EVER WONDERED WHY YOU KEEP ALL THOSE APPS ON YOUR SMARTPHONE?

BY MARTIN P. FRITZE, ANDREAS B. EISINGERICH AND MARTIN BENKENSTEIN

Consumers acquire material possessions as tangible expressions of their identity, extend themselves through products, and use material possessions as symbolic markers of group membership. Given the profound power of material possessions and individuals’ attachment to them, significant research has been conducted in an effort to understand the positive and negative consequences of such possession attachment for consumers. However, more recently, there has been a call for reconceptualizing consumerism for digital markets. Today, digital services such as Spotify, Tidal, or Apple Music for music streaming, Tinder, Grindr, or eHarmony for online dating solutions, and PayPal, Alipay, or WeChat Pay for online payment offerings, extensively permeate consumers’ lives. Digital services are ubiquitous, especially in digitized economies and often lead to time-consuming activities and habits, which can dramatically affect individuals’ well-being, either positively or negatively. Importantly, digital service consumption compared to other services often comes with very low entry barriers. For example, obtaining a membership at a gym demands that customers make an effort (i.e., making an appointment, driving to the location, talking to sales staff) even before the consumption process has begun. The “let’s give it a try” barrier is much higher in terms of personal resource investment than for digital service consumption. Simply downloading a new app, trying out a streaming service, or registering on a social media platform takes only seconds and requires little resource investment. Therefore, we wanted to explore when and how consumers, if at all, form attachments to digital services technologies and examine the extent to which and why people immediately stick to a digital service after using it for the first time (i.e., they become instantaneously attached).

One of the most important and robust empirical findings noted in the context of ownership research is the endowment effect. In the series of previous experiments on the endowment effect, people assigned approximately twice the value to commonly desired material items such as pens or mugs when they were endowed with the item and asked to state prices to sell the item compared with people who were asked to make offers to buy these items. A novel and important contribution of our research is to examine the endowment effect’s instantaneous nature of the reference point shift and consequent value change for digital service technologies.

As a preliminary test of our theoretical perspective, we conducted a field study to examine the real-world relevance of the endowment effect for digital services. We followed the recommended standard procedures employed in most previous studies. According to the established experimental standard approach of the endowment effect, the participants are randomly designated owners (nonowners) of a target object (e.g., pens, mugs). They are then told that they are (not) allowed to keep the object. Owners (vs. nonowners) are asked about the amount of money for which they would be willing to sell (buy) the object, indicating their willingness to accept, “WTA” (willingness to pay for the object, “WTP”). The endowment effect is quantified by the resulting WTA‒WTP disparity (WTA>WTP). Accordingly, and simply put, in the prestudy we expected that actual users of a digital service technology will state higher prices to give up using the service (WTAU–S) than nonusers will be willing to pay (WTPNU–B) to start using it (WTAU–S > WTPNU–B). The study followed a quasi-experimental design and included one manipulated between-subjects factor (group: nonuser-seller, user-buyer) and one measured variable (price). The real-world digital service referred to is a complimentary mobile app offered at some universities. It provides students with information about canteen menus, available jobs, events, and accommodation offers, all customized to their particular university. An online survey was conducted at a university that provides the app to its students. Those participants who stated they did not know the app or did not currently use it were automatically assigned to the nonuser-buyer group. The participants who stated they currently used it were assigned to the user-seller group. We found that user-sellers stated significantly higher prices than nonuser-buyers. As such, the prestudy confirmed the endowment effect for digital services as it replicated prior results in the context of material products in the context of digital service technologies.

