IDEAS home Printed from https://ideas.repec.org/a/taf/euract/v8y1999i3p421-441.html
   My bibliography  Save this article

Accounting information, salesforce compensation and acquisition of new customers

Author

Listed:
  • Maximilian Jung
  • Christian Riegler

Abstract

The need for the management accounting system (MAS) to support marketing decisions has been identified in literature and practice. Accordingly, several improvements have been suggested with the main intention of providing more detailed information on marketing segments. Yet, even with respect to these improved systems it has to be acknowledged that the quality of the information provided will not be identical for all marketing segments: it can be assumed that it will be more precise for existing segments, which are already served by the firm, than for new ones, with which the firm has comparatively little experience. Further, it has to be considered that the MAS will seldom be the only source of useful information, as the example of the good salesforce having gained a 'deep understanding' of the market while doing his job shows. A problem arises if the acquisition of this additional information is (personally) costly and unobservable and therefore has to be motivated by incentive compensation schemes. This paper emphasizes that standard compensation contracts, as recommended by literature and practice, may fail to induce goal-congruent behaviour. It is shown that ranking commission rates according to the profitabilities reported by the MAS may be dysfunctional and that a non-intuitive rank order may be necessary to motivate the salesforce to become better informed and to use this knowledge appropriately.

Suggested Citation

  • Maximilian Jung & Christian Riegler, 1999. "Accounting information, salesforce compensation and acquisition of new customers," European Accounting Review, Taylor & Francis Journals, vol. 8(3), pages 421-441.
    • Handle: RePEc:taf:euract:v:8:y:1999:i:3:p:421-441
    DOI: 10.1080/096381899335862
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/096381899335862
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/096381899335862?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Amiya K. Basu & Rajiv Lal & V. Srinivasan & Richard Staelin, 1985. "Salesforce Compensation Plans: An Agency Theoretic Perspective," Marketing Science, INFORMS, vol. 4(4), pages 267-291.
    2. Demski, Js & Sappington, Dem, 1987. "Delegated Expertise," Journal of Accounting Research, Wiley Blackwell, vol. 25(1), pages 68-89.
    3. Albers, Sönke, 1993. "Optimales Verhältnis zwischen Festgehalt und erfolgsabhängiger Entlohnung bei Verkaufsaußendienstmitarbeitern," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 336, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
    4. Rajiv Lal & V. Srinivasan, 1993. "Compensation Plans for Single- and Multi-Product Salesforces: An Application of the Holmstrom-Milgrom Model," Management Science, INFORMS, vol. 39(7), pages 777-793, July.
    5. Albers, Sonke, 1996. "Optimization models for salesforce compensation," European Journal of Operational Research, Elsevier, vol. 89(1), pages 1-17, February.
    6. Gutschelhofer, Alfred & Roberts, Hanno, 1997. "Anglo-Saxon and German life-cycle costing," The International Journal of Accounting, Elsevier, vol. 32(1), pages 23-44.
    7. Sappington, David, 1983. "Limited liability contracts between principal and agent," Journal of Economic Theory, Elsevier, vol. 29(1), pages 1-21, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christian Homburg & Martin Artz & Jan Wieseke & Bernhard Schenkel, 2008. "Gestaltung und Erfolgsauswirkungen der Absatzplanung: Eine branchenübergreifende empirische Analyse," Schmalenbach Journal of Business Research, Springer, vol. 60(7), pages 634-670, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Johannes Habel & Sascha Alavi & Nicolas Heinitz, 2023. "A theory of predictive sales analytics adoption," AMS Review, Springer;Academy of Marketing Science, vol. 13(1), pages 34-54, June.
    2. Kräkel, Matthias & Schöttner, Anja, 2016. "Optimal sales force compensation," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PA), pages 179-195.
