The Impact of FSMA on Restaurants

restaurant-2623071_1920[We’re pleased to welcome author Mark Johnson of Michigan State University. He recently published an article in Cornell Hospitality Quarterly entitled “An End User Perspective: The Impact of FSMA on Restaurants,” which is currently free to read for a limited time. Below, Dr. Johnson talks about the background of this research:]

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On January 4, 2011, President Obama signed into law the Food Safety Modernization Act (FSMA or P.L. 111-353). This act may be the most far-reaching food safety legislation since the Food, Drug and Cosmetics Act of 1938 (FDCA). FSMA aims to ensure that the U.S. food supply is safe by shifting the focus of regulation from contamination response to prevention. This legislation imposes administrative costs on the food supply chain in the U.S. by requiring additional record keeping and safety procedures.

The law created record keeping requirements for firms. These requirements are often referred to as one-up-one-down. This nickname emphasizes the fact that the act requires grocers, wholesalers, and food processors to keep track of the immediate parties that they buy food and food products from as well as the parties that they sell food and food products too. This ensures that any contamination problems in the U.S. food supply chain can quickly and efficiently be traced to its source and aid in the rapid response to foodborne illness before it becomes widespread. The Congressional Budget office (August 12, 2010) estimated that FSMA would directly cost taxpayers $1.4 Billion through federal administrative costs. However, attempts to measure the costs imposed on businesses by the legislation were largely ignored until we reported, in a previous study, that expected costs to food processors, wholesalers and grocers was approximately 10% of equity value (Johnson and Lawson 2016). This represented a market value cost of $33 Billion. This previous result encouraged me to consider that others in the food supply chain, end users, such as consumers and restaurants may bear some of these supply chain costs.

The surprising evidence from my current article indicates that restaurants lost approximately 5% of firm value. In this case of restaurants this represents approximately 7.5 billion dollars of lost value. These equity costs represent expected future cash flow and risk effects for the firms studied. These costs, 1.4+33+7.5= $42B, should be weighed against the potential benefits to consumers that the act brings. These benefits may be directly measurable in a potential drop in food borne illness cases over the next 5-10 years as the act is fully implemented.

Previous article:
The Impact of the Food Safety and Modernization Act on Firm Value,” M. Johnson and T. Lawson, Agricultural Finance Review, 2016, 76(2): 233-245.
Current article:
An End User Perspective: The Impact of FSMA on Restaurants,” M. Johnson, Cornell Hospitality Quarterly, Forthcoming

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Kitchen photo attributed to StockSnap. (CC)

Psychological Capital for Leader Development

[We’re pleased to welcome authors Thiraput Pitichat of Claremont Graduate University. Pitichat recently published an article in Journal of Leadership & Organizational Studies entitled “Psychological Capital for Leader Development,” which is currently free to read for a limited time. Below, Pitichat speaks on the objectives of this research:]

JLOS_72ppiRGB_powerpointWhat are the mechanisms behind effective leader development processes? Why do some individuals have a tendency to develop as leaders more than the others? This research suggests that organizations should focus on promoting leaders’ valuable resources or capital – Leader development psychological capital (LD PsyCap), which consists of leader development hope, optimism, resilience, and self-efficacy. Two main objectives of this research are:

1.) to validate LD PsyCap construct; 2.) to test our hypotheses on individual and organizational level factors that predict LD PsyCap as well as leader development behaviors as an outcome of LD PsyCap.

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The Bias of Size in Gambling Decisions: Evidence from a Casino Game Hierarchy

backgammon-2488089_1920[We’re pleased to welcome author Lawrence Hoc Nang Fong, Davis Ka Choi Fong, Robin Chark, Peter Man Wai Chui of the University of Macau. They recently published an article in Cornell Hospitality Quarterly entitled “The Bias of Size in Gambling Decisions: Evidence from a Casino Game,” which is currently free to read for a limited time. Below, Dr. Wang reflects on the inspiration for conducting this research:]

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What motivated you to pursue this research?
This study stems from the authors’ observations of Cussec players in casinos. As gamblers strive to predict the outcome based on previous outcome pattern shown on the screen which is attached to the table, is there any other hint they are trying to locate? While the Chinese characters “Big” and “Small” are clearly displayed on the screen, they can be the hint. Our feeling is that gamblers would incline to bet on “Big” as it sounds more positive than “Small” and they may intrinsically link “Big” to win which is the positive outcome in gambling. Given this speculation, we’ve tried to find whether there had been a study about the said phenomenon, but we got nothing. We think this topic deserves documentation in the literature and thus initiated this research.

