The Three Capitals of Pricing – Human, Systems and Social Capital

In this paper we explore the possibility, heretofore unexplored in the marketing literature, that firms “invest funds” in their pricing processes. This builds on some of the recent economic work on the costs of price adjustment. To do this we undertook a two-year, cross- disciplinary, ethnographic study on the nature of investments made by senior managers to enhance the effectiveness of the pricing processes within their firms. We discovered at least three distinct types of investments that managers at these firms made to price more effectively, which we term as the three capitals of pricing - human capital, systems capital and social capital. Our evidence suggests that pricing is really about managing both prices and investments in the pricing capital used to set and adjust those prices. The existence of these three forms of pricing capital provides a new perspective on pricing strategy, suggesting that firms compete on prices simultaneously in three different ways within their organizations. First, they compete on whether to invest in pricing capital versus or other areas of capital investment, such as plant, equipment, etc. Second, they decide what form of pricing capital to invest in – human, systems or social. Third, they set and adjust prices constrained by the existing pricing capital they have in place at the time of their pricing actions. We discuss the implications of these three forms of pricing capital and these new perspectives on pricing for the marketing, economics and strategy literature.Cost of Price Adjustment, Menu Cost, Managerial and Customer Costs of Price Adjustment, Pricing Capital, Pricing Production Process (PPP), Price Rigidity, Sticky Prices, Rigid Prices, Microfoundations of the Costs of Price Adjustment, Allocative Efficiency, Price System, Endogenous Price Adjustment Cost, Pricing, Human Capital, Systems Capital, Social Capital, Resource Based View of the Firm, Ethnography

Patterns of industrial development revisted : the role of finance

The authors reexamine the role of financial market development in the intersectoral allocation of resources. First, they characterize the assumptions underlying previous work in this area, in particular, that of Rajan and Zingales (1998). The authors argue that Rajan and Zingales (1998) implicitly test whether financial intermediaries allow firms to better respond to global shocks to growth opportunities. Second, the authors propose a more efficient alternative test of this hypothesis using statistical techniques developed in the social networks literature. Specifically, they find that countries have more highly correlated growth rates across sectors when they have well-developed financial markets, suggesting that financial markets play an important role in allowing firms to take advantage of global growth opportunities. These results are particularly strong when financial development takes into account both the level and composition of financial development: private banking appears to play a particularly important role in resource allocation. The authors'technique allows them to further distinguish between the"growth opportunities"hypothesis stated above and the alternative"finance and external dependence"hypothesis, which implies that countries with similar levels of financial development should specialize in similar sectors. They do not find evidence to support this alternative view of finance and development.Payment Systems&Infrastructure,Economic Theory&Research,Public Health Promotion,Health Monitoring&Evaluation,Economic Conditions and Volatility,Achieving Shared Growth,Governance Indicators,Economic Growth,Health Monitoring&Evaluation,Economic Conditions and Volatility

Installed base information : ensuring customer value and profitability after the sale

This thesis explores the business benefits for capital goods manufacturers in maintaining systematic records for individual products in their installed base. The research results show that such installed base information can be essential for a company interested in improving both the value their customers get from using their products and their after-sales operations' profitability. Although companies have product-related records on their sales, production, deliveries, service contracts, and service jobs, the data in the often function-specific information systems remain incompatible, and an overview of the installed base is missing. The resulting situation resembles that of manufacturing before ERP systems were introduced to unify function-specific transaction data in the manufacturing process. Whereas the ERP systems for production have been powerful in standardizing transaction data involving product and component types, the value for customers after the sale is created through product individuals. To implement information systems focusing on individual products, it is necessary to understand which functions are interested in such information and what data should be standardized and gathered. The research's main objective was to improve understanding of the reasons for maintaining installed base information and understanding of the installed base information's structure. The research's empirical part consists of four in-depth case studies in four capital goods manufacturing companies providing product-related services. In each case study, the focal company developed its installed base information systems. Consequently, several purposes for installed base information were identified towards providing customer value during the product use, both through ensuring the products' operational reliability and through supporting the customer's goals with the products. Ensuring product reliability for the customer requires that service units be prepared for servicing the individual products in their area and that the company can identify and resolve production and design problems with their products. Supporting the customers' goals requires that sales and product development can adjust the customer offers to differences among customer applications as well as changes in the customers' operations. At the same time, after-sales operations' profitability can be improved through adjusting investments in service resources and service pricing based on the serviced products. Further, analyses of the installed products and the after-sales service operations support identifying performance problems with products, services, or customer contracts decreasing after-sales service profitability and requiring corrective actions. The research revealed three main categories of information needed to support the above purposes: information on the individual products, information on the customer site where the product is installed, and information on the service events involving the product installations. These information categories enable analyses involving products, customer applications, and their performance over time

