Winning your customers’ minds and hearts: Disentangling the effects of lock-in and affective customer experience on retention

Abstract Building barriers to lock in customers and improving the affective customer experience are two key strategies employed by firms to enhance customer retention. Although pursuing the same goal, these strategies work differently: the former relies more on a calculative, cost–benefit approach to the exchange, while the latter promotes affective aspects of the relationship. Integrating experiential learning theory with social exchange theory, we provide a conceptual framework to understand the impact of lock-in and affective customer experience on customer retention, and the moderating role of relationship depth. Using a comprehensive data set for a sample of 13,761 customers covering all firms in one telecom market for two different services, we empirically test the framework via multinomial logit modeling. The results offer novel insights into the interplay between the two strategies. For poor affective customer experience (i.e., a score below five on a 0–10 scale), lock-in helps firms reduce customer churn (between 49.03% and 47.86%). However, the impact of lock-in decreases when affective customer experience improves and turns to be insignificant once the experience reaches the “acceptable level” (i.e., a score above seven on a 0–10 scale). Importantly, the separate and joint effects of the two strategies are stronger when there is a low relationship depth, and weaker when heavy relationships are established. The findings offer useful practical advice to manage these strategies in an efficient and optimal way

Online Personalization And Information Sharing Under Horizontal Relationship

Customer preference information is of great importance for vendors to carry out price discrimination and targeted marketing. Advanced Internet technologies, especially web 2.0 and web-economy, have been provided accessibility and allowed vendors to acquire these information by the user-community and online personalization technologies. This study investigates an information market where the complementary firm pays to the vendor to indirectly acquire the customer preference information, which could be costly to acquire. We develop an economic model to examine vendor’s optimal information acquisition and sharing strategies under horizontal relationship under different payment formats of the complementary firm (i.e. fixed-fee or service-rate payment). We show that both payment formats improve the basic personalization service, and the basic personalization service is equal under two payment cases, but the extra personalization service under fixed-fee payment is higher than that under the service-rate payment. Nevertheless, the vendor’s equilibrium benefits are improved with information sharing under both payment formats. Moreover, although the complementary firm would get zero benefits under fixed-fee payment and positive benefits under service-rate payment, the customer preference information can be acquired under both cases. Our findings not only help researchers interpret why the vendors implement information sharing strategies, but also assist practitioners in developing better social commerce and cooperation strategy. The implications of this paper can shed light on how firms interact under horizontal relationship where a vendor possesses information superiority

Abstracts : Policy Research working paper series - numbers 2857 - 2882

This paper contains abstracts of Policy Research Working Paper series, numbers 2857 - 2882Banks&Banking Reform,ICT Policy and Strategies,Environmental Economics&Policies,Health Economics&Finance,Economic Theory&Research

Regulation and the New Economy

The fundamental theorem of welfare economics asserts that under conditions of perfect competition Pareto efficiency will obtain. This has provided the conceptual basis for the market failure approach to regulation, which focuses on failure to satisfy the conditions for perfect competition as potentially justifying government intervention in markets. The approach is evaluated in the context of a number of key characteristics of the industries of the New Economy. Three areas of regulatory focus are examined: policy approaches relating to competition, intellectual property, and information privacy. It is apparent that the applicability of the market failure approach is open to question, particularly in regard to competition policy. The exploitation by dominant market players of what may be termed "natural" barriers to entry resulting from some of the characteristic features of the New Economy (scale and scope economies, network effects and consumer lock-in) should be judged in the light of Schumpeterian competition rather than that of neoclassical perfect competition. The difficulty facing regulatory authorities is how to differentiate between situations requiring intervention and those that do not. The discussion of intellectual property highlights the fact that, in general, government intervention is not necessarily the only or even the best solution to instances of market failure. Finally, the case of information privacy illustrates how the spillover effects of regulatory actions in one jurisdiction can impact on other jurisdictions and necessitate coordination in a globalised economy. The need for countries to cooperate and coordinate their policies is perhaps the key conclusion of the analysis.New Economy, regulation, government intervention

Overhauling corporate taxation in the digital economy. CEPS Policy Insights No 2019-15/October 2019

