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Abstract:
In this paper, we study the drivers of customer satisfaction for financial services. We discuss a full Bayesian analysis based on data collected from customers of a leading financial services company. Our approach allows us to explicitly accommodate missing data and enables quantitative assessment of the impact of the drivers of satisfaction across the customer population. We find that satisfaction with product offerings is a primary driver of overall customer satisfaction. The quality of customer service with respect to financial statements and services provided through different channels of delivery such as new information technology enabled automated call centers, and traditional branch offices, are also important in determining overall satisfaction. However, our analysis indicates that the impact of these service delivery factors may differ substantially across customer segments. In order to facilitate managerial action, we discuss how specific operational quality attributes for designing and delivering financial services can be leveraged to enhance satisfaction with product offerings and service delivery. Our approach and findings have significant implications for managing customer satisfaction in the financial services industry.

Abstract:
This research addresses the following questions: Do information technology (IT) investments have an effect on customer satisfaction? What are the causal mechanisms that mediate the effect of IT systems on customer satisfaction? Does the effect of IT on customer satisfaction differ across industry sectors? Based on an analysis of longitudinal data on 50 U.S. firms for the period 1994-2000, we document the association between IT investments and customer satisfaction. We find support for the hypotheses that the effect of IT investments on customer satisfaction is mediated through the effect of IT on perceived quality and perceived value. Our results also indicate that the effect of IT investments on customer satisfaction differs between the manufacturing and service sectors. While prior work on the business value of IT at the firm level focused on financial and accounting measures, our research establishes the effect of IT investments on overall customer satisfaction of a firm. We propose and validate a theory of mediation effects of perceived quality and perceived value. This proposal has the potential to synthesize information systems effectiveness and marketing literature towards an integrative understanding of the relationship between IT investments and customer satisfaction.

Information Technology, Customer Satisfaction, Customer Relationship Management, Firm Performance

Abstract:
Anecdotal reports suggest that offshoring may have negative implications for North American consumers. Despite the anecdotal reports, North American firms are increasingly offshoring front office functions such as customer service and back office functions such as IT. This leads to two primary research questions. Does front office offshoring actually have negative implications for consumers? If so, why would firms increasingly offshore in the face of evidence that offshoring has negative implications for consumers? This research addresses these questions by considering the relationship between offshoring and customer satisfaction. Customer satisfaction, expressed through the American Customer Satisfaction Index (ACSI), is an important indicator of firm performance. Higher ACSI scores have been linked to higher firm profitability, shareholder value and risk-adjusted stock returns.

We analyze longitudinal data of 150 North American firms and business units from 1998-2006, and find that while front office offshoring is associated with a decrease in customer satisfaction, onshore front office outsourcing is associated with a similar decrease. This finding suggests that declines in customer satisfaction from front office offshoring may be partly attributable to language and cultural issues, and partly related to other gaps for outside service providers (offshore or onshore) to adequately serve and satisfy consumers. We also find that back office offshoring is associated with an increase in customer loyalty. The difference between front office and back office offshoring suggests that in addition to considering whether or not to offshore, firms must carefully evaluate which functions are suitable for offshoring.

Offshoring, front office, back office, ACSI, customer satisfaction, customer loyalty, perceived value, perceived quality, customer expectations

Abstract:
The impact of low search costs in Internet markets has received a great deal of attention in the academic literature and in the press. While many have argued that the presence of low search costs will lead to strong price competition and vanishing margins, the empirical evidence is decidely mixed. Reflecting this uncertainty, firms have taken radically different strategies with regard to facilitating search across sites. Some firms have actively blocked or attempted to limit price search (e.g., by refusing to be listed at shopbots) while others have actively encouraged price search.

In this research, we use a unique dataset of detailed customer survey data to analyze the impact of consumer search behavior on the formation of consideration sets and the consumer's ultimate purchase decision. We find that while searching across market leaders is not detrimental for market followers, searching across market followers is somewhat detrimental for market leaders. These results suggest that today's market leaders may be at risk from increased consumer adoption of broad search technologies such as Internet shopbots.

Consumer search costs, competition, consideration set formation, empirical, survey

Abstract:
Recent years have witnessed a surge of interest in the notion of capabilities as an important source of competitive advantage. This recognition has, in turn, placed emphasis on the question of where and how these capabilities emerge and how they influence firm performance. The present paper is an attempt to address this question. Using a large sample of detailed project level data from a leading firm in the global software services industry, we attempt to empirically study the importance of capabilities. We find that two broad classes of capabilities are significant. The first class, which we label client-specific capabilities, is a function of repeated interactions with clients over time and across different projects. This learning from repeated interactions with a given client reduces project execution costs and helps improve project contribution. The second class, termed project management capabilities, are acquired through deliberate and persistent investments in infrastructure and systems to improve the firm's software development process. Our empirical results suggest that the marginal returns to acquiring different capabilities may be different and an understanding of such trade-offs can improve firm decisions to improve and/or acquire such capabilities. We discuss the key contributions of our paper and the implications for future research on capabilities.

