Nita Umashankar

Developing Customer Service Innovations for Service Employees: The Effects of NSD Characteristics on Internal Innovation Magnitude

During product recovery, firms rely on their customer service agents to recover customers’ product failures and deliver superior customer service. However, customers who contact the firm about a product failure often are dissatisfied, which makes customer service agents’ jobs challenging. Therefore, firms continuously try to improve their internal customer service operations to increase benefits for customer service agents and, by extension, their customers. The authors hypothesize that the way firms design (agent codesign and design acceleration) and implement (agent enablement) an internal customer service innovation has direct and joint effects on the magnitude of benefits of the innovation to customer service agents, termed internal innovation magnitude. The authors test the conceptual model using data on 38 internal customer service innovations at a Fortune 500 high-technology firm. The findings extend the internal marketing literature by demonstrating that service employees represent a critical source of user-generated feedback. The findings also contribute to marketing practice by suggesting that accelerating the design process not only saves costs but also increases benefits for the internal users of the innovation.

Choosing the right target: Relative preferences for resource similarity and complementarity in acquisition choice

Research summary: Corporate acquisition is a popular strategic option for firms seeking new resources. However, little research exists on the question of why one firm is chosen over another. We develop a model relating characteristics of similarity and complementarity between acquirers’ and target firms’ key resources, including their products and R&D pipelines, to the likelihood of the acquirers choosing a particular firm. We construct measures of similarity and complementarity between and across products and R&D pipelines, and test their effects using a novel application of the choice model. Findings reveal that acquirers view similarity and complementarity differently, based on the resource they are comparing. When making comparisons to their own R&D pipelines, acquirers prefer similarity over complementarity whereas when making comparisons to their product portfolios, they prefer complementarity over similarity.Managerial summary: Corporate acquisition is a popular way for firms to grow and obtain innovative resources. However, we know little about why acquirers choose one firm over another. We capture the influence of similarity and complementarity between acquirers’ and target firms’ products (current innovative value) and R&D pipelines (future innovative value) on whether a particular target firm is acquired. Insights from the pharmaceutical industry reveal that acquirers value similarity and complementarity in target firms differently, based on whether the comparison being made is with respect to their products or their R&D pipelines. Regarding their R&D pipelines, acquirers prefer that the target firm has similar, rather than complementary, resources. However, the opposite is true concerning their own products: acquirers prefer that the target firm has complementary, versus similar, resources.

The Benefit of Becoming Friends: Complaining After Service Failures Leads Customers with Strong Ties to Increase Loyalty

Service firms spend considerable resources soliciting complaints to initiate recovery efforts and improve their offerings. However, managers may be overlooking the fact that complaints serve an equally important role in engendering loyalty. The authors demonstrate that the strength of social ties between customers and service providers influences the degree to which complaining drives loyalty. Paradoxically, while strongly tied customers fear that complaining threatens their ties with the provider, when they are encouraged to complain, their loyalty increases because offering feedback serves as an effective way to preserve social ties. Conversely, for weakly tied customers, complaining has no effect on loyalty. Furthermore, complaints are more effective in driving loyalty for strongly tied customers when the feedback is directed toward the provider who failed, rather than to an entity external to the failure. Finally, when providers signal an authentic openness to feedback, strongly tied customers are more loyal after complaining, whereas authenticity does little to engender loyalty for weakly tied customers who complain. The value of complaints in driving loyalty is promising both for customers who perceive a strong tie to a particular provider within the firm and, more generally, in service industries wherein strong ties naturally occur.

Cross-Buying After Product Failure Recovery? Depends on How You Feel About It

Cross-selling to customers during product failure recovery (PFR) encounters can be challenging as customers are reluctant to cross-buy after having recently experienced a failure, despite it being recovered. We examine several models of cross-buying and failure/recovery characteristics using a large-scale experiment and secondary transaction data from a Fortune 100 computer systems firm. We find that customers’ integral-affective responses dominate their cognitive responses. Further, customers are more willing to cross-buy when the firm’s recovery effort increases for more severe product failures or those with unstable attributions. Yet, greater recovery effort does little to diminish the negative effect of attributing the failure to the firm. Overall, understanding the relative dominance of a sequence of affective versus cognitive factors and the critical role that contextual factors play in customer cross-buying decisions will help managers design PFR encounters to increase the odds of cross-selling.

Anticipated vs. Actual Synergy in Merger Partner Selection and Post-Merger Innovation

Past research has primarily focused on what happens after a merger. This research attempts to determine whether anticipated benefits from the merger actually accrue. We characterize the effects of observed variables on whether pairs of firms merge, vis-a-vis roommate matching, and then link these factors to post-merger innovation (i.e., number of patents). We jointly estimate the two models using Markov Chain Monte Carlo methods with a unique panel data set of 1,979 mergers between 4,444 firms across industries and countries from 1992 to 2008. We find that similarity in national culture and technical knowledge has a positive effect on partner selection and post-merger innovation. Anticipated synergy from subindustry similarity, however, is not realized in post-merger innovation. Furthermore, some key synergy sources are unanticipated when selecting a merger partner. For example, financial synergy from higher total assets and complementarity in total assets and debt leverage as well as knowledge synergy from breadth and depth of knowledge positively influence innovation but not partner selection. Furthermore, factors that dilute synergy (e.g., higher debt levels) are unanticipated, and firms merge with firms that detract from their innovation potential. Overall, the results reveal some incongruity between anticipated and realized synergy.Data, as supplemental material, are available at https://doi.org/10.1287/mksc.2016.0978 .