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.

Example of an online social referral ad

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.”

Their paper, “On the Role of Fairness and Social Distance in Designing Effective Social Referral Systems,” was published in MIS Quarterly in September 2017.

Learn more about Fox School Research.

For more stories and news, follow the Fox School on Twitter, Facebook, and Instagram.

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.
For more stories and news, follow the Fox School on Twitter, Facebook, and Instagram.

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
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.”

Paul A. Pavlou, a foremost scholar of Management Information Systems and Strategy, has been appointed Associate Dean for Research, Doctoral Programs and Strategic Initiatives at Temple University’s Fox School of Business and School of Tourism and Hospitality Management. Pavlou was recently named the Milton F. Stauffer Professor of Information Technology and Strategy by Temple’s Board of Trustees in recognition of his distinguished scholarship and service.

In announcing the appointment, Dean M. Moshe Porat said Pavlou will also serve as the Fox School’s Chief Research Officer, responsible for promoting research excellence, supporting sponsored research, leading outstanding doctoral education and pursuing strategic research initiatives to enhance the school’s reputation.

Paul Pavlou“In addition to being a very influential scholar, Paul is ambitious, energetic and thoughtful,” Porat said. “He cares deeply about Temple University and the Fox School of Business, and he has the commitment to elevate our school’s research performance and reputation to new heights.”

The Office of Research, Doctoral Programs and Strategic Initiatives, which Pavlou leads, aims to promote research and knowledge transfer for faculty and doctoral students, as well as to further increase the reputation of the Fox School as a prominent center for research and doctoral education.

The Office will oversee the research agenda of the Fox School, as well as external grants and the academic journals housed in the school. The Office will initiate, manage and support the dissemination of research information, research awards and visiting scholars.

The Office’s doctoral programs area will cover the schools’ two academic doctoral programs, the PhD in Business Administration and PhD in Statistics, as well as the recently established Executive Doctorate in Business Administration, an applied doctorate for executives and senior managers. The Office’s strategic initiatives function will oversee a variety of inter- and multidisciplinary initiatives to build and enhance connections to other schools and colleges within Temple, as well as to other universities and industry.

In a recent presentation of the vision of the Office of Research, Doctoral Programs and Strategic Initiatives, Pavlou stressed the importance of promoting research excellence and driving Fox faculty and doctoral students in a collaborative program for research that would result in sponsored projects and high-quality publications.

“Our vision is to enhance the reputation and impact of the Fox School as a global leader in research, doctoral education, industry outreach and community engagement to better serve our diverse stakeholders – students, faculty, academia, industry, government, the people of the Commonwealth of Pennsylvania and society in general,” Pavlou said.

Pavlou’s research has appeared in all top Management Information Systems (MIS) journals, and he was ranked first in the world in publications in the top two MIS journals (Management Information Systems Quarterly and Information Systems Research) during the 2010-12 period. His work has been cited more than 10,000 times by Google Scholar and over 3,000 times by the Social Science Citation Index. He received his PhD in Business Administration from the University of Southern California (USC) in 2004 and a Masters in Electrical Engineering from the Viterbi School at USC in 1999.

Despite the reputation of online marketplaces being distant and impersonal, through social technologies such as instant messaging, they can create the sense of personal and social relationships between buyers and sellers, termed “swift guanxi” in China, to facilitate loyalty, interactivity and repeat transactions, according to new research by Temple University Fox School of Business Professor Paul A. Pavlou.

Three researchers – in addition to Pavlou, Tilburg University’s Carol Xiaojuan Ou and Robert M. Davison of the City University of Hong Kong – studied data from TaoBao, China’s leading online marketplace, to examine the efficacy of using computer-mediated-communication (CMC) technology to build guanxi and turn impersonal one-time shoppers into loyal and committed long-term customers through personal rapport.

Guanxi is a Chinese concept “broadly defined as a close and pervasive interpersonal relationship” and “based on high-quality social interactions and the reciprocal exchange of mutual benefits,” Ou, Pavlou and Davison wrote.

In the past, online shoppers have been presumed to prefer impersonal transactions, but their study argues that both retailers and customers inherently desire the kind of relationship that can be called guanxi, even if the degree and extent of communication varies by culture. For example, in China, communication before a transaction of a few dollars could take more than 45 minutes.
“Nobody would argue that personal relationships are unimportant, but it is unfathomable that people in the U.S. would engage in such extensive communications and personal interactions for a small transaction,” said Pavlou, the Fox School’s Milton F. Stauffer Professor of Information Technology and Strategy.

The instant messaging technology used on TaoBao allows buyers and sellers to interact immediately and to use emoticons and avatars in the negotiation and verification of the transaction details. In addition, all of the customers’ messages related to a specific product are shown in a message box. Finally, the feedback system provides users with textual and numerical evaluations of buyers and sellers that further establish rapport.

