Culture, Relationship Norm, and Dual Entitlement

58 Pages Posted: 12 Jun 2018

See all articles by Haipeng (Allan) Chen

Haipeng (Allan) Chen

University of Kentucky - Gatton College of Business and Economics

Lisa Bolton

Pennsylvania State University

Sharon Ng

Nanyang Technological University (NTU) - Division of Marketing and International Business

Dongwon Lee

Korea University Business School

Dian Wang

Texas A&M University - Department of Marketing

Date Written: May 26, 2018

Abstract

According to the dual entitlement principle, consumers find it fair for firms to price asymmetrically to cost changes, that is, increasing prices when costs increase but maintaining prices when costs decrease. However, we conduct a meta-analysis revealing that asymmetric pricing is less prevalent in collectivistic (vs. individualistic) countries (study 1). We propose a fairness-based explanation, demonstrating that interdependent consumers in collectivistic cultures perceive asymmetric pricing to be less fair than do independent consumers in individualistic cultures (studies 2A-2C, 4 and 5). We attribute this cultural variation in the endorsement of dual entitlement to culture-specific relationship norms. Specifically, we argue that while the practice of asymmetric pricing is consistent with the exchange norms among independent consumers that emphasize self-interest pursuit, it is inconsistent with the communal norms among interdependent consumers mandating firm benevolence. Supporting this argument, we find that (a) directly manipulating communal (vs. exchange) norms yields similar differences in fairness perceptions that mimics those due to culture (studies 3 and follow-ups), (b) the cultural differences are mediated by the communal mandate for firm benevolence (study 4), and (c) the cultural differences are mitigated when a firm frames asymmetric pricing as benevolent (study 5). We conclude by discussing the theoretical and managerial implications of these findings for dual entitlement and asymmetric pricing, as well as for the role of culture in buyer-seller relationships and price fairness.

Keywords: dual entitlement, culture, relationship norms, price fairness, asymmetric pricing

Suggested Citation

Chen, Haipeng (Allan) and Bolton, Lisa and Ng, Sharon and Lee, Dongwon and Wang, Dian, Culture, Relationship Norm, and Dual Entitlement (May 26, 2018). Chen, Haipeng (Allan), Lisa Bolton, Sharon Ng, Dongwon Lee and Dian Wang* (2018), “Culture, Relationship Norm, and Dual Entitlement,” Journal of Consumer Research, DOI: 10.1093/jcr/ucx118. Available at SSRN: https://ssrn.com/abstract=3185316

Haipeng (Allan) Chen (Contact Author)

University of Kentucky - Gatton College of Business and Economics ( email )

550 South Limestone
Lexington, KY 40506
United States

Lisa Bolton

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Sharon Ng

Nanyang Technological University (NTU) - Division of Marketing and International Business ( email )

Singapore

Dongwon Lee

Korea University Business School ( email )

Anam-Dong, Seongbuk-Gu
Seoul, 136701
Korea, Republic of (South Korea)

HOME PAGE: http://dongwon.info

Dian Wang

Texas A&M University - Department of Marketing ( email )

College Station, TX
United States

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