JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.. American Marketing Association is collaborating with JSTOR to digitize, preserve and extend access to Journal of Marketing.Agency and related theories have proven useful as theoretical frameworks for examining relationships between principals and their agents in many disciplines. However, though marketing involves a wide array of agency relationships, agency-based research has only recently begun to be reported in the marketing literature. The authors therefore attempt to clarify the marketing implications of agency theory by describing its major constructs, the two different types of models embedded within the theory, and some closely related theoretical structures. They also critically review past and potential agency-based research in marketing and suggest ways in which marketers might contribute to improving its validity and usefulness. AGENCYtheory has spawned a large amount of recent research in economics, finance, accounting, organizational behavior, political science, and sociology. Its proponents prophesy that a revolution is at hand, that agency and related theories can greatly improve our understanding of why organizations exist and how they work (Hesterly, Liebeskind, and Zenger 1990). Some scholars, however, are troubled by these theories' underlying assumptions about human behavior and organizational processes (Donaldson 1990). A few detractors brand them minimalist, tautological, trivial, and even dangerous (Hirsch, Michaels, and Friedman 1987; Perrow 1986).

We use store-level data to document the exact process of changing prices and to directly measure menu costs at ve multistore supermarket chains. We show that changing prices in these establishments is a complex process, requiring dozens of steps and a nontrivial amount of resources. The menu costs average $105,887/year per store, comprising 0.70 percent of revenues, 35.2 percent of net margins, and $0.52/price change. These menu costs may be forming a barrier to price changes. Speci cally, (1) a supermarket chain facing higher menu costs (due to item pricing laws that require a separate price tag on each item) changes prices two and one-half times less frequently than the other four chains; (2) within this chain the prices of products exempt from the law are changed over three times more frequently than the products subject to the law."In principle, xed costs of changing prices can be observed and measured. In practice, such costs take disparate forms in different rms, and we have no data on their magnitude. So the theory can be tested at best indirectly, at worst not at all" [Alan Blinder 1991, p. 90]. I. INTRODUCTIONThe costs of changing nominal prices, also known as "menu costs," have important macroeconomic implications. First, menu costs can be a source of price rigidity, and thus can provide a * Address all correspondence to the rst author. We are especially indebted to Peter Aranson, Nathan Balke, George Benston, Robert Chirinko, Leif Danziger, Anil Kashyap, John Leahy, Jeffrey Sandgren, the discussants John Driscoll at the American Economic Association meetings in San Francisco, January 1996, and Robert Hall at the NBER Economic Fluctuations Program meeting in Cambridge, MA, July 1996, the editor Olivier Blanchard, and an anonymous referee for providing valuable comments and suggestions. We are also grateful to Martin J. Bailey, Hashem Dezhbakhsh, Xavier Drèze, David Lilien, Paul Rubin, Eytan Sheshinski, Daniel Tsiddon, and seminar participants at the 1996 American Economic Association meetings, the marketing and the macroeconomics workshops at the University of Chicago, the economics workshops at Emory, Southern Methodist, and Texas A&M Universities, and the July 1996 NBER Economic Fluctuations Program meeting for useful discussions. Michael Caldwell, Pinaki Mitra, and Georg Mü ller provided research assistance. The second and third authors would like to thank the Graduate School of Business of the University of Chicago for funding. All authors contributed equally to the work. The usual disclaimer applies. micro-based explanation for monetary nonneutrality. Second, even small menu costs may be suf cient to generate substantial aggregate nominal rigidity and large business cycles.1 Consequently, menu costs have received considerable attention in the theoretical macroeconomics literature as many predictions generated by traditional Keynesian and more recent new Keynesian models crucially depend on the existence of some form of price rigidity. 2Despite the theoretical importance of menu costs, however, li...

Strategists following the resource-based view argue that firms can generate rents through value creation. To create value, firms develop and use resources and capabilities that other firms cannot imitate, trade for, or substitute other assets for. Even a firm that has created value, however, may not capture the potential rents associated with that value. To capture rents, a firm must set the right prices for what it sells. Most views of pricing assume that a firm can readily set appropriate prices. In contrast, we argue that pricing is a capability. To develop the ability to set the right prices, a firm must invest in resources and routines. We base our argument on a study of the pricing process of a large Midwestern manufacturing firm. We show that pricing resources, routines, and skills may help or inhibit a firm in setting the right price-and hence in appropriating value created. Our view of pricing as a capability contributes to the resourcebased view because it suggests that strategists should consider the portfolio of value creation and value appropriation capabilities a firm uses to create competitive advantage. Our view also contributes to economics because it suggests that strategic decisions about pricing capabilities have important implications for a fundamental economic action, determining prices. Managers in firms without effective pricing processes may be unable to set prices that reflect the wishes of its customers, so the customers may misuse their resources. As a result, resources may be used ineffectively. Our view of pricing as a capability therefore takes the resource-based-view straight to the heart of what is perhaps the central economic question: the best use of resources.

Heterogeneity among rivals implies that each firm faces a unique competitive set, despite overlapping market domains. This suggests the utility of a firm‐level approach to competitor identification and analysis, particularly under dynamic environmental conditions. We take such an approach in developing a market‐based and resource‐based framework for scanning complex competitive fields. By facilitating a search for functional similarities among products and resources, the framework reveals relevant commonalities in an otherwise heterogeneous competitive set. Beyond its practical contribution, the paper also advances resource‐based theory as a theory of competitive advantage. Most notably, we show that resource substitution conditions not only the sustainability of a competitive advantage, but the attainment of competitive advantage as well. With equifinality among resources of different types, the rareness condition for even temporary competitive advantage must include resource substitutes. It is not rareness in terms of resource type that matters, but rareness in terms of resource functionality. Copyright © 2003 John Wiley & Sons, Ltd.

Quick Response (QR) is a movement in the apparel industry to shorten lead time. Under QR, the retailer has the ability to adjust orders based on better demand information. We study how a manufacturer-retailer channel impacts choices of production and marketing variables under QR in the apparel industry. Specifically, we build formal models of the inventory decisions of manufacturers and retailers both before and after QR. Our models allow us to address who wins and who loses under QR, and suggest actions such as service level, wholesale price and volume commitments that can be used to make QR profitable for both members of the channel, i.e., Pareto improving. Detailed discussions with a major retailer, and information from industry sources provide supporting evidence for the structure and conclusions of the model.inventory, channels, lead time, service level, Bayesian models