However, more recently the endowment effect’s main explanatory accounts (i.e. the underlying psychological processes that drive the effect) have been subject to academic debate. On the one hand, since the initial studies on the endowment effect, the effect has long been ascribed to loss aversion, i.e. fact that losses loom larger than gains. That is, owners state higher prices to sell an object than buyers are willing to pay for it because, for owners, giving away the object is a loss. This loss for the owners is more severe than the gain buyers derive from obtaining the object. Therefore, higher price evaluations for the object by owners are mainly driven by a perceived parting disutility. The main reason for this is that the accumulation of possessions provides existential security for individuals. It is noteworthy that this human behavior with its evolutionary heritage may even be independent of the object-related evaluation. On the other hand, a growing stream of research directly challenges the “loss aversion account” and instead highlights the “ownership account” to explain the endowment effect. According to the “ownership account”, the higher valuation of the target object relates to a special bond with the object, which in turn induces ownership utility. This is ascribed to a resulting possession‒self link, as the object is incorporated into the extended self, becoming a self-referential part of the person’s identity. Referring to the “ownership account”, the reluctance of giving up an object is related to a special meaning of the object for the owner.

In order to explain how consumers become instantaneously attached to digital service technologies, we conducted an online experiment where we employed an extended experimental design for separately testing the ownership and loss aversion account and putting both accounts into direct competition. Moreover, we expected that the differences in prevailing service characteristics (hedonic vs. utilitarian) are likely to influence the endowment effect for digital services because the instantaneous formation of proprietary feelings for external objects is driven by people’s foresight or expectations of the object’s future use. That is, people instantaneously develop proprietary feelings for an object after evaluating their future usage intentions. Specifically, people retain psychological possessions because of two underlying saving patterns: instrumental saving and sentimental saving. Instrumental saving refers to the perceived future need for an object. The object fulfills the purpose of solving a task, and the person acknowledges the possibility of being able to use the object in the future. Simply put, people hold onto such an object simply because they might need it in the future, even if they currently have no immediate need for using it (e.g., insurance policy, antivirus software). In contrast, sentimental saving occurs when an individual consciously acknowledges that the object is relevant to maintain the individual self-concept. Sentimental saving is determined by the person’s self-related feelings for the object (e.g., family video, lifestyle app).

Considering the different explanations of the endowment effect, we expected the endowment effect to hold for both hedonic and utilitarian digital services. However, we argue that the difference in the occurrence of the endowment effect for both types of digital services lies in the psychological processes driving the effect.

People should be more likely to hold onto utilitarian digital services based on instrumental saving because the usage of utilitarian services does not tie-in with consumers’ identities but rather their practicability triggers future usage considerations (i.e., “I might need it in the future”). This is related to the endowment effect because loss aversion occurs due to a reluctance to give away external objects even when such objects currently have no special meaning for the owner. In contrast, a hedonic digital service should serve as an extension of the person’s self and is thus a reminder of a relevant part of the self-concept. Hence, people should be likely to hold onto hedonic digital services based on sentimental saving because the usage of it ties in with consumers’ identities. This conscious acknowledgment of an object’s self-related importance relates the endowment effect’s “ownership account” because the reluctance to switch from a hedonic service should occur due to the self-related importance of the service for the user.

Taken together, in the experimental study we found that psychological processes underlying the endowment effect differ between utilitarian and hedonic digital services. Indeed, proprietary feelings towards utilitarian digital services occurred due to loss aversion, whereas proprietary feelings towards hedonic digital services reflect the consumer’s conscious self-relatedness to the digital service. Individuals consciously or unconsciously hold onto digital utilitarian services simply because they are reluctant to feel a loss when with regard to giving them up. In turn, digital hedonic services hold a special self-referred meaning to individuals.

Given the ongoing progress in artificial intelligence and the potential for virtual reality to act as the next “super drug”, further research on human attachment to digital service offerings is rich in potential. We invite additional research on what we believe is a promising and important field of work not only for business to better maneuver an environment with an increased offering of digital services but also to help humankind in the pursuit of self-understanding and autonomy.

This research was recently published in Electronic Commerce Research and can be accessed at: https://link.springer.com/article/10.1007/s10660-018-9309-8

 

What Business Leaders can learn from the Psychology of Ownership

A GUEST COMMENTARY BY FABIAN BERNHARD, ASSOCIATE PROFESSOR OF MANAGEMENT AT EDHEC BUSINESS SCHOOL IN FRANCE

TSOO: You have been doing research  in the field of ownership, could you please tell us the main insights?

