Quality Tier Research Articles

Corporate social responsibility and bank value: evidence from bank capital

PurposeThis study aims to examine the effect of corporate social responsibility (CSR) on banks’ capital, value and risk by investigating its impact on capital inflows and asset quality. The authors aim to investigate the value-protective characteristics of socially responsible performance.Design/methodology/approachThis study uses a two-stage least squares approach with instrumental variables, with bank and year fixed effects to address concerns regarding endogeneity, specifically reverse causality and unobservable factors.FindingsThe results confirm a positive association of CSR with capital adequacy, including higher quality Tier 1 Capital. The authors find strong evidence that banks with higher CSR scores are associated with greater bank value and lower risk. The extended analyses find that the improvement in capital is from annual growth in capital and lower risky assets.Originality/valueThe research advances the field by providing new empirical evidence of a positive association between CSR and capital, including high-quality Tier 1 Capital. This study complements the prior research by simultaneously examining the dynamic links between CSR and capital, bank risk and bank value. The findings are consistent with the view that there is a dynamic link in which CSR affects the operations of banks.

Price rigidity, wholesale price passthrough, and quality‐tiered private labels

AbstractQuality‐tiered private labels have become a main strategy for grocery retailers. However, impacts of private label development on wholesale prices and their effects on retail price rigidity remain unanswered as appropriate wholesale price data remain scarce. This paper fills this research gap by analyzing retail‐pricing behavior and wholesale passthrough for categories with quality‐tier differentiated private labels. We find the speed of wholesale passthrough to differ across categories, quality tier, and direction of adjustment. Overall, we find wholesale prices to play a secondary role to price promotions in explaining price rigidity across grocery categories with quality‐tiered private labels.

Choice of Response Strategy Adopted by Indian Private Higher Education Institutions Collaborated with Foreign Education Institutions: Applying Porter’s Five Force Model

Market follows the profit and compete for the resources to get competitive advantage that is inevitable. Private higher education institutions in India collaborate with foreign education providers to deliver education services in variety of modes for enlarging the student share in the market. Applying Porter’s Five Force Model it was analysed how the institutions in NCR of India position themselves in the market forces and strategise to get comparative advantage. India with huge size of middle class and vast system of higher education always attract the foreign institutions to collaborate and expand. The restrictive and proscriptive regulation does not allow foreign qualification in India except twinning mode. The finding of the present analysis using porter’s five force model suggest that regulation of the state must be comprehensive and supportive to encash the flow of market innovations that happen to be. Thoughtful regulatory framework may reap the benefit other wise institutions under market forces offer unrecognised foreign degree in informal way under the orbit of formal institution that motivate less quality tier II and III institutions to supply educational services disguising under formal system of higher education.

Is the Art Market More Bourgeois than Bohemian?

The art market is famous – or notorious – for auctions at Sotheby’s and Christie’s at which works by well-known artists are sold for stratospheric prices. Researchers have argued that such prices are volatile and unpredictable based on economic fundamentals, implying that at least some segment of the art market behaves irrationally. In this paper, we examine whether the broader art market, composed mostly of small galleries, is more consistent with standard economic models. In particular, we ask whether the location patterns of art galleries exhibit behavior consistent with agglomeration economies, as would be predicted for retail firms selling highly differentiated and expensive products. Using a newly developed database, we find strong evidence of agglomeration economies among Manhattan art galleries from 1970-2003. Galleries locate in highly concentrated spatial clusters, and these clusters are more likely to occur in neighborhoods with affluent households and older, more expensive housing, consistent with locating near potential consumers. We find no evidence that galleries locate in cheap, “bohemian” neighborhoods. The highest quality tier of the art market, which has been most widely studied, contains a relatively small share of gallery establishments, although these “star” galleries have a longer average lifespan than non-star galleries. Locating near other galleries also increases the longevity of firms and establishments.

Are you hiring Johnny Football or Johnny Doe? Uncertain labour quality and the measurement of monopsony in college football

ABSTRACTI assess monopsony in the college football labour market as it relates to both typical and elite performers, while also accounting for the uncertain performance quality of prospective players who are in this labour market. Existing studies suggest that the marginal revenue product (MRP) of elite collegiate players later drafted into the National Football League (NFL), significantly exceeds their compensation. These comparisons overstate monopsony rents because schools don’t know ex ante which prospects will become these elite performers. Using financial data spanning 2004–2011 from 114 major schools, I estimate the MRP of players sorted into three ex post quality tiers, and find that while eventual NFL draftees generate revenue that significantly exceeds their compensation, a majority of scholarship players do not. Then, using Rivals.com talent ratings of 6,604 prospective players recruited from 2002–2008, I estimate the probability that prospects will reach each ex post quality tier given their ex ante ratings. MRP estimates are adjusted by these conditional probability estimates to reflect the expected MRP of prospects, which allows more appropriate assessment of monopsony rents. I find that schools possess substantially less monopsony power than unadjusted MRP estimates suggest.