In what ways is your research innovative, and how do you think it will impact the field?
Cognitive bias has been a popular research agenda for decades. The bias of size, to our best understanding, remains unexamined. We believe that this study opens a new research stream of cognitive bias in gambling. Future research may examine the questions that we raised at the end of the paper:
“Is the bias maintained if the cue is physical size? In the gambling context, will an outcome option with a larger area on the table layout signal a higher chance of winning?”

What is the most important/ influential piece of scholarship you’ve read in the last year?
Peetz and Soliman’s (2016) paper entitled “Big money: The effect of money size on value perceptions and saving motivation” is an importance piece of work that sheds light to our study. They found that a picture of money with larger size was perceived as more valuable. While gambling is an activity overwhelmed by monetary reward, the mental link between “Big” and win (money as reward) is not unreasonable. We felt blessed to discover and read Peetz and Soliman’s paper.

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Capturing Relative Importance of Customer Satisfaction Drivers Using Bayesian Dominance Hierarchy

[We’re pleased to welcome authors Philippe Duverger and Xiaoyin Wang of Towson University. Duverger and Wang recently published an article in Cornell Hospitality Quarterly entitled “Capturing Relative Importance of Customer Satisfaction Drivers using Bayesian Dominance Hierarchy,” which is currently free to read for a limited time. Below, they reflect on the inspiration for conducting this research:]

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What motivated you to pursue this research?

We observed that most research on the drivers of customer satisfaction (CS) used large samples, often aggregated from several month and/or several properties. Although this is a fine method to look at CS trends it is not practical at the property level for immediate action. The current methods require large samples in order to achieve sufficient power and find significant estimates in models. Unfortunately, most hotel property monthly survey yield samples of less than 100 that will make driver analyses problematic and more likely most drivers will have non-significant estimates.

We asked ourselves if there would not be a method that could circumvent the problem of property managers that want and need to address CS drivers on a monthly basis, if not on a daily basis.

What has been the most challenging aspect of conducting your research? Were there any surprising findings?

We used a Bayesian statistical framework, borrowing from several literature areas to construct a model. Bayesian statistical analysis is still a fairly new method in practice, often not well understood, and can be computationally heavy. Therefore we first needed to explain the advantages of the method in a way that was pragmatic enough because our goal in this paper was to appeal to the hospitality manager.

Bayesian statistics work from the belief that the unknown parameter is a random variable and is associated with a probability distribution (prior distribution). The information in the sample data is used to adjust the prior perception of the unknown parameter and results in the final estimation of the parameter (posterior distribution). Therefore, even if the sample is small, significance can be determined.

Maybe more pragmatically, Bayesian analysis is “often a more direct way to tackle questions we usually want to know, such as: is the hypothesis likely to be true?” Bayesian analysis does not use double negatives, such as we often encounter, e.g., “we failed to reject the null hypothesis that there is no difference.” Bayesian analysis reports are straight forward: “given these data, it is likely that the difference is X% probable” (Chapman and McDonnell Fei 2015, p. 150).

There are many other advantages that we discuss in the paper.

In what ways is your research innovative, and how do you think it will impact the field?

We believe that our Bayesian model, for which we share the code at http://tinyurl.com/kdqjf4u, could be used by hospitality properties or hospitality corporate departments, to enhance monthly reporting along with other marketing metrics, and shared via dashboards.

 

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The Warm Glow of Restaurant Checkout Charity: Do You Participate?

