Do you find it unfair when a friend gets a referral bonus after you bought the product they recommended? According to new research, the answer largely depends on social distance—or the closeness of a relationship—between the new and existing customer.
In the last five years, the percentage of U.S. citizens with social media profiles has grown from 56% to 81%. Companies want to take advantage of their customers’ social networks, so many encourage customers to promote their products by offering monetary incentives for referrals.
Researchers Yili Hong of Arizona State, Paul A. Pavlou of Temple University, Nan Shi of Shanghai University, and Kanliang Wang of Renmin University of China investigated the success of these online social referrals, with particular interest in the social distance between customers and their expectations of fairness in the distribution of referral rewards.
The research outlines three types of online referral incentives: rewards that go to only the existing customer, to only the new customer, or divided equally between the two. Groupon, for example, offers a monetary bonus to those who have made successful referrals. However, Dropbox splits their reward equally between both the old and new clients.
The researchers conducted both lab and field experiments with people in two types of personal relationships: a long social distance, such as an acquaintance; and a small social distance, such as a friend or a close relative.
Hong, Pavlou, Shi, and Wang found that acquaintances in long social distance relationships prefer the monetary reward to be split equally. But for close friends with a small social distance, people are less concerned about the fairness of the reward.
Interestingly, online referrals are more successful between friends with smaller social distances, despite the reward not being fairly split between friends.
The study is the first of its kind to consider both fairness and social distance in social commerce. “While fairness has been viewed as a fundamental prerequisite to successful referrals, it is only important for distant acquaintances and not close friends,” says Pavlou, senior associate dean and Milton F. Stauffer Professor in the Fox School of Business at Temple University.
This research provides new insight for companies designing online referral systems. Based on these findings, Pavlou says, “Companies can experiment with less than equal (fair) referrals to maximize the success of the referral while minimizing the cost of the reward.”
Learn more about Fox School Research.
Paul A. Pavlou is the Milton F. Stauffer Professor and senior associate dean at the Fox School of Business, and co-director of Temple University’s Data Science Institute. Dr. Pavlou has repeatedly been ranked number one in the world in publications by top publications in the Management Information Systems (MIS) discipline in 2010-2016, he has won several best paper awards, and his work has been cited more than 31,000 times by Google Scholar.
We caught up with Dr. Pavlou to ask what advice he has for doctoral students and aspiring researchers.
How do you determine a research question?
Observe what’s happening in the real world and try to see if you can contribute in those emerging areas. Start by seeing what is going on around the world, what companies do, what is happening in society, and trying to see what is interesting in the world and what excites industry and managers. It is about looking at the “big picture.” Often, an idea is not perfect the first time. You have to discuss it, improve it, sharpen it, and challenge it. You have to ask why people, academics, and managers would read your work—it should be an interesting problem that has broader societal implications. So you have to focus on what interests people and about what people would get excited. There’s simply no magic formula!
What happens once you have an idea you would like to research?
First, form a team that has complementary strengths. You look for researchers who either have or are doing work in a certain area. For example, if you are working with highly quantitative and empirical research, you need to find people who can deal with large scale data and sophisticated types of methodology. Sometimes you need an expert in an area who can guide the research in a certain way. You need to consider the unique advantages your project may carry. What do we have in terms of data? And keep asking, is this a practical problem that is exciting and relevant to industry and practice?
How can PhD students get feedback and develop their own points of view on research topics?
We have different forums to give feedback from different departments. There are school-wide events, such as the Young Scholars Interdisciplinary Forum and the PhD Paper Competition, where students can present their work, and we encourage them to be receptive to the feedback. There are also multiple department-specific events, and students should make an effort to present in front of the faculty. However, it is important that doctoral students have their own voice and viewpoints on their research topics. I do not want students to just go along with my feedback without questioning it. Students need to be able to defend their positions and not to agree without carefully thinking about the feedback. Students are supposed to know their topic better than anybody.
What advice do you have for current and prospective PhD students?
My advice is to do interesting research that is theoretically and methodologically strong. Try to be focused in your substantive area of expertise. It is best to be strong in one area versus being weak in two areas. Quality is more important than quantity! Also, be as rigorous as possible in terms of your methodology—and the doctoral programs are the best place to strengthen your methodological skills.
How can the Office of Research help doctoral students?
The Office of Research supports students in multiple ways. We provide services such as copyediting for manuscripts, and a workbook with tips for successful grant writing. We have small funding opportunities such as our new seed-funding program that is designed help students establish proof-of-concepts or complete a pilot study. We offer numerous databases for research, and can support travel arrangements for presenting at conferences. However, the most useful resource we have is the faculty and their time. In both the PhD program and Doctorate in Business Administration (DBA) program, we have advisors who can guide your research and dissertation.
Learn more about Fox School Research.
Research team continues to garner headlines
Last week, Fox School professors Dr. Vinod Venkatraman, Dr. Angelika Dimoka and Dr. Paul A. Pavlou, who identified an area of the brain that can better predict the success of TV ads, were featured in two publications. Locally, WHYY published an article supplement a well-produced piece for radio. (Audio available online.) Nationally, MIT Technology Review took a look into the future of neuromarketing, and spoke with Fox’s team on the subject.
University-wide exposure for Fox profs
Forbes recently featured the research findings of Fox School professors Dr. Vinod Venkatraman, Dr. Angelika Dimoka and Dr. Paul A. Pavlou. Internally, the researchers’ work made for the top headline in a recent edition of Temple Today.
Dr. Paul A Pavlou, the Chief Research Officer and Associate Dean of Research at the Fox School of Business, recently earned recognition as a world leader in scientific research.
Pavlou was named one of Thomson Reuters’ 2014 World’s Most Influential Scientific Minds, which published its list of honorees in June. Pavlou earned the distinction from the Intellectual Property and Science business branch of Thomson Reuters for citations of his work in a 10-year period, between 2002-2012.
The Milton F. Stauffer Professor of Information Technology and Strategy at the Fox School, Pavlou joined more than 3,000 fellow scholars across 21 fields of study for being among the world’s most-highly cited researchers in his or her specialty. Pavlou’s papers registered more than 12,000 citations over the last decade, as he became one of 95 researchers honored by Thomson Reuters in the field of Economics & Business.
“I do research for my own personal motivation, because I like to discover new things,” Pavlou said, “but it is a great recognition that others rely on your work and cite your work.”
This is not the first such recognition of Pavlou’s research. In 2011, he was rated as the world’s most-productive researcher by top management information systems journals MIS Quarterly and Information Systems Research, according to an analysis by the Association of Information Systems for the period 2010-2012.
Pavlou said he anticipates that his latest personal accolade, from Thomson Reuters, will render a double-edged impact at the Fox School. One of Pavlou’s goals, he said, is to continue to build Fox’s sterling reputation through highly cited, published papers from its students.
“I like to push the mentality that it’s not only (important) to get published, but to get published in well-read, well-respected journals,” he said. “Getting published by itself is not easy. Some may say, ‘It got published. I don’t care if nobody cites it. It’s there.’ But if you can take it to the next level and say, ‘This is something people will read, publish, cite,’ that’s what I’m trying to do.”