Doug J. Chung is an assistant professor of business administration in the Marketing Unit and teaches the Marketing course in the MBA required curriculum and Business Marketing in Executive Education.
Professor Chung focuses his research primarily on sales force management and incentive compensation. His current work examines how different components of an incentive compensation plan affect the performance of varying types of sales agents.
Professor Chung earned his Ph.D. in management at Yale University, where he also earned an MA and M. Phil in management. He is the recipient of the ISMS Doctoral Dissertation Award, ISBM Doctoral Support Award, and the Mary Kay Doctoral Dissertation Award. He is also a member of the Edward A. Bouchet Graduate Honor Society. He completed his undergraduate studies at Korea University.
Prior to pursuing a career in academics, Professor Chung served as an officer and platoon commander in the South Korean Special Forces. He also held a variety of industry positions with several multinational companies.
Professor Chung models the effect of incentive compensation to study its impact on the sales force. Using data from a Fortune 500 company, he has developed a dynamic structural model of sales force response to a bonus-based compensation plan and examined how various components of the plan affect the performance of sales agents. While bonuses enhance productivity across all segments, strong and weak performers exhibit differences. The best sales people can sustain their high levels of productivity even after attaining their quotas with the incentive of overachievement commissions, and weaker performers can be kept on track toward annual quotas with the incentive of quarterly bonuses. Professor Chung is expanding his research to include cultural factors by investigating the effect of local and global incentives in businesses in Latin America.
Motivating Diverse Salespeople Through a Common Incentive Plan
Do Bonuses Enhance Sales Productivity? A Dynamic Structural Analysis of Bonus-Based Compensation Plans
We estimate a dynamic structural model of sales force response to a bonus based compensation plan. Substantively, the paper sheds insights on how different elements of the compensation plan enhance productivity. We find evidence that: (1) bonuses enhance productivity across all segments; (2) overachievement commissions help sustain the high productivity of the best performers even after attaining quotas; and (3) quarterly bonuses help improve performance of the weak performers by serving as pacers to keep the sales force on track to achieve their annual sales quotas. The paper also introduces two main methodological innovations to the marketing literature: First, we implement empirically the method proposed by Arcidiacono and Miller (2011) to accommodate unobserved latent class heterogeneity using a computationally light two-step estimator. Second, we illustrate how discount factors can be estimated in a dynamic structural model using field data through a combination of (1) an exclusion restriction separating current and future payoff and (2) a finite horizon model in which there is no forward looking behavior in the last period.
Keywords: Performance Productivity;
Compensation and Benefits;
Chung, Doug J., Thomas Steenburgh, and K. Sudhir. "Do Bonuses Enhance Sales Productivity? A Dynamic Structural Analysis of Bonus-Based Compensation Plans." Marketing Science
The Dynamic Advertising Effect of Collegiate Athletics
I measure the spillover effect of intercollegiate athletics on the quantity and quality of applicants to institutions of higher education in the United States, popularly known as the "Flutie Effect." I treat athletic success as a stock of goodwill that decays over time, similar to that of advertising. A major challenge is that privacy laws prevent us from observing information about the applicant pool. I overcome this challenge by using order statistic distribution to infer applicant quality from information on enrolled students. Using a flexible random coefficients aggregate discrete choice model that accommodates heterogeneity in preferences for school quality and athletic success, and an extensive set of school fixed effects to control for unobserved quality in athletics and academics, I estimate the impact of athletic success on applicant quality and quantity. Overall, athletic success has a significant long-term goodwill effect on future applications and quality. However, students with lower than average SAT scores tend to have a stronger preference for athletic success, while students with higher SAT scores have a greater preference for academic quality. Furthermore, the decay rate of athletics goodwill is significant only for students with lower SAT scores, suggesting that the goodwill created by intercollegiate athletics resides more extensively with low-ability students than with their high-ability counterparts. But, surprisingly, athletic success impacts applications even among academically stronger students.