Status Demotion Research Articles

Status, cognitive overload, and incomplete information in advice-seeking networks: An agent-based model

Advice-seeking typically occurs across organizational boundaries through informal connections. By using Stochastic Actor-Oriented Models (SAOM), previous research has tried to identify the micro-level mechanisms behind these informal connections. Unfortunately, these models assume perfect network information, require agents to perform too cognitively demanding decisions, and do not account for threshold-based critical events, such as simultaneous tie changes. In the context of knowledge-intensive organizations, the shortage of high-skilled professionals could determine complex network effects given that many less-skilled professionals would seek advice from a few easily overloaded, selective high-skilled, who are also sensitive to status demotion. To capture these context-specific organizational features, we have elaborated on SAOM with an agent-based model that assumes local information, status-based tie selection, and simultaneous re-direction of multiple ties. By fitting our simulated networks to Lazega’s advice network used in previous research, we reproduced the same set of macro-level network metrics with a parsimonious model based on more empirically plausible assumptions than previous research. Our findings show the advantage of exploring multiple generative paths of network formation with different models.

Does status demotion in hierarchical loyalty programs foster relationship fading?

PurposeStatus demotion in hierarchical loyalty programs (HLPs) has received considerable academic attention. However, existing research is relatively silent on whether HLP status demotion fosters service relationship fading by influencing demoted customers’ psychological disengagement and the likelihood of patronage reduction. Drawing on the relationship fading literature and the stimulus–organism–response framework, this study aims to examine these effects. It further investigates the moderating role of psychological ownership on the links of status demotion with psychological disengagement and the likelihood of patronage reduction.Design/methodology/approachTwo studies (Studies 1 and 2) were conducted in the context of airline HLPs. Study 1 was a structured survey conducted among 213 demoted airline HLP customers in Australia, and Study 2 was an experiment conducted among 178 executive MBA students in Bangladesh. The PROCESS macro was used to test the moderated mediation model.FindingsThe results of both studies show that HLP status demotion significantly influences customers’ psychological disengagement and the likelihood of patronage reduction. The findings also reveal that psychological disengagement mediates the relationship between status demotion and the likelihood of patronage reduction. Further, customers with high (low) psychological ownership feel high (less) psychological disengagement and show high (less) likelihood of patronage reduction due to their HLP status demotion.Originality/valueThis study extends the existing literature on relationship marketing and HLPs by offering a better understanding of how and under what conditions status demotion elicits customers’ psychological disengagement and the likelihood of patronage reduction.

Legal Consequences of Violating the Endogamy Marriage System in Indonesia: A Study of Legislation

This study aims to examine and analyze how sanctions are applied for violating the endogamous marriage system and linked in the context of the positive law system in Indonesia. This study uses normative legal research with conceptual, historical, and comparative approaches. The collected legal material is then qualitatively analyzed to describe the problem and answer study purposes. The results show sanctions and consequences for individuals violating the endogamous marriage system. Sanctions can range from social ostracism, status demotion to fines and withdrawal of access to resources. In religious endogamy, violations are considered sins, and marriages can be declared invalid under Law Number 1 of 1974. Violations of racial or ethnic and caste endogamy do not have formal legal consequences but can impact an individual’s social status. Therefore, it is recommended that authorities and community leaders continue educating individuals about the implications of these endogamous marriage systems. The need for open dialogues about the pros and cons of these systems is also essential. Furthermore, the Indonesian legal system should protect all individuals’ rights and uphold principles of equality and non-discrimination while respecting cultural and religious nuances.

Exploring the effects of status demotion in hierarchical loyalty programs

ABSTRACT Service industries practice hierarchical loyalty programs (HLP) to enhance the relationship with customers. However, little is known about the negative effects of HLP status demotion and under what condition such effects vary among the demoted customers. This study thus aims to examine the effects of HLP status demotion on customers’ satisfaction, word-of-mouth, and share-of-wallet. This study further explores the moderating role of the cause of demotion (spending-based vs. policy-based) of such effects. Two studies were conducted in the context of hotel and airlines industries in Bangladesh. PROCESS Macro was used to test the moderated mediation model, and the results of both studies show that status demotion significantly influences customers’ satisfaction, word-of-mouth, and share-of-wallet. Further, customers who perceive firms’ policy changes as the cause of their status demotion show lower level of satisfaction, word-of-mouth, and share-of-wallet.

