Percent Of Revenue Research Articles

The Pursuit Of Improved Physical And Mental Health

The Pursuit Of Improved Physical And Mental Health

Foreign Ownership of Firms in IP Intensive Industries

For decades, U.S. domestic and foreign IP policy has been predicated on the assumption that U.S. firms dominated both domestic and foreign markets for IP products. In an effort to evaluate the standing of U.S. firms in IP intensive industries, this paper identifies the “nationality” of the leading firms in several important IP industries. The paper finds that for many industries, this assumption of U.S. dominance is no longer correct. This suggests that at times, IP policies adopted by Congress and the Executive Branch may benefit foreign corporations at the expense of U.S. consumers.Here are some of the paper’s key findings: Four of the “Big Six” publishers, the largest English language trade publishers, are foreign-owned. More than 80 percent of the global revenue of the Big Six is generated by these foreign-owned companies. These foreign-owned companies published more than two thirds of the trade books in the U.S.Four of the five largest STM (science, technical and medical)/Professional publishers are foreign-owned. More than 90 percent of the revenue of the five largest STM/Professional publishers was generated by foreign-owned firms.Only seven of the world’s 50 largest publishers of all categories are U.S.-owned.The book publishing industry in Europe has approximately twice as many employees as in the United States.Of the top ten best-selling fiction authors in any language whose work is still in copyright, five are foreign. A British author wrote three of the top five best-selling books in the U.S. in 2012.Two of the three major record labels are foreign-owned. These two labels have a market share of 59 percent. Thirteen of the twenty best-selling recording artists are foreign.Of the 50 most popular motion pictures in the United States in 2012, half were filmed partly or entirely outside of the United States.In 2013, the Oscar winners in thirteen of 24 categories were foreign. In 2012, the Oscar winners in eleven of 24 categories were foreign. In 2011, the Oscar winners in eight of 24 categories were foreign.Seventy percent of the most recent generation of game consoles were manufactured by Japanese companies. Japanese companies have manufactured 92 percent of all game consoles ever sold.In 2011, foreign companies obtained 7,000 more U.S. patents than U.S. companies.In 2011 and 2012, seven of the top ten companies receiving U.S. patents were foreign.57 percent of the global revenue of the fifteen largest pharmaceutical companies was generated by foreign-owned companies.The majority of the employees of both the U.S. and the foreign-owned pharmaceutical companies work outside of the United States.There is absolutely nothing sinister about foreign ownership of firms in IP intensive industries, including foreign ownership of companies originally established in the U.S. This is to be expected in a globalized economy with multinational corporations and complex cross-border supply chains. Moreover, many countries in Western Europe and East Asia are at the same level of technological and economic development as the United States. The critical point is that in such a globalized economy, U.S policymakers should no longer assume without reflection that the beneficiaries of protectionist IP policies are U.S. firms and, by extension, U.S. workers and shareholders.

CEO Compensation in Copyright-Intensive Industries

For the past six years, the CEOs of firms in copyright-intensive industries received significantly higher compensation than the CEOs of the firms in the other industries we used for comparison (construction, transportation, and mining). For example, in 2012, copyright-intensive industry CEOs received $22.9 million on average in compensation, while the CEOs in the other industries received $7.4 million. In other words, the 2012 compensation of copyright-intensive industry CEOs was more than triple the compensation of CEOs in the other industries. During the entire six-year period, copyright-intensive industry CEO compensation on average was 2.8 times higher than CEO compensation in the other industries. Moreover, between 2007 and 2012, CEO compensation in the copyright-intensive firms grew by 45%, while it increased by only 8% in the other industries.Additionally, CEO compensation as a percentage of revenue was more than twice as high in the copyright-intensive industries as in the other industries. CEO compensation as a percentage of revenue in the publishing industry was four times higher than in the transportation industry, almost three times higher than the non-copyright average, and twice as high as in the motion picture industry. In the copyright policy debates, the labor unions representing workers in copyright-intensive firms have joined with management in demanding greater intellectual property protection. Indeed, copyright policy is one of the few areas where the AFL-CIO and the U.S. Chamber of Commerce routinely agree with one another. They contend that copyright infringement is causing job loss in the United States. Nonetheless, during this period when the copyright-intensive industries purportedly are losing jobs because of attacks by pirates, CEO compensation has increased dramatically, both in absolute terms and relative to CEO compensation in other industries. These generous compensation packages belie the suggestion that the copyright industries confront an existential threat from infringement. Moreover, these upwardly trending compensation levels demonstrate that the copyright industry CEOs are not sharing the pain infringement allegedly causes their employees.