“The role of CMC tools in establishing swift guanxi via interactivity, presence, and trust, suggests that buyer-seller interaction can easily and quickly transform strangers into acquaintances,” the researchers wrote. “In terms of repeat transactions, the effective use of CMC tools creates a significant opportunity for online sellers who wish to reinforce swift guanxi with buyers via building buyers’ trust.”

With the use of CMC tools (such as instant messaging, message boxes and feedback), TaoBao has achieved a loyalty rate, or “stickiness,” of 71.3 percent of its customer base – the kind of loyalty that is typically associated with only brick-and-mortar retailers.

Guanxi, largely enabled by CMC tools, can help explain the success of Taobao in China despite eBay’s attempts to capture China’s online market with eBay China (EachNet).  Currently Taobao has 96 percent market share in China compared to 0.1 percent for EachNet.

Pavlou explained the significance of the study’s findings by citing an April 2000 article in The Economist that said: “If you don’t have the patience to learn about guanxi, old boy, you might as well pack your bags and go home.”

“This study validates this warning by showing the ability of social technologies to transform online marketplaces from impersonal transactions among strangers to personal relationships among virtual friends,” Pavlou said. “The future of electronic commerce lies in personal relationships virtually enabled by social technologies.”

The study, titled “Swift Guanxi in Online Marketplaces: The Role of Computer-Mediated-Communication Technologies,” is published online in MIS Quarterly, a top information-systems journal.

Media Contact: Michelle Syen, AIS communications director, email, 404-760-4240

The Association for Information Systems (AIS) is collaborating with the Institute for Business and Information Technology (IBIT) at Temple University’s Fox School of Business on an annual job index for the field of information systems. This report, which will include pay scales and career prospect information, is intended to become the first reliable indicator of the growth of the discipline and profession.

“This partnership and initiative is an important part of the overall IS branding campaign being undertaken for the association,” said AIS President Dov Te’eni. “Those of us who have been working in the field are privy to its exciting career prospects, and this index will be a useful measurement of the bright future for those entering the field as students, academics or professionals. We are excited to work with Temple University on this endeavor, whose expertise in researching and developing this report will be integral to its success.”

“The IS job market – enrollment, placement, available jobs – is today very hard to assess. We plan to address this problem by producing a systematic annual assessment of the IS labor market,” said Munir Mandviwalla, IBIT executive director and chair of Fox’s Department of Management Information Systems (MIS). Mandviwalla is part of the project team with Fox professors Paul Pavlou and Crystal Harold. “We are pleased to partner with AIS and offer our services to the IS community.”      

AIS is a professional organization whose purpose is to serve as the premier global organization for academics, students and professionals specializing in information systems. For more information, visit

Dr. Paul A. Pavlou of the Fox School of Business Management Information Systems (MIS) Department is ranked as the top MIS researcher in the world for 2011, according to an analysis of top academic journals in the field.

The ranking was generated through a database of the Association for Information Systems (AIS), the premier global organization for academics specializing in MIS, and based on an analysis of publications in the top two journals in the field MIS Quarterly and Information Systems Research – with impact factors of 5.04 and 3.36, respectively.   

Pavlou is an associate professor of MIS, a Stauffer Senior Research Fellow, and director of Fox’s PhD Program in Business Administration. His research, which focuses on electronic commerce, digital business strategy, research methods and NeuroIS, has been cited more than 7,000 times by Google Scholar.

Pavlou works closely with faculty and PhD students in the Fox School’s MIS Department on diverse topics, including strategic pricing of IT services in global online marketplaces, social media, open innovation, and consumer surplus in online IT outsourcing markets.

In 2011, Fox’s MIS Department ranked third in the world for publications in MIS Quarterly and Information Systems Research and ranked first globally in 2010. U.S. News & World Report also ranks the department among the Top 20 MIS programs in the nation.

“This distinction for Paul and the MIS faculty once again demonstrates the Fox School’s commitment to excellence in thought leadership and research productivity,” Dean M. Moshe Porat said. “We congratulate our MIS Department and join in celebrating this achievement.”

With Cyber Monday here, a new study of e-commerce giants eBay and Amazon challenges a common assumption that trust and risk are always important considerations for buyers in online marketplaces, arguing instead that auction sites may have “over-invested in institutional structures” to reduce buyers’ economic risk while ignoring social elements of their transactions.

It has been widely assumed that online auction sites always need to build trust and reduce risk, but a forthcoming article in Information Systems Research counters that it is not necessarily “the higher the better” for risk-reducing safeguards – which are costly for companies to build and maintain – because some buyers might view them as stifling good deals while others might not consider them at all.

Paul Pavlou
Paul Pavlou

The paper, co-authored by Paul Pavlou of Temple University’s Fox School of Business and David Gefen of Drexel University’s LeBow College of Business, both in Philadelphia, analyzed data from 398 buyers on eBay’s and Amazon’s marketplaces to gauge buyers’ assessments of online safeguards, such as escrow services, feedback mechanisms and market rules.

