Robert H. Smith School of Business

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    A Multi-Method Examination of Partitioned Pricing
    (2015) Abraham, Ajay Thomas; Hamilton, Rebecca W; Business and Management: Marketing; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation investigates the relationship between partitioned pricing (Morwitz, Greenleaf, and Johnson 1998) and dependent variables such as demand, preference, and attention. The first essay proposes a theoretical framework to examine extant and new moderators of partitioned pricing, classifying moderators based on the source of their impact as presentational, evaluative, or attentional. A meta-analysis of 17 years of research on partitioned pricing examines 149 observations from 43 studies in 27 papers (N = 12,878). The perceived benefit of the surcharge and the typicality of partitioning the surcharge in the category emerge as robust moderators of the effect of partitioned pricing on consumer demand. Surcharges for components perceived to provide high benefit and highly typical surcharges make partitioned prices more attractive. Replicating the meta-analytic effects of typicality, a follow-up experiment shows a more positive effect of partitioning on preference for typical surcharges than for atypical surcharges, and an eye-tracking experiment offers insight into the underlying mechanism by showing that people pay more attention to atypical surcharges than to typical surcharges. Different pricing strategies in the same market suggest different beliefs about the efficacy of partitioning prices on consumers' preferences. The second essay in this dissertation explores the impact of two countervailing theoretical influences that may predict how the numerical magnitude of surcharges can affect preferences. "Base price anchoring" suggests that as the magnitude of the surcharge increases (holding the total price constant), consumers may anchor on a lower base price, leading them to evaluate partitioned prices more favorably. In contrast, "surcharge salience" suggests that as the magnitude of the surcharge increases, attention to the surcharge increases, and evaluations of partitioned prices decrease. An analysis of eBay auction data reveals support for the influence of base price anchoring, and a follow-up experiment suggests that this mechanism dominates at lower levels of surcharge magnitude whereas surcharge salience dominates at higher levels of surcharge magnitude. Finally, an eye-tracking study demonstrates the influence of surcharge salience on preference and attention.
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    ESSAYS ON MARKET MICROSTRUCTURE AND HIGH FREQUENCY TRADING
    (2014) Li, Wei; Kyle, Albert S.; Business and Management: Finance; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation includes two chapters on topics related to market microstruc- ture and high frequency trading. In the first chapter, I explore the effects of speed differences among front-running high frequency traders (HFTs) in a model of one round of trading. Traders differ in speed and their speed differences matter. I model strategic interactions induced when HFTs have different speeds in an extended Kyle (1985) framework. HFTs are assumed to anticipate incoming orders and trade rapidly to exploit normal-speed traders' latencies. Upon observing a common noisy signal about the incoming order flow, faster HFTs react more quickly than slower HFTs. I find that these front-running HFTs effectively levy a tax on normal-speed traders, making markets less liquid and prices ultimately less informative. Such negative effects on market quality are more severe when HFTs have more heterogeneous speeds. Even when infinitely many HFTs compete, their negative effects in general do not vanish. I analyze policy proposals concerning HFTs and find that (1) lowering the frequency of trading reduces the negative impact of HFTs on market quality and (2) randomizing the sequence of order execution can degrade market quality when the randomizing interval is short. Consistent with empirical findings, a small number of HFTs can generate a large fraction of the trading volume and HFTs' profits depend on their speeds relative to other HFTs. In the second chapter, I study the effects of higher trading frequency and front-running in a dynamic model. I find that a higher trading frequency improves the informativeness of prices and increases the trading losses of liquidity driven noise traders. When the trading frequency is finite, the existence of HFT front-runners hampers price efficiency and market liquidity. In the limit when trading frequency is infinitely high, however, information efficiency is unaffected by front-running HFTs and these HFTs make all profits from noise traders who do not smooth out their trades.