Effect of Store Brand Introduction on Channel Price Leadership: An Empirical Investigation

In this study, we conduct an empirical investigation of the impact of store brand introductions on the price leadership relations in a distribution channel between a retailer and national brand manufacturers. We analyze a multi-product category retail database from a major grocery chain, which captures both a period before and a period after the introduction of a store brand in each product category. By applying the time series approach to this data set, we show that store brand introductions frequently lead to price leadership changes, generally in a more favorable direction for the retailer than for the national brand manufacturer, evidenced by either the decay of the manufacturers’ price leadership or the rise of the retailer’s price leadership. However, such a change is not universal but tends to be concentrated among a certain quality tier of national brands, which is not always the low-tier, but sometimes the top-tier despite the low-price low-quality position of the store brand. The patterns detected in the data suggest that these changes are likely to reflect the retailer’s strategic effort to reshape the price leadership environment in a product category aided by the enhanced bargaining power and managerial sophistication that accompanied the store brand introductions.

Pricing Variation Within Dual-Distribution Chains: The Different Implications of Externalities and Signaling for High- and Low-Quality Brands

Within many of the multioutlet branded chains that dominate the retail and services landscape, the organizational form (e.g., company management, franchising) used to manage an outlet varies from site to site, as do the prices charged at those sites. I propose that organizational form and prices may be systematically related as a result of brand externalities. In particular, I develop logic that the relevant form of externality should differ for upper quality tier brands and lower tier brands. Using panel data on price and organizational form from more than 6,700 branded U.S. hotels affiliated with 40 “dual-distribution” brands—those brands that simultaneously company manage and franchise individual outlets—I find that, consistent with the brand externality arguments, company-managed locations have higher prices within high-quality chains, whereas franchisees price higher in the lower tiers. This paper was accepted by Bruno Cassiman, business strategy.

Competitive pricing in the golf industry

In this paper, we estimate the price elasticities of golf course demand, and then examine how pricing relative to competitors further shapes demand (course utilization) and revenue per available tee time round (RevPATR). Using a set of data for an entire destination golf market of 80 golf courses between 2012 and 2014, we examined price elasticity by course quality tier, customer segments (i.e., player types), month of the year, and day of the week. The sample used to calculate elasticities consisted of 140,567 daily rounds of golf. The average daily rates were aggregated from transaction data based on over 2 million rounds of golf booked annually in the market for the 3-year period. We find that during the entire sampling period the demand for golf was primarily price inelastic, suggesting that a drop in price will not have a significant positive impact on demand and revenue will decrease. Our examination of relative price position using a sub-sample from 2013 revealed that courses that priced above their competition not only reaped higher RevPATR, but also experienced higher daily course utilization. These finds suggest that given price inelasticity in the golf market studied, higher priced golf courses are able to extract both a revenue and a course utilization premium. Nevertheless, the full opportunity for maximizing revenue in the market using revenue management techniques has yet to be exploited.

An Empirical Analysis of Self-Enforcement Mechanisms: Evidence from Hotel Franchising

The relational contracts literature suggests that a principal can improve contract self-enforceability by specifying initial requirements that increase the agent’s ex post rents. Initial requirements specified in hotel franchise agreements—size and quality tier of the hotel—offer a unique empirical setting to test this. Using proprietary data on 5,547 new franchised hotels and their revenues, we find that hotels far away from their franchisor’s headquarters are larger, more likely to belong to a high quality tier, and generate higher revenues ex post. This supports the idea that the agent’s ex post rents can serve as a substitute to the principal’s monitoring intensity in the mitigation of agency problems. Our findings shed light on how formal contract terms can influence informal (relational) contracts between business partners. This paper was accepted by Bruno Cassiman, business strategy.

