Strategic Investments In The Right CRM Technologies, In The Right Amount, and In The Right Order

Although many companies have spent a great deal of money to adopt CRM (Customer Relationship Management) technologies, many have not seen satisfactory returns on their CRM installations. One of the reasons for such dissatisfaction and low ROI may be the lack of a comprehensive approach to evaluating the impact of CRM technologies, which are very different from traditional cost-cutting and quality-improving IT. To bridge the gap between the existing research stream on IT investment and firms’ dissatisfaction with returns on CRM technologies, we aim to analyze the optimal CRM implementation strategy and the impact of CRM investments on a firm’s profitability. For our analysis, we classify CRM technology into two broad categories, targeting-related CRM technology and support-related CRM technology. We find that the two types of CRM technologies are substitutive in generating firms’ revenue rather than complementary. We also find that firms’ investments in both targeting-related CRM and support- related CRM can decrease consumer welfare under certain conditions. We develop a model that not only considers different factors across industries and environments, but is also helpful in determining the right CRM technology, in the right amount, and in the right order

How Well Do Banks Manage Their Reserves?

In this paper we investigate how well banks manage their reserves. The optimal policy takes into account expected foregone interest on excess reserves and penalty costs for going below required reserves. Using a unique panel data-set on daily clearing house settlements of a cross-section of Mexican banks we estimate the deposit uncertainty banks face, and in turn their optimal reserve behavior. The most important variables for forecasting the deposit uncertainty are the interbank fund-transfers of the day, certain calendar dates, and the interest differential between the money market rate and the discount rate - a measure reflecting the bank's opportunity cost of money holdings. For most banks the model's prediction accord relatively well with the observed reserve behavior of banks. The model produces reserves costs that are significantly smaller relative to the case when reserves are set via simple rule of thumb. Furthermore, alternative motives for holding reserves (such as liquidity and reputation effects) do not seem to be the explanation for why certain banks hold relatively large reserves.

Crowdsourcing Contests: A Dynamic Structural Model of the Impact of Incentive Structure on Solution Quality

A key challenge faced by firms that undertake crowdsourcing-contests to get solutions from crowds to their problems is to design an incentive structure which helps attract high quality solutions. We develop a structural model of user participation in crowdsourcing-contests and present empirical evidence on how incentive structure could affect the quality of solutions. Using data from Threadless.com, we find that participants exert less effort as competition for the reward increases. This may indicate that increasing the reward may adversely affect the quality of the solutions produced as it will increase the competition. However, counter-intuitively the policy simulations indicate that increasing the reward increases both quantity and quality of the solutions. This is because under the new policy of higher reward, individual equilibrium behavior is different. When the firm increases the reward, the additional utility from increase in the reward offsets the reduction in probability of winning due to intensified competition

Attracting Whom? - Managing User-Generated-Content Communities for Monetization

Successful monetization of user-generated-content (UGC) business calls for attracting enough users, and the right users. The defining characteristic of UGC is users are also content contributors. In this study, we analyze the impact of a UGC firm’s quality control decision on user community composition. We model two UGC firms in competition, with one permitting only high quality content while the other not controlling quality. Users differ in their valuations and the content quality they contribute. Through analyzing various equilibrium situations, we find that higher reward value generally benefits the firm without quality control. However, when the intrinsic value of contribution is low, higher reward value may surprisingly drive high valuation users away from that firm. Also somewhat interestingly, we find that higher cost of contribution may benefit the firm that does not control quality. Our work is among the first to study the business impact of quality control of UGC

Personalized Pricing and Quality Differentiation on the Internet

No changes were made in the Abstract. Please use the previous Abstract that was submittedVertical Differentiation, Personalization, Price Discrimination, Electronic Commerce,

Strategic Impact of Internet Referral Services on Channel Profits

Internet Referral Services, hosted either by independent third-party infomediaries or by manufacturers serve as âÃÂÃÂlead-generatorsâÃÂàin electronic marketplaces, directing consumer traffic to particular retailers. In a model of price dispersion with mixed strategy equilibria, we investigate the competitive implications of these institutions on retailer and manufacturer pricing strategies as well as their impact on channel structures and distribution of profits. Offline, retailers face a higher customer acquisition cost. In return, they can engage in price discrimination. Online, they save on the acquisition costs, but lose the ability to price discriminate. This critical tradeoff drives firmsâÃÂàequilibrium strategies. The establishment of a referral service is a strategic decision by the manufacturer, in response to a third-party infomediary. It leads to an increase in channel profits and a reallocation of the increased surplus to the manufacturer, via the franchise fees. Further, it enables the manufacturer to respond to an infomediary, by giving itself a wider leeway to set the unit wholesale fee to the profit maximizing level. We discuss implications of referral services on channel coordination issues, and whether a two part tariff can be successfully used to maximize channel profits. Contrary to prior literature, we find that when retailers can price discriminate among consumers, the manufacturer may not set the wholesale price to marginal cost to coordinate the channel. Consistent with anecdotal evidence, our model predicts that while it is optimal for an infomediary to enroll only one retailer, it is optimal for a manufacturer to enroll both retailers. Finally, our results show that under some circumstances, the manufacturer even benefits from the presence of the competing referral infomediary and hence, will not want to eliminate it.Information Systems Working Papers Serie

