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Selected recent publications in the top management and economics journals

Mapping Consumers Context Dependent Consumption Preferences A Multidimensional Unfolding Approach

( Park, Junghyun | Kim, Minki | Chintagunta, Pradeep K. )



How, and to what extent, consumer choices are influenced by the context in which the product is consumed remain important marketing questions. In this article, the authors develop a parsimonious context-dependent multidimensional unfolding model that can accommodate consumers’ context-specific behaviors via ideal points in multiattribute space along with brand locations in that space while accounting for unobserved heterogeneity in consumer behavior. The authors provide an empirical illustration using panel data on beer brand choices in different contexts from U.S. beer consumers. They find more heterogeneity in behavior across social versus nonsocial contexts than across in-home and out-of-home consumption. The authors then show how the model can be used to derive a firm’s optimal direction of brand repositioning given its competitive landscape in the various consumption contexts. Since consumer preferences can be correlated across contexts, they show that a movement toward the ideal point in one context does not necessarily improve the firm’s market competitiveness in other contexts; thereby hurting the brand’s overall performance.

Dynamic Pricing with Point Redemption

( Chung, Hakjin | Hyun-Soo Ahn | So Yeon Chun )



Problem definition: Reward points function as a new currency that consumers can spend on products and services. We study how point redemption affects the seller’s day-to-day pricing and inventory decisions. Academic/practical relevance: Despite widespread use of point redemption, little has been done on its implication on the seller’s operational decisions. This paper extends the revenue management literature to incorporate the impact of point redemption and provides managerial insights on how the seller can factor point redemption into decisions about price and inventory. Methodology: We develop a choice model in which a consumer chooses to pay with cash or points based on the attributes of reservation price, point balance, and the perceived value of a point. We incorporate this choice model into a dynamic model where a seller adjusts the price along with redemption availability and the required point amount. Results: We show that the effect of point redemption on the seller’s price is nontrivial, as the optimal price tilts upward or downward to the reimbursement rate (the compensatory revenue for a reward sale) depending on the inventory level, time, and the reimbursement rate. Furthermore, such price adjustments can attenuate the optimal markup/markdown level, reducing the price fluctuation derived by a dynamic pricing policy in the absence of reward sales. We find that operationalizing reward sales with some discretionary policies (e.g., control over the reward availability or point requirement) can considerably increase the seller’s revenue. Managerial implications: Our results guide how sellers manage prices and inventory dynamically when consumers can redeem points for purchases. Specifically, we show that a seller can benefit from allowing reward sales even when the reimbursement rate is substantially lower than the cash price. Although the seller benefits from having full control over the required point balance, the greatest benefit can be realized via the control of reward availability.

Shared fate and entrepreneurial collective action in the U.S. wood pellet market

( Hiatt, Shon | Park, Sangchan )



Although studies underscore the importance of creating a coherent collective identity in order to legitimate a new market category, strategy and entrepreneurship research is divided on whether and to what degree an entrepreneur will engage in collective action to promote the identity. To reconcile the inconsistency, we introduce the concept of entrepreneurial shared fate—the belief of a focal venture that it and its competitors are bound together by a sense of belongingness and equally experience similar consequences—and explore how external threats can influence the degree of shared fate. We conceptually distinguish between communal and individual threats and propose that communal threats will increase, whereas individual threats will decrease, shared fate. We also explore boundary conditions that strengthen and weaken the main effects of perceived communal and individual threats on collective identity promotion. Empirically, we examine venture identity framing in response to forest-conservation activism in the U.S. wood pellet market. Implications for research on new market categories, collective identity, optimal distinctiveness, and forest management are discussed.

Dynamic resource redeployment in global semiconductor firms

( Chang, Sea-Jin | Matsumoto, Yoichi )



This study explores how firms decide in which businesses to further invest and from which businesses to withdraw resources by examining the detailed product portfolios of firms in the global semiconductor industry. Results show that resource redeployment within incumbent businesses is more prevalent than via new entry or complete exit, since the former is more flexible and easily reversible than the latter. This study further finds that, while underutilized resources may drive resource redeployment, resource shortage by a newly entered or expanding incumbent business may also siphon resources away from other incumbent businesses, leading to their exit or temporary retrenchment. Fabless firms with resource that are more fungible, scalable, and decomposable vis-a-vis integrated device manufacturers show a more flexible and gradual pattern of resource redeployment. Managerial summary In fast-moving environments, firms should quickly redeploy resources to more promising business areas. We find fabless firms with more fungible, scale free, and decomposable resources engage in more active resource redeployment than integrated device manufacturers with specialized fabs and equipment, like Intel or Samsung. Redeployment among the latter requires a well-planned, synchronized approach so as to avoid idle resources. As such, in order to take advantage of dynamic resource redeployment, managers should begin by assessing the characteristics of firm resources along these dimensions. Managers may also consider business model transformation to separate their activities by specializing in areas in which they can best utilize their resources and capabilities, like fabless firms and foundries in the semiconductor industry.

Frontiers: Virus Shook the Streaming Star: Estimating the COVID-19 Impact on Music Consumption

( Sim, Jaeung | Cho, Daegon | Hwang, Youngdeok | Telang, Rahul )



Many have speculated that the recent outbreak of COVID-19 has led to a surge in the use of online streaming services. However, this assumption has not been closely examined for music streaming services, the consumption patterns of which can be different from video streaming services. To provide insights into this question, we analyze Spotify’s streaming data for weekly top 200 songs for two years in 60 countries between June 2018 and May 2020, along with varying lockdown policies and detailed daily mobility information from Google. Empirical evidence shows that the COVID-19 outbreak significantly reduced music streaming consumption in many countries. We also find that countries with larger mobility decreases saw more notable downturns in streaming during the pandemic. Further, we reveal that the mobility effect was attributable to the complementarity of music consumption to other activities and likely to be transient rather than irreversible. Alternative mechanisms, such as unobservable Spotify-specific factors, a demand shift from top-selling songs to niche music, and supply-side effects, did not explain the decline in music consumption.

Contact : Joo, Sunhee ( shjoo2006@kaist.ac.kr )

Faculty & Research