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    THE ROLE OF SELF-BRAND CONNECTION IN BRAND PRIMING AND BRAND CO-CREATION CONTEXTS
    (2014) Johnson, Heather Macrea; Kirmani, Amna; Business and Management: Marketing; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation includes two essays that examine how self-brand connection influences brand-related behaviors in different contexts. Essay I investigates conditions under which brand primes can lead to decreased behavioral intentions toward the brand not shown in prior brand priming research (Berger and Fitzsimons 2008; Ferraro, Bettman, and Chartrand 2009). We identify the type of association primed (core vs. non-core) as an important factor in determining whether positive or negative brand priming effects will occur for consumers with low vs. high self-brand connection (SBC; Escalas and Bettman 2003). Studies 1 and 2 find support for the notion that high (vs. low) SBC consumers' brand associative networks have stronger links between core associations and brand and overlap between the self and core associations. Studies 3 and 4 show that when SBC is low, priming core and non-core associations leads to increased behavioral intentions found in prior work (Berger and Fitzsimons 2008). When SBC is high, however, priming a non-core association decreases behavioral intentions, while priming a core association does not affect behavioral intentions. Thus, contrary to prior research (Park et al. 2010), we show that higher SBC may result in lower behavioral intentions under certain conditions. Essay II explores the conditions under which brief brand co-creation activities are effective in enhancing high (vs. low) SBC consumers' subsequent brand engagement in social media, such as liking the brand on Facebook and sharing brand promotions with others. Many brand marketers offer interactive activities that enable consumers to participate in the ongoing development of the brand, such as telling their own stories about the brand or evaluating other consumers' stories. We offer evidence that these co-creation activities vary according to their potential to create brand knowledge. We then examine how consumers' self-brand connection and the co-creation activity's brand knowledge potential interact to affect brand engagement. Across three studies, we demonstrate that high SBC (i.e., loyal) consumers intend to engage more deeply with the brand after participating in high rather than low brand knowledge potential co-creation activities. We show that generation of original, personal brand meaning underlies the effect.
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    The Transformational Role of IT in Entrepreneurship: Crowdfunding and the Democratization of Access to Capital and Investment Opportunity
    (2014) Kim, Keongtae; Hann, Il-Horn; Viswanathan, Siva; Business and Management: Decision & Information Technologies; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    My dissertation examines the strategic impacts of IT-enabled platforms on entrepreneurial and innovation activities. Specifically, I explore the behaviors of both investors and entrepreneurs in online crowdfunding markets that have the potential to democratize access to capital and investment opportunities. In my first essay, I examine the role of experts in a crowdfunding market. While conventional wisdom considers a crowdfunding market as a mechanism to democratize decision making and reduce reliance on experts, I find that experts still play a pivotal role in these markets. In particular, I find that the early investments by experts serve as credible signals of quality for the crowd, and have a significant impact on the crowd's investment decisions. In my second essay, I analyze whether crowdfunding democratizes access to capital for entrepreneurs. I find that difficult access to credit from traditional sources induces entrepreneurs to rely more on crowdfunding as a viable alternative, while this effect varies across project types and across areas. In each essay, I analyze micro-level data from online crowdfunding markets with a variety of econometric methods. The results have important theoretical and practical implications for questions ranging from the design of online crowdfunding markets to competition between online and offline channels for funding and regional dynamics of crowdfunding.
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    PROFESSIONAL REFERRALS: KEEPING-WHILE-GIVING, RECIPROCATION, AND THE TRANSFER OF OPPORTUNITIES AMONG ENTREPRENEURIAL PROFESSIONALS
    (2013) Searcy, Deborah Woods; Stevens, Cynthia K; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    Through inductive research, I explored the dynamic process between entrepreneurial professionals in sending and receiving professional referrals. I define a professional referral as an entrepreneurial professional advising a client to instead do business with a specific other professional within the same industry. While considering the needs of the client, these entrepreneurs involved in the professions must transfer a valuable opportunity to a competitor. Prior research indicates that entrepreneurial professionals should refer opportunities based on skill and specialty, should receive fees for referrals, and should select referral recipients based on tie formation mechanisms, trust, and reputation protection. Yet professional referrals involve unique complexities, as they occupy a vague conceptual space between economic and social exchange. This paper addresses the interplay of these obligations. By using a grounded theory methodology, I was able to generate an emergent model and mid-level theory. I interviewed 42 lawyers, using semi-structured interviews. The model is arranged into three transitional decisions: refer the opportunity, select a referral recipient, and establish (or terminate) a referral routine. For the first decision, in addition to referrals based on objective skill and specialty, I found that entrepreneurial professionals will refer business on subjective costs, including emotional toll and being morally compromised; I term this new dimension social referrals. Next, the entrepreneurial professional must decide to whom the referral will be sent. I found that entrepreneurial professionals are possessive of their clients, as each client represents a long-term revenue stream. Possessiveness results in reciprocity expectations, the most important of which is keeping-while-giving, or the expectation of the return of the same client relationship. Entrepreneurial professionals also set dependability expectations. Expectations directly impact selection, and these relationships are amplified by the presence of tie formation mechanisms. Finally, entrepreneurial professionals establish referral routines; they repeatedly send their referral business to no more than three individuals within a given dimension for exchange. Breaching reciprocity and dependability expectations can cause routines to be terminated, but overall, this final transitional decision occurs by default and can continue indefinitely. These interconnected steps combine to form a middle-range theory of professional referral dynamics.
