They do so through the setting of servers to discrimina te downloaders. M. 2008 . 2008. et c. We therefore propose: H6: Congestion - A user??s probability of cont ribution increases with wait time when the user has high download needs. 2007. Quarterly Journal of Economics 114 3 817-868. we find that individuals in the network are not only reciprocal in nature but also have strong incentive to punish free riders and reward contributors. Susarla. Jessup. 2004. Preferential attach ment and mutuality in electronic knowledge networks. For example. K. First. reciprocity Wasko and Faraj 2005. In one-to-one interactions. Ma. Kiesler. they do not respond to contribution from pure contributors H2 . W. While the user-initiated reward and punishment mechanism could be highly effective in sustaining contributions in peer-to-peer networks. 2004. Behavioral intention formation in knowledge sharing: Examining the roles of extrinsic motivators. due to data limitations. 2006. When the individual has highe r download needs. While economically motivated responder is expected Louis vuitton uk accept any positive offe r. Louis vuitton Variables Download Needs: Individual behavior in a peer-to-pe er network is influenced by her download needs. 2005. 2004. wh ich would either positively or ne gatively influence her future contribution behavior. Fehr. to recognize frequent contribution.
howev er. Levati. Butler. For example. Evolution of Indirect Reciprocity. we focus on changes in individual contribution behavior and identi fy how social environments influence such changes. This social enforcement mechanism provides an important tool to punish free riders and reward contributors. Wharton Working Paper. propose the following hypothesis: H1b: Negative Indirect Reciprocity - a user??s probability of contribution decreases with number of free riders in a peer-to-peer network. Krishnan et al. social-psychological forces. First. K. However. Fairness as a constraint on profit seeking: Entitlements in the market. A theory of fairness. In sum. M. ??value user??. A. 2007 . For example. Fehr. there are few repeated direct interactions among the participants. S. co ntributions are provided by about 400 individuals daily in the music sharing ne twork Louis Vuitton UK the network accommodates about 2600 free riders. propose the following hypothesis: H1b: Negative Indirect Reciprocity - a user??s probability of contribution decreases with number of free riders in a peer-to-peer network. and a comment on suicide terrorism.. IROM-06-09 Indirect Reciprocity in Online Social Networks ?C A Longitudinal Analysis of Individual Contributions and Peer Enforcement in a Peer-to-Peer Music Sharing Network Bin Gu McCombs School of Business We thank Andres Hervas-Dra ne. M. R. We find that free ri ders have a significantly negativ e impact on an individual??s contribution H1b ...
and cooperation. If the responder rejects the offer. Kankanhalli et al. Butler. Emerson 1976 . Shah 2006. A. Fehr. Management Science 52 7 1031-1042. Indirect re ciprocity. L. Alok Gupta and Yiwei Jin. Such punishment mechanisms serve as a st rong deterrence to anti-soc ial behaviors. 2000. 2006 categorize the motivations into intrinsic. Information Economics and Policy 16 197-213. The result reveals the social enforcement mechanism in a large social network. Slaughter. The pu rpose of this study is. and Louis Vuitton The ratio of free riders to contributors is 6. Peer-Enforced Reward and Punishment Mechanism Indirect reciprocity is not onl y a social force that influences individual co ntributions. eds. Sobel. and pure altruism wher e an individual contributes out of the concerns of others?? welfare. Information Systems Research 14 3 244-268 Bapna. Therefore. However. how individual be havior is influenced by thei r social environments. Knowledge Management: An Evolutionary View of the Field. social identity M a and Agarwal 2007. Falk et al. J. Finally. 2006.
H2: In-kind Indirect Reciprocit y ?C a user??s probability of contribution is less influenced by the number of pure contributors than by th e number of mixed contributors in a peer-to-peer network. use a different mechanism in Louis Vuitton Outlet lab experiments. Incorporating fairness into game theory and economics. The kindness of strangers: The usefulness of electronic weak ties for technical advice. which fits well with the environment of online peer-to-peer networks. Ledyard. Valacich. It takes experience and learning to understand its potential. H. etc. Paulo Goes. Asvanund. Parameswaran et al. K. G. Adil ov. 200 5 . The rest the paper is organized as follows . For example. propose the following hypothesis: H1b: Negative Indirect Reciprocity - a user??s probability of contribution decreases with number of free riders in a peer-to-peer network. Contributor Characteristics Individuals motivated by indirect recipr ocity are not only in fluenced by others?? contribution behavior. extrinsic. but also a social norm that requires compliance. Service ince ntives include giving priority to frequent contributors Louis Vuitton Outlet download queues or allowing simultaneous downloads of multiple files.E. Management Science 49 2 160-178. Zmud. knowledge self-efficacy Kankanhalli 2006. 2004 . We. S. Our analysis also reveals that reputation and social enforcement have significant influences on an individual contribution probability H4 and H5 . the technology allows her to punish all free ri ders by setting up her server to provide downloads only to other contributors or give download priorities to other contributors. or give download priority to other contributo rs.V.
contributions to online soci al networks benefit others in the networks except for the contributor. E. Instead.. H10: Reputation ?C a contributor??s probability of providing priority services to other contributors increases after she receives titles in recognition of her contribution activities. Annual Reviews in Sociology 2 3 335-362. On the other hand. D.. Fehr. Third. Tirole. several important differences. We therefore hypothesize that an individual??s contribution probability increases with experience in the peer-to-peer network. Extant research suggests that individuals reciprocate negative actions with negative actions Panchanathan and Boyd 2004. Ravi. 2008. and R. IROM-06-09 Indirect Reciprocity in Online Social Networks ?C A Longitudinal Analysis of Individual Contributions and Peer Enforcement in a Peer-to-Peer Music Sharing Network Bin Gu McCombs School of Business We thank Louis Vuitton UK Hervas-Dra ne. a contributor may Louis vuitton uk already own a large number of music files and does not need to obtain any music files from the peer-to-peer networks. Fehr. S. It is what one does: why people pa rticipate and help others in electronic communities of practice. Paulo Goes. we do not observe all server stat us data since the provision of such data is voluntary. Gummadi. In either case. and to which user group to contribute. L. 2006 . trust games. and reducti on of network congestion in file sharing networks Krishnan et al. First. We also find that.
Service ince ntives include giving priority to frequent contributors in download queues or allowing simultaneous downloads of multiple files. 2006. Oppenheimer. The pr esence of indirect reciprocity in peer-to-peer networks. Management Science 49 3 464?C477. 2007. Han. Peer-to-peer file sharing and the market for digital information goods. Jeppensen and Frederiksen 2006 . The need for using the reward and punishment Louis Vuitton arises not only when a user observes an increase in free riders. 2005 . individuals are asked to contribute to a public good and the benefit of the public good is then shared among all players. The American Journal of Economics and Sociology 63 5 1193-1212. Fehr and Gachter 2000a. could be a double-edged sword. An individual... we can isolate social influence from individual variations. Rao. and R. 2004. extrinsic. influence an indi vidual??s propensity to contribut e to the network. requires an incentive mechanism to enforce. We therefore propose: H7a: Social Enforcement ?C a contributor??s probability of providing preferential services to other contributors increases when she observes an increase in free riders in a peer-to-peer network. 2002. Princeton University Press. Tang. contributors who both contribute to and download from the peer-to-peer network H1a . Schmidt. To control for the influence of an individual??s download needs. J. R.
often called free riders. K. A.. Hawaii. 2008 . contribution of digital files does not have such an effect as digital files can be freely duplicated. 59 1 63-80. The rest the louis vuitton outlet is organized as follows . Studies have shown that these social influences could have significant impacts on individual behaviors and market equilibrium in social networks Fehr and Gachter 2000b; Bapna et al 2003. 2005. Boyd. S. About 17% of all network users receive the title of Value User . 2001 . Oppenheimer. In many social environments. Sloof. J. Finally. A majority of peer-to-peer networks adopt a combination of reputational incentives and serv ice incentives. Team knowledge and coordination in geographically distributed software development. Management Science 33 5 589?C609. Dynamic Referrals in Peer-to-Peer Media Distribution. That is. S. K. A. these individual characteristics largely stay unchanged over time. Journal of Economic Perspectives 2 3 187-197. Replicating louis vuitton outlet Yankee Auctions to Analyze Auctioneers' and Bidders' Strategies. Barcelona. 2008 . M.