Comportamento dos gastos em educação em Santa Maria – RS (2007-2011)

A educação de qualidade é um fator extremamente importante a ser considerado em todos os países que almejam uma sociedade mais justa e desenvolvida. No Brasil, os bens e serviços voltados à educação podem ser oferecidos tanto por entes públicos como privados. No caso dos entes públicos, a Constituição Federal de 1988 (CF/88) estabelece as responsabilidades de cada esfera de governo na prestação de serviços educacionais. Com base nesse contexto, este artigo tem como objetivo analisar o comportamento dos gastos com a função orçamentária voltada para a educação e manutenção e desenvolvimento do ensino (MDE) do município de Santa Maria (RS), no período de 2007 a 2011. Para isso, utilizou-se a classificação funcional estabelecida pela Portaria nº 42/1999, do Ministério do Orçamento e Gestão, com a finalidade de acompanhar os gastos agregados em educação e o percentual das receitas aplicadas especificamente em MDE, conforme artigo 212, da CF/88 e Lei Orgânica do município. Como principais resultados, pode-se constatar o cumprimento da Lei Orgânica Municipal e do artigo 212, da CF/88, que prevê o investimento de, no mínimo 25% das receitas de impostos e transferências aplicadas na educação em MDE. No período analisado, o Índice de Desenvolvimento da Educação Básica (IDEB) da 4ª e 8ª séries obteve um aumento de, aproximadamente, 17% e 13%, respectivamente, o que demonstra uma melhora na qualidade do Ensino Fundamental oferecido pela esfera municipal.

Understanding and Evaluating IT Budgets and Funding

The average firm spends over two-thirds of the IT budget on maintaining the present infrastructure and architecture. The IT budget in turn makes up between thirty to fifty percent of the capital expenditure of a firm annually. An appreciation of the models would enhance an understanding of funding for new IT initiatives and/or making improved decisions on IT investments and operations. In an era where IT infrastructure is essential, a sound IT portfolio is important. This paper explores the necessities of maintaining a firm’s current IT health, investing in future capacity and improving the competitive position of the firm. This paper tries to suggest how an organization can shift from barely maintaining the current IT infrastructure, much to the chagrin of everyone involved, to an industry leading, value generating and sound IT infrastructure. This paper first examines four models for Budgeting and Funding for Information Technology in a firm (Charge Based, Lord and Master, Revenue Percentage, Absolute Outsourcing). Then it proceeds to develop a speculative framework to assist IT budget and funding. There is evidence that the first four models (Charge-based, Lord and Master, Revenue Percentage and Absolute Outsourcing). Charge-based is a model where the IT unit is treated outright as a service provider and paid for services implemented. In Lord and Master, a firm’s IT unit has absolute control over implementation and execution of IT services. Revenue Percentage is where the IT unit compete for budgets in the form of a percentage of the organization overall revenue/profits. Absolute Outsourcing is also a service-charge based system; the only difference being that there is no defined IT unit within firm. IT needs are outsourced to an IT firm outside of the organization and services rendered, charged back to the organization.The impact an IT department has, whatever model it uses to exist, on organizational activities is un-questionable. The study of these models will help firms gather knowledge as to where they stand and also analyze if they need a change in their IT related financial environment. The proposed models are evaluated on: how each model works, how much is allocated as an IT budget, how the financial relationship of IT with other departments and stake holders functions, and implications on organizational learning. Using the funding and budgeting models as building blocks future research is welcomed on governance, change management as well as operational, day to day practical decision making which has relevance to both academic and practitioners.

Financial Factors and the Implementation of Medications for Treating Opioid Use Disorders

Despite the established effectiveness of pharmacotherapies for treating opioid use disorders, implementation of medications for addiction treatment (MAT) by specialty treatment programs is limited. This research examined relationships between organizational factors and the program-level implementation of MAT, with attention paid to specific sources of funding, organizational structure, and workforce resources. Face-to-face structured interviews were conducted in 2008 to 2009 with administrators of 154 community-based treatment programs affiliated with the National Institute on Drug Abuse's Clinical Trials Network; none of these programs exclusively dispensed methadone without offering other levels of care. Implementation of MAT was measured by summing the percentages of opioid patients receiving buprenorphine maintenance, methadone maintenance, and tablet naltrexone. Financial factors included the percentages of revenues received from Medicaid, private insurance, criminal justice, the Federal block grant, state government, and county government. Organizational structure and workforce characteristics were also measured. Implementation of MAT for opioid use disorders was low. Greater reliance on Medicaid was positively associated with implementation after controlling for organizational structure and workforce measures, whereas the association for reliance on criminal justice revenues was negative. The implementation of MAT for opioid use disorders by specialty addiction treatment programs may be facilitated by Medicaid but may be impeded by reliance on funding from the criminal justice system. These findings point to the need for additional research that considers the impact of organizational dependence on different types of funding on patterns of addiction treatment practice.