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    Problems and Models in Strategic Air Traffic Flow Management
    (2013) Swaroop, Prem; Ball, Michael O; Business and Management: Decision & Information Technologies; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    The thesis comprises of three essays. The first essay is titled "Do more US airports need slot controls? A welfare based approach to determine slot levels." It analyzes the welfare effects of slot controls on major US airports. We consider the fundamental trade-off between benefits from queuing delay reduction and costs due to simultaneous schedule delay increase to passengers while imposing slot limits at airports. A set of quantitative models and simulation procedures are developed to explore the possible airline scheduling responses through reallocating and trimming flights. We find that, of the 35 major US airports, a more widespread use of slot controls would improve travelers' welfare. The results from our analyses suggest that slot caps at the four airports that currently have slot controls (Washington Reagan, Newark, New York LaGuardia, New York John F. Kennedy) are set too high. Further slot reduction by removing some of the flights at these airports could generate additional benefits to passengers. Slot controls can potentially reduce two thirds of the total system delays caused by congestion. A number of implementation and design issues related to the use of slot controls are also discussed in the paper. The second essay is titled "Designing the Noah's Ark: A Multi-objective Multi-stakeholder Consensus Building Method." A significant challenge of effective air traffic flow management (ATFM) is to allow for various competing airlines to collaborate with an air navigation service provider (ANSP) in determining flow management initiatives. This challenge has led over the past 15 years to the development of a broad approach to ATFM known as collaborative decision making (CDM). A set of CDM principles has evolved to guide the development of specific tools that support ATFM resource allocation. However, these principles have not been extended to cover the problem of providing strategic advice to an ANSP in the initial planning stages of traffic management initiatives. In the second essay, we describe a mechanism whereby competing airlines provide ``consensus'' advice to an ANSP using a voting mechanism. It is based on the recently developed Majority Judgment voting procedure. The result of the procedure is a consensus real-valued vector that must satisfy a set of constraints imposed by the weather and traffic conditions of the day in question. While we developed and modeled this problem based on specific ATFM features, it appears to be highly generic and amenable to a much broader set of applications. Our analysis of this problem involves several interesting sub-problems, including a type of column generation process that creates candidate vectors for input to the voting process. The third essay is titled "Strategic Opportunity Analysis in COuNSEL -- A Consensus-Building Mechanism for Setting Service Level Expectations." The consensus-building mechanism described in the second essay has been accepted as a technically viable solution for the stated problem -- although many practical challenges still remain before it may be deployed in operations. A key issue worthy of further investigation is its strong strategy-resistance -- as claimed by the authors of Majority Judgment, the voting procedure embedded in COuNSEL. Using the broad ideas of Nash Equilibria, we characterize the necessary and sufficient conditions for an airline to benefit from unilaterally deviating from truthfully grading one or more candidates. The framework provides the airline with all the other airlines' grades on a set of candidates, and allows it an opportunity to present new grades. The analysis is repeated over multiple instances, and likelihood of beneficial strategic opportunity is presented.
