UNDERSTANDING CUSTOMER CHOICES IN SERVICE OUTSOURCING AND REVENUE MANAGEMENT

This dissertation investigates customer behavior modeling in service outsourcing and revenue management in the service sector (i.e., airline and hotel industries). In particular, it focuses on a common theme of improving firms’ strategic decisions through the understanding of customer preferences. Decisions concerning degrees of outsourcing, such as firms’ capacity choices, are important to performance outcomes. These choices are especially important in high-customer-contact services (e.g., airline industry) because of the characteristics of services: simultaneity of consumption and production, and intangibility and perishability of the offering. Essay 1 estimates how outsourcing affects customer choices and market share in the airline industry, and consequently the revenue implications from outsourcing. However, outsourcing decisions are typically endogenous. A firm may choose whether to outsource or not based on what a firm expects to be the best outcome. Essay 2 contributes to the literature by proposing a structural model which could capture a firm’s profit-maximizing decision-making behavior in a market. This makes possible the prediction of consequences (i.e., performance outcomes) of future strategic moves. Another emerging area in service operations management is revenue management. Choice-based revenue systems incorporate discrete choice models into traditional revenue management algorithms. To successfully implement a choice-based revenue system, it is necessary to estimate customer preferences as a valid input to optimization algorithms. The third essay investigates how to estimate customer preferences when part of the market is consistently unobserved. This issue is especially prominent in choice-based revenue management systems. Normally a firm only has its own observed purchases, while those customers who purchase from competitors or do not make purchases are unobserved. Most current estimation procedures depend on unrealistic assumptions about customer arriving. This study proposes a new estimation methodology, which does not require any prior knowledge about the customer arrival process and allows for arbitrary demand distributions. Compared with previous methods, this model performs superior when the true demand is highly variable.

The Issue with Issues Management: An Engagement Approach to Integrate Gender and Emotion into Issues Management

Using sexual assault on college campuses as a context for interrogating issues management, this study offers a normative model for inclusive issues management through an engagement approach that can better account for the gendered and emotional dimensions of issues. Because public relations literature and research have offered little theoretical or practical guidance for how issues managers can most effectively deal with issues such as sexual assault, this study represents a promising step forward. Results for this study were obtained through 32 in-depth interviews with university issues managers, six focus groups with student populations, and approximately 92 hours of participant observation. By focusing on inclusion, this revised model works to have utility for an array of issues that have previously fallen outside of the dominant masculine and rationale spheres that have worked to silence marginalized publics’ experiences. Through adapting previous issues management models to focus on inclusion at the heart of a strategic process, and engagement as the strategy for achieving this, this study offers a framework for ensuring more voices are heard—which enables organizations to more effectively communicate with their publics. Additionally, findings from this research may also help practitioners at different types of organizations develop better, and proactive, communication strategies for handling emotional and gendered issues as to avoid negative media attention and work to change organizational culture.