Public accounting firms' mix of service revenue and average productivity

PurposeThe purpose of this study is to examine the impact of public accounting firms' mix of service revenue on their average productivity measured by total revenue per partner.Design/methodology/approachUsing data from Public Accounting Report on top public accounting firms by revenue, an OLS regression model is applied by regressing revenue per partner on the percentage of revenue generated from auditing and attest, tax, management consulting, and other services independently.FindingsResults show that the proportion of auditing and attest service revenue is negatively associated with public accounting firms' productivity. However, the proportion of other services revenue, other than tax and management consulting services, is positively associated with productivity. Additional investigation shows that if public accounting firms provide other services in their mix of services, then tax and management consulting services do not contribute to these public accounting firms' productivity.Research limitations/implicationsResults of this study cannot be generalized beyond the top 100 public accounting firms, and the measurement of revenue per partner ignores the exact number of partners within different service areas.Practical implicationsAlthough auditing and attest services are considered core services of public accounting firms, they do not increase the productivity of the firm.Originality/valueThis study helps in assessing whether average productivity of public accounting firms is affected by the proportion of a specific type of service in the post‐SOX era.

Player Salaries and Revenues in the Australian Football League 2001–2009: Theory and Evidence

AbstractIn this article we consider the Australian Football League Players’ Association (AFLPA) initial fixed percentage of revenue pay request for the 2012–2016 Collective Bargaining Agreement (CBA) with the Australian Football League (AFL) in the context of theoretical predictions of models of player salaries in both settings of profit-maximising and win-maximising clubs. We then explore the AFL data from 2001–2009 and show that the declining share of player salaries as a proportion of revenue is consistent with the predictions from these theoretical models. This poses the question of what the league and the clubs do with the additional revenue if they are not paying it to the players. We explore alternative talent investments (better coaching, improved facilities) as a club strategy and the changing spending on game development as a league strategy.

The Leading Edge of Corporatization in Higher Ed: For-Profit Colleges

22 A number of years ago in a meeting with Benno Schmidt, former President of Yale University and current Chair of the City University of New York Board of Trustees, I, as a member of the executive committee of the CUNY Faculty Senate, argued that a certain decision was not wise because it moved the university in a corporate direction. Chair Schmidt’s answer, “Oh, Susan, if only CUNY could be more corporate.” Since the spectacular increase in the number of students in for-pro„t colleges over the last ten years, student debt has skyrocketed (student loan debt exceeded $1 trillion in 2011), the dropout rate at forpro„ts has increased—the 6–year completion rate for B.A. students at Phoenix University is 9% (Howard Hotson, “Short Cuts,” London Review of Books, June 2, 2011), and faculty autonomy in higher education has decreased. Many more faculty serve at the will of their employers, not just at for-pro„ts, but at public and private colleges as well: in other words, without tenure, job security, shared governance, unions, or academic freedom. Increasingly curriculum decisions, driven by the market, are made by administrations and implemented by hired teachers. In for-pro„t colleges faculty are told that they are the servants of the students, who are told that they rule because they cause pro„t to be made. ˜e primary purpose of for-pro„t colleges is to make money for partners (in a privately held company) or for shareholders (in a publicly held corporation). Right now, they do that chiešy by securing federal grants or loans for student tuition, funded by taxpayers’ money, and promising their indebted students quick college degrees and good jobs. Education, if it occurs, is a by-product and not the reason for the existence of for-pro„t colleges (“Education Is the Last ˜ing on ˜eir Minds,” New York Times Editorial, May 5, 2011). Eighty-seven percent of revenue for the 14 largest for-pro„t colleges is from the GI Bill, Pell Grants, Tuition Assistance Program, and other government-backed loans paid for by taxpayers. One-third of the GI Bill goes to for-pro„ts. ˜is is a disproportionate share of federal student aid, given that for-pro„ts enroll only 12% of college students (Joe Nocera, “How to Improve on an F,” New York Times Magazine, September 16, 2011). GI Bill loans are especially sought after because they are not part of Title IV education funds, and (according to the 1988 version of the Higher Education Act) for-pro„t The Leading Edge of Corporatization in Higher Ed: For-Profit Colleges