Is the corporate income tax (CIT) still an efficient system for taxing companies today? The CIT was introduced when economies were characterised primarily by tangible assets and goods and by limited international trade. Globalisation, digitalisation and the increasing weight of immaterial goods in company transactions and balance sheets have rendered that system outdated. These radical changes call for equally radical reflections on how to reform the CIT, bearing in mind the need for a corporate tax system that is fit for both the digital and the traditional economy, in developing and developed countries alike. Rather than offering a complete solution, this paper discusses various approaches that could contribute to a solution. First, we suggest that the CIT base should always be strictly aligned with the accounting profit and loss account, eschewing special adjustments for tax purposes. Second, a more radical possibility would be to abandon altogether the reference to corporate income and tax companies instead on cash flow, based on destination. And, third, the possibility could also be explored to tax companies with reference to ‘presumptive’ indicators of activity, rather than on the basis of public accounts. Presumptive indicators are already used in federal systems to allocate corporate income among decentralised jurisdictions. These propositions would not be viable without international agreement, at least at the level of the European Union. Such an agreement may prove difficult given the conflicts of interest between EU member states and between them and the United State

Essays on the Impact of Behavioral Aspects and Education for Financial Development

Diese Arbeit untersucht den Einfluss verhaltensökonomischer Aspekte und Bildung für die finanzielle Entwicklung. Sie besteht aus vier Kapiteln, welche jeweils ein separates Forschungspapier darstellen. Die Kapitel decken folgende Themen ab: Determinanten einer impulsiven Kreditaufnahme, Hindernisse bei finanzieller Inklusion, die Auswirkungen von finanzieller Bildung und die finanziellen Folgen eines Schocks. Alle Kapitel nutzen Umfragedaten. Außerdem nutzen einige Kapitel experimentelle (Labor-)Ergebnisse. Nach einer Einleitung untersucht Kapitel zwei die Rolle von Selbstkontrolle und finanzieller Bildung bei einer impulsiven Kreditaufnahme und analysiert experimentelle Daten, die in einem Labor in Berlin erhoben wurden, sowie Umfragedaten aus der Innovations-Stichprobe des Sozio-oekonomischen Panels. Kapitel drei trägt zu einem besseren Verständnis der Determinanten und Hindernisse für die Nutzung von Mobile Money in einem einkommensschwachen Land bei, wobei es auch den Beitrag von Mobile Money zur finanziellen Inklusion betrachtet. Da Bildung die Wahrscheinlichkeit erhöht, dass neue Technologien genutzt werden, könnte finanzielle Bildung weitere Bemühungen zur finanziellen Inklusion und zum Verbraucherschutz für die finanzielle Entwicklung sinnvoll ergänzen. Daher ist es wichtig, die Auswirkungen von Programmen zu bewerten, die auf finanzielle Bildung abzielen. Dafür werden in Kapitel vier die Auswirkungen eines Finanzbildungsprogramms und seine Spillover-Effekte anhand einer randomisierten kontrollierten Studie analysiert. Kapitel fünf beleuchtet die Auswirkungen der COVID-19-Pandemie auf das finanzielle Wohlergehen und die Technologienutzung von Kleinstunternehmern. Die in Kapitel drei bis fünf verwenden Daten wurden in zwei groß angelegten Erhebungswellen im ländlichen Uganda erhoben.This thesis focuses on the role of behavioral characteristics and education for financial development. It consists of four chapters, each being a separate research paper, covering related areas: determinants of impulsive borrowing, barriers to financial inclusion, the impact of financial education, and the financial consequences due to a shock. All chapters use survey evidence, and some include (lab) experimental findings. After the introduction, Chapter two investigates the role of self-control and financial literacy for impulsive borrowing, analyzing experimental data collected in a laboratory in Berlin and survey data provided by the German Socio-Economic Panel's Innovation Sample. Chapter three contributes to a better understanding of the determinants and barriers to mobile money adoption in a low-income country, and the contribution of mobile money services to financial inclusion. As education makes it more likely to adopt new technologies, financial education could complement other financial inclusion and consumer protection efforts for financial development. Thus, it is relevant to assess the consequences of programs targeting financial education. Therefore, chapter four analyzes the impact of a financial education program and its spillover effects via a randomized controlled trial. Chapter five sheds light on the consequences of the COVID-19 pandemic on the financial well-being and technology adoption of micro-entrepreneurs. Chapter three to five use data collected in two large-scale survey waves in rural Uganda

O confinamento por COVID-19 e a satisfação com as empresas de entrega de comida em domicílio

