WSB Research: Now You Know

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Q: Can fair and unfair coexist in distribution channels?

A fair share can take on a different sort of meaning throughout a distribution channel, and it might not even be an equal share.

That’s what Paola Mallucci, a Wisconsin School of Business assistant professor of marketing and a Wisconsin Naming Partners Fellow, and a co-author found in their research on fairness concerns in a distribution channel, the path taken by goods or services as they reach consumers.

Mallucci set up a lab replica of a distribution channel environment. Subjects were assigned wholesaler and retailer roles to reproduce the real-world dynamic. Both made pricing decisions with a set amount of money to invest, with wholesalers setting the price first.

Data showed retailers considered it fair if channel leaders received more profit, as long as they didn’t take advantage of their position by squeezing out even more. Channel members accepted that members’ different roles in the distribution channel made different profit shares acceptable. For retailers, the initial agreement was a stronger factor than investments or equal share of the money.

The research suggests that once firms understand how the perception of fairness can be achieved—through relationship-building, not equal shares—they could enhance profits and efficiency. Fair might not be equal, but, as the saying goes, fair is fair.

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Q: What kind of pay boosts employee performance?

A raise or bonus for a job well done can make an impact in two places: the employee’s pocket and a company’s productivity. Pay for performance is such common practice in the workplace that the question isn’t if it works, but when it works.

Charlie Trevor, professor of management and human resources, the Pyle Bascom Professor in Business Leadership, and chair of WSB’s Department of Management and Human Resources, and two co-authors integrated economic and psychological principles into their research to learn more about the effects of pay-for-performance approaches.

The co-authors conducted a five-year study with data from a large insurance company that used merit and bonus pay for its more than 11,000 employees in multiple locations and in a variety of jobs. Those studied appeared to prefer the immediate windfall of a bonus over a permanent pay raise spread out over the year. The data showed it was bonus pay, a one-time lump-sum payout, that had more impact on job performance than an equivalent amount of merit pay (an incremental increase in base salary).

The research provides insight into cost-effective ways companies can reward employees and spur productivity. However, while a bonus might provide a short-term solution, previous research shows merit pay remains a valuable tool for recruitment and retention, and should not be dismissed.

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Q: How can others impact your privacy on social media?

Social media gives its users ample opportunity to volunteer whatever information they want to share with the world. Unfortunately, they can’t always control what others share about them.

Research by Sung S. Kim, WSB’s Peter T. Allen Professor in the Department of Operations and Information Management, looked at the impact of perceived privacy invasion on Facebook. He found the impact has everything to do with what “friends” users have in common.

Kim and his co-authors set up a mock Facebook page and asked subjects to respond to hypothetical embarrassing situations. Some of these “revelations” were posted by a friend naming the person and “tagging” them so every Facebook friend of both parties would see it. Others were posted without the tagging that brought the post extra attention.

When posts were tagged, the subject had a greater sense of privacy invasion. If the two parties shared many mutual friends, there was less perceived privacy invasion. In fact, data showed that when they had many mutual friends, the tagged post enhanced the bond between them.

The takeaway? If you want to keep your friends, be as careful about what you say about them in the virtual world as you are in the real one.

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Bruce Ellig (BBA 1959, MBA 1960)

established the Bruce R. Ellig Scholarship Fund for outstanding undergraduate students. He previously funded the Bruce R. Ellig Distinguished Chair in Pay and Organizational Effectiveness. More Class Notes »

Amy Martens (BBA 2002)

graduated with an MBA in health systems leadership from Edgewood College in 2015. In early 2017 she accepted a position as director of operations with the University of Wisconsin–Madison School of Medicine and Public Health, where she provides administrative leadership and overall programmatic and operational support, managing fiscal and human resources to carry out educational, research, and service missions. More Class Notes »

Joshua Blumenfeld (BBA 2001)

founded, an online job search engine, in 2012. In 2015 and 2016, MyJobHelper was recognized by Inc. magazine as one of the fastest-growing private companies in America. In 2016, MyJobHelper was also a Deloitte Fast 500 Winner. Earlier this year, MyJobHelper launched its Latin American operations and now operates in more than 15 countries including the UK, Australia, Canada, Brazil, and Peru. More Class Notes »