Somnath Banerjee

Peer Reviewed Publications (or acceptances)

1. Banerjee, S., & Stock, A. (2018). Retailer Dominance and Quality Variation: Observations and a Theoretical Explanation. Journal of Retailing, 94(4), 408–418. https://doi.org/10.1016/j.jretai.2018.10.001

Abstract: A number of consumer and business reports suggest that slightly lower quality (or feature) versions of products are being sold through dominant retailers, while higher quality versions continue to be sold through weaker retailers and, customers are uninformed about such subtle differences. We study two intriguing questions based on this phenomenon namely (1.) why are lower quality-lower priced versions sold primarily through dominant retailers and not the weaker retailers? (2.) Why do sometimes the weaker retailers not inform customers about these quality differences? Using a game theoretic model, we find that when quality is noncontractible an increase in retail dominance leads to a decrease in quality offered by the dominant retailer vis-à-vis the weaker retailer. However, we show that the weaker retailer does not have an incentive to advertise its higher quality if quality differences are not too high. This situation arises endogenously when the dominant retailer is not too powerful as compared to the weaker retailer or when retail differentiation is high. The motivation for this result is traced to the threat of increased competition in the event of such advertising.

2. Banerjee, S., & Chai, L. (2019). Effect of Individualism on Online User Ratings: Theory and Evidence. Journal of Global Marketing, 32(5), 377–398. https://doi.org/10.1080/08911762.2018.1549690.

Abstract: This research examines the effect of individualism on online user ratings. We develop a theory based on expectation disconfirmation theory and prospect theory, and posit that user review ratings by consumers from individualistic cultures (e.g., America), as compared to collectivistic cultures (e.g., China), are likely to be lower, and the effect is moderated by customer-based brand equity and experience of premium product variants (e.g., business class travel). We test our hypotheses on a data set gathered from online user reviews by customers from 166 countries for airlines across the world and find support. In addition, customer-based brand equity and experience of premium product variants have positive direct effects on user rating valence. We also test our hypotheses on recommendation intent of users and control for fixed effects and find support. Managerial implications and future research avenues are discussed.

3. Banerjee, S., Pillai, R.G., Jones, J.M., Hung, K. T., Tangpong, C. (2019). A Hidden Liability of Power: An Innovation-Inhibiting Effect. Journal of Managerial Issues, 31(4), 388 – 408. https://www.pittstate.edu/business/_files/documents/pittjmiwinter2019.pdf#page=42.

Abstract: According to business strategy literature, power in business transactions is considered to be a source of competitive advantage, and it is assumed that more power is better. Extant literature also posits that innovation is another source of competitive advantage and critical to firm long-term viability. This research examines the effect of power differential on innovation adoption in the context of business-to-business exchange. Results of an experimental study show that greater power has a negative effect on innovation adoption, thus suggesting a potential liability of power differential. Cognitive biases in managerial decision making arguably are power-induced and explain the negative effect of power differential on innovation adoption. Relational norms are hypothesized as a mechanism to mitigate the negative effect of power differential on innovation adoption, but are not empirically supported in this study. Theoretical and managerial implications of the findings are also discussed.

4. Banerjee, S., & Bhardwaj, P. (2019). Aligning marketing and sales in multi-channel marketing: Compensation design for online lead generation and offline sales conversion. Journal of Business Research, 105, 293–305. https://doi.org/10.1016/J.JBUSRES.2019.06.016

Abstract: Firms engaged in personal selling in business and retail markets tend to invest substantial portions of their marketing budgets on lead generation through marketing agents and conversion by sales reps. However, such an arrangement of marketing-sales interface has often been found to be inefficient due to the multi-channel attribution problem. We use analytical models to find optimal sales compensation designs to solve the multi-channel attribution problem. Findings suggest that contracts involving revenue incentives, lead qualification, and sales autarky leave a gap between the first-best and the achieved profit due to budget balance, costs of lead qualification, and the sales force's lack of specialization in marketing, respectively. An increase in risk aversion favors sales autarky and lead qualification contracts over the revenue incentive contracts while an increase in overall uncertainty favors lead qualification. A certain type of contest (or stack ranking-based pay) achieves first-best profit when uncertainty is moderate.