Using Constraint Reasoning on Feature Models to Populate Ecosystem-driven Cloud Services e- Marketplace

Service providers leverage cloud ecosystems and cloud e-marketplaces to increase the business value of their services and reach a wider range of service users. A cloud ecosystem enable participating services to combine with other services, along their QoS properties; while the e-marketplace provides an environment where atomic services interconnect in unprecedented ways to be traded on the marketplace platform. Noting the unprofitability, impracticality and error-prone nature of performing ad hoc service combination of atomic services, the concern addressed in this technical report is how to guide the combination of atomic services participating in an ecosystem in a seamless manner. In this technical report, we proposed the use of feature models to model the inter-relationships and constraints among the atomic services, which is transformed into a constraint satisfaction problem and off-the-shelve constraint solvers are used to determining valid combinations. The collection of valid combinations become the blueprint that guides service composition and populates the e-marketplace service directory; users can then make service selection decisions based on the list. The applicability of the approach proposed in this report is demonstrated via an example of Customer relationship management as a service ecosystem

Issues in the Use of Ratings-based Versus Choice-based Conjoint Analysis in Operations Management Research

Conjoint analysis has played an important role in helping make a number of operations management decisions including product and service design, supplier selection, and service operations capacity. Many recent advances in this area have raised questions about the most appropriate form of conjoint analysis for this research. We review recent developments in the literature and provide new evidence on how the choice between ratings- and choice-based conjoint models might affect the estimates of customer demand used in operations management models. The biggest systematic difference between ratings-based (RB) and choice-based (CB) parameters is consistent with the compatibility effect, i.e., some enriched attributes like brand name tend to be more important in RB models and some comparable attributes like price are likely to be more important in CB models. Still, there were reasonably small differences between choice- and ratings-based parameters. Parameter similarity was also seen in the lack of differences both in the choice share validations when the ‘‘keep on shopping” alternative was not considered and in the profiles that were predicted to maximize choice shares. This suggests that the two approaches will produce similar estimates of the relative importance of various attributes. In spite of demonstrated success with each method, several reasons lead us to recommend the use of hierarchical Bayesian choice-based conjoint models. First, the slightly higher individual hit rate validations give us greater confidence in predictive accuracy overall as well as an increased ability to target individual customers. Additionally, the greater ease of modeling both changes in market size and competitive reactions are attractive benefits of choice-based models

Sustainable Activity-Based Costing in a Small Flexible Manufacturing Environment

This qualitative study was written to expand the understanding of the potential sustainable use of activity-based costing in a small flexible manufacturing environment. The research was designed as a multiple-site case study, targeting two diverse small manufacturers in this market segment. Information was gathered to develop an understanding of how these firms cost their products, captured base manufacturing data, and the impact their leadership had on the management of costing processes. The information was gathered from documents received and observations on the shop floor at each participant site. In addition, participants from different functions either directly impacting or indirectly influencing the costing processes were interviewed at each site. The common theme at both locations was the minimal level of management accounting knowledge beyond the individuals directly tasked with the maintenance of the costing process. The other two topic themes discussed the way the firms collected production data. The interpretation of the findings by the researcher noted the strong influence of the market and profitability constructs on the leadership’s openness to change. This study will assist practitioners in emphasizing the need to understand the corporate environment before initiating any costing process change. Further research on possible optimum organizational size for the initiation of developing complex costing processes was encouraged, as the need to gain more accurate data is balanced against the day-to-day operational demands of the manufacturer. In addition, the findings noted the need to expand management accounting knowledge outside the accounting function to assist firms in understanding the impact of their actions and the impacts of process improvement initiatives. Key words: Flexible manufacturing, activity-based costing, management accounting

Conflicting Voices and Strategic Choices: Capital Structure Heterogeneity and Strategic Actions