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    INSTITUTIONAL LOGICS, INDIE SOFTWARE DEVELOPERS AND PLATFORM GOVERNANCE
    (2013) Qiu, Yixin; Gopal, Anandasivam; Hann, Il-Horn; Business and Management: Decision & Information Technologies; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This two-essay dissertation aims to study institutional logics in the context of Apple's independent third-party software developers. In essay 1, I investigate the embedded agency aspect of the institutional logics theory. It builds on the premise that logics constrain preferences, interests and behaviors of individuals and organizations, thereby determining the appropriate and legitimate decisions and actions of actors. In the meantime, most social actors operate in fields characterized by multiple institutional logics where contradictions exist, allowing individuals and organizations with opportunities for negotiation and change through exploitation or management of these contradictions. I specifically study two competing institutional logics: professional and market logics when they are experienced simultaneously by independent iOS app entrepreneurs. Using participant observation and semi-structured interviews, I delineate the ways in which logic tension is reconciled through mechanisms of logic synthesis in three entrepreneurial areas - app ideation, app execution and app marketing, and conditions which facilitate or inhibit logic synthesis. In essay 2, I study the emergence and evolution of field-level logics in the context of Apple's desktop developers - Mac indies. Following the cultural emergence model of field-level logics in Thornton et al. (2012), and the argument that "field-level logics are both embedded in societal-level logics and subject to field-level processes that generate distinct forms of instantiation, variation, and combination of societal logics" (p148), I particularly examine the relationship between resource environment and the emergence and evolution of field-level logics. Taking advantage of a critical change in developers' resource environment - Apple's opening of the iOS App Store and subsequently the Mac App Store, and hence its governance model shifting from mainly a technological platform to a platform that includes a market exchange place, I identify developers' logics before and after the change, namely, the software ecosystem logic and platform ecosystem logic. Two ideal types are constructed for the logics along elemental categories, and a content analysis demonstrates the logic shift pattern as resource environments change. A further analysis of the two logics suggests that the software ecosystem logic and platform ecosystem logic are in contestation at this early stage of institutional change.
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    SUPPLY CHAIN STRUCTURE, PRODUCT RECALLS AND FIRM PERFORMANCE: INVESTIGATING RECALL DRIVERS AND RECALL FINANCIAL PERFORMANCE RELATIONSHIPS
    (2013) Steven, Adams Brima; Corsi, Thomas; Business and Management: Logistics, Business & Public Policy; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation is a two-essay study on globalization, sourcing structure and product quality and firm performance in global supply chain management. In the first essay, using a unique archival dataset on firms and their suppliers, the role of supply chain strategies in contributing to product safety and quality, as assessed through product recalls are investigated. The second essay investigates the relationship between product recalls and firm performance. Moreover, the moderating effects on the recall-profitability relationship of supply chain as well as recall management strategies are investigated . Essay 1 investigates how a number of supply chain strategies contribute to product recalls. In particular, I examine how the make or buy decision (i.e., outsourcing), the decision to concentrate the supply base (i.e., use few vs. several suppliers), the use of foreign suppliers (i.e., offshoring), and the extent of global operations, contribute to product recalls. The subject area of product quality and safety failures leading to product recalls is important because product recalls can have a major, negative impact on firm performance. For example, in the event of a product recall, replacement orders may need to be shipped, new suppliers may need to be found and vetted, and marketing expenditures may need to be made to counter negative publicity from the recall. Applying key theories in operations and supply chain management, I find that firms vary greatly in recall propensity and that these variations are related to heterogeneity in outsourcing, offshoring, and supply base concentration. In the second essay, I revisit the recall-performance relationship. First, I investigate the relationship between product recalls and profitability. Firms may choose to try to avoid product recalls by increasing their expenditures on product quality and inspection services. Or, on the other hand, they may emphasize short term profitability by reducing production and inspection costs, thereby increasing the risk of incurring a product recall. Since firms are expected to balance production and quality inspection costs against the costs associated with product recalls in order to maximize profit performance, the recall-profitability relationship is not clear, a priori. I further investigate the moderating effect of global operations, supply base structure and recall strategies on the relationship between product recalls and profit margins. My theory-based research suggests a curvilinear recall-profit relationship and that this relationship depends on key global supply chain practices and recall management strategies.