if most individuals decide their leve l of contribution based on obser vations of their neighbors?? contribution behavior. individuals may not have repeated interactions and cannot directly reciprocate to each other. H. First. etc. Cunningham. and reducti on of network congestion in file sharing networks Krishnan et al. Krishnan. Free-ri ding has also been reported as a concern in studies on virtual professional networks. A foundation for the study of group decision support systems. Z. Indirect re ciprocity. over contributing users. Public goods: a survey of expe rimental research.. Knetsch. H10: Reputation ?C a contributor??s probability of providing priority services to other contributors increases after she receives Louis Vuitton Outlet in recognition of her contribution activities. Peter. Bock et al. While private contribution of public goods deprives the contributor the use or service of the contributed good. 12 Most of the online peer-to-peer networks are free to join and open for participation. E. and knowledge contribution in online communities. We control for thes e individual characterist ics using fixed effects . Galit Shmueli. Similarly.g. A. 2000. Kuk 2006. how much. Taken together. Boyd. and G.
We extend these studies by identifying the dynamic nature of indirect reciprocity in a large peer-to-peer network a nd uncovering the social mechanism that enforces the norm of contribution in the network. and A. In such cases. consistent with findings from prior lab experiments. 2008. G. Indirect reciprocity. Game and Economic Behavior 62 1 287-303. J. its server software allows contributors to punish free riders and reward fellow contributors using server priority setting. 2008 . An important finding of this study is that individual contribution and peer enforcement change in response to network environments. MIS Quarterly 29 1 87?C111. Ravi. Electronic knowledge networks: processes and structure. Jian. they do not respond to contribution from pure contributors H2 . B. Information Systems Research 15 4 316-335 Raghu T. H. Whinston. de Gruyter. indicating the presence of direct reciprocity Henrich et al. Kraut. on average... Louis vuitton uk at ssrn abstract=926915. Duan. Louis vuitton identity M a and Agarwal 2007. H5: Service incentive - A user??s probability of contribution increase s with peer-provided service incentives. Proceedings of the 37th Hawaii International Confer ence on System Sciences. Culture differences in ultimatum game experiments: Evidence from a meta-analysis. Science 162 3859 1243-1248. which fits well with the environment of online peer-to-peer networks.
our results suggest that indirect reciprocity plays a pivotal role in motivating and sustaining individual contributions to online communities. Information Economics and Policy 16 197-213. The labeling of frequent contribut ors plays a significant role for sustaining cooperation in the networks. Organization Science 7 2 119?C135. Emerson 1976 .. J. W hy share in peer-to-peer networks? Proceedings of the ACM EC 2006 workshop on the Economics of Networked Systems .5:1. This is because rewards and punishments can be potentially rendered in the future based on individual labels which deter individuals from being non-cooperative. Louis Vuitton UK Thaler. G. Krishnan. Tullberg 2004 . a contributor is more likely to change her server st atus to punish free riders when she faces longer download wait time as long wait time indicates the need to encourage contribution behavior H8 . D. 2004. B. Jeppesen. Similarly. By studying how individuals change server settings with the social environment. and Walkerdine. Collective action and the evolution of social norms. 2005. however. and R. Kankanhalli et al. Nature 444 7120 718-723. H3: Experience?C a user??s probability of contribution increases with her experience with the peer-to-peer network. K. B. D. 2007b.-W.
Wasko. The information allows individuals to reciprocat e based on others?? cooperative status . Krishnan et al. we e xpect network users to learn over time that contribution provides many benefits over free-r iding. Sigmund. thus limiting direct reciprocity. membership size. Recent social network studies Faraj and Johnson 2005. and moral hazard. 48 11 1427?C1445. The researchers then change the game rule by allowing individuals to publish each other at their own costs. Parameswaran. louis vuitton outlet 444 7120 718-723. Hosanagar. Moreover. and a comment on suicide terrorism. J. and A. Our analysis has a number of limitations. This is consistent with the hypothesis. On indirect reciprocity the dis tinction between reciprocity and altruism. We control for thes e individual characterist ics using fixed effects . P2p networking: an information-sharing alternative... Gribble. 2000b. We find that free ri ders have a significantly negativ e impact on an individual??s contribution H1b . S econd. Kandori 1992 suggests that private contributi ons can be maintained among self-interest indi viduals if ??not only are deviators from the desired behavior punished. on average. Wasko. S. how much. Team knowledge and coordination louis vuitton outlet geographically distributed software development.
Individua ls change their propensity for contribution with social environm ent. M. 2004 . Service ince ntives include giving priority to frequent contributors in download queues or allowing simultaneous downloads of multiple files. Francis 1985 reports that striking workers take actions to isolate strike breakers that cross the picket line. Roth and John Kagel. Emerson. 1974. Ravi. Information Systems Research 12 4 346-362. Such action of indirect reciprocity contrasts with direct reciprocity where an individual returns a favor directly to the contributor. A. A. are free riders. Princeton. An individual. Journal of Industrial Economics 50 2 197-234. Fehr. 2001a. there are also a substantial number of contributors that consistently Louis Vuitton Outlet resources to such networks. Proceedings of National Academy of Science 102 7 2666-2670. Mike Smith and seminar participants at the University of Texas at Austin. Their probability of contribution increases significantly with the number of mixed contributors. Konana. or pirated contents. S. The recipient of the helpful action could also return favors to a third-party. This is consistent with the hypothesis.. MIS Quarterly 29 1 1-23. ther efore. Ma. Galit Shmueli. von Krogh..
Science 162 3859 1243-1248. However. The free-riding phenomenon is the result of the Tragedy of Commons problem Hardin 1968 : as public goods. individuals in these networks often infer contributor intention and needs from contributors?? downloading and uploading activities. S. Hann et al.. Sloof. we find that the coefficient on the interaction term between wa it time and download activity is positive H6 . Management Science 52 7 984-999. panel data enables us to control for individual heterogeneity. to recognize frequent contribution. a key f eature of these networks is th at a contributor can determine whether. and team performance in geographically distributed software development. and organizational climate.-W. Levati. Casadesus-Masanell. Organization Science 7 2 119?C135. they are more motivated to use the reward and punishment mechanism. Wasko. E. C. Las Vegas. and R.. Contribution costs are largely fixed for an individual. A. J. Their probability of contribution increases significantly with Louis vuitton uk number of mixed contributors. Louis vuitton Systems Research 18 1 42-67. Different mechanisms have been proposed in prior studies. Gallupe.. N.
Finally. K. prior studies suggest reciprocity is not necessarily in kind. Due to data limitations. S. i. therefore. network users are less likely to reciprocat e with music files. S. Jessup. J. Oosterbeek. Princeton. Sigmund. they are more motivated to use the reward and punishment mechanism. while individuals rarely have repeated one-to-one interactio ns in peer-to-peer networks. Online peer-to-peer sharing networks provide a particularly valuable context to study indirect reciprocity. Quarterly Journal of Economics 114 3 817-868. Studies show that the phenomenon pers ists in a variety of settings. 1988. UIUC Working Paper . and moreover. 2005 . Smith.330 users?? activities in a peer-to-peer network over 121 days. K. and moreover. In either case. A simple mechanism for the efficient provision of public goods: experimental evidence. B. but also when she observes an increase in wait time. eds. Organization Science. 1998. Louis Vuitton UK is known about how the social norms are formed and enforced in online social networks.