States find creative ways to finance cancer programs

States find creative ways to finance cancer programs

Equity Evaluation of Fees for Vehicle Miles Traveled in Texas

The Texas state gas tax has been 20 cents per gallon since 1991, and the federal gas tax has been 18.4 cents per gallon since 1993. The gas tax is not only stagnant but also depreciating in value because of inflation. Thus, the money needed to maintain the infrastructure and improve roadways is not being adequately generated. One proposed alternative to the gas tax is the creation of a fee for vehicle miles traveled (VMT), with equity being a crucial issue. This research used Texas data from the 2009 National Household Travel Survey to consider the equity impacts of four VMT-fee scenarios. Data were filtered and weighted to reflect results representative of Texas vehicle-owning households in 2008. Each scenario was run both statically and dynamically under the assumption that the VMT fee would replace the state gas tax. On the basis of quantitative measures, the vertical equity of all proposed VMT-fee scenarios and that of the current state gas tax were similar. In terms of horizontal equity, Scenario 4 was designed to be inherently horizontally equitable: charging different rates for travel on urban roadways and rural roadways corresponding to funding needs associated with that roadway type. Scenario 3, which favored fuel-efficient vehicles, was found to be the least horizontally equitable and caused rural households to contribute the highest percentage of revenue of all scenarios considered. All other scenarios were found to be more horizontally equitable than the current state gas tax.

A emenda constitucional n. 29 de 2000 e os governos estaduais

O objetivo deste artigo é investigar os efeitos da Emenda Constitucional n. 29, de 2000 (EC n. 29) nas decisões alocativas dos governadores estaduais referentes aos gastos com saúde. Os resultados dos modelos ajustados mostraram que a variável indicadora emenda para a aprovação da EC n. 29 mostrou-se altamente significativa, confirmando que sua aprovação induziu os governadores a elevarem o percentual da receita aplicado na saúde. Entre as variáveis de contexto, apenas a receita líquida per capita e o perfil ideológico do partido do governador mostraram-se significativas. No entanto, os resultados encontrados permitem afirmar que tais variáveis condicionam apenas marginalmente o efeito substantivo da EC n. 29 nos estados.

Supply chain coordination for a deteriorating item with stock and price‐dependent demand under revenue sharing contract

AbstractThis paper deals with an integrated single‐manufacturer single‐retailer supply chain model for a single item. The market demand is assumed to be dependent on both the on‐hand stock and price, and the manufacturer and the retailer are in an agreement of lot‐for‐lot policy. The proposed model is developed under the contract that the retailer offers the manufacturer a percentage of revenue (s)he generates by selling a lot. We determine optimal policies for both the centralized and decentralized coordination systems. A comparison of these policies is made with a numerical example. Sensitivity analysis is performed to examine the stability of the solution.

Trends of increase in western medical services in traditional medicine hospitals in china

BackgroundCompare changes in types of hospital service revenues between traditional Chinese medicine (TCM) hospitals and Western-medicine based general hospitals.Methods97 TCM hospitals and 103 general hospitals were surveyed in years of 2000 and 2004. Six types of medical service revenue between the two types of hospitals were compared overtime. The national statistics from 1999 to 2008 were also used as complementary evidence.ResultsFor TCM hospitals, the percentage of service revenue from Western medicine increased from 44.3% to 47.4% while the percentage of service revenue from TCM declined from 26.4% to 18.8% from 1999 to 2004. Percentages of revenue from laboratory tests and surgical procedures for both types of hospitals increased and the discrepancy between the two types of hospitals was narrowed from 1999 to 2004. For TCM hospitals, revenues from laboratory tests increased from 3.64% to 5.06% and revenues from surgical procedures increased from 3.44% to 7.02%. General hospitals' TCM drug revenue in outpatient care declined insignificantly from 5.26% to 3.87%, while the decline for the TCM hospitals was significant from 19.73% to 13.77%. The national statistics from 1999 to 2008 showed similar trends that the percentage of revenue from Western medicine for TCM hospitals increased from 59.6% in 1999 to 62.2% in 2003 and 66.1% in 2008 while the percentage of revenue from TCM for TCM hospitals decreased from 18.0% in 1999, 15.4% in 2003, and 13.7% in 2008.ConclusionWestern medicine has become a vital revenue source for TCM hospitals in the current Chinese health care environment where government subsidies to health care facilities have significantly declined. Policies need to encourage TCM hospitals to identify their own special and effective services, improve public perception, increase demand, strengthen financial sources, and ultimately make contributions to preserving one of the national treasures.