5. Jae Min, J. Jones, C. Haugtvedt, S. Banerjee. (2020). Consumer response to state-of-origin labels: the moderating role of residency. Journal of Consumer Marketing, 37(7), 761–773. https://doi.org/10.1108/JCM-11-2019-3514 

Abstract: Purpose: Despite the large number of studies on country of origin, little is known about the effects of state-level product origin information on consumer attitudes and purchase intentions. Likewise, little is known about when the state-of-origin (SOO) information enhances, has no effect or has a negative effect on consumer attitudes and purchase intentions. Primarily drawing on the country-of-origin literature, this study aims to examine the influence of SOO label information and the moderating role of state residency. Design/methodology/approach: To test five hypotheses, the authors conducted a survey (Study 1) and an experiment (Study 2). The analyses included content analysis, regression and ANOVA. Findings: The findings show that for certain products, moderate-to-strong product–state associations exist. However, when the associations are weak, consumers show bias for products made in their (vs other) states. The findings also show that when consumers evaluate their state products, normative (vs cognitive) reasons drive their attitudes, but that when they assess products from states other than their state of residency, cognitive (vs normative) reasons drive attitudes. Additionally, economic sustainability seems a powerful motivator for buying products made in their state of residency. Practical implications: Companies should take advantage of positive biases for their products in the states in which they produce products. However, when companies market their products outside their states of production, in some cases, they should consider deemphasizing SOO information unless there is a strong product–state association present among consumers outside of the state. Originality/value: This paper adds value by providing new insights for designing product origin labeling programs. Suggestions for future research and marketing strategies for practitioners who want to use SOO as a branding strategy are offered.

6. K-T Hung, S Banerjee, O Nordstrom, C Tangpong, Y Li and J Li (2023). The Influence of Top Management’s Strategic Planning Capacity and Entrepreneurial Orientation on Corporate Entrepreneurship, Entrepreneurship Research Journal, https://doi.org/10.1515/erj-2022-0018

Abstract: This study examines whether, and how, top management influences middle management’s support of corporate entrepreneurship activities. Specifically, the study explores the influence of top management characteristics, i.e. strategic planning capacity and entrepreneurial orientation, on manager’s decision to support innovation adoption. We report on the findings from a vignette study. Research participants included a group of 259 experienced business professionals: 148 from the United States and 111 from China. The results suggest that the alignment of strategic planning capacity and entrepreneurial orientation influences middle management’s support for corporate entrepreneurship in both cultural settings. 

Other Research Projects

7.  Miloš Fišar, Ben Greiner, Christoph Huber, Elena Katok, Ali I Ozkes, Management Science Reproducibility Collaboration. (2023) Reproducibility in Management Science, Management Science, 70(3) 1343-1356. https://doi.org/10.1287/mnsc.2023.03556  

With the help of more than 700 reviewers, we assess the reproducibility of nearly 500 articles published in the journal Management Science before and after the introduction of a new Data and Code Disclosure policy in 2019. When considering only articles for which data accessibility and hardware and software requirements were not an obstacle for reviewers, the results of more than 95% of articles under the new disclosure policy could be fully or largely computationally reproduced. However, for 29% of articles, at least part of the data set was not accessible to the reviewer. Considering all articles in our sample reduces the share of reproduced articles to 68%. These figures represent a significant increase compared with the period before the introduction of the disclosure policy, where only 12% of articles voluntarily provided replication materials, of which 55% could be (largely) reproduced. Substantial heterogeneity in reproducibility rates across different fields is mainly driven by differences in data set accessibility. Other reasons for unsuccessful reproduction attempts include missing code, unresolvable code errors, weak or missing documentation, and software and hardware requirements and code complexity. Our findings highlight the importance of journal code and data disclosure policies and suggest potential avenues for enhancing their effectiveness. 