Status demotion in hierarchical loyalty programs and customers’ revenge and avoidance intentions

PurposeStatus demotion in hierarchical loyalty programs (HLPs) has received considerable academic attention. However, little is known about whether status demotion engenders two widely recognised behavioural intentions: revenge and avoidance. This study aims to make up this gap by examining the effects of status demotion on customers’ revenge and avoidance intentions. The underlying mechanism and boundary conditions of these effects are also explored.Design/methodology/approachTwo studies were conducted to test the hypotheses. Study 1 was conducted using a structured survey from 347 active HLP members/customers of Chinese airlines. Study 2 used an online experiment amongst 268 active HLP airline customers in Australia. Partial least squares-based structural equation modelling and Hayes’ (2013) PROCESS macro were used for data analysis.FindingsThe results of Study 1 show that status demotion increases customers’ revenge and avoidance intentions simultaneously. Meanwhile, these effects are more significant for demoted customers with an external locus of causality than those with an internal locus of causality and demoted customers with higher entitlement tend to possess more revenge intentions than avoidance intentions. Study 2 further identified perceived inequity as a mechanism, which links status demotion to revenge and avoidance intentions of demoted customers.Research limitations/implicationsThis study examines demoted customers’ revenge and avoidance intentions amongst Chinese and Australian airline travellers. Future research may focus on actual behaviour and test the current study’s model in cross-cultural and cross-industry settings.Practical implicationsManagers should deal with demotion decisions carefully as the failure to manage outraged customers may weaken customer-company relationships.Originality/valueThis study extends the existing literature on relationship marketing and HLPs by offering a better understanding of how and under what conditions status demotion elicits customers’ intentions for revenge and avoidance.

Sticky educational expectations: A cross-country comparison

This work studies the cross-country variability in the interaction effect between academic achievement and social origin on the configuration of the expectation of enrolment in the academic track of upper secondary education. Drawing on the Relative Risk Aversion Theory and the Compensatory Advantage model, we anticipate that academic achievement and social origin interact so that high-SES students’ expectations are irresponsive to low academic achievement. We call this phenomenon “stickiness in expectations”. However, we expect to observe sticky educational expectations of high-SES students particularly in those countries where the transition into the academic track of upper secondary education is consequential for their social status maintenance. To test this hypothesis, we use 2018 PISA data for 11 OECD countries and carry out a two-stage regression analysis. We estimate stickiness in expectations for each country using a counterfactual decomposition method. We then regress the country-specific estimate of stickiness in educational expectations on macro-level indicators of the risk of downward mobility associated with non-enrolment in the academic track and the economic capacity to compensate for low achievement in each country. We find sticky educational expectations in 6 of the 11 countries studied and show that stickiness is larger in those countries where not enrolling the academic track in Upper Secondary Education entails a larger risk of social status demotion for high-SES students.

Use it or lose it: point expiration and status demotion

PurposeIn managing hierarchical loyalty programs (HLP), firms often use a reward point expiration and status demotion policy to reduce financial liability and to encourage repeat purchases. This study aims to examine how point expiration and status demotion policies affect customer patronage, the role of extension strategies in mitigating the negative effects of these policies on customers and the moderating role of status endowment in the effect of point expiration on customers patronage following status demotion experience.Design/methodology/approachThree experiments were conducted using the hotel industry as the context. The hypothesized relationships were tested using ANOVA and a serial moderated mediation analysis using SPSS PROCESS Macro.FindingsCustomers subjected to reward point expiration exhibited a higher level of anger and perceived severity of the problem than those subjected to status demotion in HLP. Consequently, when customers experienced both point expiration and status demotion, the point extension strategy rather than the status extension strategy was found to be a more effective remedy for reducing perceived unfairness, although there was no change in the level of patronage reduction between the two extension strategies. Importantly, the effect of point expiration on patronage reduction was stronger among endowed-status customers than earned-status customers, serially driven by heightened feelings of embarrassment and perceived unfairness.Originality/valueThe study adds to the existing literature on HLP by comparing the effects of point expiration and status demotion on customer patronage with practical insights for HLP managers.

The pauper wears prada? How debt stress promotes luxury consumption

Being in debt prevails in the modern society, but little is known about the behavioral consequences of being under debt stress. Based on compensatory consumption theory, this paper examined how debt stress affects people's consumption behavior. Through a survey and three lab experiments, we found that: (1) debt stress increases consumers' luxury consumption intentions; (2) perceived status demotion mediates this relationship, such that debt stress leads to perceived status demotion, which in turn enhances consumers' luxury consumption intentions; (3) lay rationalism moderates this relationship, such that the positive relationship between debt stress and luxury consumption is stronger among less rational consumers. We concluded by discussing the theoretical and managerial implications of our findings.

