Do Charities Get More when They Ask More Often? Evidence from a Unique Field Experiment

Charitable organizations send out large volumes of direct mailings, soliciting for money in support of many good causes. Without any request, donations are rarely made, and it is well known that each request for money by a charity likely generates at least some revenues. Whether a single request from a charity increases the total amount donated by an individual is however unknown. Indeed, a response to one request can hurt responses to others. The net effect is therefore not easily observable, certainly not when multiple charities address the same individuals. In this paper we alleviate these observational difficulties by carrying out a field experiment in which five large charities cooperate. With the unique data that we collect, we study the impact of sending more requests on total donations. The results indicate that there is a negative competitive effect on requests from other charities, but this effect dies out rapidly. Soon after the mailing has been sent, it is only a strong cannibalization of the charity’s own revenues that prevails. This empirical finding suggests the important conclusion that not much coordination across charities is needed to increase revenues. We also demonstrate that charities need sophisticated evaluation tools that do not ignore the effects of cannibalization.competition;field experiment;direct mailing;fundraising

Do Charities Get More when They Ask More Often? Evidence from a Unique Field Experiment

Charitable organizations send out large volumes of direct mailings, soliciting for money in support of many good causes. Without any request, donations are rarely made, and it is well known that each request for money by a charity likely generates at least some revenues. Whether a single request from a charity increases the total amount donated by an individual is however unknown. Indeed, a response to one request can hurt responses to others. The net effect is therefore not easily observable, certainly not when multiple charities address the same individuals. In this paper we alleviate these observational difficulties by carrying out a field experiment in which five large charities cooperate. With the unique data that we collect, we study the impact of sending more requests on total donations. The results indicate that there is a negative competitive effect on requests from other charities, but this effect dies out rapidly. Soon after the mailing has been sent, it is only a strong cannibalization of the charity’s own revenues that prevails. This empirical finding suggests the important conclusion that not much coordination across charities is needed to increase revenues. We also demonstrate that charities need sophisticated evaluation tools that do not ignore the effects of cannibalization

Consumer Perspectives on Fairtrade Prices

Worldwide consumer support of disadvantaged producers from developing countries has been encouraged through a variety of options, including the acquisition of Fairtrade-certified products. Prior studies showed that consumers’ purchases of Fairtrade products are driven by moral incentives and economic factors. Among the economic factors, only cursory research attention has been paid to a key aspect influencing purchases: the specific price of the Fairtrade item as compared to the price of non-Fairtrade items in the same product category. The price difference between Fairtrade and non-Fairtrade items can range anywhere from 0% to 70% or higher. This aspect is becoming ever more important in light of recent calls toward setting a price premium level of 100%, up to 200% in some categories, to reflect the changes in producers’ working conditions and living standards triggered by the global pandemic. Our studies suggest that such increases may not have the desired outcome. We hypothesize a negative relationship between the price premium and consumers’ willingness to pay (WTP) for Fairtrade items, testing this proposition in six cross-cultural studies. Our studies involve surveys administered to cross-sectional samples of consumers from the United States, from Canada, and samples of students from large North American universities. The surveys assessed consumers’ willingness to buy Fairtrade products using 7-point Likert scales (1 = “very unlikely to choose the Fairtrade product”; 7 = “very likely to choose the Fairtrade product” at the specified price premium level), for various product categories. Linear mixed-effects models for repeated measures (within-participants data) were employed for the key analyses. The significant finding of a negative relationship between the price premium and WTP supports our Hypothesis in each study, underscoring that as the Fairtrade premium is set at increasing levels (from 0% to 2%, 10%, and 25% higher price for the Fairtrade items), consumers’ average willingness to pay is significantly diminished, decreasing from 6.43 (MWTPat0%premium) to 5.56 (MWTPat2%premium) to 4.19 (MWTPat10%premium) to 2.95 (MWTPat25%premium) in Study 1; from 6.15 (MWTPat0%premium) to 5.37 (MWTPat2%premium) to 4.08 (MWTPat10%premium) to 2.98 (MWTPat25%premium) in Study 2; from 6.16 (MWTPat0%premium) to 5.34 (MWTPat2%premium) to 3.89 (MWTPat10%premium) to 2.27 (MWTPat25%premium) in Study 3, and from 6.39 (MWTPat0%premium) to 5.62 (MWTPat2%premium) to 4.45 (MWTPat10%premium) to 3.22 (MWTPat25%premium) in Study 4. These findings highlight actionable policy implications of marketing Fairtrade products to consumers, with a focus on the price component of the marketing mix. From a theoretical perspective, our research sheds light on the less-than-straightforward consequence of Fairtrade premium increases: we propose and show that the economic model is more applicable than the contributions/donations model in the context of Fairtrade. We emphasize that Fairtrade should not be regarded conceptually as just a special case of social contributions, because general helping theory is not able to account for the particularities of Fairtrade. Also, the impact of the price premium level on Fairtrade purchases is shown to have a different direction compared to the field of cause-related marketing purchases, revealing notable conceptual and empirical distinctions between these fields

