3.3.1 Experimental Design
This study design is a 2x2 between-subject design and divided into four scenarios questionnaire. The between-subject experimental design consisted rebuttal’s value creation (high versus low) and stages of the product life cycle (new versus standardized). The questionnaire uses a five-point Likert scale that is from strongly disagrees to strongly agree. The questionnaire has three parts in this study and all details are described below (full content of the questionnaire please refer to appendix).
19
(1) Pure scenario
In this part, the purpose is to understand how the managers react the anti-dumping investigation with intuition when they were not reminded any external factors. In the pure scenarios, all participants read the same situation as follows.
Imagine you are an executive in a publicly-traded company named Company X which produces special screws. Company X recently launches a special screw, which can be used in many high level consumer market, such as high level dental implant. The Company X’s procurement and manufacture costs for this special screws are relatively low, therefore the selling price are cheaper compared to other competitors’. However, your competitor, Company Y, believes your product is dumping, so it files a dumping petition to the U.S.ITC (United States International Trade Commission). The U.S.ITC soon launches a dumping investigation on your product, and decides to impose the anti-dumping duty for your product. Now the sales volumes of Company X has decreased by 20%.
You do not believe Company X’s special screws are dumping products, so you are considering whether to proceed the anti-dumping rebuttal. At this moment, as a top executive of Company X you are considering the relevant market potentials (e.g., dental implants) for the special screws industry, but also worrying about the impact of the dumping investigation. In addition, a general anti-dumping rebuttal petition takes about 2-3 years. Therefore, you have to evaluate whether you should proceed this anti-dumping rebuttal.
If you choose the “To rebuttal” strategy, the cost and benefit are as followings: First, anti-dumping rebuttal will increase business costs (e.g.,
20
identification of re-investigation costs, evidence collection, attorneys' fees, and lawsuit costs… etc..). Second, if the rebuttal is successful, company X can enhance its reputation on its excellence, innovation and leading position, and gain the competing advantage. Third, during the rebuttal period, the human and financial resources can be dispersed, which may lead to delay in R&D and the launch of the new products. Finally, if the rebuttal is successful, the company gets full refund and the paid anti-dumping duty will be withdrawn. The profit and the market share will also increase.
On the other hand, if you choose the “Not to rebuttal” strategy, the cost and benefit are as followings: First, there are no additional attorneys' fees and rebuttal expenses. Second, not rebuttalling will decrease company X’s reputation on its excellence, innovative and leading position. Third, the R&D will not delay. Finally, Company X will have to pay the anti-dumping duty and it will affect the company's revenue and market share in the future. It may also indirectly affect the stock price.
(2) Scenario with conditions
In this part, participants will be given the different information across these four scenarios. In order to manipulate the independent variables, four scenarios are exactly similar, except that the stages of product life cycle and rebuttal's value creation vary. For example, the new product stage/high value creation scenario is described as follows.
As the executives of Company X, you decide to look at the current situation of the whole industry completely before making your rebuttal decision. The current market size of the special screw industry is about $2-3 billions, and Company X’s product is at the new product stage in the industry.
21
Because the technical threshold is higher, and the products are unique and highly variable, only fewer competitors in the market. Moreover, the market growth rate is increasing steadily.
You have also discussed with other managers in the relevant departments, and understand that if you choose to rebuttal, you will have to put in more costs, such as attorney fees (about $ 1,200 per hour). On the other hand, if the rebuttal is successful, company X might get more benefits, such as royalties and damage compensation. If you choose not to rebuttal, you will not need to put in any costs, but it may result in the potential loss of the company's benefit.
The following is a detailed description:
To rebuttal: Based on past cases, the rebuttal will cost at least $3 million. After the assessment by the law department, the successful probability for the rebuttal is more than 51%, and the expected revenue will increase by 20-30%.
Not to rebuttal：Although you need not put any relevant rebuttal fees, the company's revenue will decrease by more than 20% due to the anti-dumping duty.
In contrast, to participants in the standardized product condition instead read “Company X’s product is at the standardize product stage” and “ the technical threshold is low, and the products are similar each other in the industry, therefore there are many competitors in the market. Moreover, the market growth rate is decreasing steadily.” Similarly, participants in low value creation condition read “ the successful probability for the rebuttal is between 20%-25%, and the expected revenue will increase by 7-10%” if they choose to rebuttal. The other details are the same across four conditions.
22
(3) Basic personal information
In this part, participants need to fill up basic information, including gender, age, occupation, and seniority, etc. We will use this part to identify participants basic personal information through the cluster group method.
3.3.2 Survey Procedure
We collect 114 senior managers from different industries as our survey sample, and randomly assigned each subject to one of four conditions. After deducting some invalid questionnaires, there are 107 valid questionnaires. First, participants encounter the pure scenarios and then respond to their anti-dumping rebuttals decisions in the scenarios with conditions. In the pure scenarios, all participants read that they are considering a rebuttal due to an anti-dumping accuse. After reading the pure scenario, participants then read the scenario with conditions, and answer the questionnaire of items. Then, they respond whether they will rebuttal (yes versus no). Finally, participants answer their demographics and are debriefed.