Our constitution* states that „Property entails obligations.” Accordingly, owners of an object have certain rights and duties how to act with their possessions. Most people are very much familiar with this legal aspect of ownership. Less known, however, are the psychological aspects of the feeling of ownership. Research during the past decade has started looking into this phenomenon referred to as “psychological ownership”.

Psychological ownership influences human thinking and acting. And indeed latest research in the field of neuroscience confirms what philosophers, psychologists, sociologists, and business scholars have suspected and theorized for a long time. Ownership about material and immaterial objects has a strong motivational force on the way we act and our attitude towards things. Once we call an object “ours” and feel like having the right to possess it we tend to taking better care of it. We are motivated to closely paying attention to the owned object, supporting it, improving it, and also have difficulties relinquishing it.

While the psychological effects of ownership are present in all aspects of our daily lives, it is particularly the business world that has become interested in using psychological ownership as a motivational tool managing their workforce. The idea is to make employees feel and act like owners. When they feel like the organization is ‘theirs’ they potentially put more effort into it. However, rather than giving out shares and making employees factual and “legal” owners, it has been shown that the mere ownership feeling can increase individual commitment and performance.

Given these desirable outcomes the question arises how to actively influence employees’ psychological ownership. Together with a psychologist we looked deeper into this phenomenon. In a quantitative study of 50 companies we examined the ownership feelings of over 200 employees. We found that psychological ownership can depend on the business owners’ leadership style. Certain business owners in our study were more transformational in their leadership to their employees than others. They acted as role-models, provided their workforce a general vision but left enough autonomy for their followers to find their own ways to fulfill goals. Employees under such leadership were more likely to develop ownership feelings. On the other side, results showed that transactional leaders, meaning those that put emphasis on extrinsic rewards and control created them to a lesser degree. While transactional leaders were still effective, a third group of leaders, those who followed a “laissez-faire” approach, meaning not giving enough guidance to employees, blocked the emergence of ownership feelings.

In line with these findings, the study also showed that those employees with higher degrees of psychological ownership demonstrated more positive attitudes and behaviors. For example, the psychological owners displayed higher levels of performance and were more willing to go the extra mile. They helped their colleagues more often, were more committed, and more satisfied in their jobs. As a consequence psychological ownership also created more loyalty towards the company and among the workforce.

In a second series of more recent studies with colleagues from the universities of Mannheim and Rostock, we investigated in more depth how some leaders exert their influence on psychological ownership. For example, we examined the effects of emotional exhaustion of service workers and customer appreciation of their work. Similarly, we could show a relationship of certain leadership styles on employee welfare and an organizational climate of initiative taking.

Overall, the studies illustrated the potential power of ownership feelings in organizational settings and the difference well-suited leadership can make. Psychological ownership also plays a particularly relevant role in closely-held companies in several ways. First, it has been argued that founders of businesses work harder and longer hours than most employees. This may have to do with ownership feelings. When we work for our “own” ideas or projects our motivation is usually highest. We regularly observe such effect in enthusiastic start-up entrepreneurs working long hours to make their business “fly”. So, ownership feelings may be the motivational fire in entrepreneurial business endeavors.

Second, many business founders would like to see that the entrepreneurial spirit and commitment to the business transfers to the next generation. Accordingly, they ask how to convey ownership feelings to their future successors. In a research project with American colleagues we tackled this issue and investigated several teaching approaches to stimulate emotional attachment and psychological ownership in the next generation of young family business members.

And lastly, it is also of interest for family-owned businesses to find ways to include and keep those motivated who are not part of the family, namely the nonfamily employees and external managers. Together with two colleagues from the University of St. Gallen we found that justice and fairness perceptions play an essential role for the development of ownership feelings in the nonfamily personnel. By means of creating a fair environment family-owners could create a motivated and committed team.