Status demotion in hierarchical loyalty programs and its effects on switching: Identifying mediators and moderators in the Chinese context

Hierarchical loyalty programs (HLPs) are widespread across many service industries; however, research on the effects of status demotion in an Eastern cultural context is relatively scant. Based on the psycho-evolutionary theory of emotions, the theory of embarrassment and the literature on losing face, this study explores the effect of status demotion on customers' intentions to switch service providers in the Chinese context. By doing so, the study examines how feelings of frustration and social discomfort mediate the relationship between status demotion and the switching intentions of Chinese airline HLP members. It further examines how relationship age and gender moderate the link between status demotion and feelings of frustration and social discomfort. Three hundred and forty-seven active members of airline HLPs in China participated in a structured survey. The data collected were then analyzed using partial least squares-based structural equation modeling. The results show that status demotion causes members to experience feelings of frustration and social discomfort, which further lead them to switch service providers. These effects of status demotion on frustration and social discomfort are found to be higher (lower) among the members with longer (shorter) relationship age and male (female) members. The findings of the study have significant theoretical and managerial implications.

Spillover Effects of Status Demotion on Customer Reactions to Loyalty Reward Promotions: The Role of Need for Status and Exclusivity

Prior research demonstrates that status demotion in the loyalty reward program heightens negative emotions, particularly when demotion is due to changes in company policies. In this research, we argue that such negative emotions are likely to spillover to evaluations of post-demotion promotions. We further argue that such spillover effects should be attenuated among individuals high in need for status. Study 1 examines the joint effect of the cause of demotion and customers’ need for status on loyalty. In study 2, we investigate the impact of exclusivity cues in post-demotion promotions and show that exclusive promotions diminish the negative impact of policy-based demotions on post-promotion loyalty among individuals high (vs. low) in need for status. Travel and tourism companies might want to consider using geographical location as a proxy for need for status or priming status-seeking via exclusive promotions (“elevate your travel experience”) to alleviate demoted customers’ negative emotions.

Status demotion in loyalty programmes: the role of perceived unfairness

ABSTRACTHierarchical loyalty programmes are widely adopted by service companies to enhance their relationships with customers. However, its negative effect, especially when customers are demoted, is relatively less researched. Building on equity theory, this study explores the effect of status demotion on customers’ loyalty intentions through the mediation of perceived unfairness. The moderating roles of status level and purpose of travel are also examined on the relationship between status demotion and perceived unfairness. Evidence from 220 airline customers in China shows that status demotion significantly influences customers’ perceived unfairness, which eventually decreases their loyalty intentions. The detrimental effect of status demotion on perceived unfairness is found to be higher for members who are demoted from top tier to low tier than those demoted from other tiers (top to middle and middle to low) and for members who travel for business purposes than for leisure purposes.

Investigating status demotion in hierarchical loyalty programs

PurposeThe purpose of this paper is to extend research on customer loyalty status and customer demotion by investigating if the effect of demotion on customer attitudinal and behavioral responses is the same for top-tier and low-tier customers in the context of airlines.Design/methodology/approachA survey was conducted with travelers intercepted at large airport terminals in Australia. Multivariate analyses examined group differences across status change (no change vs demoted) and status level (high status vs low status). Multi-group moderation structural equation modeling (SEM) analysis tested the moderating role of status (high status vs low status) on the effects of demotion on the relationship between customers’ attitudes and loyalty intention, and between loyalty intention and share of wallet.FindingsThis study shows that the detrimental effects of demotion on the relationship between customer satisfaction/commitment/perceived betrayal on loyalty intentions, and on the relationship between loyalty intentions and share of wallet are stronger for “high status” than “low status” customers.Research limitations/implicationsA cross-sectional design was employed to investigate customer demotion in the airline industry. Future studies could investigate different types of demotions in other industries by employing a longitudinal design.Practical implicationsThe study provides new insight about the effects of status demotion and highlights that service firms could be jeopardizing the loyalty of numerous valuable customers, especially among the “high status” customer group.Originality/valueThis study reveals loyalty status moderates the effect of demotion on customer attitudinal responses and loyalty behaviors. It draws on social identity, social comparison, emotion and equity theories to explain the different effects of demotion on customers from different status level groups.