The objectives of this research are to qualitatively explore the attitudes towards online food delivery providers (ODP) during the COVID-19 lockdown in Ecuador, and to quantitatively analyse whether there are changes in e-satisfaction with ODPs and three determinants (e-service quality, delivery workers personal aspects, and food quality). Qualitative analysis results of 104 customer opinions showed positive attitudes towards ODPs and a new motivation for using this service: risk exposure reduction. However, concerns about the application of biosafety guidelines by restaurants and delivery workers were also evident. A structural equations model (n=483) revealed that personal aspects lost significance as a determinant for e-satisfaction during the lockdown, most likely due to personal contact reduction during delivery.Los objetivos de esta investigación son explorar cualitativamente las actitudes hacia los proveedores de comida a domicilio (ODP por sus siglas en inglés) durante el confinamiento por COVID-19 en Ecuador y analizar cuantitativamente si hay cambios en la satisfacción digital respecto a los ODPs y tres determinantes (calidad del servicio digital, aspectos personales de los repartidores y calidad de la comida) en dicho periodo. Los resultados del análisis cualitativo a 104 opiniones de clientes mostraron actitudes positivas hacia los ODPs y una nueva motivación para su uso: reducción de la exposición al riesgo. La preocupación sobre la aplicación de medidas de bioseguridad por restaurantes y repartidores también fue evidente. Un modelo de ecuaciones estructurales (n=483) mostró que la variable aspectos personales perdió significancia como determinante de la satisfacción digital durante el confinamiento; resultado atribuible a la reducción del contacto personal durante la entrega de comida.Os objetivos desta pesquisa são explorar qualitativamente as atitudes em relação às empresas de entrega de comida em domicílio (ODP pela sigla em inglês) durante o confinamento por COVID-19 no Equador e analisar quantitativamente se há mudanças na satisfação digital em relação aos ODPs e três fatores determinantes (qualidade do serviço digital, aspectos pessoais dos entregadores e qualidade da comida) no referido período. Os resultados da análise qualitativa de 104 opiniões de clientes evidenciam atitudes positivas em relação aos ODPs e uma nova motivação para a sua utilização: redução da exposição ao risco. A preocupação com a aplicação de medidas de biossegurança por restaurantes e entregadores também foi evidente. Um modelo de equação estrutural (n = 483) mostrou que a variável aspectos pessoais perdeu significância como determinante da satisfação digital durante o confinamento; resultado atribuível à redução do contato pessoal durante a entrega de alimentos

Innovations in emerging markets: The case of mobile money

Mobile money is a financial innovation that provides transfers, payments, and other financial services at a low or zero cost to individuals in developing countries where banking and capital markets are deficient and financial inclusion is low. We use transaction costs and institutional theories to explain the growth and impact of mobile money. Having developed a new archival dataset that tracks mobile money deployment across 90 emerging economies during 16 years between 2000 and 2015, we address the question of relative economic impact of the banking and telecoms sectors in the provision of mobile money. We show that telecom groups and not banks are more likely to launch mobile money in countries where legal rights are weaker and credit information less prevalent. However, it is when mobile money is offered via a banking channel that the spillover effects on the economy are greater. Findings have significant implications for policy and strategy

Designing economic instruments for the environment in a decentralized fiscal system

When external effects are important, markets will be inefficient, and economists have considered several broad classes of economic instruments to correct these inefficiencies. However, the standard economic analysis has tended to neglect important distinctions and interactions between the geographic scope of pollutants, the enforcement authority of various levels of government, and the fiscal responsibilities of the levels of government. For example, externalities generated in a particular local area may be confined to the local area or may spill over to other jurisdictions. Also, local governments may be well informed about how best to regulate or enforce pollution control within their jurisdiction, but they may not consider the effects of their actions on other jurisdictions. Finally, the existence of locally-generated waste emissions affects the appropriate assignment of both expenditure and tax responsibilities among levels of government. The standard analysis therefore focuses mainly upon an aggregate (or national) perspective, it typically ignores the possibility that the externality may be created and addressed by local governments, and it does not consider the implications of decentralization for the design of economic instruments targeted at environmental problems. This paper examines the implications of decentralization for the design of corrective policies; that is, how does one design economic instruments in a decentralized fiscal system in which externalities exist at the local level and in which subnational governments have the power to provide local public services, as well as to choose tax instruments that can both finance these expenditures and correct the market failures of externalities?Environmental Economics&Policies,Debt Markets,Taxation&Subsidies,Public Sector Economics&Finance,Emerging Markets