Prof. Dr. Fabian Bernhard is an Associate Professor of Management and a member of the Family Business Center at EDHEC Business School in France. He is also a research fellow at the University of Mannheim in Germany, where he also had studied business administration. A scholarship led him to the University of Oregon from where he graduated with an MBA. After working several years at a large, international consulting company in New York, he returned to academia in 2007. During the following years as a PhD student at the European Business School (EBS) and the WHU Otto Beisheim School of Management in Germany, he developed the ideas of his book on “Psychological Ownership in Family Businesses”. After having completed his doctoral degree in 2011, he was a research professor at INSEEC Business School in Paris and an adjunct professor at the Family Enterprise Center (FEC) at Stetson University of Florida in the US.

Fabian Bernhard’s current topics of interest revolve around the intersection of organizational behavior, organizational psychology, and family business research. In particular, Fabian is interested in the emotional dynamics in family businesses, moral emotions (such as shame and guilt), the education and preparation of next generational family business leaders, as well as all kinds of  attachment to the family business, such as psychological ownership, commitment, social identity, and their influence on the decision-making process in family businesses. If you want to know more about Fabian, feel free to visit his profile at EDHEC [CLICK HERE].

This article was originally published in transfer – Werbeforschung & Praxis, (03/ 2017) 

A Researcher’s Perspective on Ownership: Bart Claus – We are what we have. Or were we?

A GUEST COMMENTARY BY BART CLAUS, ASSISTANT PROFESSOR OF MARKETING AT IÉSEG SCHOOL OF MANAGEMENT IN PARIS, FRANCE

TSOO: You have been doing research  in the field of ownership, could you please tell us the main insights?

To me ownership is one of the most fundamental phenomena in consumer behavior, even in human behavior in general. You see this when looking at how big a part of their active lives people commit to paying off a mortgage – 30 years standard in the U.S., but even longer in other countries. You see this in fashion item purchases. Even kids at very young age organize their worlds based on who owns what. Our sense of ownership is solidly hardwired in our human brain. Consequently, in my research I find that merely being assigned ownership literally changes peoples’ perspectives. Not only do they value their possessions more – a traditional effect – but physiological effects ensure that they literally see and remember objects more in detail, and see more difference with similar objects. In other words: everybody sees their own possessions as more unique than they actually are.

Furthermore, people mentally process owned objects as being closer to themselves – similar to processing objects that are physically close, or even similar to thinking about close friends and family. These findings make it easier to understand why we use the “my” that we use for “my socks” also for the chair that I happen to sit on (“my seat”) but also for “my friends” and “my home” (different of course from “my house”). These findings also clarify the central role possessions play in people’s identities, together with everything else we address with “my”. It is difficult to claim you are a sportswoman or –man if you don’t invest in the right apparel. Without owning a vast collection of records, it will be more difficult to pass yourself off as music lover.

Looking at that, these are interesting times. Until now, people often measured a successful life by the collection of items accumulated over this life, and often it was even exactly this collection that represented the life and owner’s identity itself. More and more, we engage in “liquid consumption” that in many cases doesn’t leave the trace of ownership. The emerging sharing economy, is one such example. In another research project, I look at the creation and destruction of value through sharing, finding that overall, sharing does create value. However, with the central role of ownership in our psychological and social structures, it remains to be seen how we will define identities and evaluate lives in which all accumulation of ownership has been replaced by access to shared goods, and how or life satisfaction will be affected.

Dr. Bart Claus (PhD in Applied Economic Sciences, KU Leuven) is an Assistant Professor of Marketing and Academic Director of the MSc. in International Business at IÉSEG School of Management in Paris, France. His research in consumer behavior focuses on the interplay between consumers’ social and personal identities on one hand, and consumer choice and ownership on the other hand. This research has attracted national and international funding, and has been published and presented widely in academic journals and conferences, and practitioner print outlets. In the past, he has consulted both companies and governments on marketing and communication strategy and issues related to behavioral change. He has experience in teaching from bachelor to executive level. If you want to know more about Bart, feel free to visit his profile at IÈSEG School of Management [CLICK HERE].