Capabilities, software services, strategy

Abstract:
The starting point for this paper is the general paucity of research on the demand-side of custom software development. As an initial step, we derive and estimate a Hedonic Pricing model using a sample of 160 projects executed by a large software solutions vendor based in India. Our results indicate that there are powerful economic incentives spurring the increasing trend toward offshoring of custom software projects. We estimate that the average annual decline in quality adjusted price amounted to about 14 percent. Second, we also estimate the contribution of quality and human capital to price premia in software projects which helps us pinpoint the targets of vendor effort allocation that will help boost client value functions. This leads us to speculate that the efficiency of custom software development can perhaps be improved by the allocation (or reallocation) of vendor resources designed to increase quality and delivery performance. We discuss the implications of our results for the research and practice of software development.

Outsourcing, custom software, offshore development, hedonic Price

Abstract:
This paper studies the influence of supply-side and demand-side factors on the compensation of information technology (IT) professionals and considers the human capital and institutional explanations. We focus on returns to an MBA and the IT-related experience of IT professionals and use the largest data set of IT professionals that has been compiled to date in the United States to answer our research questions. We find that firms pay a significant premium for an MBA. Although firms value the IT experience of IT professionals, they value an MBA significantly more. The results of this study cast doubt on the belief that IT skills have a large firm-specific component. While IT experience is valued more than non-IT experience for IT professionals, firms value IT experience at other firms much more than they value firm-specific IT experience. Likewise, contrary to popular perception, we do not find evidence for complementarities among an MBA education and IT experience. Among institutional effects, firms in IT and IT-intensive industries pay significantly more to IT professionals than other firms and dotcom firms also paid significant premium in 1999 and 2000. However, these firms do not value an MBA or firm-specific IT experience any more than other firms. We discuss the implications of these findings for further research, for firms' compensation practices, and for individual IT professionals.

IT professionals, MBA degree, IT Experience, Tenure, Compensation, Human Capital

Abstract:
Radio Frequency Identification (RFID) technology promises to transform supply chain management. Building on previous research in information systems and supply chain management, this paper proposes a theoretical framework for RFID adoption and benefits, and tests the framework using data on U.S. firms. Our analysis suggests that there is a positive association between information technology (IT) application deployment and RFID adoption. We find that RFID implementation spending and partner mandate are associated with an expectation of early return on RFID investment, and a perceived lack of industry-wide standards is associated with an expectation of delayed return on RFID investment. These results suggest that firms with broad IT application deployment and a critical mass of RFID implementation spending are more likely to report early returns from RFID deployments. This paper extends previous research to understand the relationship between organization characteristics and adoption and expected benefits of the emerging RFID technology.

RFID, Information Technology, Adoption, Benefits, Business Value of IT

Abstract:
This research evaluates the effect of customer relationship management (CRM) on customer knowledge and customer satisfaction. An analysis of archival data for a cross-section of U.S. firms shows that the use of CRM applications is positively associated with improved customer knowledge and improved customer satisfaction. This article also shows that gains in customer knowledge are enhanced when firms share their customer-related information with their supply chain partners.

customer relationship management, customer knowledge, customer satisfaction, information technology

Abstract:
Do investments in customer satisfaction lead to excess returns? If so, are these returns associated with higher stock market risk? The empirical evidence presented in this article suggests that the answer to the first question is yes, but equally remarkable, the answer to the second question is no, suggesting that satisfied customers are economic assets with high returns/low risk. Although these results demonstrate stock market imperfections with respect to the time it takes for share prices to adjust, they are consistent with previous studies in marketing in that a firm's satisfied customers are likely to improve both the level and the stability of net cash flows. The implication, implausible as it may seem in other contexts, is high return/low risk. Specifically, the authors find that customer satisfaction, as measured by the American Customer Satisfaction Index (ACSI), is significantly related to market value of equity. Yet news about ACSI results does not move share prices. This apparent inconsistency is the catalyst for examining whether excess stock returns might be generated as a result. The authors present two stock portfolios: The first is a paper portfolio that is back-tested, and the second is an actual case. At low systematic risk, both outperform the market by considerable margins. In other words, it is possible to beat the market consistently by investing in firms that do well on the ACSI.

Customer Satisfaction, Stock Prices, Stock Returns, Risk, Market Value, Stock portfolios