Review: Stereoscopic Moving Images

By the end of June 2011, in the months preceding the release of Transformers: Dark Side of the Moon, the press was questioning the viability of both 3D movies and TV. A number of articles pointed out that along with the growth of 3D theater installations, possibly at 15,000 screens in North America, the percentage of revenue coming from the stereoscopic versions of features had dropped. In the rest of the world the percentage of box office revenue for 3D was better but there was the implication that these regions will suffer the same declines as the novelty wears off.

Total Immersion training transforms IAS

PurposeDescribes an award‐winning training program that helped UK business‐to‐business marketing agency IAS to harness the power of social media.Design/methodology/approachExplains the reasons for the training, the form it took and the benefits it has brought.FindingsDetails how digital revenues increased by 400 percent and net profits held at 11 percent of revenue. The company won 23 pitches out of 28, gained 19 industry awards, became an Investor in People and was among the Crains Manchester Business Best Places to Work in 2009.Practical implicationsReveals a sharp rise in staff confidence, togetherness, sense of belonging and competence, with staff turnover at one fifth of the national average.Social implicationsHighlights the importance of keeping abreast of the latest developments in digital technology.Originality/valueReveals how, in a recession, with clients spending on average 20 percent less, IAS increased its revenue by £1m by winning new business at an unprecedented rate.

Dynamics of manufacturing productivity: lesson learnt from labor intensive industries

PurposeThis study is designed to examine the impact of favorable working environment (FWE) and R&D on manufacturing productivity of labor intensive industries. More specifically, the purpose of this study is to generate quantitative evidence of the effect of FWE and R&D‐based manufacturing process on outputs and productivity.Design/methodology/approachConvenience sampling method has been used to conduct this study. This method provides the opportunity for selecting those manufacturing industries that are convenient to get access for collecting relevant information. Three categories of labor intensive manufacturing industries such as category A, B and C have been chosen to perform this research. Industrial category A represents the manufacturing operations which are based on skill of labor. Category B is a group of industries which provides the FWE the ability to utilize the potential of skill in the manufacturing process. However, category C is a specialized group of industries and its manufacturing process is dependent on R&D. The operating data of inputs cost and the revenue of corresponding outputs have been gathered from audited documents of the relevant sample industries and the data have been analyzed by using standard statistical techniques in order to establish the relationship between dependent and independent variables.FindingsIt is found that the industrial category B has spent about 1 percent of revenue on FWE and gained 9.5 percent higher productivity compare to industrial category A. However, the result has shown that the expenditure on FWE is positively associated with productivity (r<0.5). Whereas, the study has revealed that industrial category C has spent about 1.5 percent of revenue on R&D activities for improving manufacturing process and gained 20 higher productivity compare to industrial category A. Nevertheless, the expenditure on R&D is strongly correlated with productivity (r>0.7). The study concludes that FWE as proxy of job satisfaction of workforce and R&D on manufacturing process are value‐added inputs for labor intensive industries and it is positively associated with manufacturing productivity.Originality/valueThis paper presents three original case studies on labor intensive manufacturing industries. This study has addressed an important issue of labor intensive manufacturing industries and generated quantitative evidence of the impact of FWE and R&D activities on productivity. These issues have been well researched in developed and many developing countries in capital‐intensive industries, but no dedicated study is available that has addressed this issue from the perspective of the highly labor intensive industries such as the garment industry. The findings of this research would enrich the present knowledge stock of manufacturing systems. Eventually, the findings would be the basis for further research on manufacturing process for enhancing performance. Based on this concept, this study would be valuable to policy makers, academics and government agencies.

A Fresh Look At Economic Value Added: Empirical Study Of The Fortune Five-Hundred Companies

Rapid and complex changes in the economic and business environment are posing serious challenges to today’s business executives. Meeting these challenges requires effective measures for control and performance evaluation. This article focuses on the uses, benefits and limitations of economic value added (EVA) as a value creation measure. Calculation of this trendy measure is complicated because of the many adjustments needed to convert the generally accepted accounting principles (GAAP) based income to economic income. The article compares the performance of EVA user companies with non-user Fortune 500 companies for the years 1997 and 1998. It shows that users performance means profits as percentage of revenues, assets, and stockholders’ equity were higher than the means of non-users. However, the means for 1998 earnings per share (EPS), EPS change from 1997 and EPS growth for the years 1988-1998 were lower for the EVA user companies. EVA will become less popular in its use as an instrument of control and performance evaluation. Therefore, the conclusion of this research is not in support of EVA use as a measure of value creation to stockholders.