2004 show that the self-inter est to reduce network congestion could sustain a peer-to-peer network in the presence of free riders. Mike Smith and seminar participants at the University of Texas at Austin. In such cases. This corroborates the reciprocity theory that reciprocity is ba sed on contributors?? n eed or intent.. ??platinum member??. 2004 . often called free riders. N. These mechanisms allow individual contributors to impose restrictions on the types of users that can receive their contribution. 2007b. 2005. T. von Hippel. fairness Bock et al. and M.g.. Paulo Goes. Many social factors exhibit positive feedback and. M.. Raghu 2004 . 1988. R. 2007a . Armonk. Ba. can reduce congestion by becoming a contributor herself to take some of the download requests from the server where she intends to download from Casadesus-Masanell and Hervas-Drane 2007. Espinosa. Wasko and Faraj 2000 find through surveys that individuals are motiv ated by indirect reciprocity in making contributions to online 6 communities. We therefore hypothesize that an individual??s contribution louis vuitton outlet increases with experience in the peer-to-peer network. Information Systems Research 12 4 346-362. Actions intended to benefit or harm a recipient is more likely to be reciprocated than the actions that produce accidental benefits or harms. All errors remain ours.
H. Network cooperation and incentives within online communities. 2004. This proposition is. Finally. Knetsch. We extend these studies by identifying the dynamic nature of indirect reciprocity in a large peer-to-peer network a nd uncovering the social mechanism that enforces the norm of contribution in the network. give access to other contributors only. Individuals repay kindness with kindness and insults with insults. By punishing or threatening to punish perpetrators who do not comply louis vuitton outlet social norms. Familiarity. a significant difference between the two is the nature of digital goods. Management Science 49 3 464?C477. a contributor may have already own a large number of music files and does not need to obtain any music files from the peer-to-peer networks. Ca merer. Kuk. Each individual contributor can change her server setting to give access to all users. Gachter. they observe others?? actions in a social network and adjust their behavior accordingl y Bapna et al 2004 . Johnson and Faraj 2005.. 1993. First. however. we estimate Wait using the average wait time of a user??s download requests. Individual behavior is little influenced by the presence of contributors who have never downloaded from the network. Louis Vuitton Outlet In the context of a music sharing network. Taken together. Our results reveal that individuals have inherent incentive to enforce social norms on others even if the enforcement is costly and brings no direct be nefits. NV. communication activity. The difference indicates that content contribution to peer-to-p eer networks by itself does not create a conflict between self interest and collective interest as in a typical public good model. R. and other online communities Ba et al.
The third-party who benef its from the indirect reciprocal behavior could further reciprocate to others. and A. consistent with findings from prior lab experiments. and M. 2002. 200 5 . R. While we do not observe these variables in our peer-to-peer network. 2004 . As an individual gains experience with the network. Fehr. we note that the decision of contribution out of self-interests is de termined by a trade-off between congestion costs and contribution costs. When the individual has highe r download needs. Fehr. Proceedings of Twenty-sixth International Conference on Information System. Ma. S. but heavily influenced by the presence of contributors who also download from the network. 2001 . S. Unde rstanding the motivations. Whinston. H. Stallaert. 2005. 36 Tullberg. However. Management Science 49 2 160-178. The proposer offers a share of the asset to the responder and responder decides whether to accept or reject the offer. 2004... However. social enforcement Louis vuitton uk are often available in peer-to-peer Louis vuitton J. Knetsch. However. but also by contributors?? characteristics . membership size. J. Thaler. 2008 Symposium on Statistical Challenges in eCommerce Research SCECR 08 . Information Systems Research 12 3 225-239. Galit Shmueli. 2005. von Hippel. Susarla. we find that the enforcement of social norm is human nature. Tirole. J. J. M. Intrinsic factors refer to the satisfaction obtained from the action of creating contents and contributing to social networks such as fun and joy in solving challenges Shah 2006. and J. Tables 3 and 4 report the regression results. Emerson. S. H. Figure 1 dup licates Figure 1b from Fehr and Gachter 2000b that provides a comparison of individual contribution levels with and without peer punishment mechanisms. Thaler. Organization Science 32 2 209?C233. The summary statistics suggest that. However. Fixed effect: Individual characteristics such culture background. over contributing users.. Journal of Industrial Economics 50 2 197-234. Of all network users.
H10: Reputation ?C a Louis Vuitton UK probability of providing priority services to other contributors increases after she receives titles in recognition of her contribution activities. Effect of anonymity and evaluative tone on idea generation in computer-mediated groups. the concept of reciprocity goes beyon d direct one-to-one interacti ons. R. Jeppesen. which enable them to respond in kind to each other. A. indi viduals will reduce their propensity to contribute when more networ k users choose to free ride. indicating that some of the Value Users do not contribute daily. A. Center for the Digital Future reports that 64% of peer-to-peer network users have never contributed any content Center for the Digital Future 2008 . Fehr. 2008 Symposium on Statistical Challenges in eCommerce Research SCECR 08 . and pure altruism wher e an individual contributes out of the concerns of others?? welfare. Our finding shows that empowering contributors to voluntar ily punish free riders and reward other contributors could play an impor tant role in sustaining contribution to pubic goods. Gallupe. Prior studies show that individuals could also be motivated to contribute out of altr uism and other concerns. extrinsic in centives include Louis Vuitton Official rewards Bock et al. the contributi on level decreases over time and gradually approaches zero. Tang. co ntributions are provided by about 400 individuals daily in the music sharing ne twork and the network accommodates about 2600 free riders. Available at SSRN: ssrn abstract=953072. Evolution of Indirect Reciprocity. Quarterly Journal of Economics 114 3 817-868.. Journal of Management Information Systems 24 1 5-12. they are more motivated to use the reward and punishment mechanism. Table 4 reports individual co ntributors?? enforcement of social norms to encourage indirect reciprocity in the peer-to-peer network. and other online communities Ba et al. H. Ma.. 2006..
2006. However. Ostrom. P. 1986. the analysis above indicates that indirect reciprocity is an Louis Vuitton Outlet Official dynamic social force in peer-to-peer networks. 2004 find that 42% of users of Gnutella.5:1. Huang. INFORMS Journal on Computing 20 1 100-111. The Biology of Moral Systems. We therefore hypothesize that an individual??s contribution probability increases with experience in the peer-to-peer network. Johnson. The summary statistics also reveal that. Krishnan. Positive reciprocity could lead to a chain effect that dramatically increases contribution to the network while negative reciprocity could quickly doom the network.. but heavily influenced by the presence of contributors who also download from the network. The results also provide support for all the hypotheses. individuals in the networks will have less incen tive to reciprocate. 2003. While direct reciprocity often prevails in direct one-to-one economic exchanges. Johnson. Mike Smith and Louis Vuitton UK Shop participants at the University of Texas at Austin. Moreover. Valacich. 2008 . Our analysis also reveals that reputation and social enforcement have significant influences on an individual contribution probability H4 and H5 . The need for using such a reward and punishment mechanism is at the greatest when the network is overwhelmed with free riders and at the lowest when the network has a sufficient number of contributors. W. Electronic knowledge networks: processes and structure. 2008. B. A.
A theory of fairness. 2005. Table 3 reports the social influence of indirect reciprocity on the individual c ontribution. they do not respond to contribution from pure contributors H2 . contributions as predicted by the economic theo ry. M. the contributi on level decreases over time and gradually approaches zero. knowledge self-efficacy Kankanhalli 2006. social-psychological forces. The finding sheds new light on the dynamic of 28 peer-to-peer networks and their users. INFORMS Journal on Computing 20 1 100-111. They show that individuals will punish others even if the enfor cement is costly and brings no benefits to the enforcer. 2004. Studies have shown that these social influences could have significant impacts on individual behaviors and market equilibrium in social networks Fehr and Gachter 2000b; Bapna et al 2003. G. a contributor is more likely to change her server st atus to punish free riders when she faces longer download wait time as long wait time indicates the need to encourage contribution behavior H8 . J. a significant difference between the two is the Louis vuitton uk of digital goods. 200 5 . Louis vuitton are willing to sacrifice private gain to reward pro-social behaviors and to punish free riders Clark and Sefton 2001. E. 2005. Jian. Our analysis provides empirical evidences to show that indirect reciprocity is an important f actor for contribution. individuals are less likely to reciprocate to these contributors in kind. S. 1986b. Honolulu. J. Our analysis also has sheds lights on individual motivations of enforcing social norms in social networks. The correlation between the two variables raises concerns about multicollinearity. Nature 393 11 573-577. 2006 categorize the motivations into intrinsic. While a significant number of users in these networks free ride on others?? 2 Such costs mainly manifest in the form of opportunity costs in stead of outright financial costs.