 

This article was originally published in transfer – Werbeforschung & Praxis, (03/ 2017) 

It’s the best time of the year to say thank you – to all of you and to Floyd Rudmin, in particular!

This time of the year is always a good chance to step back from our busy schedules and take some time to express our gratitude toward significant people in our lives. We have very good reasons to do so this year! Besides thanking you all for your interest in and support of this blog, we want to express our deepest gratitude to Floyd Rudmin (University of Tromsø). He has made us and by extension all of you a truly unique pre-Christmas gift.

Floyd, a prominent pioneer and incomparable maverick in the field of ownership, has generously donated his invaluable and truly interdisciplinary collection of books on ownership and possession to m.core (Institute for Marketing and Consumer Research) at WU Vienna. We see ourselves as stewards of this treasure and are doing our best to preserve and extend this resource and to make it accessible to as many as possible. Floyd’s collections consists of over 130 books and numerous copies of book chapters and journal articles. Throughout his decades-spanning career he has meticulously gathered titles across a variety of disciplines ranging from anthropology over psychology, sociology, and history to law and political sciences.

We are very happy and thankful that this true treasure of literature on ownership has now found a new home at WU. The collection can now be found at a separate location in the WU library. We are sure that this will be a great opportunity for the entire community to visit our university in Vienna and have a look for yourselves at this marvelous collection – which we are continuously growing (further suggestions are more than welcome!). In addition we are trying to digitize everything where the rights allow doing so and we will host a link to the full collection as soon as this is searchable.

In the spirit of the days, we could not stress enough how great it is when “mine” becomes “ours” and eventually “everyone’s”. Thank you so much Floyd for your generous gesture and this intellectually rewarding transfer of ownership! We would like to invite all blog readers to freely spread the word about it and help us grow this collection.

We wish you all a Merry Holiday Season and a joyful, inspiring and fulfilling New Year 2018!

One for you, one for me: Giving shared gifts

We know from past research on the mere ownership effect that people tend to like their possessions merely because they own them. But do people also like their possessions more merely because others own them too? Evan Polman (University of Wisconsin–Madison, USA) and Sam J. Maglio (University of Toronto Scarborough, Ontario, Canada) examined this question in the context of gift-giving. They found that when gift givers buy also for themselves what they gift, what the authors call “companionizing”, gift recipients like the gifts more and feel closer to the gift givers. These findings suggest that similarity due to owning the same item as someone else can increase liking of the item – and suggest a simple way to make gifts that are more satisfying!

You can read more about this research here.

Who owns the monkey selfie? The case of animal copyrights

A settlement has been reached in the long-running legal battle over who owns the copyright of the famous “monkey selfie”. The pictures were taken in 2011 in Indonesia by a macaque using camera equipment belonging to the British photographer David Slater. Shortly after, a legal dispute began as Slater objected to Wikipedia Commons’ hosting the pictures. Wikipedia refused to remove the pictures claiming that the copyright belonged to the monkey. In 2015, PETA (People for the Ethical Treatment of Animals) joined the dispute by suing on behalf of the monkey named Naruto, based on the argument that the monkey should be assigned the copyright. Finally, the photographer whose camera was used for the selfie agreed to donate 25% of any future revenue from the pictures to charities dedicated to protecting the monkeys’ natural habitat. Definitely a thought-provoking case raising unique issues about expanding legal rights to non-human animals.

Just owned – already ‘mine’?

Have you ever wondered how much time is required before we see owned objects as reflections of ourselves? It is known from prior research using various explicit measures such as favourability ratings that people tend to associate owned objects with the self. What is less known though is how long it takes for associations between owned objects and the self to emerge. A new study by A. Nicole LeBarr and Judith M. Shedden (McMaster University, Canada) distinguished between newly-owned and already-owned objects in order to provide an answer to this question with the help of implicit measures. According to the results of the study, people were fast at associating owned objects with themselves even if they had owned them just for a few minutes. Apparently, the time between owning a new object and viewing it as a reflection of ourselves might be much shorter than previously thought.

You can read more about this research here.