The mix of debt and equity in a firm’s capital structure has been associated with varied strategic actions, such as diversification and innovation. Different forms of debt and equity have been associated with particular types of strategic actions. Although there are clear differences between debt and equity, I argue there are also similarities across the two forms of capital. I develop a theoretical framework to categorize both debt and equity along the dimensions of time horizon and risk tolerance, so as to categorize the providers of capital as Transient Equity, Dedicated Equity, Transactional Debt, and Relational Debt. I then empirically investigate the association between the presence of these four forms in the capital structure of firms and their strategic actions. My theory development is anchored in transaction cost economics, which conceptualizes debt and equity as not merely financing choices but also governance structures (Williamson, 1988). Debt (rules) resembles markets while equity (discretion) has features of hierarchies. My integrated categorization of heterogeneous debt holders and equity holders along the dimensions of time horizon and risk tolerance augments this transaction cost reasoning to within debt and equity. I test my hypotheses on multiple panels of publicly held U.S. firms between 1996 and 2010 in the contexts of diversification, research & development (R & D), and mergers & acquisitions (M & A). After controlling for endogeneity – using Generalized Methods of Moments (GMM) regressions for dynamic panels with robust inference – I find strong support for the hypothesized relationships in the case of mergers and acquisitions; and partial support for association between forms of capital and diversification, and research and development. In essence, my theory development and empirical analysis suggests a more nuanced role in strategy formation of capital providers than envisioned in extant theory

Minimizing food waste in grocery store operations: literature review and research agenda

Research on grocery waste in food retailing has recently attracted particular interest. Investigations in this area are relevant to address the problems of wasted resources and ethical concerns, as well as economic aspects from the retailer’s perspective. Reasons for food waste in retail are already well-studied empirically, and based on this, proposals for reduction are discussed. However, comprehensive approaches for preventing food waste in store operations using analytics and modeling methods are scarce. No work has yet systematized related research in this domain. As a result, there is neither any up-to-date literature review nor any agenda for future research. We contribute with the first structured literature review of analytics and modeling methods dealing with food waste prevention in retail store operations. This work identifies cross-cutting store-related planning areas to mitigate food waste, namely (1) assortment and shelf space planning, (2) replenishment policies, and (3) dynamic pricing policies. We introduce a common classification scheme of literature with regard to the depth of food waste integration and the characteristics of these planning problems. This builds our foundation to review analytics and modeling approaches. Current literature considers food waste mainly as a side effect in costing and often ignores product age dependent demand by customers. Furthermore, approaches are not integrated across planning areas. Future lines of research point to the most promising open questions in this field

Export pricing

In the actual context of recession in Europe small and medium enterprises are striving to expand their business abroad. Export pricing strategies are an essential tool for market expansion but the literature still presents a big gap. This gap is ascribable to a lack of qualitative studies which can produce advancements in the field and also managerial guidelines are needed to undertake export activities. Through the analysis of business cases this research is aimed at the identification of the main determinants that characterise an export pricing strategy jointly with the in-depth understanding of managerial issues that can be used by managers involved in export activities. This study will reach its goal through the achievement of three main objectives that are the creation of a theoretical model after analysing the existing literature, make an empirical investigation through interviews and obtain a final version of an export pricing model after reviewing the findings. Qualitative data will be collected with in-depth interviews within a range of managers directly involved in export pricing decisions and coming from different business sectors. Six determinants will be asked directly in the interviews and the other will be deducted from data collected. The innovative feature of this research is the introduction of a cultural dimension that has never been analysed before by previously researches but for two studies on psychic distance. At the end of the investigation, the results will show a different picture in respect of what has been observed in the literature. Different level of adaptation in respect of what has been observed by the theoretical constructs is shown and two new determinants are highlighted. The main limitations derives from the usage of qualitative analysis which generalizability is not verified, therefore further studies adopting a quantitative approach should be undertaken in order to verify and test what has been found. This research was also important as a vehicle of introducing practical guidelines that marketers need in performing export activities. Form the interviews will emerge also that knowledge on different cultures is strongly needed and has an influence on export pricing strategies at the initial stage in which skimming pricing strategies are engaged in overcoming the cultural gaps.fi=Opinnäytetyö kokotekstinä PDF-muodossa.|en=Thesis fulltext in PDF format.|sv=Lärdomsprov tillgängligt som fulltext i PDF-format