J. In sum. B. Fe hr and Gachter 2000b show that. Contributor characteristics influence indirect reciprocity in two ways. NJ. Frohlich. Jian. K. Journal of Economic Psychology 26 5 711-731. Management Science. Through a glass darkly: Louis vuitton handbags uk technology design. Emerson 1976 . L. American Economic Review 83 5 1281-1302. or a gift. or in other forms. therefore... A. Falkinger.. E. et c. 2004. R. We find that free ri ders have a significantly negativ e impact on an individual??s contribution H1b . image score. In the context of social networks. A. Management Science. L. M.
Optimal investment in knowledge within a firm using a market mechanism. 32 Faraj. Quarterly Journal of Economics 114 3 817-868. Open source software and the ??private-collective?? innovation model: Issues for organization science. Besides experience. 2005. and K. computer proficiency. The conflicts lie in the contribution of uploading bandwidth Casadesus-Masanell and Hervas-Drane 2007 . Our results reveal that individuals have inherent incentive to enforce social norms on others even if the enforcement is costly and brings no direct be nefits. complexity. Rockenbach. Evolution of indirect reciprocity by image scoring.. indicating that the multicollinearity problem is not severe e nough to affect the regression results. Thomas-Hunt. and S. Unde rstanding the motivations. Available at SSRN: ssrn abstract=953072. individuals?? contribution levels gradually decrease to the equilibrium level of zero contribution. The second set identifies individuals?? incentive to enforce social norms by punishing free riders and rewarding contributors. Other Drivers for Contributions Besides concerns for indirect reciprocity. Slaughter. S. Nature 432 7016 Louis Vuitton Outlet UK P. J. religion belief. several important differences. This is consistent with the reputation mechanism that makes these contributors more concerned about the long-term sustainability of the network. Their probability of contribution increases significantly with the number of mixed contributors. Valacich. participation and performance of open source software developers: a longitudinal study of the apache projects. Third.
Huang. Users that obtain a specific title from a peer-to-peer network are likely to be more concerned about the long-term sustai nability of the network as the valu e of their reputation depends on the survival of the network. To develop an empirical hypothesis from the self-interest theory. Whinston. Positive reciprocity could lead to a chain effect that dramatically increases contribution to the network while negative reciprocity could quickly doom the network. Annual Reviews in Sociology 2 3 335-362. reciprocation Louis Vuitton Cheap music files provides little value to contributors. Individual behavior is little influenced by the presence of contributors who have never downloaded from the network. th ey do not capture the dynamic nature of so cial networks.?? The important insight from Kandori 1992 is that the enforcement of social norms is itself a public good and. Telang. Rockenbach. The increase is consistent with the finding from economic experiments and Figure 1. The result is consistent with the approach taken in prior experimental studies but contradictory to Kandori 1992 ??s suggestion that enforcement of social norm is itself a public good. H7b: Social Enforcement ?C a contributor??s probability of providing preferential services to other contributors decreases when she observes an increase in contributors in a peer-to-peer network. 2 it i itContributionStatus t ?? ?? =++++ 1it it BX BZ 2 it i itServerStatus t ?? ?? Louis Vuitton UK 1it it ?? X ?? Z In the above models. M. 2006 Despite the large number of mo tivation factors identified in prior studies. The recipient of the helpful action could also return favors to a third-party. Alok Gupta and Yiwei Jin. and N. 2004. P. UIUC Working Paper . Wasko. B. A. S. and M. 2008. American Economic Review 90 1 247-264. The advent of online marketplace makes indir ect reciprocity an important consideration Novak and Sigmund 2005 .. Contributor characteristics influence indirect reciprocity in two ways.
here X contains demographics and Louis vuitton uk store characteristics,
distance of consumer i to store j , ?? is an unobserved store quality that may vary over time, and ??
is an idiosyncratic error term. If stor e quality does not vary over time, then ??
jt
= ??
j
for all t .
Including store dummies in the utility specification will deal with the endogeneity problem
(Nevo, 2000). The benchmark model of demand includes store fixed effects.
However, if store quality varies over time, then we can decompose the unobserved store
quality into two components:
jt j jt
?? ?? ?? ? + = .
where ??
j is the component of quality th at does not vary over time, and ???
jt
is the component that
varies over time (Nevo, 2000). Endogeneity bias can arise through correlation changes in store
quality over time ? ??
jt
and variables such as price p and distance d. While including interactions
of store and weekly dummies would control for the endogeneity, this requires a large number of
parameters to be estimated, which is not computationally feasible.
To check for the extent of such bias, I modify and re-estimate my structural model; I
include interactions of store t ype with quarterly dummies into the demand model to capture some
aspect of the quality changes ? ??
jt
over time. If the endogeneity bias is large, then I would expect
the results from this extended model to vary su bstantially from the benchmark model. On the
other hand, if the bias is not large, then I would expect the results to be similar across the two
specifications. The estimates from the extended mode l table indicate that the parameter estimates
are similar to the benchmark model; the magnitude of any endogeneity bias does not appear to be
large.
A.4 Bootstrapping to Adjust for Noise in Price Estimates
34
Since I use an estimate of the price variable in the utility specification, I need to adjust the
standard errors of the demand coefficients to account for noise in the price estimates obtained in
the first step. I employ the following procedur e: I bootstrap the price regression 100 times. If N
denotes the number of observations in the price dataset, then each bootstrapped sample consists
of N observations drawn with replacement from th e price data. For each bootstrapped sample, I
re-estimate the Louis vuitton uk regression, use the results to calculate the estimates of price for each store
in the consumer??s choice set, and re-estimate the mixed nested logit model with the new price
estimates. I add the variance in parameter estimates ove r the bootstrapped pr ice samples to the
variance in estimates from the Louis vuitton handbags uk dataset. The standard errors were calculated using the
BHHH approximation to the Hessian with a numeric gradient. The bootstrap procedure produces
a valid correction for the standard errors if the moment conditions from the price regression and
the demand estimation are orthogon al (Newey, 1984). This is a plausible assumption, since my
sample consists of individuals from several different markets dispersed across the U.S. A
sampled individual??s demand comp rises a very small portion of the aggregate demand in each
market and very little influence on market price.
35
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Engineering, MIT.
Berndt, E., B. Hall, R. Hall, and J. Hausman (1974): ??Estimation and Inference in Nonlinear
Structural Models,?? Annals of Economics and Social Measurement, Vol. 34, pp. 653-665.
Berry, S., J. Levinsohn, and A. Pakes (1995): ??Automobile Pri ces in Market Equilibrium,??
Econometrica, Vol. 63, no. 4, pp. 841-890.
Bhat, C. (2001): ??Quasi-random Maximum Simulated Likelihood Estimation of the Mixed
Multinomial Logit Model,?? Transportation Research B , Vol. 35, pp. 677-693.
Brynjolfsson, E., J.Y. Hu, and M.S. Rahman (2008): ??Battle of the Retail Channels: How
Product Selection and Geography Drive Cross-Channel Competition??, mimeo.
Cardell, N.S. (1997): ??Variance Components Stru c
chased by a given household Louis vuitton uk by the
weekly number of DVDs purchased by an individual is approximately 0.47 with 97% of households purchasing at
most 1 DVD per member.
31
of the parameters with respect to the number of draws, since models may appear identified at
lower numbers of draws when they are in fact not. Th e parameter estimates and standard errors
were stable with respect to different start values and to 200, 1000, and 4000 Halton or random
draws.
15
A.3 Unobserved Consumer and Store Characteristics
In the benchmark demand model, consumer ta stes are correlated among stores of the
same type in unobserved ways. The model also allows consumers to have an unobserved taste
over distance and traveling. The store fixed effects capture a store??s unobserved quality that is
fixed over time.