The Impact of Internet Referral Services on a Supply Chain

In many industries, Internet referral services, hosted either by independent third-party infomediaries or by manufacturers, serve as digitally enabled lead generators in electronic markets, directing consumer traffic to downstream retailers in a distribution network. This reshapes the extended enterprise from the traditional network of upstream manufacturers and downstream retailers to include midstream third-party and manufacturerowned referral services in the supply chain. We model competition between retailers in a supply chain with such digitally enabled institutions and consider their impact on the optimal contracts among the manufacturer, referral intermediary, and the retailers. Offline, retailers face a higher customer discovery cost. In return, they can engage in price discrimination based on consumer valuations. Online, they save on the discovery costs but lose the ability to identify consumer valuations. This critical trade-off drives firms’ equilibrium strategies. We derive the optimal contracts for different entities in the supply chain and highlight how these contracts change with the entry of independent and manufacturer-owned referral services. The establishment of a referral service is a strategic decision by the manufacturer. It leads to diversion of supply chain profit from a third-party infomediary to the manufacturer. Further, it enables the manufacturer to respond to an infomediary, by giving itself greater flexibility in setting the unit wholesale fee to the profit-maximizing level. Both third-party and manufacturer-sponsored referral services play a critical role in enabling retailers to discriminate across consumers’ different valuations. Retailers use online referral services to screen out low-valuation consumers and sell only to high-valuation consumers in the online channel. Our model thus endogenously derives a correlation between consumer valuation and online purchase behavior. Finally, we show that under some circumstances, it is too costly for the manufacturer to eliminate the referral infomediaryNYU, Stern School of Business, IOMS Department, Center for Digital Economy Researc

Organizational Capabilities and the Assimilation of Electronic Procurement in Service Industries

This study seeks to identify the factors leading to the assimilation of electronic procurement (e-procurement) in organizations. Realizing the strategic importance of e-procurement, many organizations have increased their investments to exploit its potential benefits. However, organizations differ greatly in their abilities to assimilate the application and translate it into tangible benefits. This study tries to enhance understanding of barriers and facilitators that affect organizations’ abilities to assimilate e-procurement. Drawing upon perspectives from strategic management and other literature, this study develops a conceptual model that identifies the determinants of organizations’ capabilities to implement e-procurement applications. This study empirically validates the conceptual model, conducting a survey with purchasing executives and managers of organizations in service industries. The conceptual framework and empirical investigation of this study are expected to greatly contribute to both theory and practice. For theory, the study promises to enhance understanding of barriers and facilitators of e-procurement assimilation in organizations. For practice, this study will yield useful implications on how to effectively manage e-procurement assimilation efforts. The findings will make the task more manageable and less stressful for practitioners, eventually facilitating the spread of the application across individuals, work groups, organizations, and society at large

Information Technology and Organizational Learning: An Empirical Analysis

Organizational learning theory suggests that organizations “learn from experience” and are thus able to adapt their range of potential behaviors through the processing of information. Our research integrates this perspective with information systems economics theory and empirically tests whether new information technology investments contribute to an organization’s ability to learn from experience. Based on a cross- sectional time series analysis of data spanning 48 months and six independently operated payment processing facilities owned by a major international financial institution, our results indicate that IT has a significant positive impact on the rate at which organizations can translate learning from cumulative experience into incremental productivity gains

Pricing Open Source Software

In this paper, we examine the issue of pricing open source software. We compare three different pricing mechanisms: commercial software, open source software dual-licensing, and open source software support. We investigate whether the open source software pricing models are viable under monopoly and duopoly when an open source software vendor competes with a commercial software vendor. Our model considers the motivation for and the barrier to open source software adoption, which provides a better picture of the open source software market. We identify the factors that affect the optimal pricing strategy of the commercial and the open source software vendors. Our results can give pricing guidelines to the open source software vendors in the case of monopoly and duopoly, which is not clear in the current state