Best Paper Award for Prof. Dr. Maik Hammerschmidt
Paper: Tolerating customers’ late payment is rewarded by intensification of the business relationship
Prof. Dr. Maik Hammerschmidt has received the Best Paper Award of the Marketing Strategy SIG of the American Marketing Association (AMA) for the paper "Does Customer Delayed Payment Hurt or Help Relationship Performance?".
The study examines business-to-business relationships 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 a supplier firm allows its customers to pay their invoices at a later date than originally agreed, these customers reciprocate through higher purchase volume and willingness to pay higher prices leading to more profitable business relationships for the supplier.
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 favorable financial effects, which have so far been ignored in research. However, if payment terms are excessively 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.