Innovations—Doomed to Fail? Investigating Strategies to Overcome Passive Innovation Resistance

The constant and successful market introduction of new products is of major concern to companies throughout all industries. However, empirical research points to high failure rates of innovations, indicating that most new products fail as they are rejected by consumers due to their resistance to innovation. Several studies have confirmed the importance of passive innovation resistance as a dominant barrier, which has to be overcome before new product adoption can start. However, empirical evidence on how to overcome passive innovation resistance is still lacking. This study intends to address this gap by evaluating the effectiveness of marketing instruments (i.e., mental simulation and benefit comparison) to reduce negative effects of passive innovation resistance on new product adoption. The results of a scenario‐based experiment (n = 679) confirm high effectiveness for both instruments. However, the effectiveness varied with the type of passive innovation resistance present. More specifically, mental simulation was found to be the most effective instrument in the case of cognitive passive resistance, whereas benefit comparison was found to be most effective in the case of situational passive resistance. Thereby, the effect of both marketing instruments was stronger the more radical the new product was perceived. Hence, companies should assess the type of passive innovation resistance that is predominant in their target market, and align their choice of marketing instruments that accompany a new product launch to most effectively overcome passive innovation resistance. Employing such new product launch tactics should decrease initial market resistance and thus help companies in reducing innovation failure rates.     

Does a long‐term orientation create value? Evidence from a regression discontinuity

Research summary : In this paper, we theorize and empirically investigate how a long‐term orientation impacts firm value. To study this relationship, we exploit exogenous changes in executives' long‐term incentives. Specifically, we examine shareholder proposals on long‐term executive compensation that pass or fail by a small margin of votes. The passage of such “close call” proposals is akin to a random assignment of long‐term incentives and hence provides a clean causal estimate. We find that the adoption of such proposals leads to (1) an increase in firm value and operating performance—suggesting that a long‐term orientation is beneficial to companies—and (2) an increase in firms' investments in long‐term strategies such as innovation and stakeholder relationships. Overall, our results are consistent with a “time‐based” agency conflict between shareholders and managers. Managerial summary : This paper shows that corporate short‐termism is hampering business success. We show clear, causal evidence that imposing long‐term incentives on executives—in the form of long‐term executive compensation—improves business performance. Long‐term executive compensation includes restricted stocks, restricted stock options, and long‐term incentive plans. Firms that adopted shareholder resolutions on long‐term compensation experienced a significant increase in their stock price. This stock price increase foreshadowed an increase in operating profits that materialized after two years. We unpack the reasons for these improvements in performance, and find that firms that adopted these shareholder resolutions made more investments in R&D and stakeholder engagement, especially pertaining to employees and the natural environment. Copyright © 2016 John Wiley & Sons, Ltd.     

What Is a Tree Worth? Green‐City Strategies,Signaling and Housing Prices

We investigate the correlation between curbside tree plantings and housing price movements in Philadelphia from 1998 to 2003, comparing two programs, one by the Philadelphia Horticultural Society (PHS) that requires block-group effort that focuses on low-income neighborhoods and the other by the Fairmount Park Commission that is individual-based without specific target areas. A 7 to 11% price differential is identified within 4,000 feet of the Fairmount tree plantings. We argue that this is largely driven by either social capital creation or a signaling mechanism, on top of an intrinsic tree value (around 2%). Findings using the PHS tree program suggest that development of social capital or environmentally conscious behavior might be a less important channel. Any positive changes brought by the PHS tree plantings were not detected with sufficient statistical power.     

Are consumers concerned about palm oil? Evidence from a lab experiment

A lab experiment evaluates the consumers’ willingness to pay (WTP) for food products made with and without palm oil. Palm oil production induces environmental damages, and its consumption presents a health risk. However, the production of alternative oils raises land use issues. In the experiment, successive messages emphasizing the characteristics of palm oil and palm oil-free products are delivered to participants. Information has a significant influence on WTP when it underlines the negative impact of the related product. This effect is stronger for the palm oil product than for the palm oil-free product. The experiment also compares the welfare effects of two regulatory instruments, namely a consumer information campaign versus a per-unit tax. Because of the respective attributes of both palm oil and palm oil-free products, the information campaign improves welfare with a much larger impact than the tax.     

Labor market evaluation versus legacy conservation: What factors determine retiring CEOs' decisions about long‐term investment?

Do CEOs nearing retirement attempt to boost short‐term firm performance or do they care more about what type of legacy they will leave behind? The two opposing predictions about the behavior of CEOs upon retirement suggest that retiring CEOs' decisions about certain long‐term investment items may be more complex than suggested in the literature. In search of an answer to this question, we examine the relationship between CEO retirement and the level of firm commitment to corporate social responsibility (CSR). The results show that CEO retirement has a negative effect on firm commitment to CSR. However, we found that the negative effect becomes weaker when CEOs retire at relatively older ages or are retained on the board of directors of their own firms. Our finding suggests that CEOs who face weaker pressure from the labor market for corporate directors may pay more attention to preserving their legacy. Copyright © 2014 John Wiley & Sons, Ltd.     