Paying for Performance When Health Care Production is Multi-Dimensional: The Impact of Rwanda's National Program on Rewarded Services, Multitasking and Health Outcomes

Performance-based contracting is particularly challenging in health care, where multiple agents, information asymmetries and other market failures compound the critical contracting concern of multitasking. As performance-based contracting grows in developing countries, it is critical to better understand not only intended program impacts on rewarded outcomes, but also unintended program impacts such as multitasking and heterogeneous program effects in order to guide program design and scale-up. We use two waves of data from the Rwanda Demographic and Health Surveys collected before and after the quasi-experimental roll- out of Rwanda’s national pay-for-performance (P4P) program to analyze impacts on utilization of healthcare services, health outcomes and unintended consequences of P4P. We find that P4P improved some rewarded services, as well as some services that were not directly rewarded, but had no statistically significant impact on health outcomes. We do not find evidence that clearly suggests multitasking. We find that program effects vary by baseline levels of facility quality, with most improvements seen in the medium quality tier.

Multi-Product Duopoly with Cross-Product Cost Interdependencies

Many multi-product firms incur a complexity fixed cost when offering different product lines in different quality tiers relative to the case when offering all products lines in the same quality tier (high or low). Such fixed costs create an interdependency between firms’ choices of quality tiers across different product lines, even when demands are independent. We investigate the effects of this interdependency on equilibrium profits in a Stackelberg duopoly game. Both firms’ profits are (weakly) higher when the complexity cost is infinite than when it is 0. The Stackelberg leader’s profits are always (weakly) higher with a positive complexity fixed cost, but its profits can be non-monotonic in the magnitude of this cost. The Stackelberg follower’s profits can be lower when the complexity fixed cost is positive than when it is equal to 0.

Social responsibility and its differential effects on the retailers’ portfolio of private label brands

Purpose – The purpose of this paper is to explore how social responsibility initiatives can be integrated into different tiers of retailers’ private label brands (PLB) and introduces a conceptual model and opposing predictions building on research in social responsibility and evolutionary psychology. The empirical evidence from two studies suggests that retailers should consider the type of PLB (i.e. quality tier) in the introduction of social responsibility initiatives. Design/methodology/approach – To investigate opposing predictions, the authors conducted two experiments with presence of social responsibility initiative and PLB quality tier as the factors. The authors present the results from 168 Canadian consumers focussing on two product categories. Findings – The findings of two experiments are more consistent with an explanation based on resource synergy beliefs rather than costly signaling theory. Social responsibility initiatives enhanced consumer evaluations of high-quality PLBs, but hurt consum...

Counterfeiters: Foes or Friends? How Counterfeits Affect Sales by Product Quality Tier

A key concern about counterfeits and weak intellectual property protection is that they may hamper innovation by displacing legitimate sales. This paper combines a natural policy experiment with randomized lab experiments to estimate the heterogeneous impacts of counterfeiting on the sales and consumer purchase intent related to branded products of various quality levels. I collect new product-line-level panel data (1993–2004) on Chinese shoe companies. I identify heterogeneous effects of counterfeit entry on sales of authentic products of three quality tiers, finding that counterfeits have both advertising effects for a brand and substitution effects for authentic products, additionally the effects linger for some years. The advertising effect dominates the substitution effect for high-end authentic product sales, and the substitution effect outweighs the advertising effect for low-end product sales. The positive effect of counterfeits is most pronounced for high-fashion products (such as women's high-leg boots and dress shoes), shoes tailored to young customers, and high-end products of brands not yet well-known at the time of counterfeiter entry.This paper was accepted by David Hsu, entrepreneurship and innovation.

Kindergarten Reading Skill Level and Change as Risk Factors for Chronic Problem Behavior

In this study, the authors explored the effect of prereading skills at the start of kindergarten and change in skills during kindergarten on response to Tier I (universal) Schoolwide Positive Behavior Support in Grade 5. A longitudinal data set of 473 students, including Dynamic Indicators of Basic Early Literacy Skills measures at the start, middle, and end of kindergarten and office discipline referrals in Grade 5, was used to determine whether reading skills at school entry or change in reading skills over the course of kindergarten were more predictive of chronic problem behavior in Grade 5. Results of logistic regression analyses indicated that low initial phonological awareness predicted problem behavior, but including skill growth in the model resulted in significantly improved and more accurate prediction. Results are discussed in terms of early screening and intervention and reducing risk for problem behavior through quality Tier I reading instruction in kindergarten.