Status demotion in hierarchical loyalty programs: effects of payment source

ABSTRACTHierarchical loyalty programs are being operated currently by many firms to improve customer relationships. While past work has demonstrated the negative effects of status demotion in such programs, research on how these effects may vary across different customer group based on payment source is almost nonexistent. This paper examines the moderating role of payment source (‘own money’ versus ‘others money’) on the effects of status demotion on customer attitudes and behavior in hierarchical loyalty programs. Analysis of data collected from members of airline loyalty programs show that the negative effects of status demotion on customer attitudes, loyalty intentions, and share-of-wallet are stronger for demoted ‘own money’ customers than for demoted ‘others money’ customers. The study provides a deeper insight about the effects of status demotion and points out that firms could possibly be endangering the loyalty of many potentially valuable customers, in particular among the ‘own money’ customer group.

Don’t take away my status! – Evidence from the restructuring of a virtual reward system

In a natural experiment on a popular German Question & Answer community we investigate how user status demotion affects user activity levels in online communities. The virtual reward system on this platform is designed to activate the status seeking behavior of its members. The members’ status within the community is represented by the member’s rank. In the experiment the platform operator restructured the virtual reward system, in the process reducing or abolishing the incentives for selected activities on the platform. After restructuring nearly all users saw their status demoted, with almost three quarters having lost one rank, and more than a quarter having lost two or more ranks. We identify the impact of status demotion by comparing how the members in these two groups respond to the restructuring. We find that users who lost two or more ranks reduce their post-event activities for which the incentives were reduced or abolished by 18% more than those who lost only one rank, and by 9% more than the latter for activities which were unaffected by the event.

SOCIAL SELECTIVITY OF TRACK MOBILITY IN SECONDARY SCHOOLS

ABSTRACT Previous research has shown that track mobility during secondary education is influenced by parental background. However, family background effects might vary due to institutional variations in the educational structure. Therefore, in our paper we compare social selectivity of track mobility in two countries, Germany and The Netherlands. Both countries offer a hierarchically tracked educational system, but differ in details. Further, both countries established educational reforms in the late sixties, changing the conditions for track mobility differently. In our empirical analyses using data from the Family Survey Dutch Population and the German Life History Study we find that changing to a higher track is more likely for students who face the threat of status demotion, whereas changing to a lower track is independent of status maintenance motives. Intra-secondary transitions occur less often in The Netherlands than in Germany and are less motivated by status maintenance. Educational legislation reduces the effects of relative education of the parents only on upward mobility in Germany and only on downward mobility in The Netherlands.

Does Customer Demotion Jeopardize Loyalty?

Hierarchical loyalty programs award elevated customer status (e.g., “elite membership”) to consumers who meet a predefined spending level. However, if a customer subsequently falls short of the required spending level, firms commonly revoke that status. The authors investigate the impact of such customer demotion on loyalty intentions toward the firm. Building on prospect theory and emotions theory, the authors hypothesize that changes in customer status have an asymmetric negative effect, such that the negative impact of customer demotion is stronger than the positive impact of status increases. An experimental scenario study provides evidence that loyalty intentions are indeed lower for demoted customers than for those who have never been awarded a preferred status, meaning that hierarchical loyalty programs can drive otherwise loyal customers away from a firm. A field study using proprietary sales data from a different industry context demonstrates the robustness of the negative impact of customer demotion. The authors test the extent to which design variables of hierarchical loyalty programs may attenuate the negative consequences of status demotions with a second experimental scenario study and present an analytical model that links status demotion to customer equity to aid managerial decision making.

Does Customer Demotion Jeopardize Loyalty?

Hierarchical loyalty programs award elevated customer status (e.g., “elite membership”) to consumers who meet a predefined spending level. However, if a customer subsequently falls short of the required spending level, firms commonly revoke that status. The authors investigate the impact of such customer demotion on loyalty intentions toward the firm. Building on prospect theory and emotions theory, the authors hypothesize that changes in customer status have an asymmetric negative effect, such that the negative impact of customer demotion is stronger than the positive impact of status increases. An experimental scenario study provides evidence that loyalty intentions are indeed lower for demoted customers than for those who have never been awarded a preferred status, meaning that hierarchical loyalty programs can drive otherwise loyal customers away from a firm. A field study using proprietary sales data from a different industry context demonstrates the robustness of the negative impact of customer demotion. The authors test the extent to which design variables of hierarchical loyalty programs may attenuate the negative consequences of status demotions with a second experimental scenario study and present an analytical model that links status demotion to customer equity to aid managerial decision making.