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Selected recent publications in the top management and economics journals

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.

Reviewing Before Reading? An Empirical Investigation of Book-Consumption Patterns and Their Effects on Reviews and Sales

( Lee, Heeseung Andrew | Choi, Angela Aerry | Sun, Tianshu | Oh, Wonseok )



Over the past decades, research on online book reviews has inundated academic circles with numerous theoretical reflections and empirical manifestations aimed at explaining the effects of such resources on business performance. Yet, these studies succumbed to the conventional pitfall of assuming that consumers write reviews only after they fully read the book that they purchased. A recent industry report revealed that although many individuals initiate book reading, only a few finish them. With these considerations in mind, we investigated how consumers' book-consumption patterns affect their review behaviors and how reviews generated from incomplete consumption influence subsequent sales. We used expectation confirmation theory (ECT) as a theoretical foundation to elaborate on the review behaviors of consumers at various stages of their e-book consumption. On the basis of ECT, we argue that customers can submit reviews not necessarily after full consumption, but at any point during this trajectory, and even when consumption has yet to take place. Consumption patterns were traced and captured from records of reading activities on e-book devices and apps. Our results indicate that a considerable number of consumers provide positive reviews even before initiating reading or after progressing up to an extremely early section of a book. In addition, the relationship between review valence and completion rate can be characterized as a U-shaped pattern, given that reviews arising from negative disconfirmations occur more frequently than those emerging out of positive disconfirmations. The findings also uncover that customers occupying the extreme ends of the completion continuum provide less extreme review ratings. The effect of completion rate on review length is significantly positive. Our text-analysis results suggest that reviews based on sufficient consumption contain more useful insights than do those grounded in incomplete consumption. Moreover, review comments formed after incomplete consumption adversely affect subsequent sales. Finally, we discuss a number of our findings' implications and provide actionable recommendations that can aid platforms in their efforts to refine their online-review systems and policies in pursuit of enhanced credibility in peer evaluation.

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.

Gradual bargaining in decentralized asset markets

( Rocheteau, Guillaume | Hu, Tai-Wei | Lebeau, Lucie | In, Younghwan )



We introduce a new approach to bargaining, with strategic and axiomatic foundations, into models of decentralized asset markets. According to this approach, which encompasses the Nash (1950) solution as a special case, bilateral negotiations follow an agenda that partitions assets into bundles to be sold sequentially. We construct two alternating-offer games consistent with this approach and characterize their subgame perfect equilibria. We show the revenue of the asset owner is maximized when assets are sold one infinitesimal unit at a time. In a general equilibrium model with endogenous asset holdings, gradual bargaining reduces asset misallocation and prevents market breakdowns. ⓒ 2020 Elsevier Inc.

Targeted Advertising and Consumer Inference

( Shin, Jiwoong | YU, Jungju )



The mere fact that consumers are targeted by advertisements can affect their inference about the expected utility of a product. We build a micro-model where multiple firms compete through targeted advertising. Consumers make inferences from targeted advertising about their potential match values for the product category, as well as the advertising firm's unobserved quality. We show that in equilibrium, upon being targeted by a firm, consumers make optimistic inferences about the product category and the firm's quality. With such improved beliefs, a targeted consumer is more likely to engage in a costly search throughout the category. We find that the increase in consumer search creates an advertising spillover beyond the level of the mere awareness effects of advertising and that firms' equilibrium level of targeted advertising can be non-monotonic in targeting accuracy. Additionally, we show that sometimes, it can be optimal for firms to relinquish customer data and instead engage in non-targeted advertising. The results provide insights into the trade-offs between advertising reach and targeting accuracy.

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

Faculty & Research