5390059375_4cb242cbbc_z.jpgIt’s often seen and experienced that retail stores, restaurants, and supermarkets ask for a donation to the cause of the season when you checkout. How often do you donate and agree to that $1-$5 on the pin pad? If you do donate, do you feel like an avid supporter of both the store you’re shopping at and the featured charity? Researchers and authors Michael Giebelhausen, Benjamin Lawrence, HaeEun Helen Chun, and Liwu Hsu go so far as to say people feel a “warm glow” when agreeing to donate on a whim.

They recently published an article in Cornell Hospitality Quarterly entitled, “The Warm Glow of Restaurant Checkout Charity,” which is currently free to read for a limited time. The abstract for this article is below:

Checkout charity is a phenomenon whereby frontline employees (or self-service technologies) solicit charitable donations from customers during the payment process. Despite its growing ubiquity, little is known about this salient aspect of the service experience. The present research examines checkout charity in the context of fast-food restaurants and finds that, when customers donate, they experience a “warm glow” that mediates a relationship between donating and store repatronage. Study 1 utilizes three scenario-based experiments to explore the phenomenon across different charities and different participant populations using both self-selection and random assignment designs. Study 2 replicates with a field study. Study 3 examines national store–level sales data from a fast-food chain and finds that checkout fund-raising, as a percentage of sales, predicts store revenue—a finding consistent with results of Studies 1 and 2. Managers often infer, quite correctly, that many consumers do not like being asked to donate. Paradoxically, our results suggest this ostensibly negative experience can increase service repatronage. For academics, these results add to a growing body of literature refuting the notion that small prosocial acts affect behavior by altering an individual’s self-concept.

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Donation box photo attributed to Zhu (CC).

 

Marketing for Tourism, Hospitality & Events

SAGE Publishing would like to highlight one of the newer textbooks that provides a foundation of basic marketing principles applied to global tourism. The book, Marketing for Tourism, Hospitality & Events, is co-authored by Simon Hudson of the University of South Carolina and Louise Hudson who is an Independent Researcher.80886_9781473926646

The book is complimented by a companion website featuring a range of tools and resources for lecturers and students, including PowerPoint slides, an instructor manual, a test bank of multiple choice questions, and author-curated video links to make the examples in each chapter come to life. Below is a featured video supplement where David Edelman explains how companies can now shape the consumer decision journey:

Click here to preview the book, as well as view other content topics and resources.

Interested in other tourism topics? Click below to view SAGE’s journals that publish the latest research in the field:

Journal of Travel Research
Journal of Hospitality & Tourism Research
Journal of Service Research
Cornell Hospitality Quarterly

How Couples Approach Making Travel Decisions

“Which hotel looks nicer for the better price? Where should we eat? What excursions did the concierge recommend?” These are all questions couples ask each other when planning a vacation, and when plans change during the trip. For some couples, the decision time on where to eat can take longer than others, and the even bigger decision is where to travel in the first place. So how are couples approaching the decision process, and is there a gender correlation between who makes what decision? I.e. when to travel, budget on the hotel, the bus tour to sign up for.

A recent study entitled “Exploring the Length and Complexity of Couples Travel Decision Making“, published  in Cornell Hospitality Quarterly, observes the patterns of how couples decide on the much anticipated annual travel plans. This article is co-authored by Wayne W. Smith, Robert E. Pitts, Steve W. Litvin, and Deepti Agrawal, and is currently free to read for a limited time. The abstract for their article is below:

A quasi-experiment is used to examine the dynamics of the shared decision-making process by cqxb_58_2.cover.pngobserving couples in real time as they make decisions about an overnight stay at a luxury resort. Observations and video recordings of the decision processes of 24 couples were coded and analyzed. The time to final decision, number, and type of tactics used were found to vary with couples’ length of experience with one another. Observation indicated that couples with greater travel experience together relied on “predealing” based on their experience together to avoid conflict, while less-experienced couples’ decisions were more likely to yield winners and losers. These findings and those related to the use of persuasive tactics by members of the couple dyads provide the basis for specific recommendations for marketing travel products.

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