Moral identity centrality and cause-related marketing : the moderating effects of brand social responsibility image and emotional brand attachment

Cause-related marketing (CRM) is a popular hybrid marketing tool that incorporates charitable initiatives and sales promotion. CRM has strength in simultaneously encouraging consumer purchases and doing something good for the society. Drawing on the moral identity-based motivation model, this research examines how consumer MI influences consumer behavioural response to CRM. Two field experiments were conducted to test a series of hypotheses relating to the conditional effect of MI on behavioural response to CRM. Brand social responsibility image and emotional brand attachment positively moderated the relationship between consumer moral identity centrality and intention to purchase CRM sponsor brand. The findings contribute to the literature on CRM, moral identity-based motivation of consumer behaviour, and emotional brand attachment

Forced distribution rating systems and team collaboration

This study provides three real-effort experiments on how a forced distribution rating system (FDRS) influences team collaboration. In the first and the second experiment, we examine the performance implications of an FDRS in a card sequencing task (1) when working alone and (2) when working in a team. In the third experiment, we test how an FDRS affects knowledge sharing within teams. Our findings show that an FDRS increases the speed of completing the card sequencing task when working alone and decreases the speed of completing the card sequencing task when working in a team. Beyond that, we find that an FDRS also significantly decreases knowledge sharing within teams. As the FDRS was perceived as unfair in collaborative settings but not when working alone, we provide evidence on the role of perceived justice concerning the effects of an FDRS and shed light on the psychological and economic consequences of introducing an FDRS in environments where team collaboration is essential for success. © 2021 The Author(s

Beyond posted prices: the past, present and future of participative pricing mechanisms

Driven by the low transaction costs and interactive nature of the internet, customer participation in the price-setting process has increased. These changes were first brought about by the rise of online auctions in the early 2000s, followed by the emergence of newer participative mechanisms. Today, platforms such as eBay have popularized online auctions on a global scale, Priceline has made headlines with its name-your-own-price (NYOP) business model, and Humble Bundle has enabled independent musicians and game developers to market their works through pay-what-you-want (PWYW) pricing. Advertising exchanges conduct several hundred million individual auctions per day to sell online advertising slots. These are just a few examples of participative pricing in transactions among consumers or businesses. In parallel, academic research on participative pricing has blossomed in recent years, with an overarching concern over the profitability and other marketing implications these mechanisms have on sellers and buyers. The present paper contributes to this literature in three ways. First, we propose a definition of participative pricing mechanisms, as well as a useful taxonomy. Second, we discuss the current understanding by synthesizing conceptual and empirical academic literature. Third, we outline promising research questions with a key focus on the related behavioral aspects of buyers and sellers

Social Responsibility and Firm's Objectives

This paper shows that a firm’s objectives can extend beyond profit maximization. I use data from a for-profit firm offering charity auctions of celebrities belongings whose donations affect both revenues and costs. Comparing actual donations with the profit-maximizing benchmark indicates that the firm donates in excess of profitmaximization. I provide additional evidence pointing to donations as a further objective of the firm. Also, donations do not substantially increase willingness to pay, indicating that demand cannot explain expenditures in CSR. My results shed light on the functioning of benefit corporations and open questions on the competitive conduct of non-profit maximizing companies