Culture, Relationship Norms, and Dual Entitlement

Haipeng Chen, Lisa Elizabeth Bolton, Sharon Ng, Dongwon Lee, Dian Wang

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

According to the dual entitlement principle, consumers find it fair for firms to price asymmetrically to cost changes - that is, for firms to increase prices when costs increase but maintain prices when costs decrease. However, a meta-analysis reveals asymmetric pricing is less prevalent in collectivistic (vs. individualistic) countries (study 1). We propose a fairness-based explanation, demonstrating that interdependent consumers in collectivistic cultures perceive asymmetric pricing to be less fair than do independent consumers in individualistic cultures (studies 2, 4, and 5). We attribute this cultural variation to culture-specific relationship norms. Specifically, we argue that while the practice of asymmetric pricing is consistent with the exchange norms among independent consumers that emphasize self-interest pursuit, it is inconsistent with the communal norms among interdependent consumers mandating firm benevolence. Supporting this argument, we find that (a) directly manipulating communal (vs. exchange) norms yields similar differences in fairness perceptions that mimic those due to culture (study 3), (b) the cultural differences are mediated by the communal mandate for firm benevolence (study 4), and (c) the cultural differences are mitigated when a firm frames asymmetric pricing as benevolent (study 5). We conclude by discussing the theoretical and managerial implications of these findings.

Original languageEnglish (US)
Article numberucx118
Pages (from-to)1-20
Number of pages20
JournalJournal of Consumer Research
Volume45
Issue number1
DOIs
StatePublished - Jun 1 2018

Fingerprint

pricing
firm
cultural difference
fairness
costs
Entitlement
Asymmetric pricing
Costs
Benevolence
Cultural differences
Fairness
Cultural Differences

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Anthropology
  • Arts and Humanities (miscellaneous)
  • Economics and Econometrics
  • Marketing

Cite this

Chen, Haipeng ; Bolton, Lisa Elizabeth ; Ng, Sharon ; Lee, Dongwon ; Wang, Dian. / Culture, Relationship Norms, and Dual Entitlement. In: Journal of Consumer Research. 2018 ; Vol. 45, No. 1. pp. 1-20.
@article{4cdf0cd4da394892a835054ff2bed09c,
title = "Culture, Relationship Norms, and Dual Entitlement",
abstract = "According to the dual entitlement principle, consumers find it fair for firms to price asymmetrically to cost changes - that is, for firms to increase prices when costs increase but maintain prices when costs decrease. However, a meta-analysis reveals asymmetric pricing is less prevalent in collectivistic (vs. individualistic) countries (study 1). We propose a fairness-based explanation, demonstrating that interdependent consumers in collectivistic cultures perceive asymmetric pricing to be less fair than do independent consumers in individualistic cultures (studies 2, 4, and 5). We attribute this cultural variation to culture-specific relationship norms. Specifically, we argue that while the practice of asymmetric pricing is consistent with the exchange norms among independent consumers that emphasize self-interest pursuit, it is inconsistent with the communal norms among interdependent consumers mandating firm benevolence. Supporting this argument, we find that (a) directly manipulating communal (vs. exchange) norms yields similar differences in fairness perceptions that mimic those due to culture (study 3), (b) the cultural differences are mediated by the communal mandate for firm benevolence (study 4), and (c) the cultural differences are mitigated when a firm frames asymmetric pricing as benevolent (study 5). We conclude by discussing the theoretical and managerial implications of these findings.",
author = "Haipeng Chen and Bolton, {Lisa Elizabeth} and Sharon Ng and Dongwon Lee and Dian Wang",
year = "2018",
month = "6",
day = "1",
doi = "10.1093/jcr/ucx118",
language = "English (US)",
volume = "45",
pages = "1--20",
journal = "Journal of Consumer Research",
issn = "0093-5301",
publisher = "University of Chicago",
number = "1",

}

Culture, Relationship Norms, and Dual Entitlement. / Chen, Haipeng; Bolton, Lisa Elizabeth; Ng, Sharon; Lee, Dongwon; Wang, Dian.

In: Journal of Consumer Research, Vol. 45, No. 1, ucx118, 01.06.2018, p. 1-20.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Culture, Relationship Norms, and Dual Entitlement

AU - Chen, Haipeng

AU - Bolton, Lisa Elizabeth

AU - Ng, Sharon

AU - Lee, Dongwon

AU - Wang, Dian

PY - 2018/6/1

Y1 - 2018/6/1

N2 - According to the dual entitlement principle, consumers find it fair for firms to price asymmetrically to cost changes - that is, for firms to increase prices when costs increase but maintain prices when costs decrease. However, a meta-analysis reveals asymmetric pricing is less prevalent in collectivistic (vs. individualistic) countries (study 1). We propose a fairness-based explanation, demonstrating that interdependent consumers in collectivistic cultures perceive asymmetric pricing to be less fair than do independent consumers in individualistic cultures (studies 2, 4, and 5). We attribute this cultural variation to culture-specific relationship norms. Specifically, we argue that while the practice of asymmetric pricing is consistent with the exchange norms among independent consumers that emphasize self-interest pursuit, it is inconsistent with the communal norms among interdependent consumers mandating firm benevolence. Supporting this argument, we find that (a) directly manipulating communal (vs. exchange) norms yields similar differences in fairness perceptions that mimic those due to culture (study 3), (b) the cultural differences are mediated by the communal mandate for firm benevolence (study 4), and (c) the cultural differences are mitigated when a firm frames asymmetric pricing as benevolent (study 5). We conclude by discussing the theoretical and managerial implications of these findings.

AB - According to the dual entitlement principle, consumers find it fair for firms to price asymmetrically to cost changes - that is, for firms to increase prices when costs increase but maintain prices when costs decrease. However, a meta-analysis reveals asymmetric pricing is less prevalent in collectivistic (vs. individualistic) countries (study 1). We propose a fairness-based explanation, demonstrating that interdependent consumers in collectivistic cultures perceive asymmetric pricing to be less fair than do independent consumers in individualistic cultures (studies 2, 4, and 5). We attribute this cultural variation to culture-specific relationship norms. Specifically, we argue that while the practice of asymmetric pricing is consistent with the exchange norms among independent consumers that emphasize self-interest pursuit, it is inconsistent with the communal norms among interdependent consumers mandating firm benevolence. Supporting this argument, we find that (a) directly manipulating communal (vs. exchange) norms yields similar differences in fairness perceptions that mimic those due to culture (study 3), (b) the cultural differences are mediated by the communal mandate for firm benevolence (study 4), and (c) the cultural differences are mitigated when a firm frames asymmetric pricing as benevolent (study 5). We conclude by discussing the theoretical and managerial implications of these findings.

UR - http://www.scopus.com/inward/record.url?scp=85060094090&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85060094090&partnerID=8YFLogxK

U2 - 10.1093/jcr/ucx118

DO - 10.1093/jcr/ucx118

M3 - Article

AN - SCOPUS:85060094090

VL - 45

SP - 1

EP - 20

JO - Journal of Consumer Research

JF - Journal of Consumer Research

SN - 0093-5301

IS - 1

M1 - ucx118

ER -