Designing channel incentives to overcome reseller rejection

As more and more products are distributed through independent channel resellers, suppliers find it increasingly difficult to craft highly motivational incentive packages. Instead, many suppliers' product lines are neglected by resellers in deference to more compatible incentive offers. This paper studies the many aspects of incentive rejection and incentive compatibility and prescribes a four-step, theory-based process to help suppliers craft attractive incentive programs. The process involves identifying resellers' performance needs, recognizing how each need suggests a different basis for incentive rejection, and designing an incentive package such that the incentives support specific reseller needs. Also, unique channel conditions are considered.

Toward a business-to-business channel incentives classification scheme

A recent focus on intermediary compensation underscores the need to organize the many complex incentives used by channel practitioners. Employing a grounded theory methodology, a channel incentives classification scheme is induced from 170 unique channel incentives used in 59 high technology suppliers’ channel programs. The incentives are organized into 16 subcategories and 5 major categories: Credible Channel Policies, Market Development Support, Supplemental Contact, High-Powered Incentives, and End-User Encouragements. Each incentive subcategory is discussed as a means of controlling reseller behaviors. Also, the conditions that give rise to the implementation of incentives are investigated through four testable research propositions.

Channel incentives as unilateral and bilateral governance processes

The authors investigate channel incentives as extra-contractual governance processes that maintain and extend marketing channel relationships. More specifically, instrumental incentives are monetary-based payments made by a manufacturer in a unilateral channel arrangement to motivate distributor compliance, while equity incentives are bilateral expectations of fair treatment that motivate both parties to continue to cooperate with one another. A model of the antecedents and performance consequences of channel incentives is conceptualized and tested on 314 marketing channel relationships using a structural equation modeling methodology. The findings support the conceptual model and suggest that unique facets of the channel relationship explain the type of incentive mechanism in use.

CEO compensation, option incentives and information disclosure

This paper examines the impact of information disclosure on the valuation of CEO options and the incentives created by those options. Prior executive compensation research in the US has made assumptions about key input variables that can affect the calculation of option values and financial incentives. Accordingly, biases may have ensued due to incomplete information disclosure about noncurrent option grants. Using new data on a sample of UK CEOs, we value executive option holdings and incentives for the first time and estimate the levels of distortion created by the less than complete US-style disclosure requirements. We also investigate the levels of distortion in the UK for the minority of companies that choose to reveal only partial information. Our results suggest that there have to date been few economic biases arising from less than complete information disclosure. Furthermore, we demonstrate that researchers using US data, who made reasonable assumptions about the inputs of noncurrent option grants, are unlikely to have made significant errors when calculating CEO financial incentives or option wealth. However, the recent downturn in the US stock market could result in the same assumptions, producing exaggerated incentive estimates in the future.

Corporate boards and incentives: empirical evidence from the UK in 1935

We investigate boardroom governance using UK historical data for 1935. We demonstrate that there is a negative relationship between risk and incentives in this year. Prior research has produced anomalous results (Prendergast, 2002). Second, we show that average (median) board ownership of ordinary shares is about 7.95% (2.88%). Heuristically this figure is less than previously reported estimates for the US also using 1935 data. Finally, we show the phenomenon of multiple board membership. UK directors in 1935 hold many directorships – sometimes exceeding 10 concurrent memberships.

Prepaid monetary incentives on mail survey response

Increasing mail survey response using monetary incentives is a proven, but not always cost-effective, method in every population. This paper tackles the questions of whether it is worth using monetary incentives and the size of the inducement by testing a regression model of the impact of prepaid monetary incentives on response rates in consumer and organizational mail surveys. The results support their use and show that the inducement value makes a significant impact on the effect size. Importantly, no significant differences were found between consumer and organizational populations.

The optimum prepaid monetary incentives for mail surveys

Increasing mail-survey response using monetary incentives is a proven, but not always cost-effective method in every population. This paper tackles the questions of whether it is worth using monetary incentives and the size of the inducement by testing a logit model of the impact of prepaid monetary incentives on response rates in consumer and organizational mail surveys. The results support their use and show that the inducement value makes a significant impact on the effect size. Importantly, no significant differences were found between consumer and organizational populations. A cost-benefit model is developed to estimate the optimum incentive when attempting to minimize overall survey costs for a given sample size. © 2006 Operational Research Society Ltd. All rights reserved.

Prepaid monetary incentives on mail survey response

Increasing mail survey response using monetary incentives is a proven, but not always cost-effective, method in every population. This paper tackles the questions of whether it is worth using monetary incentives and the size of the inducement by testing a regression model of the impact of prepaid monetary incentives on response rates in consumer and organizational mail surveys. The results support their use and show that the inducement value makes a significant impact on the effect size. Importantly, no significant differences were found between consumer and organizational populations.

