News Release: Finance and Economics

Apr. 17,  2009

The Benefits of Publicizing the Qualifications of Skilled Employees

From Knowledge@Emory

Attracting customers certainly can be difficult, especially when one’s offering is stacked against established competition with a strong following. But whatever the industry or sector, notes Peter Roberts, an associate professor of Organization and Management at Emory University’s Goizueta Business School, getting the word out about the credentials of the company’s key people is a great place to start in convincing prospective customers of the quality of one’s products. In a research paper titled “Getting Known by the Company You Keep: Publicizing the Qualifications and Former Associations of Skilled Employees,” Roberts, along with co-author Mukti Khaire, an assistant professor of business administration at Harvard Business School, use data from the burgeoning Australian wine industry to prove the point.

The authors indicate that the “culture-based” wine industry relies heavily on the public’s knowledge of the winemaker’s credentials in selling its products. The development of an “artisan identity” within the wine industry, argue the authors, makes emerging producers, such as those from Australia, even more reliant on their winemakers’ credentials. According to Roberts, the recent boom in the Australian wine market, and its relative infancy in comparison to other producers, made it the ideal market to study their theory.

By publicizing the expertise and prior successes of their skilled winemakers, many of the Australian wineries studied used this sort of “signaling” approach to lead new buyers to their wines. “When product quality cannot be ascertained in advance of purchase, producers must convince relevant audiences that they are worthy of consideration as quality players,” they note. In this respect, the otherwise anonymous producer is not only looking to win over customers, but also the industry critics and analysts by broadcasting the credentials of its winemaker.

The authors selected a sample of Australian wine producers and documented instances of the publicizing of the careers of skilled employees. The researchers started with the 1,279 Australian wine producers listed in the 2001 Australian and New Zealand Wine Industry Directory, and then used this base to search the Internet for further data. A total of 453 Australian wine producers maintained websites in early 2002, with approximately 80 percent of these sites referring “explicitly to the winemaking function, while 63 percent identified the winemaker by name.”

The authors looked through these websites for specific references to winemaker credentials, and the pair determined that the most frequent information published about the producers included the “extent of winemaking experience [of the top winemaker], the names of former employers, the presence of formal winemaking training, the extent of international winemaking experience, and the various experiences as judges at local and international wine shows.”

The paper notes that given a crowded field of competition, producers are often unsure of what kind of attention their products might receive. Consequently, they try to “enhance their visibility within the market’s quality-oriented niches.” The research indicates that the benefits of signaling were “consideration and differentiation” of one’s products. Producers are not only looking for visibility in the crowded marketplace—one historically dominated by well-known French and Italian wine industry stalwarts—they must also create an identity that is clearly associated with quality.

The reasons for publicizing credentials

Certainly, it makes sense that the decision to publicize a winemaker’s credentials should be based on his or her actual qualifications and success in the field. But the authors found that the ultimate “decision to publicize information about a winemaker’s qualifications is driven more by the signaling needs and constraints operating on the producer and less by the actual qualifications of the individual.” The duo proved this point by looking at winemakers employed to more than one winery at the same time and the propensity to publicize their credentials. By isolating these cases of “multiple observations on a given winemaker and within-winemaker variance in broadcasting behavior,” they found the smaller wineries were more likely to publicize the employee’s credentials.

The authors take their research one step further by delineating between mass market wineries and those considered to be “quality niche producers” with more select offerings. The data indicated that qualifications may help to overcome the larger producer’s quality perceptions to a degree. “However, there may be limits to this approach as growth continues,” they state. Tempering the ability of the very largest producers to succeed at the publication of credentials comes from the industry’s views on mass market or larger wineries. The paper notes, “These observations suggest that as large producers grow beyond their effective participation as artisan quality players, they rely more heavily on traditional means of establishing quality-based claims.”

The mass market appeal or the problem for larger wineries becomes whether or not they can succeed at winning over the public to believe in their “quality-oriented” brand. Going back to the wine magazines, the authors found that the larger producers tried once again use signaling—advertisements including wine awards and the credentials of their vintners—to win over wine buyers to their quality claims.

On the other hand, the smaller wineries were more likely to use the services of contract vintners—much more so than their medium and larger counterparts. The paper notes that the more temporary nature of the employment relationship also works against making winemaker qualifications and indirect associations more visible. They therefore conclude that given the large amount of resources needed to employ the top winemakers on a permanent basis, balanced against the perceptions of type and quality among the largest producers, “wineries of an intermediate size obtained the largest benefits from publicizing the credentials of its vintner.”

Interestingly, the research also indicated that producers with lower status in the field sought to publicize their working relationship with producers of higher status. Of course, “elite” producers didn’t reciprocate. However, the former finding suggests that these elite “producers may not fully control the pattern of indirect affiliations that become visible in the market.” The top and most well-known winemakers may be “less likely to publicize names of former employers, but significantly more likely to be named as former employers in the communications of other producers.”

In conclusion, the pair notes that the investment into a quality product is high, and thus, “in order to benefit from investments in product quality, producers must receive consideration within the market’s quality-oriented niche.” Understanding the success of this kind of signalizing or broadcasting approach appears to be a critical step for fledgling businesses dependent on the quality perceptions of the product.

Roberts notes that the research findings are relevant for many other industries as well, adding that financial services, clothing design, filmmaking and restaurant enterprises, as well as R&D-driven firms do depend on the broadcasting of prior expertise and knowledge of their top people in order to attract customers and financing to their products and services. The paper concludes that “an employee’s credentials--and especially her previous employers--do seem to be linked to producer quality claims in other market contexts.”


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