Knowledge that Transforms

This article examines the effects of collective layoff announcements on sales and marketing-mix elasticities, accounting for supply-side constraints. The authors study 205 announcements in the automotive industry using a difference-in-differences model. They find that, following collective layoff announcements, layoff firms experience adverse changes in sales, advertising elasticity, and price elasticity. They explore the moderating role of announcement characteristics on these changes and find that collective layoff announcements by domestic firms and announcements that do not mention a decline in demand as a motive are more likely to be followed by adverse marketing-mix elasticity changes. On average, sales for the layoff firm in the layoff country are 8.7% lower following a collective layoff announcement than their predicted levels absent the announcement. Similarly, advertising elasticity is 9.8% lower and price elasticity is 19.2% higher than absent the announcement. Conversely, layoff firms typically decrease advertising spending in the country where collective layoffs have occurred, yet they do not change prices. These findings are relevant to marketing managers of firms undergoing collective layoffs and to analysts of collective layoff decisions.

This work introduces the concept of contract ambiguity from the law literature into the interorganizational governance literature. Within the context of franchising, the authors present a three-study multimethod design empirically establishing the construct of contract ambiguity of franchisor obligations, providing new insights into the strategic design of contracts and their outcomes. In Study 1, the authors establish construct validity by demonstrating that contract ambiguity of franchisor obligations is distinct from contract specificity and contract completeness of franchisor obligations, with differential outcomes. In Studies 2 and 3, the authors demonstrate that contract ambiguity of franchisor obligations increases an interest-based (vs. a rights-based) conflict solving approach, implying greater cooperation and joint problem solving, and reduces franchisee-initiated litigation. The findings also indicate that while contract ambiguity of franchisor obligations decreases franchisee-initiated litigation, this effect is amplified by higher levels of franchisor training programs but mitigated by the presence of a franchisee association. The article closes with a discussion of implications for academics and practitioners.

Nonprofit organizations often rely on individuals to execute their mission of addressing unmet societal needs. Indeed, one of the most significant challenges facing such organizations is that of enlisting individuals to provide support through the volunteering of time or donation of money. To address this challenge, prior studies have examined how promotional messages can be leveraged to motivate individuals to support the missions of nonprofit organizations. Yet promotional messages are only one aspect of the marketing mix that may be employed. The present study examines how donor-based nonprofit organizations can employ the marketing mix—product, price, promotion, place, process, and people—to influence the experiences of sacrifice associated with donation. The authors do so through an ethnographic study of individuals participating in living organ donation. First, they identify the manifestation of sacrifice in donation. Next, they define three complementary and interactive types of sacrifice: psychic, pecuniary, and physical. Then, they articulate how the marketing mix can be employed to mitigate experiences of sacrifice that emerge through the donation process. The authors conclude by discussing implications for marketing practice and identifying additional research opportunities for sacrifice in the realm of donation.

For brands to thrive, they must understand consumer sentiment; if consumers’ likelihood of sharing their opinion is a function of their attitude toward a brand, then brands’ perception of consumer sentiment may be systematically biased. While research in consumer-to-consumer sharing (i.e., word of mouth) suggests that those with extreme attitude are more likely to share than those with neutral attitude (a U-shaped relationship), the relationship between consumers’ attitude toward a brand and their propensity to share with a brand is unknown. In contrast to the U-shaped pattern observed in word of mouth, the authors find a hockey stick–shaped relationship between attitude and sharing with brands (“__/”). Those with positive attitude (vs. neutral attitude) are more likely to share their opinion, but those with negative attitude do not show a similar increase in sharing. The authors show that this pattern emerges because, among consumers with positive (vs. neutral) attitude toward a brand, reciprocity norms drive increased sharing, but among consumers with negative (vs. neutral) attitude, competing mechanisms drive behavior: the desire to vent increases sharing, but at the same time an aversion to criticize others directly deters sharing. The authors test these ideas using a series of studies, including a field study.

The authors study differences in the effects of prices, nonprice promotions, and brand line length on brand shares at different retail formats. Their conceptual framework rests on the presence of trip-level fixed and category-level variable utility components and shows how the trade-off between these components results in (1) different formats visited on different types of shopping trips and (2) differential marginal sensitivities of brand shares to changes in marketing-mix variables across trip types. Together, these provide predictions on how marketing-mix variables differentially affect brand shares at various retail formats. The authors use Nielsen Homescan and store-level data from 2011–2014 and analyze the top ten spending product categories across four retail formats—convenience stores, drugstores, supermarkets, and mass merchandisers—in over 200 Nielsen markets. Implications for brand manufacturers managing the marketing mix across different formats are offered. JEL codes: M310, L11, D4