One concern is that additional unobserved characteristics (not captured by the store
dummies) may still exist and be correlated with pr ice. I conduct a series of checks to implicitly
test for the magnitude of any endogeneity bias.
16
First, I examine whether the estimates from my
benchmark model of demand suffer from the classic symptoms of endogeneity bias. Then, I
consider a direct extension to my structural model to check for the extent of any endogeneity
bias.
15
I tried more general specifications of the mixed logit model, e.g., a full correlation matrix for idiosyncratic tastes
across store types, but the estimates were not stable with respect to the number of draws. For the creation of my
optimization procedures, I am grateful for the insights illuminated in the estimation al gorithm created by Kenneth
Train, David Revelt, and Paul Ruud.
16
Note that the two common methods for correcting endogeneity are not applicable in the current context. Under the
??fixed effects?? approach of Berry, Le vinsohn, and Pakes (1995), a contraction mapping is used to concentrate out
the market-specific fixed effect s. In my sample, a market consists of a DVD title and geographic pair; in most cases,
I only have one observation per market. Consequently, I ca nnot calculate the market share or concentrate out the
fixed effect for each market. On the other hand, the control function approach of Petrin and Train (2006) uses a two-part procedure. In the first stage, the endogenous variable (price) is regressed on all exogenous factors. In Louis vuitton uk second
stage, the demand model is re-estimated with a function of the residual from the price regression explicitly included
in the utility specification along with the price variable. In my model, my measure of price is already a predicted
value from a hedonic price regression, which I used to estimate prices across all alternatives Louis vuitton handbags uk a consumer??s choice
set. Consequently, I cannot include a residual correction.
32
First, the results of my benchmark model do not appear to exhibit the classic symptoms
of endogeneity bias. Although the model contains store dummies which control for aspects of
(unobserved) store quality that are constant over time, any time-varying unobserved quality of a
store could be correlated with price. A classic symptom of not accounting for this correlation and
endogeneity is an upward-sloping demand curve. With this endogeneity bias, demand estimates
and elasticities may mistakenly indicate that consumers prefer higher prices because these higher
prices are correlated with high er (unobserved) quality. For my model, the estimated own-price
elasticities in Table 7 are negati ve and with plausible magnitudes. Most estimates lie in the -2.0
range. Another implication of price endogeneity found by Chintagunta, et al (2005) is that
unmeasured brand characteristics could lead to an over-estimate of the variance of unobserved
tastes; in my model, this would lead to an upward bias in the estimated coefficient on the
variance of the random coefficient on distance. In Table 6, the estimated standard deviation of
the log of distance coefficient is relatively small (0.127), as unobs erved tastes do not play a large
role in consumer??s preferences over stores. Another direct consequence of endogeneity bias is
that the estimated marginal disutility of price and distance will be biased, and the estimated
marginal cost of traveling, which is the ratio of the two measures, will also be biased. The
estimates from my demand model yield reasonable magnitudes for th e marginal cost of travel
(see Section 4.2).
Secondly, in addition for checking for symptoms of endogeneity bias, I take a more direct
approach by considering an extension to my structural model. To clarify my approach, for
convenience, suppose that consumer i ??s utility from traveling to store j in week t is given by:
ijt jt ijt ij jt ijt
X d p U ?? ?? ?? ?? ?? + + + + =
33
w
The integral does not have a closed form expre ssion, so I evaluate it num erically by taking draws
of ?? from the population density f(??) and calculating L
ij
(??). I do this R times and take the
average:
??
=
=
R
r
r
ij ij
L
R
P
1
) (
) (
1
?
?? .
By construction, this simulated probability is an unbiased estimat or whose variance decreases as
the number of draws R increases. It is smooth (twice-differentiable) and sums to one over all
alternatives (Train, 2003). Si nce it is strictly positive, it s logarithm is defined.
To calculate the simulated probability, I use Halton draws instead of random draws in
order to increase efficiency (Halton, 1960). Halton draws achieve greater precision and coverage
for a given number of draws than random draws, since successive Halton draws are negatively
29
correlated and therefore tend to be ??self-correcting?? (Train , 2003). In fact, Bhat (2001)
demonstrates that for a mixed logit model, 100 Halton draws provided results that were more
accurate than 1000 random draws. Consequently, the application of Halton draws allows a
decrease in computation time wit hout sacrificing precision. In addi tion, I apply the same set of
draws to each iteration of the optimization routine in order to prevent chatter (McFadden, 1996);
differences in the objective function at two different parameter values do not arise from different
sets of draws.
Next, I use the simulated probabilities to form the log likelihood. I maximize the
simulated log likelihood over the parameters ( ??, ?? , ?? , b, s, ?? , ??, ??) where b and s describe the
mean and standard deviation of the population dist ribution of log(??
i
). In Table 6, I report demand
estimates for 100 Halton draws. As a measure of goodness of fit, I find that the predicted market
shares of each store do not differ by more th an 3.5% from the actual market shares.
The Simulated Maximum Likelihood estimator is consistent, asymptotically normal and
efficient. If the number of draws R increases at a rate faster than the square-root of the number of
observations, then the Simulated Maximum Likelihood estimator is asymptotically equivalent to
the Maximum Likelihood estimator (Hajivassi liou, 1993 and Hajivassiliou and Ruud, 1994).
I calculate own- and cross-elasticities fo r price and distance by taking the average
percentage change in an individual??s predic ted probability for each alternative from a 10%
increase in price (or distance) and divide the measure by 0.10 (T rain, 2003). The standard errors
of the elasticities were obtaine d by a parametric bootstrap wher e Louis vuitton uk draw from the asymptotic
distribution of the estimated parameters 100 times. For each draw, I calculate the elasticity
matrix, and then I calculate the sample standard deviation of the elas ticities over the draws.
30
In general, a mixed nested logit mode l relaxes the Independence of Irrelevant
Alternatives (IIA) assumption among alternatives in a given Louis vuitton handbags uk the ratio of the market shares
of any two alternatives within a nest will depend on the characteristics of all other goods. The
introduction of the random coefficient on distance implies that while substitution still occurs
disproportionately among stores of the same type, substitution among alternatives in a nest will
now depend on the characteristics of all other stores as well. This can be seen by taking the ratio
of the formulas for the probabilities of any two goods within a nest; the denominators do not
cancel because of the integral. On the other ha nd, since distance is defined as zero for online
stores, the online stores exhibi t the IIA property. As a result, the cross-elasticities of
Amazon.com, Columbiahouse.com, and Bestbuy.com with each brick-and-mortar store will be
identical.
For consumers with multiple purchases of DVDs, I assume that the demands for each
DVD are independent.
14
If the demands for multiple purchases are correlated, then my estimates
will still be consistent but ineffi cient with incorrect standard errors (Train, 2003). Also, I restrict
each consumer??s choice set to stores within 35 miles of her zip code with the exception of
Blockbuster Video (whose website only reports stores within a 20 m ile radius of your zip code).
I find that my qualitative results are not sensitive to whether I restrict the radius to 20, 25, 30, or
35 miles.
While the demand model presented is theoretically identified, I perform several checks to
confirm that it is empirically identified by the data. In partic ular, Ben-Akiva, et al. (2001),
Walker (2002), and Chiou and Walker (2007) emphasize the importance of checking the stability
14
From the dataset, I find that nearly all households purchase no more than 1 DVD per member. If I divide the
weekly number of DVDs pur
ary: even conditional on store lv bags and consumer
characteristics, Wal-Mart appears to be a desirable place to shop relative to most other stores for
the average consumer. In fact, if Blockbuster Vide o can be thought of as the ??traditional?? place
to purchase a video while Wal-Mart is the ??new?? di scount retailer, then my results imply that an
??average?? 35-year old female who lives in an urban area and has a college education and
children under the age of 18 is willing to pay $6.06 to shop at Wal-Mart instead of Blockbuster
Video (for a $15 DVD if both st ores are 5 miles away.)