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    EMPLOYEE VOICE BEHAVIOR DURING ORGANIZATIONAL CHANGE
    (2013) Shin, Jiseon; Taylor, M. Susan; Seo, Myeong-Su; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    I seek to understand the dynamic organizational change process by focusing on employees' change-related voice as the mechanism through which their dissatisfaction with change implementation processes relates to their positive behavioral outcomes during organizational change. I propose that employees who are dissatisfied with their organization's change implementation processes are more likely to engage in change-related voice behavior - defined as behavior that expresses constructive suggestions (promotive voice) and challenges (prohibitive voice) to improve change processes - and that their affective commitment to change, change efficacy, and work-unit leader's empowering leader behavior will positively moderate the relationship between dissatisfaction and change-related voice behavior. Through a survey with a sample of 192 employees and 27 work-unit leaders working for an organization undergoing a large-scale organizational change, I found that the patterns of how the hypothesized antecedents relate to change-related voice behavior vary depending on the type of voice behavior. Specifically, employees are more likely to make constructive suggestions (promotive voice) when their work-unit leader shows empowering behaviors and when they are high in change efficacy. Employees who are dissatisfied with the change implementation processes engage in promotive voice behavior only when they are strongly committed to change (affective commitment to change) and believe they are not capable of handling change demands (change efficacy). Furthermore, employees tend to point out problems in current change implementation processes (prohibitive voice) when the levels of their work-unit leader's empowering leader behavior and dissatisfaction with the current change processes are high; and the relationship between dissatisfaction and prohibitive voice was stronger when the level of their change efficacy is low rather than high. Lastly, increased levels of employee change-related voice behavior in both types are positively related with their individual performance of change tasks.
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    Reconfiguration Strategies, Entrepreneurial Entry and Incubation of Nascent Industries: Three Essays
    (2013) Moeen, Mahka; Agarwal, Rajshree; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    The first essay of my dissertation focuses on the incubation stage -- the period between introduction of a technological change and its first commercialization -- of an industry, which is an understudied phenomenon. It examines firms' technological investments in a nascent industry in anticipation of commercialization, and contributes novel insights to the classic industry evolution literature that conceptualizes industry formation from the first instance of product. Using the agricultural biotechnology industry as the empirical context, this essay documents not only the extent to which firms undertake technological investments in anticipation of entry, but also the heterogeneity in types of entrants and their modes of value capture. I thus shed light on the intertwined processes of economic value capture at the firm-level and ecosystem development at the industry-level that underpin incubation of nascent industries. The second essay examines the capability antecedents of a firm market entry into a nascent industry. A firm's technical capabilities and complementary assets, at time of entry, have been consistently noted as key determinants of the likelihood of entry. Drawing on the premise that firms make deliberate decisions regarding technological investments well before they enter nascent markets, I make a distinction between a firm's pre-entry and pre-investment capabilities and study the type of pre-investment capabilities that are related to the likelihood of firm entry. I suggest that a firm's pre-investment reconfiguration experiences are the critical capability: these experiences shape the firm's development of pre-entry technical capabilities and complementary assets, which in turn affect the likelihood of entry. I find empirical support for the mediating role of pre-entry capabilities to the relationship between pre-investment experiences and the likelihood of entry in the context of the population of firms that conducted R&D investments in agricultural biotechnology between 1980 and 2010. The third essay studies the reconfiguration strategies pursued by firms in anticipation of entry into a nascent industry. Whether entry to a nascent industry is undertaken by de novo startups, diversifying firms from related industries or industry incumbents from the obsolescing industry, a critical strategic action for firms is to achieve the required configuration of capabilities for operations in the new industry. The choice, timing, and sequence of these capability reconfiguration mechanisms may, however, differ across different types of firms. I provide theoretical propositions that link firm types to the underlying sources of heterogeneity and suggest how this heterogeneity leads to differential paths undertaken by de novo startups, diversifying firms and industry incumbents while reconfiguring themselves in anticipation of entry into a nascent industry. Implications of the model are discussed using three firm case studies from the agricultural biotechnology industry.