Best Paper Award for Prof. Dr. Maik Hammerschmidt
Paper: Tolerance of late payment is rewarded by intensification of the business relationship
Prof. Dr. Maik Hammerschmidt has received the Best Paper Award of the Organizational Frontline Symposium of the American Marketing Association (AMA) for the paper "The Implications of Customer Delayed Payment for Boundary Spanners".
The study examines specific business relationships between companies and shows that allowing customers to delay payments beyond the due date increases supplier profits as customers reciprocate this leniency by intensifying their future relationship with the supplier.
This means that if employees of a company with direct customer contact, i.e. the so-called boundary spanners or frontline service employees, allow their customers to pay their invoices at a later date than originally agreed, these customers reciprocate by intensifying the business relationship, for example through more purchases or a willingness to pay higher prices.
This stands in contrast to the prevailing opinion in practice that late payment by customers is always bad for businesses and must be avoided at all costs. The authors of the study show that, at least within certain limits, it can have positive financial effects by intensifying the business relationship, which have so far been ignored in research. However, if payment terms are very much overdrawn, the negative effects outweigh the positive ones.
The project is part of a collaboration with co-authors from the University of New South Wales (UNSW), University of Houston, and Oklahoma State University.
The AMA is the most prestigious scientific marketing association worldwide. The Organizational Frontlines Research Pre-Conference took place on February 9-10, 2023 in Nashville, USA.