Does Energy Consumption Respond to Price Shocks? Evidence from a Regression‐Discontinuity Design

We exploit unique features of a recently introduced tariff schedule for natural gas in Buenos Aires to estimate the short‐run impact of price shocks on residential energy utilization. The schedule induces a non‐linear and non‐monotonic relationship between households' accumulated consumption and unit prices, thus generating exogenous price variation, which we exploit in a regression‐discontinuity design. We find that a price increase causes a prompt and significant decline in gas consumption. The results also indicate that consumers respond more to recent past bills than to expected prices, which argues against an assumption of perfect awareness of complex price schedules by consumers.     

The Ex‐Day Price Behavior of REITs: Taxes or Ticks?

Taxes and microstructure constraints are often cited as possible explanations for why stock prices drop by less than the dividend on their ex‐dates. Using a sample of real estate investment trusts, which have no significant correlation between dividend size and yield, we find that close‐to‐open ex‐dividend price drops are related to dividend size as suggested by the microstructure models, but close‐to‐close price drops are related to dividend yield as predicted by the tax theory. These results imply that overnight price drops are primarily determined by microstructure, but that trading during the ex‐day causes prices to adjust to reflect individual tax preferences.     

Why Do Firms Enter a New Product Market? A Two‐Dimensional Framework for Market Entry Motivation and Behavior

What are the energetic forces that induce established firms to enter new product markets? While most previous research has explained the economic profits expected from a new product market as firms' distinctive motivation for market entry, some recent studies also emphasize interfirm competition and benchmarking activities as another important factor that motivates firms' new market entry. To explain the established firms' diverse new product market entry behaviors, this study presents a two‐dimensional scheme of entry motivation in terms of the degrees of target market profit focus and competitor focus. The first dimension captures the economic motivation of firms' new market entry that ranges from focusing on the direct expected profits from the target market to considering more strategic/indirect benefit incentives. The second dimension captures the degree of firms' external motivation for entry affected by competitors that ranges from independent entry decisions to fully competitor‐oriented entry decisions. Using multiple‐industry survey data, the current study empirically verifies that these two entry motivation dimensions explain a great portion of actual firms' new product market entry behaviors and that they are independent of each other. Subsequently, this study validates that firms' operational size and their environmental factors like perceived technological uncertainty and competitive intensity upon new market entry affect the degrees of the two dimensions of firms' new product market entry motivation. More specifically, large firms less emphasize target‐market profits than small firms, and when perceived technological uncertainty is high, potential market entrants become less target market profit focused but more competitor focused. Under a highly competitive new market condition, firms focus on both target‐market profits and competitors. Based on the analysis of new market entry motivation dimensions, the current study proposes a new typology of established firms' market entry behaviors. The suggested typology represents the four different types of new product market entrants and examines specific characteristics and entry strategies for each type of potential entrants. This entry‐motivation framework should provide a deeper understanding of the backgrounds of entry behaviors and assist firms in developing appropriate entry strategies and in advantageously responding to rival firms' actions with regard to entry.     

When Does Search Openness Really Matter? A Contingency Study of Health‐Care Innovation Projects

Given the growing popularity of the open innovation model, it is increasingly common to source knowledge for new product ideas from a wide range of actors located outside of organizational boundaries. Such open search strategies, however, might not always be superior to their closed counterparts. Indeed, widening the scope of knowledge sourcing at the ideation stage typically comes at a price given the substantial monetary and nonmonetary costs often incurred in the process of identifying, assimilating, and utilizing external knowledge inputs. Considering both the benefits and costs of search openness, the authors develop a project‐level contingency model of open innovation. This model suggests that search openness is curvilinearly (taking an inverted U‐shape) related to new product creativity and success. They hence assume that too little as well as too much search openness at the ideation stage will be detrimental to new product outcomes. Moreover, they argue that the effectiveness of open search strategies is contingent upon the new product development (NPD) project type (typological contingency), the NPD project leader (managerial contingency), and the NPD project environment (contextual contingency). To test these propositions empirically, multi‐informant data from 62 NPD projects initiated in the English National Health Service (NHS) were collected. The econometric analyses conducted provide considerable support for a curvilinear relationship between search openness and NPD outcomes as well as for the hypothesized contingency effects. More specifically, they reveal that explorative NPD projects have more to gain from search openness at the ideation stage than their exploitative counterparts. Moreover, the project‐level payoff from search openness tends to be greater, when the project leader has substantial prior innovation and management experience, and when the immediate work environment actively supports creative endeavors. These findings are valuable for NPD practice, as they demonstrate that effective knowledge sourcing has much to contribute to NPD success. In particular, pursuing an open search strategy might not always be the best choice. Rather, each NPD project is in need of a carefully tailored search strategy, effective leadership, and a supportive climate, if the full value of external knowledge sourcing is to be captured.     