Management Topics: How Accountable Care Will Impact Home Health Agencies

Be prepared dear readers—the winds of change are preparing to blow at gale force. You’ve probably heard the term Accountable Care Organization (ACO), but you might not yet realize the impact that an ACO is likely to have on your total operation. In fact, the drive to ACOs is likely to deliver a dramatic change to the way home health agencies operate at all levels of the organization. Certainly the details about ACO structure and requirements are continuing to emerge at the Federal level. Yet we do have some early indication of the key features and likely downstream impacts expected with the drive to ACOs. Let’s be clear. Much of the downstream impacts written in this column represent “educated conjecture” mixed with a tincture of speculation, all based on current knowledge about the ACO requirements. Despite the fact that there are continuing refinements to the ACO program, you should expect that the final impact to home health care agencies to align pretty closely with what is written here. Regardless of the size and market penetration of your individual agency you should expect the way you operate to change fairly dramatically. In many cases, the change will not occur for everyone on a set date—the changes will most likely come as the number organizations moving to accountable care deepens its penetration across the North American health care market. The drive to accountable care is designed to bend the health care cost curve. According to the Congressional Budget Office (CBO) 96% of Medicare spending goes to seniors with four our more chronic illnesses. The most frequently treated conditions among Medicare beneficiaries include hyperlipidemia, COPD/asthma, diabetes mellitus, hypertension, mental disorders, cancer, trauma-related disorders, and heart conditions (Thorpe, Ogden, & Galactionova, 2010). Look at that list again. Think about what constitutes the majority of your visits. What percentage of your agency revenue is driven by these conditions? What would happen if that revenue was suddenly and dramatically reduced or eliminated? Are you prepared for such dramatic changes? These are just a few of the questions we must be prepared to answer. As the various components of Patient Protection and Affordable Care Act progresses (PPACA) the bar will continue to be set higher across the three major areas of coverage expansion, financing, and delivery system reform. At the core of the PPACA is the paradox of giving more care to more people while at the same time paying less for that care. How this paradox is achieved represents the million dollar question. Unfortunately, more questions than answers have emerged. Does the federal government raise taxes or cut benefits? Another possible scenario is to reallocate spending to health care from other federal programs or to simply cut reimbursement to providers. What is not in question is that every provider will need to deliver care differently amid an incentive-based reimbursement system. The focus will be a shift further away from fee for service to capitation and sharedsavings models. The first likely impact for home health agencies will occur in October 2012 when pay-for-performance payment schemes begin. The core focus of pay-for-performance will be readmissions. This program targets those patients readmitted within 30 days of discharge. In contrast to current payment rules, patients readmitted within 30 days will receive no additional payment for additional services. But the program doesn’t stop here. There is an overall payment reduction penalty to those hospitals, which experience “excessive readmissions.” The penalty will be determined by an adjustment factor calculated as the percentage of revenue paid for excessive readmissions divided by total revenue. Overall, it is expected that pay-for-performance will reduce Medicare payments by US$7.1 billion between 2013 and 2019 (Senate Finance Committee, 2009).

Bidder motives in cause-related auctions

We study cause-related auctions where a percentage of the dynamically determined purchase price of an item is donated to charity. Little is known about the effectiveness of such auctions. Bidders who value donations to charity have an incentive to bid more aggressively in such auctions. Regardless of whether they win or not, these bidders can significantly affect prices. The purpose of this paper is to study bidders' willingness to pay a premium in charity auctions and the drivers that affect the charity premium. We use a carefully designed field experiment involving simultaneous pairs of auctions that are identical in all respects but percentage of the proceeds donated to charity. This design gives us the ability to look at bidder choice among auctions based on charitable considerations. We use a mixture model approach to allow for different types of individual preferences. We find that individuals fall into three segments: two altruistic segments and a selfish segment. The altruistic segments, which drive up the charity premium, can be classified as warm glow bidders who derive pleasure from the act of giving and other-regarding bidders who give for selfless reasons. Results show that the difference in donation percentages is the major factor influencing the charitable premium. However, bidders differ considerably in their responses to donation percentages. While other-regarding bidders tend to seek auctions where a greater percentage of revenue is donated to charity, warm glow bidders only contribute when the charity premium is sufficiently low. Thus, managers should focus their marketing efforts on appealing to these different segments, depending on the percentage donated to charity.