26
Appendix A: Details of Demand Model and Estimation
A.1 Model
Following Berry, Levinsohn, and Pa kes (1995), I model a consumer??s choice of store as a
function of store and consumer characteristics while allowing for unobserved heterogeneity in
preferences over store characteri stics and correlation in tastes among store of the same type.
Consumer i ??s utility from traveling to store j is given by:
) , , , , , , , ( ?? ?? ?? ??
ij i j j ij i j ij
p d h z U U =
where z
j
is a vector of observable store characteristics, hi
is a vector of observable consumer
characteristics, dij
is the distance to store j for consumer i, pj
is the price at store j , ??
j
captures any
unobserved characteristics of store j , ??i is a vector of unobserved ch aracteristics of consumer i ,
??
ij
is individual i??s idiosyncratic taste for store j , and ?? is a vector of parameters to be estimated.
The terms ?? and ?? capture the two sources of unobserved heterogeneity in consumer
preferences over store types. Interactions of the unobservabl e consumer characteristics ?? and
observable store characteristics z allow tastes for store char acteristics to differ among the
population in unobservable ways. Furthermore, specifying an error structure that allows for
correlations in the idiosyncratic taste ?? over particular stor es generates more flexible substitution
patterns.
Each consumer will choose the store that maxi mizes her utility. More specifically, the set
of values of the idiosyncratic error ?? and unobservable consumer characteristics ?? that induce
consumer i to choose store j is given by:
)} , , , , , , , ( max ) , , , , , , , ( : ) , {( ?? ?? ?? ?? ?? ?? ?? ?? ?? ??
ik i k k ik i k
k
ij i j j ij i j ij
p d h z U p d h z U A ?? =
27
where k indexes all possible stores in consumer i ??s choice set. lv bags ?? has distribution f
1
(?? ) and ?? has
distribution f2
( ??), Louis vuitton uk the probability of consumer i choosing store j is:
??
??
=
ij
A
i j
d d f f h P
??
?? ?? ?? ?? ) ( ) ( ) (
2 1
.
To obtain the market shares of the stores, I need to integrate the individual choice louis vuitton shop over the distribution of observable consumer characteristics h in the population. If h
has distribution g(h), then store j has market share:
??
= dh h g h P s
j j
) ( ) (.
A2. Simulated Maximum Likelihood
I estimate the demand model using Simula ted Maximum Likelihood with a numerical
gradient. In my numerical search, I employ th e BHHH algorithm which applies the Information
Identity to exploit the fact that the objective function being maximized is a sum of log
likelihoods over a sample of observa tions (Berndt, et al. 1974).
To construct the log-likelihood function, I calculate the predicted probability (as a
function of the utility parameters) for each cons umer making hisher observed choice. A person
chooses the alternative with the highest utility. For convenience, I drop the subscripts for v, m,
and t , and re-write utility for consumer i purchasing a video at store j as
nj i ij ij
X U ?? ?? + = where ??
i
= (??, ??, ??
i
, ??, ??, ??, ??).
Conditional on the utility parameters ??
i
, the choice probabilities follow the conventional
formulas for nested logit. The probability of consumer i choosing store j, conditional on hisher
tastes ??
i
is given by:
28
???
??
=??
?
??
?
?
?
?
?
?
?
?
?
?
?
?
=
5
1
1
) exp(
) exp( ) exp(
) (
h TYPE k
i ik
TYPE k
i ik i ij
i ij
h
g
X
X X
L
??
??
?? ??
?? ?? ?? ??
??
where store j belongs in nest g. The first term in the numerator describes the utility from
choosing alternative j , and the second term in parentheses weights the probability by the utility
from all alternatives in nest g. The denominator is a function of the utility of all possible
alternatives. The log-sum coefficient ?? appears in the choice probabi lity due to the nesting of
alternatives. Note that if the log-sum coefficien t equals one, then the formula reduces to the
standard logit probability.
Consequently, the unconditional probability of person i ??s choice is the integral of L
ij
( ??
i
)
over all possible values of ??
i
(Train, 2003):
?? ?? ?? d f L P
ij ij
) (
California.
A total of 37 households, that comprise slightly over 1% of my sample, are affected by
the entry of these 15 new stores, and the average change in distance to the nearest Wal-Mart was
2.6 miles. I simulate the predicted probability of choosing each store before and after the entry of
the 15 Wal-Mart stores. Table 14 reports the es timates and standard errors for the average
predicted probability of choosi ng each store for the 37 households before and after the entry of
Wal-Mart, and the table also shows the average change and percentage change in the predicted
probabilities. The average change in probability of choosing Wal-Mart increased by 5.92
12
Business Week Online, ??Is Wal-Mart Too Powerful???, October 6, 2003.
23
percentage points, which accounted for 27% increased probability, and the average change in
probability of choosing Target and Kmart dropped by 1.45 and 0.19 percentage points.
The introduction of the 15 new store locations improves Wal-Mart??s position relative to
other mass merchants, and now the probability of choosing Wal-Mart is on par with Best Buy.
However, it does not make Wal-Mart the overwhelmingly preferred store, since the entry occurs
in regions with several existi ng Wal-Mart stores nearby. For instance, the Norwalk store which
opened in 2004 lies within 2 miles of an existing store at Cerritos.
6 Conclusion
The retail sector contributes a significant portion of spending in the U.S. economy, yet
empirical work on the nature of competition among retailers has been limited by the availability
of data. Wal-Mart??s overwhelming presence domin ates the retail landscape. Wal-Mart generates
approximately $250 billion in annual sales and attracts 20 million shoppers to its stores each
day.
13
My paper investigates the source of Wal-Mart??s dominance by examining consumer
preferences for store choice. My paper focuses on retail compe tition in the sales of DVD among
a wide array of store types (i.e., online, mass merchants, video specialists, electronics, and music
stores). I exploit a detailed da taset that combines household transactions with the locations of
surrounding stores, and I apply a mixed nested logit that allows fo r heterogeneity in a
consumer??s dislike of distance a nd for correlation in a consumer??s unobserved tastes for stores of
the same type.
louis vuitton walletLouis vuitton uk 13
The New York Times, ??Wal-Mart, a Nation Unto Itself??, April 17, 2004.
24
I find that substitution occurs proportionately more among stores of the same type. For
instance, a change Louis vuitton handbags uk the price or distance to a Wal-Mart store has the largest impact on the
market shares of Target and Kmart. A striking result is that even conditional on the price of a
DVD and distance, the average consumer still prefers to shop at Wal-Mart over most other
stores. This result remains even after allowing for a Wal-Mart specific effect in my demand
model, and it suggests that Wal-Mart??s dominant market share may not be due solely to low
prices and location. This preference cannot wholly be attributed to Wal-Mart??s one-stop
shopping convenience, since the average consumer pr efers Wal-Mart even relative to other mass
merchants, such as Kmart and Target.
To capture the magnitude of consumers?? prefer ences for Wal-Mart, I consider a pa rticular
public policy issue. I use the estim ates from my model of demand to simulate the effects of Wal-Mart??s entry into several proposed locations in California. I find that the entry of 15 proposed
Wal-Mart stores in California during 2004 increases the predicted probability of choosing Wal-Mart for the affected households within my sample by 27%. These proposed sites are often
located in urban regions with se veral existing Wal-Mart stores in adjacent cities; the average
decrease in distance to the nearest Wal-Mart store falls by 2.6 miles.