Fixed‐Term Contracts: Short‐Term Blessings or Long‐Term Scars? Empirical Findings from the Netherlands 1980–2000

Using a comprehensive longitudinal dataset of prime‐age Dutch workers over the period 1980–2000, we examine how a previously held job with a fixed‐term contract influences both the likelihood and the duration of a future spell of unemployment. Analyses show that Dutch workers with fixed‐term contracts experience higher risks of future unemployment and have no shorter spells of unemployment compared to workers with regular contracts. Results also reveal that swifter employment re‐entries among men with fixed‐term contracts can be explained by their job search efforts before unemployment. Our study (partly) invalidates theoretical positions that claim that fixed‐term contracts foster employment security by shortening unemployment durations; suggesting that fixed‐term contracts are a short‐term blessing that could end, for some workers, in a recurrent unemployment trap.     

What Makes a Family Firm Innovative? CEO Risk‐Taking Propensity and the Organizational Context of Family Firms

Investigating the new product portfolio innovativeness of family firms connects two important topics that have recently received considerable attention in innovation and family firm research. First, new product portfolio innovativeness has been identified as a critical determinant of firm performance. Second, research on family firms has focused on the questions of if and why family firms are more or less innovative than other organizational forms. Research investigating the innovativeness of family firms has often applied a risk‐oriented perspective by identifying socioemotional wealth (SEW) as the main reference that determines firm behavior. Thus, prior research has mainly focused on the organizational context to predict innovation‐related family firm behavior and neglected the impact of preferences and the behavior of the chief executive officer (CEO), which have both been shown to affect firm outcomes. Hence, this study aims to extend the previous research by introducing the CEO's disposition to organizational context variables to explain the new product portfolio innovativeness of small and medium‐sized family firms. Specifically, this study explores how the organizational context (i.e., ownership by top management team [TMT] family members and generation in charge of the family firm) of family firms interacts with CEO risk‐taking propensity to affect new product portfolio innovativeness. Using a sample of 114 German CEOs of small and medium‐sized family firms operating in manufacturing industries, the results show that CEO risk‐taking propensity has a positive effect on new product portfolio innovativeness. Moreover, the analyses show that the organizational context of family firms impacts the relationship between CEO risk‐taking propensity and new product portfolio innovativeness. Specifically, the relationship between CEO risk‐taking propensity and new product portfolio innovativeness is weaker if levels of ownership by TMT family members are high (high SEW). Additionally, the effect of CEO risk‐taking propensity on new product portfolio innovativeness is stronger in family firms at earlier generational stages (high SEW). This result suggests that if SEW is a strong reference, family firm‐specific characteristics can affect individual dispositions and, in turn, the behaviors of executives. Therefore, this study helps extend the knowledge on the determinants of new product portfolio innovativeness of family firms by considering an individual CEO preference and the organizational context variables of family firms simultaneously.     

Do Multi‐Plant Firms Reduce Misallocation? Evidence from Canadian Manufacturing

Using Canadian plant‐level data, this paper shows that, depending on the industry, the differences in the average plant‐level productivity and cross‐plant allocation of resources between multi‐plant and single‐plant firms account for 1 to 15 per cent of the industry‐level TFP. A large part of this contribution stems from more efficient cross‐plant allocation of resources, measured by the covariance between plant size and productivity, in the pool of plants in multi‐plant firms compared to the pool of plants in single‐plant firms. There is less dispersion in the marginal products of the inputs, and thus less misallocation, in industries in which multi‐plant firms account for a larger share of output. The patterns found in the cross‐plant distribution of productivity and size are also consistent with better allocative efficiency among plants in multi‐plant firms than among plants in single‐plant firms.     

What do we know about buyer–seller negotiations in marketing research? A status quo analysis

The main objective of this study is to provide an overview of the current status quo of negotiation research in marketing. In this context, we first conduct a quantitative analysis of existing literature on buyer–seller negotiations. Specifically, we undertake a screening of 10 high-ranking marketing journals so as to identify the body of negotiation-related articles within marketing. In a next step, the identified articles are subjected to both content and co-citation analyses. To this end, we modify the interaction model of the IMP Group in order to comprehensibly structure the existing findings. In a last step, these findings are presented to various negotiation experts to verify their practical relevance. From this multi-step procedure, we derive sound implications for research and practice.