    3. Krafft, Manfred, 1997. "An empirical investigation of the antecedents of salesforce control systems," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 454, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
    4. Lee, Chung-Yee & Yang, Ruina, 2013. "Compensation plan for competing salespersons under asymmetric information," European Journal of Operational Research, Elsevier, vol. 227(3), pages 570-580.
    5. Anja Schöttner, 2017. "Optimal Sales Force Compensation in Dynamic Settings: Commissions vs. Bonuses," Management Science, INFORMS, vol. 63(5), pages 1529-1544, May.
    6. Leon Yang Chu & Guoming Lai, 2013. "Salesforce Contracting Under Demand Censorship," Manufacturing & Service Operations Management, INFORMS, vol. 15(2), pages 320-334, May.
    7. Tinglong Dai & Kinshuk Jerath, 2019. "Salesforce Contracting Under Uncertain Demand and Supply: Double Moral Hazard and Optimality of Smooth Contracts," Marketing Science, INFORMS, vol. 38(5), pages 852-870, September.
    8. Bester, Helmut & Ouyang, Yaofu, 2018. "Optimal procurement of a credence good under limited liability," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 96-129.
    9. Arzum Akkaş & Nachiketa Sahoo, 2020. "Reducing Product Expiration by Aligning Salesforce Incentives: A Data‐driven Approach," Production and Operations Management, Production and Operations Management Society, vol. 29(8), pages 1992-2009, August.
    10. Sumitro Banerjee & Alex P. Thevaranjan, 2013. "How to deal with unprofitable customers? A salesforce compensation perspective," ESMT Research Working Papers ESMT-13-05, ESMT European School of Management and Technology.
    11. Tat Y. Chan & Jia Li & Lamar Pierce, 2014. "Learning from Peers: Knowledge Transfer and Sales Force Productivity Growth," Marketing Science, INFORMS, vol. 33(4), pages 463-484, July.
    12. Nahum D. Melumad, 1989. "Asymmetric information and the termination of contracts in agencies," Contemporary Accounting Research, John Wiley & Sons, vol. 5(2), pages 733-753, March.
    13. Albers, Sönke & Krafft, Manfred, 1995. "Zur relativen Aussagekraft und Eignung von Ansätzen der neuen Institutionenlehre für die Absatzformwahl sowie die Entlohnung von Verkaufsaußendienstmitarbeitern," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 375, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
    14. Xiaoyang Long & Javad Nasiry, 2020. "Wage Transparency and Social Comparison in Sales Force Compensation," Management Science, INFORMS, vol. 66(11), pages 5290-5315, November.
    15. Fabio Caldieraro & Anne T. Coughlan, 2009. "Optimal Sales Force Diversification and Group Incentive Payments," Marketing Science, INFORMS, vol. 28(6), pages 1009-1026, 11-12.
    16. Julia Heidemann & Marcus Kaiser & Mathias Klier & Florian Probst, 2012. "Customer lifetime value-based sales force control in the financial services industry— an incentive-compatible remuneration model," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 23(1), pages 27-51, September.
    17. Shan Li & Kay-Yut Chen & Ying Rong, 2020. "The Behavioral Promise and Pitfalls in Compensating Store Managers," Management Science, INFORMS, vol. 66(10), pages 4899-4919, October.
    18. David B. Balkin & Jérôme Côté & Michel Tremblay, 1998. "Explaining Sales Pay Strategy Using Agency, Transaction Cost and Resource Dependence Theories," CIRANO Working Papers 98s-28, CIRANO.
    19. Naresh Bansal & Kissan Bansal & Minghui Ma & M. Babajide Wintoki, 2017. "Do CMO Incentives Matter? An Empirical Investigation of CMO Compensation and Its Impact on Firm Performance," Management Science, INFORMS, vol. 63(6), pages 1993-2015, June.
    20. Sumitro Banerjee & Alex P. Thevaranjan, 2019. "Targeting and salesforce compensation: When sales spill over to unprofitable customers," Quantitative Marketing and Economics (QME), Springer, vol. 17(1), pages 81-104, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:euract:v:8:y:1999:i:3:p:421-441. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/REAR20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.