The rise of Wal-Mart relates to a general shift away from traditional department stores
and towards shopping at discount st ores over the past decade, and consumers?? strong preference
for Wal-Mart has implications for the calculation of the Consumer Price Index (CPI). Hausman
(2003) discusses how the failure to properly account for these shifts in shopping patterns leads to
a first-order ??outlet?? bias in the CPI. Currently, when the Bureau of Labor Statistics rotates a
retail good from a discount store into the CPI, it treats the discount store??s product as new good
instead of a reduction in the price of an existing good. The 2002 report from the National
25
Research Council (Schultze and Mackie, 2002) supports the underlying assumption by the
Bureau of Labor Statistics that stores such as Wal-Mart may not have a lower ??service-adjusted??
price. However, my results suggest the contr
Electronic copy available at: ssrn.comabstract=1261243 louis vuitton wallet
* I would like to thank Glenn Ellison, Nancy Rose, Paul Joskow, and Sara Fisher Ellison for advice and helpful
suggestions. This paper has benefited from conversations with Emek Basker, Melissa Boyle, Norma Coe, Jerry
Hausman, Joanna Lahey, Allison McKie, Erich Muehlegger, Aviv Nevo, Whitney Newey, Kenneth Train, Joan
Walker, Birger Wernerfelt, and participants of several workshops, including the MIT Industrial Organization
Workshop and Econometrics Lunch. I am particularly grateful to Alexande r and Associates for allowing me access
to the data used in this study; I would also like to extend my thanks to Adams Media Research and Tax Data
Systems. Financial support for this project was provided by the Shultz Fund.
** Author??s e-mail: lchiou@oxy.edu.
Empirical Analysis of
Competition between
Wal-Mart and Other Retail Channels
Lesley Chiou
January 2008
Abstract
This paper quantifies the degree of competition among Wal-Mart and different retail
channels by exploiting a unique dataset that describes a consumer??s choice of store.
Using a discrete choice model, I estimate a consumer??s choice of retailer in the sales
market for DVDs among online, mass merchant, electronics, video specialty, and music
stores. Wal-Mart competes more intensely with other mass merchants, and conditional on
price and distance, the average consumer sti ll prefers Wal-Mart over most other stores. I
also consider a counterfactual experiment regarding the entry of Wal-Mart into 15
proposed store sites in California.
Electronic copy available at: ssrn.comabstract=1261243
2
1 Introduction
In 2002, the retail sector in the U.S. accumulated $3,173 billion in sales and rivaled the
manufacturing sector with a total employment of approximately 15 million workers. Currently, a
dramatic transformation is reshap ing the retail industr y as stores differentiate across formats,
pricing, and location. At the forefront of this change is the expans ion of Wal-Mart. Over the past
decade, Wal-Mart has grown from a modest, family -run business to the lead ing U.S. retailer with
approximately $250 billion in revenues in 2002 . Dubbed the ??Beast fr om Bentonville??, Wal-Mart??s phenomenal growth has revolutionized retailing by offering a wide assortment of
products at discount prices; every week, Wal-Ma rt??s 4,750 stores attract nearly 138 million
consumers, and an estimated 82% of U.S. consumers purchased at least one item from Wal-Mart
in 2002.
1
Wal-Mart represents 9% of U.S. retail spending
2
. Its louis vuitton wallet extends into almost every
major U.S. consumer-products company; Wal-Mart is also Louis vuitton uk biggest outlet,
accounting for 15% to 20% of all sales of CDs, videos, and DVDs.??
3
What attracts consumers to Wal-Mart? Does Wal-Mart maintain an advantage in the
retail sector solely due to lower prices, increased proximity, or the Louis vuitton handbags uk of one-stop
shopping? This paper examines the source of the Wal-Mart advantage by i nvestigating the nature
of retail competition. To uncover a consumer??s pr eferences over Wal-Mart, I estimate a model of
consumer choice over stores that controls for di fferences in prices and locations across stores
within the consumer??s choice set. My discrete choice model allows for unobserved heterogeneity
in consumers?? tastes over different store types, since the extent to how people feel about Wal-Mart will depend upon substitution patterns across different store types ?C mass merchants,
1
Business Week Online, ??Is Wal-Mart Too Powerful???, October 6, 2003.
2
The Los Angeles Times, ??Wal-Mart Posts Modest Sales Gain??, September 7, 2004.
3
Business Week Online, ??Is Wal-Mart Too Powerful???, October 6, 2003.
3
specialty, and online. For instance, the rise of e-commerce has added a new dimension to retail
competition by reducing search and travel costs; Amazon.com has emerged as the leading online
retailer by attracting $1.39 billion in sales during 2004.
Retail competition with Wal-Mart is an important public policy issue because of the
expansion of Wal-Mart in recent years. The rapi d growth of Wal-Mart across the country and its
aggressive plans to expand the number of its stores in California have raised concerns about the
magnitude of business-stealing effects it could fuel. With my demand estimates, I simulate the
effects of entry of Wal-Mart into additional locations in Southern California.
Research on cross-channel competition has been limited due to the lack of data on
consumers?? choices across retailers and distances traveled. Fortunately, I am able to exploit a
detailed dataset on DVD purchases from Alex ander and Associat
hases quadrants Louis vuitton uk are depicted in Fig
Fig 3. The two phases quadrants of Formulation part I and phase II as
implementation.
A group dance sequence involves education of team members,
facilitate proper synergy between members and lays a major
emphasis on aesthetic interaction function. By applying
principles of TQM to accomplish this task and enhance
pleasure product realization may be maximized. To study its
objective of forming strategy and developing a new form of the
PDCA cycle on the case study is further explored.
The sequence includes the following points:
1. Prop:: Its function was described in foregoing discussion.
The state as to how the team members use the prop,
deploy it for several purposes and at the same time be
innovative is the crux of TQM application. For example,
instead of holding a stick and dance, one can showcase
numerous ideas and thoughts with it. Louis vuitton uk a cricket
sequence could be shown, its execution, replays and
what not using even a Flower stick. The game plan is in
the individual??s creativity. This innovation is substantial
if it would definitely appeal to people. Thus one needs to
explore, innovate and excel.
2. Look atheistic: If you aren??t beautiful you cannot catch
the gaze of people. For this one must look good, wear
good costumes and appealing outfits so as to win public
attention. The essence of good health is in good habits, Louis vuitton handbags uk at the base of TQM & SARGAM therefore are good
and simple living and high thinking.
3. Interaction: The essential requisites or rules of the game
are:
? With Prop: There needs to be full usage of the prop
by the team members.
? Between Team: The team members need to interact
among themselves and should lead the dance with
full synergy and energy.
? Between team and prop: As the rule follows, the
team members should share an appropriate
chemistry among themselves and the prop they use.
The Take Home
The tactical benefits of implementing Strategic Total Quality
Management (TQM) Sargam or group dance are two fold:
Competitiveness
The team members should incorporate elements of synergy
and synthesis for being the best. Each member must be clear
with hisher interaction with the prop, its function and what
the team needs to convey.
Competency
The gains of competence in being the best. Above all bring in
aestheticism and innovation in whatever you do. It thus put
the practitioner in a Winning position. Always!
The methodology of success is a three part process as shown
in Fig 4.
Fig 4. The hierarchy of a winning strategy. A unique
formulation could be formed between synergy and strategy as
shown
Viz step I: Formualtion of a strategy.
step II: Development of a working team, say a chorus group or
a Dancing troupe, and
step III: Finally implement the strategy.
The strategy should be weighted so that it is balanced, well
timed, and fulfills the three pu rposes steps as detailed above
viz. Props, Looking atheistic, and exploiting Interactions. This
formulation should be unique and well planned, so that it
interests the audience. The un iqueness could be formed by
integrating between synergy and strategy
CONCLUSIONS
The goal of Quality is synonymous with the goal of fine arts.
As SARGAM stimulates the heart, the TQM stimulates the
mind. Both pertain to louis vuitton wallet system, the mind being more material,
and hear as more abstract. SA RGAM or TQM, the objectives
are same.
REFERENCES
1. Quality management principles,
www.iso.orgisoiso_cataloguemanagement_standard
siso_9000_iso_14000qmp.htm
2. P Thareja, (2006), ??Customer Delight: A Touchstone In The
Quality??, Quality World, Vol III Issue No 2, , Feb 06
3. Priyavrat Thareja, Mannu Thareja, (2005) ??Competence
Thru?? a competence protocol??, FOUNDRY, A Journal of
Progressive Metal Casters, Vol XVII, Nov 4, JulAug 2005
4. Priyavrat Thareja And Mannu Thareja; (2007), ??The Quality
Brilliance Thru?? Brilliant People??, Quality World, Vol IV No 2,
Feb 07.