Working Papers (papers available on request)

1. Somnath Banerjee & Axel Stock, “Forced Ranking Policies: Why and How to Implement them to Motivate an Ambiguity Averse Sales Force”. Working Paper Draft.

Abstract: Rank based appraisal policies, like the GE's 20-70-10 Forced Ranking policy, have been used as strategic levers by organizations to motivate the sales force. Although variations of such appraisal policies are used in industry practice, they raise some puzzling issues: Why do some firms commit to specific proportions ex-ante, e.g. 20-70-10, and some do not? What percentage of sales people are to be promoted, laid o§ and left in same position as part of such policies? We use an agency theoretic framework to study how Forced Ranking policies are to be designed. We find that when there is Knightian uncertainty about promotions and layoffs, effort strictly increases in ambiguity aversion only when salespeople are faced with a contract that includes a committed promotion and an ambiguous layoff policy. Consequently, firms are more likely offer such a contract. Furthermore, when the sales person's participation constraint is binding and the profit margin is intermediate, firm profits follow an inverted-u-shaped relationship with ambiguity aversion. In addition, we find that firms enjoying higher margins are more likely to commit to both promotion and layoffs. Results also suggest that in absence of costs from promoting and laying off employees, firms should use an up-or-out contract. Comparative statics for the forced ranking policy are discussed. 

2. Somnath Banerjee, Axel Stock & Lin Liu, “Firm Competition for Sales Force Owned Customer Loyalty”. Working Paper Draft.

Abstract: Firms often recruit sales representatives (or reps) to build relationships with customers and sell them products over time. In such a case of relationship marketing, customers build loyalty not only towards the firms but also towards their sales reps. However, since the loyalty generated from customer-salesperson relationship is often "owned" by the sales person it can be lost if the sales person moves to another firm. In this context, firms competing in the market compete for both customers as well as sales reps with the objective of poaching customers that are loyal to the sales reps. We employ a two-period game theoretic model of duopolistic competition to study optimal firm strategy in this scenario. Our analysis reveals that while under some conditions the possibility of poaching of sales reps decreases firm profits, interestingly, under other conditions it can actually increase firm profits. This result is driven by the fact that while possibility of poaching of sales reps increases employee retention and wage costs, it also leads to a strategic benefit in form of softening of competition for acquisition of new customers. Our finding implies that contrary to general beliefs, the presence of anti-employee poaching regulations like Non-Compete clauses to not poach each other's employees may hurt firms under some conditions. 

3. Somnath Banerjee & Axel Stock, “Peter Principle in Sales Managerial Promotions: An Alternative Explanation” Working Paper Draft.

Abstract: Organizations often promote their best sales people to sales managerial roles but after promotion find that the sales people are not as good as they were expected to be in their new roles. This problem is attributed to Peter Principle and it is generally believed that lack of managerial skills of the promoted sales people is to be blamed for the problem. In this research, we show using an agency theoretic model that the problem can arise even without the consideration of managerial skills. Promotion to a managerial position entails two different benefits associated with responsibilities of managing multiple revenue streams, namely higher sales potential due to multiple revenue streams and a possibility to diversify one's risk across multiple revenue streams. The two benefits generate asymmetric incentives in a sales force consisting of sales reps with heterogeneous risk and productivity characteristics, such that moderately risk averse reps put more effort than others to achieve promotion in spite of the fact that they are not the ones who would be the most suitable for managerial roles. Furthermore, we find that there can even be conditions in which an employee with lower productivity and higher risk aversion gets promoted. The Peter Principle problem becomes more likely with an increase in productivity of the more risk averse employee. We analyze different mechanisms that are implemented by companies to deal with this problem and show that under certain conditions sales training can be used by organizations to screen undesirable employees. Finally, we find that some market driven constraints in sales organizations, like uniform wages for sales representatives, can moderate the adverse selection problem. 

4. Somnath Banerjee & Pradeep Bhardwaj, “Pricing Models for Internet Sales Leads: Cost-Per-Lead Advertising Auction versus Affiliate Marketing”.

5. “Measuring the Brand Extension Fit Construct” (with Rajani Pillai and Vishal Bindroo).