mitigate the inefficiency costs due to the legal barriers and other frictions deterring international physical migration. This study investigates how the supply of foreign labor in digital and physical markets responds differently to monetary incentives. We use a unique data set containing information on digital labor flows from a major global online labor platform in conjunction with data on physical labor flows. We exploit short-term fluctuations in the exchange rate as a source of econometric identification: a depreciation of a country’s currency against the U.S. dollar increases the incentives of its workers to seek digital and physical employment from employers based in the United States. Using a panel count data model, we find that monetary incentives induced by depreciations of foreign currencies against the U.S. dollar are positively associated with the supply of foreign labor in digital markets, as expected from the frictionless nature of electronic markets. However, we fail to find a positive relationship between monetary incentives and the supply of foreign labor in physical markets, which might be expected due to the substantial bureaucratic restrictions and transaction costs associated with physical migration. We further examine how countries’ income and information and communications technologies development levels moderate the positive relationship between monetary incentives and digital labor flows. Our findings are useful for gauging the extent to which digital labor flows can alleviate the economic inefficiencies from the restrictions on physical migration.

OES

Since the time the industry for e-books transitioned from the wholesale to the agency model, several interesting observations have been made. For instance, despite its revenue-sharing approach that is supposed to be effective in addressing channel coordination issues present in wholesaling, the agency model has curiously led to higher prices and less demand in the e-book market. The main purpose of the current study is to provide insights into this curious market phenomenon by focusing on: (i) the substitutability between the printed- and e-book versions, and (ii) the interaction between the wholesale model (for printed books) and the agency model (for e-books). In this exploration, using a game-theoretic model, we discover that an increase in the agency fee that the retailer collects in the e-book market can depress the vitality of the market, which not only ends up hurting the publisher, but also the retailer. This is a telltale sign that retailers should perhaps be moderate in their effort to get a bigger cut in the agency arrangement. In addition, the complex interplay between the two parties across two retail channels is explained along with how it may lead to a counterintuitive equilibrium outcome. Some of the interesting observations from practice may, in fact, stem from a large agency fee in the e-book market. Reducing this fee can lead to a win-win outcome for both the publisher and the retailer.

With the recent advances in digital technology, creators of information goods such as books, songs, or videos can now self-publish and sell their work directly to consumers, without the help of traditional publishers. In this study, we construct an analytical model to examine the role of online word of mouth in this trend of disintermediation. Online word of mouth can reveal product quality for experience goods and raise awareness to accelerate product diffusion. Intuitively, one would expect that with online word of mouth, creators would be more likely to skip publishers and sell directly to consumers. However, our results suggest that online word of mouth may, in fact, encourage more creators to use publishers for high quality work. Our model also makes predictions on the conditions under which online word of mouth benefits publishers and for what types of products and creators it has the most impact.

Technology and media are delivering content that is transforming society. Providers must compete for consumer attention to sell their digital information goods effectively. This is challenging, since there is a high level of uncertainty associated with the consumption of such goods. Service providers often use free programming to share product information. We examine the effectiveness of content sampling strategy used for on-demand series dramas, a unique class of entertainment goods. The data were extracted from a large set of household video-on-demand (VoD) viewing records and combined with external data sources. We extended a propensity score matching (PSM) approach to handle censored data, which permitted us to explore the main causal relationships. Relevant theories in the marketing and information systems disciplines informed our research on consumer involvement and informedness for decision making under uncertainty, the consumption of information goods, and seller strategies for digital content. The results show that content sampling stimulates higher demand for series dramas, but in a more nuanced way than was expected. Samples of the series reveal quality information to consumers and allow them to assess preference fit directly. As a result, they become more informed about their purchase decisions. Also, households seem to be willing to pay more to be better informed, and informed households tend to purchase more. This suggests that content providers should invest in strategies that help consumers to understand the preference fit of information goods.

In pursuit of notable reputations, organizations commonly engage their stakeholders using various online mechanisms. While “reputation signaling” via online user engagement is commonplace, its implications in the context of user-generated content (UGC) remain largely unaddressed. This study empirically explores the impact of UGC on hospital reputational dynamics. A unique panel dataset was analyzed using a lagged model approach to determine the effects of signals of quality, awareness, and content variance on hospital prominence and quality as well as the impact of reputation on financial performance. The findings suggest that quality signals significantly impact patient-perceived quality ratings, and signals of awareness and content variance significantly impact prominence rating. Also, in contrast to prominence, perceived quality significantly impacts financial performance. Given the ready availability of user-generated feedback, these findings can inform patient-provider online engagement strategies and related budget allocations. Furthermore, they highlight the unique role of Facebook ratings as an antecedent to quality and prominence dimensions of reputation.