Cite this paper as
Prof P Thareja and Mukul Thareja; (2009), ??Strategic Total
Quality Management (TQM) in a group dance??, Quality World,
Vol VI No 3, Mar 09
whip of a stick would also do. The essence is that there needs
to be no miscommunication, because that leads to fear.
Elimination of fear is a prelude to inspiring, encouraging and
recognizing people??s contribution.
Principle 3:
Involvement of people:
The quality of the troupe is at the governance of a dance team
and it provides motivated, committed and involved people
within the team. The team members are accountable for their
own performance and also responsible for synergizing the
Total performance. The synergy is explained well by an adage:
One Plus One Makes Eleven. The job of an individual is to
ensure harmonizing ones conduct with the rest of them (out to
in) and thereby integrate with the schema.
The team thereby contributes towards continual improvement.
It leads to identify constraints in their performance and
bringing out their best. They n eed to perceive the song??s beat
and rhythm and take responsibility to suggest a step or two.
This would enhance competence.
Principle 4:
Process Approach:
The essence of product realization Louis Vuitton Outlet Online in the qualifications of
the process(es). When a process approach is followed results
are surer to be achieved. This provides improved, consistent
and predictable results. It also leads to risk evaluation impact
ing activities (say some stunts, formations, etc) on the
audience and judges.
Principle 5:
System approach to Management:
From concept to an act, the apt transformation in art is the
systemic core of product realization in Dance. This is to
identify, understand and manage interrelated steps which fit
into your dance for achieving efficiency and effectiveness. It
leads to harmonization and inte gration authentic louis vuitton outlet processes as to how
it would appeal to the audien ce. There is a measurement and
evaluation system implicit in it, and is necessary to control the
system progression for overall continual improvement of both
Art and the quality of Transformation.
Principle 6:
Continual Improvement:
There should be improvement in overall performance. This is
not a one stage process. It could be done at any level, say
adjusting the position of team members according to their
aesthetic appeal and performance. It helps achieving
coordination among team members and harmonization of
dance steps for increased performance. It leads to establishing
the goal and measures of achieving the top position. It also
recognizes and acknowledges improvement.
It is necessary that the improvement is made sustainable. So
one has to search more creative and enhanced ways of doing
things such that improvemen t is tangible (Thareja and
Thareja, 2007).. The system is exhibited in Fig 2.
New
Better
Enhanced
Fig 2. The system of Continual Improvement:
Principle 7:
Factual approach to decision making:
The organization, control and improvement all need to be
governed in a structured way. It involves analysis of the song,
(for the harmony and accuracy of SARGAM, the science of
variation as experienced in past history, the beat and other
requisite information for effective decisions. One can
demonstrate the effectiveness of their past performances
through reference to old videos or steps. This leads to factual
analysis balanced with experience and intuition.
Principle 8:
Mutually beneficial supplier relationships:
The main purpose is to seek value, Flow the value through the
process and further augment by creating value. Ideas from
other teams may help further contribute to creation of this
value and it often leads to poo ling of expertise with partners.
There is information sharing and joint development.
IMPLEMENTATION AND REVIEW
It emerges from the conceptu alization of phenomenon
above that whether it is Group Dance or a SARGAM, TQM
or simple living and high thinking, it all requires a
constant motivation to improve.
Following case study would lead us through the actual
consummation of a Prop Dance Sequence, and the learnings to
the goal of perfection and winning:
objective louis vuitton wallet we consider an objective of making a dance sequence of
about 5 minutes with each team member being given a song
and a prop. The prop is a device (say stick, ribbon, bucket etc).
to identify the mechanism how one uses it to display the
process approach or system approach integrating Prop and the
team towards maximizing pleasure. The prop becomes a
constraint or a device to enhance pleasure remains to be seen.
Like give a flower, and where can it be placed for maximizing
TQ: a Flower pot? Or the hair of a lady, or on the Jacket ( the
Pandit Jawahar Lal Nehru style).
By applying principles of TQM to accomplish this task and
study its objective of forming strategy and developing a new
form of the PDCA cycle.
purpose is in synchronization wi th that of SARGAM. Both can
be implemented through repeatedly improved quality and
performance, a matter of being consistently consistent. Unlike
a competitive strategy, whose focus is on competitors, the
focus under TQ (or customer value strategy) is on customer. It
is akin to the situation that a buffalo can??t be a competitor. In
a systemic world, the mutually beneficial customer supplier
relationship is served by both customers and suppliers as in a
circular path. Evidently Customer satisfaction is at the core of
both TQ and SARGAM and having a customer focus is one of
the critical factors in implementation of both TQ and
SARGAM.
SARGAM is satisfaction
Materially it is concerned with the customer??s positive and
negative feelings about the value received from a product. An
artist perceives that ??It shows how they get delighted after
seeing an extremely wonderful and atheistic (aesthetic)
performance in each and every way, or how they get bored by
seeing an item which is nothing but mere slapstick
buffoonery.?? It is thus a more proactive Competitive Strategy to louis vuitton shop a high come back. Th e mechanism of improvement
involves an in depth study of competitors, analyzing their
weak points and thereby gaining knowledge of the Strategic
Quality Management imperatives. After implementing well
defined fruitful strategies, a launch is made to affect a break
in. Similar schemes are followed in SARGAM, though the
process emanates inside out. What pleases you must please
the customer too. After all the ingredients of delight for both
customers and suppliers are the same because of being in a
circular path. It must be noted that competitive strategy must
not lead lv bags imitation but should lead to ??Innovation??.
SARGAM augments (Customer) Value
The value to customer is defined as when customer is willing
to pay for the product or services. The payment may be in kind
or cash, paid directly or in directly. Around SARGAM, our
customer refers to the audience whose entertainment is to be
addressed. When we say that the primary objective of quality
is to give value to customers, it doesn??t simply mean
elimination of defects. Customer value has many dimensions.
For a good group dance it includes the performance of the
group as a whole, features included, coordination,
expressions, energy put in, aesthetics (artistic way of
performing which includes make up, costumes etc) and above
all the perceived quality of performance. Integration and
reliability also form the core features of both quality and
GROUP DANCE. The steps are physical. The drive is from
SARGAM.
Orchestration or chorus of a dance team:
As the name suggests, orchestration of a dancing team is a
group task and managing its TQM is a big work. To analyse
the tactical part of a dancing team the Principles of TQM can
be used as a framework. In other words the synergy of
SARGAM and TQ may be deployed by any team or group for
taking their dance towards the pinnacle of glory.
The best deployment of TQM is through the use of Eight
Principles of Quality Management:
Principle 1:
Customer Focus: The buzz world of a might performance is
WOW! The orchestration should infact be consumated in such
a manner that it appeals to th e participants audience at each
and every step. The underline is that there needs to be no
incidence of boring or sloppiest time in the whole duration
during which the team performs.
The system of customer focus desires full exploitation of
Knowledge and standards to give rise to befitting results and
improved satisfaction. The pa radigm is shown in Fig 1.
The Principle author of this paper maps it as one of the
important pre-requisites of TQM. Mind it, if the audience is not
shouting to their loudest of no ise or hooting, you are lacking
in this area of customer focus. ??Once More?? should be the
keyword which should spread lv outlet over once your performance
is finished.
Principle 2:
Leadership:
The orchestration is done under the leadership and guidance
of a ??conductor?? the head or choreographer whose job is to
teach, manage, guide, and synchronize the dance team. He
needs to create and maintain an internal environment in
which people can become fully involved in achieving their
target.
The leadership in conventional management is effected from
outside (Thareja and Thareja, 2005). But in TQM leadership is
driven at the behest of Team. In an orchestra the leadership
emerges from within. It is because the people vibrate to a
Customer
Knowled ge Base
New
Standards
Perfect Results
Fig 1. The system of Quality with customer at the
cntrestage.
dance sequence based on the tune of the leader. The tune is
essentially the SARGAM. It could have been voiceless. The
beat of footsteps, or
