This study examines the relation between a firm’s labor intensity and its operating performance. Using a large sample of US public firms from the period 2001 to 2018, we find that firms with a higher level of labor intensity are less likely to engage in mergers & acquisitions (M&As) activities. Our main finding suggests that a firm’s operating performance, proxied by return on assets and return on equity, decreases with a higher level of labor intensity. Further analysis shows that if labor-intensive firms engage in M&As, they are less likely to use cash and stock as payment methods and consider the target’s legal forms of business orientation. The negative relation between labor intensity and firm performance is aggravated (attenuated) by the firm’s advertising intensity (stock payment method and private target of potential M&A characteristics). Finally, labor productivity is also negatively associated with labor intensity.

Ridesharing services such as Uber and Lyft have been substantially affected by the ongoing COVID-19 pandemic. Drawing on social capital theory, the current research investigates how social trust relates to three types of trust in compliance with COVID-19 guidelines and consumers' ridesharing intentions. Analyzing data from two economically and culturally distinct countries, the results suggest that social trust positively affects trust in platform companies' compliance with COVID-19 guidelines (TPC), but not (or to a lesser extent) trust in drivers' (TDC) and other riders (TRC) compliance with COVID-19 guidelines in both the United States and Bangladesh. Importantly, TPC, TDC, and TRC are positively related with consumers' ridesharing intentions in the United States but not in Bangladesh. Furthermore, the analysis reveals two counterintuitive moderating effects of fear of COVID-19 and trust in God. The results provide important insights on factors affecting the ridesharing industry in the context of the COVID-19 pandemic, and they emphasize the importance of considering cultural context in understanding consumers’ intentions to engage in the sharing economy.

Using a standard partial adjustment model and US firms, we study the relationship between managers' failure to achieve target labor productivity and their tendency to manage earnings. To overcome the endogeneity problem, we employ an instrumental variable technique based on negative investment growth and find that managers, experiencing a labor productivity gap, tend to manage earnings by manipulating discretionary accruals and real operating activities. Additional analysis suggests that elements of personal value maximization biases drive the estimated effect of the labor productivity gap. Our results are robust considering variation and alternative measures of statistical sensitivity. The positive association between the labor productivity gap and earnings management is also consistent with the opportunistic financial reporting hypothesis and impression management theory.

With prior research on home insurance largely focused on supply side practices, we know little about demand side attributes of this market, especially about consumer perceptions of insurance. This article demonstrates that, despite seemingly more equitable industry practices, ethnic homeowners (Mexican Americans in this study), relative to the majority White population, have a greater tendency to view home insurance as a cost burden (as opposed to coverage against potential damages and injuries) and, hence, are more vulnerable to living with minimal or no home insurance coverage. The findings suggest that this disparity is attributable to cultural differences rooted in diverse structural and institutional circumstances in which ethnic homeowners often find themselves situated. The role of ethnic identity is salient even after accounting for personal, household, property, mortgage, and natural calamity factors. New directions for policy are proposed to address the situation by informing and empowering vulnerable consumers.

PurposeFocused on multicultural service encounters, this paper aims to argue that the interplay between customer language preference, employee choice and use of language affects perceived interaction quality, which in turn influences loyalty, customer brand identification and positive word-of-mouth.Design/methodology/approachUsing Mexican Americans (Spanish) as the focal ethnic group (language), a 3 (contexts: Fast food-English; Post office-English; Post office-Spanish) × 4 (scenarios: customer language preference adhered to; adapted to; mixed; ignored) between-subject scenario-based experiment was conducted.FindingsCustomers perceive a higher, or at least equal, level of interaction quality when the employee choice of language adheres to their preference than when the employee switches to their preferred language after missing it initially. Both of these scenarios lead to significantly higher interaction quality compared to when the employee ignores customer language preference or combines elements from two languages throughout the interaction. The adverse effects of ignoring customer preferred language or mixing it with another language are accentuated among customers with low ethnic identification and those with low level of bilingualism. Prior findings regard the interplay among interaction quality, and the remainder of outcomes variables were also corroborated.Research limitations/implicationsThe findings add to the literature that examines the dynamics of intercultural service encounters and draws attention to employee choice and use of language and its impact on a host of service outcomes, with interaction quality serving as a key mediator.Practical implicationsThis study highlights the need for service firms to consider customer language preferences and train and empower employees to meet customer expectations. To the extent that the increasingly viable segments of minority customers remain underserved in most developed markets, this study provides insights into cultivating a profitable customer segment.Originality/valueThis study demonstrates the role of employee choice and use of language and its consequences.

PurposeThe purpose of this study is to explore how service employee choice and use of language to initiate and maintain conversation with second generation immigrant customers (SGIC) influence customer evaluation of the service encounter, and whether such employee acts may lead customers to employee switching, branch switching (i.e. switching from one to another location within the same brand) and/or brand switching (switching to another brand altogether).Design/methodology/approachA scenario-based between-subjects experiment of 4 (employee: match, adapt, bilingual, no adapt) × 2 (fast food, post office) × 2 (English, Spanish) was used to examine the SGIC response to service encounters in different contexts arising from employee choice and use of language. These scenarios were complemented with a series of measurement scales. The instruments, which were identical except in scenario sections, were administered on 788 second-generation Mexican American customers, resulting in 271 (fast food) and 265 (post office) effective responses.FindingsIn both service contexts, when employees initiated conversation that matched (English or Spanish) the customer expectations, the SGIC perceptions of interaction quality was higher as compared to other scenarios, leading to subsequent satisfaction and lower switching intentions (employee and branch). Similarly, interaction quality was higher for adapt scenarios as compared to bilingual or no adapt scenarios. Bilingual customers perceived higher interaction quality in bilingual/no-adapt scenarios when compared to monolingual customers. In both contexts, service quality and satisfaction were associated with employee switching and branch switching, but not with brand switching.Research limitations/implicationsBy utilizing interaction adaptation theory to conceptualize the effects of employee choice and use of language, the study grounds the model and the hypotheses in theoretical bases and provides empirical corroboration of the theory. The study also contributes toward understanding the service encounters from the perspective of an overlooked group of vulnerable customers: second-generation immigrants.Practical implicationsService research cautions service providers that a key factor in attracting and retaining customers is having detailed communication guidelines and empowering employees to follow those guidelines. The findings go a step further and underscore the critical role of communication from a managerial standpoint. It is in the interest of service organizations to develop guidelines that will govern employee choice and use of language during service encounters. So doing is commercially justified because unguided employee choice and use of language can result in customer switching and attrition.Social implicationsThe juxtaposition between assigned versus asserted identities is an important one not only in social sciences but also within service research. As service encounters grow increasingly multicultural, the need to educate employees on multiculturally appropriate communication etiquette rises in importance. The findings should encourage service firms and local governments to develop formal communication guidelines that begin with multiculturalism as a central tenet permeating all aspects of employee–employee, employee–customer and customer–customer communications. Service providers ought to take precautionary measures to ensure customers will be empowered to assert their identities in their own terms, if they wish so.Originality/valueThe study demonstrates how employee choice and use of language during service encounters may thwart SGIC, who might view such employee behaviors as acts of identity assignment and, consequently, feel stigmatized, marginalized and offended; and links such customer experiences to switching behavior through mediatory mechanisms.