The 'Healthy Passport' intervention with older people in an English urban environment:effects of incentives and peer-group organisers in promoting healthy living

This paper reports the evaluation of the effectiveness of incentives (viz. points and prizes) and of peer-group organisers ('older people's champions') in the outcomes of a health-improvement programme for people aged 50 + years in a multi-ethnic district of the West Midlands, England. Health promotion activities Were provided, and adherence, outcome variables and barriers to adherence were assessed over six months, using a `passport' format. Those aged in the fifties and of Asian origin Were under represented, but people of Afro-Caribbean origin were well represented and proportionately most likely to stay in the project. Those of greater age and With more illness were most likely to drop out. There were significant improvements in exercise, diet and the uptake of influenza vaccines and eyesight tests, but slighter improvements in wellbeing. Positive outcomes related to the incentives and to liking the format. The number of reported barriers was associated with lower involvement and lack of change, as was finding activities too difficult, the level of understanding, and transport and mobility problems, but when these were controlled, age did not predict involvement. Enjoying the scheme was related to positive changes, and this was associated with support from the older people's champions.

Technological diversification and new innovators in European regions:evidence from patent data

This paper assesses the impact of regional technological diversification on the emergence of new innovators across EU regions. Integrating analyses from regional economics, economic geography and technological change literatures, we explore the role that the regional embeddedness of actors characterised by diverse technological competencies may have in fostering novel and sustained interactions leading to new technological combinations. In particular, we test whether greater technological diversification improve regional ‘combinatorial’ opportunities leading to the emergence of new innovators. The analysis is based on panel data obtained merging regional economic data from Eurostat and patent data from the CRIOS-PATSTAT database over the period 1997–2006, covering 178 regions across 10 EU Countries. Accounting for different measures of economic and innovative activity at the NUTS2 level, our findings suggest that the regional co-location of diverse technological competencies contributes to the entry of new innovators, thereby shaping technological change and industry dynamics. Thus, this paper brings to the fore a better understanding of the relationship between regional diversity and technological change.

Angel grants employees their wish – for time off in return for high performance:new breed of incentives based on what staff really want from their employer

Purpose – Describes a new breed of HR strategies that encourage employee involvement and commitment as part of high-performance working (HPW). Design/methodology/approach – Focuses on managing employee attitudes and skills through careful attention to leadership, reward and job-design policies. Highlights the differences between people's formal employment contracts and their less formal “psychological contracts”, and emphasizes the importance of the latter. Provides a case study of UK recruitment consultancy Angel Services Group Ltd, which allows staff who meet their daily targets to go home an hour early. Findings – Urges companies to have processes in place to understand the needs of individual employees. This can be done through leadership policies that require all supervisors and managers not only to manage their staff but also to know them as people. Practical implications – Emphasizes that organizations need to see HPW initiatives as part of the normal way of managing people, and not as “flavour of the month”. Originality/value – Outlines a wide range of initiatives that could help organizations to gain their employees' commitment.

The value of innovation:the interaction of competition, R&D and IP

This paper analyses market valuations of UK companies using a new data set of their R&D and IP activities (1989–2002). In contrast to previous studies, the analysis is conducted at the sectoral-level, where the sectors are based on the technological classification originating from Pavitt [Pavitt, K., 1984. Sectoral patterns of technical change. Research Policy 13, 343–373]. The first main result is that the valuation of R&D varies substantially across these sectors. Another important result is that, on average, firms that receive only UK patents tend to have no significant market premium. In direct contrast, patenting through the European Patent Office does raise market value, as does the registration of trade marks in the UK for most sectors. To explore these variations the paper links competitive conditions with the market valuation of innovation. Using profit persistence as a measure of competitive pressure, we find that the sectors that are the most competitive have the lowest market valuation of R&D. Furthermore, within the most competitive sector (‘science based’ manufacturing), firms with larger market shares (an inverse indicator of competitive pressure) also have higher R&D valuations, as well as some positive return to UK patents. We conclude that this evidence supports Schumpeter by finding higher returns to innovation in less than fully competitive markets and contradicts Arrow [Arrow, K., 1962. Economic welfare and the allocation of resources for invention. In: Nelson, R. (Ed.), The Rate and Direction of Inventive Activity. Princeton University Press, Princeton], who argued that, with the existence of IP rights, competitive market structure provides higher incentives to innovate.

When do incentives work in channels of distribution?

The incentive dilemma refers to a situation in which incentives are offered but do not work as intended. The authors suggest that, in an interorganizational context, whether a principal-provided incentive works is a function of how it is evaluated by an agent: for its contribution to the agent's bottom line (instrumental evaluation) and for the extent it is strategically aligned with the agent's direction (congruence evaluation). To further understand when incentives work, the influence of two key contextual variables-industry volatility and dependence-are examined. A field study featuring 57 semi-structured depth interviews and 386 responses from twin surveys in the information technology and brewing industries provide data for hypothesis testing. When and whether incentives work is demonstrated by certain conditions under which the agent's evaluation of an incentive has positive or negative effects on its compliance and active representation. Further, some outcomes are reversed in the high volatility condition. © 2013 Academy of Marketing Science.