The authors argue that the primary factors buyers consider when making purchases online are risk (potential economic loss) and trust (social norms with sellers). Pavlou and Gefen state that auction safeguards generally guard against risk and ignore elements of trust. But when typical buyers make online purchases, as long as there is some level of security – such as credit card guarantees – they really care about whether or not they can trust the community of sellers.

The “sharp distinction” between what marketplace providers guard against and what buyers deem as important indicates “that institutional structures in today’s online marketplaces focus on tangible assurances aimed at reducing the buyers’ economic vulnerability and not on the intangible aspects of the transaction that aim at reducing their social vulnerability,” according to the study.

The authors found that risk is only a significant consideration for buyers using marketplaces with moderate levels of safeguards. In unsafe markets, buyers are simply unwilling to transact. In very safe markets, the chance of risk is so low that economic loss isn’t even a concern.

Pavlou and Gefen also found that transaction activity peaks in online marketplaces with moderate safeguards. But the average level of current security measures is nearly 25 percent higher than where transactions peak. This finding demonstrates that current safeguards may be higher – and potentially viewed by some buyers as restricting bargains – than the socially optimal level for online auctions.

While economic risk was found to be an important consideration for buyers only in moderately risky marketplaces, the effect of trust on transactions “extends throughout the spectrum” of unsafe, somewhat safe or extremely safe auction sites.

Pavlou and Gefen state that online transactions, while primarily an economic exchange, also have intangible social rules of conduct, such as reciprocal favors in current or future transactions, and long-term relationship building.

“Although this may imply that online marketplaces have correctly recognized that buyers focus on economic losses in their transaction decision-making process, perhaps they have done so at the expense of ignoring relevant social aspects,” the authors wrote.

EBay users who compulsively check items, imagine themselves owning a product or simply want bragging rights for placing a winning bid can experience a “winner’s curse,” in which a winning bid exceeds an item’s true value. No one likes losing, and this often drives us to make winning a greater priority than the actual value of the product, says Paul A. Pavlou, associate professor at Temple’s Fox School of Business. “As the duration of the auction prolongs, people feel attached to the product,” Pavlou said of the “pseudo endowment effect.”

June 5, 2011

EBay users who compulsively check items, imagine themselves owning a product or simply want bragging rights for placing a winning bid can experience a “winner’s curse,” in which a winning bid exceeds an item’s true value. No one likes losing, and this often drives us to make winning a greater priority than the actual value of the product, says Paul A. Pavlou, associate professor at Temple’s Fox School of Business. “As the duration of the auction prolongs, people feel attached to the product,” Pavlou said of the “pseudo endowment effect.”

Continue to Albany Times Union to read more…

Acme Markets has announced plans to lay off about 900 part-time employees in the Philadelphia region. Paul Pavlou, an associate professor at Temple’s Fox School of Business, said there is no doubt that self-checkout machines mean fewer workers are needed. “As we progress, as technology tries to simplify our lives, obviously we try to automate some tasks, some processes that previously humans used to do. So it’s a much bigger socioeconomic question,” he said. “And I can think of many examples over the last five, 10, 20 years where similar things happened.”

Tuesday, October 26, 2010

Dean M. Moshe Porat has announced two new faculty appointments within the Fox School’s graduate programs.

Dr. William Aaronson

Dr. William Aaronson, formerly assistant dean for doctoral programs and research, has been appointed associate dean for graduate programs and research. Dr. Paul Pavlou, associate professor of Management Information Systems, will fill Aaronson’s role as director of the Ph.D. in Business Administration program.

Aaronson aided in transforming the Fox School’s doctoral offerings during the last six years, and he has worked as a leader in healthcare management education on a global scale. He is an alumnus of the Fox School, where he earned his Ph.D. in business administration with a concentration in health administration.

He previously served as chair of Fox’s Health Administration Department and director of the Healthcare Management Program, and he led the Cochran Center for Research and Doctoral Programs. Aaronson was also instrumental in affecting change in healthcare management education in Central and Eastern Europe and the former Soviet Union.

Pavlou also boasts an extensive research record. His work has appeared in Management

Dr. Paul Pavlou

Information Systems Quarterly (MISQ), Information Systems Research (ISR), the Journal of Management Information Systems (JMIS) and the Journal of the Academy of Marketing Science, among others. He was recently identified as the fifth most productive researcher in information systems worldwide based on an analysis of publications in the top three information systems journals – MISQ, ISR and JMIS – from 2003 through 2007.

Pavlou earned his Ph.D. in information systems from the Marshall School of Business at the University of Southern California. His research focuses on online auction marketplaces, electronic commerce and information systems strategy. He joined the Fox School in 2008

– Morgan Zalot