Virtual knowledge teams (VKTs) depend on team processes that facilitate expertise coordination. VKTs use technology to map expertise, and thereby address the lack of familiarity among members. Despite the considerable interest in studying expertise coordination in teams, expertise coordination in VKTs is less understood. Moreover, technology’s role in expertise coordination in VKTs and the team processes, including expertise coordination, has received limited attention. This study argues and shows—through an online experiment—that technology enables VKTs by: connecting individuals through network ties; helping individuals to locate expertise, providing reputation signals; improving interpersonal processes through enhanced ties and signals; and enabling better performance through improved ties, signals, and processes. It contributes to theory by providing insights into how IT enhances expertise coordination and performance of VKTs. It contributes to practice by providing insights into the reputation signals that broadcast team members’ expertise and the effects of technology on team processes.

Previous research in software product development used the lens of escalation of commitment to study the problem of adhering to original product launch dates and suggested that decisions related to launching new products can be particularly prone to escalation of commitment because they involve a high level of uncertainty and large financial stakes. In this study, we propose perspective-taking as a de-escalation tactic to reduce product managers’ commitment to the original product launch date when faced with severe software defects. In two laboratory experiments, we found that when participants took the perspective of product users who might be negatively affected by the launch of a defective software product, their commitment de-escalated more than when they took a shareholder’s perspective. We also found that anticipated guilt about launching the product as scheduled mediated the relationship between perspective-taking and de-escalation. In addition, one of the experiments involved severe consequences associated with the software defects; in that case, we found that the mediation effect of anticipated guilt was moderated by the product managers’ customer orientation. This study makes a theoretical contribution to the literature of de-escalation of commitment by proposing perspective-taking as a new de-escalation tactic, and by demonstrating the affect-based mechanism of perspective-taking that operates through anticipated guilt. While practitioners may use perspective-taking as an effective tactic in reducing commitment to launching a defective software product, our findings highlight the importance of selecting the appropriate target perspective.

Cloud computing is a transformational technology that reduces upfront infrastructure costs, democratizes access to computing and storage capacity, and helps businesses innovate and compete in the digital economy. However, the distribution of these significant social and economic benefits among the various stakeholders in the cloud ecosystem will critically depend on pricing and resource allocation decisions made by cloud providers. These decisions impact not only the provider revenue, but also the fairness of resources allocated among cloud users and the overall social welfare. Several unique features of cloud computing (e.g., the presence of multiple, nonfungible resources and heterogeneous users) make the interplay between these competing objectives hard to understand. To truly harness the power of cloud computing and to establish regulatory benchmarks, there is a need for frameworks that quantify how resource allocation and pricing choices affect different objectives. In this work, we introduce an analytical model that incorporates user utility, endogenous pricing, fairness among heterogeneous users, social welfare, and cloud provider revenue. We identify conditions under which there is a tradeoff between fairness and revenue, and quantify the extent of this tradeoff by formulating an optimization problem in which a cloud provider maximizes its revenue, subject to constraints on the desired level of fairness. Our work provides an initial step toward developing regulatory policies for cloud neutrality to ensure an equitable distribution of the transformative benefits of the cloud.

The reach and impact of outsourcing has grown rapidly to include a variety of strategic objectives. Significant issues of cooperation and coordination in strategic outsourcing necessitate investments in formal controls that specify and monitor execution of the outsourced task to mitigate unforeseen contingencies and improve predictability in the attainment of desirable goals. In this study, we investigate the nature of formal controls in strategic outsourcing contracts and their impact on client satisfaction and financial performance. Specifically, using rich field data on 390 strategic outsourcing contracts, we examine the differential impact of output controls, activity controls, and capability controls on client satisfaction and vendor profitability. We find that activity and capability controls are positively associated with client satisfaction and profitability; in contrast, output controls differentially impact satisfaction and profitability, reflecting potential tradeoffs between the two outcomes. Our results, in addition to contributing to the research in control theory, provide actionable insights for technology vendors into the appropriate strategy and tactics required to compete efficiently and effectively in strategic services markets.