Research Note—Interbrand Variant Overlap: Impact on Brand Preference and Portfolio Profit

Firms often carry a portfolio of multiple brands within a product category to target different quality tiers in the market. Furthermore, to satisfy heterogeneous consumer preferences within each quality tier, these firms also offer several variants for each brand. A natural outcome of this practice is interbrand variant overlap that could occur across tiers or within a tier. In this paper, we show that across-tier variant overlap is likely to diminish the preference of an upper-tier brand and enhance the preference of a lower-tier brand. We also find that variant overlap within a tier is likely to increase preferences of a brand belonging to the tier. Such variant overlap effects have important brand portfolio management implications for a multibrand firm. Specifically, we demonstrate that such a firm can enhance its portfolio profit under certain conditions by pruning its variants to reduce variant overlap. Because our paper relies on aggregate data, future research should investigate variant overlap at the individual level using panel or experimental data.

Designing Quality Tier One Learning Environments for Emergent and Early Readers

Abstract In this article, the authors discuss high priority instructional targets that should be addressed in early childhood classrooms to support emergent and early literacy development. Additionally, this article discusses the collaborative role speech-language pathologists can play in providing early literacy support at varied stages of the RTI process.

An Aggregate Generalized Nested Logit Model of Consumer Choices: An Application to the Lodging Industry

In this paper, using aggregate data, we demonstrate the ability of the generalized nested logit (Wen and Koppelman, 2000; GNL henceforth) to better capture consumer choice under conditions where consumer tradeoffs among choice items is not ex-ante obvious to the researcher, and data on attributes of consumer choice are incomplete. We extend existing GNL models by using more readily available aggregate data (rather than individual data) while accounting for consumer heterogeneity and endogeneity of firm-choice variables. The empirical application is to the lodging (hotel) industry. The industry classifies properties on the basis of price tiers; it also recognizes that consumers appear to have two idea points (of downtown and airport) for location. However, it appears possible that a consumer might see a property in the same location but a different price tier as a closer substitute than a property of the same price tier at a different location. Hence for this industry, an ex-ante nesting structure based on price tiers or location alone might not capture the complexities of consumer choices. We find that GNL provides a better fit to these data than aggregate logit or aggregate probit. Our results provide managerially useful insights into who might comprise competition for any hotel, i.e. is it a nearby property of the same/different quality tier or is it a distant property of the same/different quality tier. We also briefly discuss the implications of consumer choices for firm profitability by estimating a supply-side model.

Sales Promotions and the Choice Context as Competing Influences on Consumer Decision Making

Although brand switching is one of the most researched topics in marketing, we still know very little about the moderators of switching between brands in different price‐quality tiers (e.g., from Häagen–Dazs ice cream to Breyers or to a store brand). Building on the notion that buyers have a (category‐specific) consideration set of price–quality tiers, we propose that sales promotions and the choice set composition (or the choice context) have compensatory effects on brand switching between price–quality tiers. Specifically, if one of these factors causes buyers to switch to a higher price–quality tier within their brand‐tier consideration set, then the other factor is less likely to induce switching in the same direction (to an even higher tier) and more likely to induce switching in the opposite direction. This general proposition leads to several specific hypotheses, including (a) the likelihood of switching between particular brand tiers due to price promotions can be predicted based on the choice set composition; (b) asymmetric switching, whereby consumers are more likely to switch up from a low‐tier to a promoted high‐tier brand than from a high‐tier to a promoted low‐tier brand, is reduced or eliminated if consumers consider three price–quality tiers; and (c) the compromise effect is reduced when the lowest tier brand offers a price promotion. These hypotheses were supported in a series of studies, which also examined rival explanations. The theoretical and practical implications of the findings are discussed.

Quality Tier Competition: How Price Change Influences Brand Choice and Category Choice

The authors demonstrate that competition among brands in different quality tiers can be asymmetric both in brand choice (“what”) and in category choice (“whether”). They also investigate how competition among quality tiers is affected by the direction of price changes (increase or decrease). Empirical findings from four scanner panel data sets consistently show that with price reduction, high-quality brands gain more than do low-quality brands both in “what” and “whether” decisions. Furthermore, high-quality brands are less vulnerable to losses when prices are increased. The authors conclude with implications for understanding quality tier competition and developing price promotional strategies.

Quality Tier Competition: How Price Change Influences Brand Choice and Category Choice

The authors demonstrate that competition among brands in different quality tiers can be asymmetric both in brand choice (“what”) and in category choice (“whether”). They also investigate how compet...