Persistent high failure rates of new product alliances call for identification of factors that might improve alliance outcomes. In this research, the authors identify two attributes of alliance network asymmetry that affect alliance performance and performance uncertainty: differences in the number of prealliance direct ties, which can create asymmetry in the volume of resources of the two firms, and differences in the interconnectivity among prealliance indirect ties, which leads the firms to possess different types of resources. The authors theorize that absolute levels of such asymmetries have curvilinear effects on alliance performance and performance uncertainty, which materialize as a focal firm’s abnormal returns and risk, respectively. They demonstrate that direct tie asymmetry has an inverted U-shaped effect on the focal firm’s abnormal returns and a U-shaped effect on its risk. Indirect tie asymmetry also has a U-shaped effect on the focal firm’s risk. However, the focal firm’s innovation quality and preexisting ties with its partner flatten these curvilinear effects. The findings have implications for partner selection in new product alliances.

Advertising and research and development (R&D) benefit firms by increasing sales and shareholder value. However, when a firm is in bankruptcy, the cumulative effects of its past advertising and R&D can be a double-edged sword. On the one hand, they increase the firm’s expected future cash flow, which increases the likelihood that the bankruptcy court will decide the firm can survive. On the other hand, they increase the liquidation value of the firm’s assets, which decreases the likelihood that the bankruptcy court will decide that the firm can survive. The author argues that the ability of advertising and R&D to either increase or decrease bankruptcy survival is contingent on the influence that the firm’s suppliers have, relative to other creditors, on the bankruptcy court’s decision. Advertising and R&D increase (decrease) bankruptcy survival when suppliers have a high (low) level of influence. Empirical analyses, conducted on 1,504 bankruptcies, show that advertising (R&D) increases bankruptcy survival when at least 35%−38% (18%−21%) of the bankrupt firm’s debt has been borrowed from suppliers, whereas it decreases bankruptcy survival below this point. Out-of-sample machine learning validation shows that the ability to predict whether a bankrupt customer will survive is substantially improved by considering the firm’s advertising and R&D.

“Facts Up Front” nutrition labels are a front-of-package (FOP) nutrition labeling system that presents key nutrient information on the front of packaged food and beverage products in an easy-to-read format. The authors conduct a large-scale empirical study to examine the effect of adoption of FOP labeling on products’ nutritional quality. The authors assemble a unique data set on packaged food products in the United States across 44 categories over 16 years. By using a difference-in-differences estimator, the authors find that FOP adoption in a product category leads to an improvement in the nutritional quality of other products in that category. This competitive response is stronger for premium brands and brands with narrower product line breadth as well as for categories involving unhealthy products and those that are more competitive in nature. The authors offer evidence regarding the role of nutrition information salience as the underlying mechanism; they also perform supplementary analyses to rule out potential self-selection issues and conduct a battery of robustness checks and falsification tests. The authors discuss the implications of the findings for public policy makers, consumers, manufacturers, and food retailers.

Although reacquiring customers can lead to beneficial outcomes, reacquisition processes are often unpleasant for employees, who may be required to admit and address failures. Because many organizational environments reward success and punish failure, companies need to understand how to create an organizational environment that stimulates customer reacquisitions. This study investigates the impact of failure-tolerant cultures and formal reacquisition policies on successful customer reacquisition management. Drawing on organizational design theory and psychological ownership theory, the authors find that failure-tolerant cultures have an inverted U-shaped effect on reacquisition performance because moderate failure tolerance increases reacquisition attempts while not inducing more failures or increasing their severity. Formal reacquisition policies, in contrast, have a positive linear relationship. Notably, formal reacquisition policies do not conflict with failure-tolerant cultures but enhance the beneficial effects of failure tolerance on reacquisition performance; formal reacquisition policies provide guidance for reacquisition attempts that failure-tolerant cultures inspire. Finally, results show that customer reacquisition performance is positively related to overall firm financial performance, a finding that emphasizes the managerial and organizational-level importance of reacquisition management.

Cultural products are a major component of the world economy and are responsible for a growing share of U.S. exports. The authors examine brand name strategies when cultural products are marketed in foreign countries. Incorporating the unique characteristics of these products, the authors develop a theoretical framework that integrates similarity, which focuses on how the translated brand name relates to the original brand name, and informativeness, which focuses on how the translated brand name reveals product content, to study the impact of brand name translations. The authors analyze Hollywood movies shown in China from 2011 to 2018. The results show that higher similarity leads to higher Chinese box office revenue, and this effect is stronger for movies that perform better in the home market (i.e., the United States). When the translated title is more informative about the movie, the Chinese box office revenue increases. The informativeness effect is stronger for Hollywood movies with greater cultural gap in the Chinese market. Moreover, both similarity and informativeness effects are strongest when the movie is released and reduce over time. This research provides valuable guidance to companies, managers, and policy makers in cultural product industries as well as those in international marketing.