Prospect theory and the risk-return paradox: some recent evidence

There is extensive evidence indicating a negative risk–return relation when a firm’s performance is measured based on accounting measures such as return on asset (ROA) and return on equity (ROE). Previous studies show that the risk-return paradox can be explained by the prospect theory, which predicts that managers’ risk attitudes are different for firms of different performances. However, those studies mostly use earlier data from the COMPUSTAT database, which suffers from a survivorship bias. Failure to account for delisting firms may understate the risk–return relation. We reexamine the mixture of risk-seeking and risk-averse behaviors based on an updated 20-year sample period that is free from the survivorship problem. Interestingly, our results show stronger and robust evidence supporting the prospect theory during the period from 1984 to 2003.     

Marketing research in Korea: Special joint issue of journal of business research and journal of the Korean academy of marketing science

This special joint issue of the Journal of Business Research with the Journal of the Korean Academy of Marketing Science contains nine articles that were originally presented at the Fall 2005 Korean Academy of Marketing Science (KAMS) International Conference and the Spring 2006 KAMS International Conference. After a blind review process, 120 papers were accepted for conference proceedings. Of these papers, the conference selection committee selected 20 papers as outstanding contributions to the marketing literature. A board of review members blind reviewed these 20 papers and accepted 9 of them for this special issue. Contributions to marketing literature are discussed.     

Consumer Responses to Vertical Service Line Extensions

Vertical line extensions extend an established brand to products at different price/quality points. In this study, we examine consumer evaluations of vertical service line extensions and the feedback effects of these extensions on the parent brand. Findings of two empirical studies in the hotel industry indicate that consumers perceive higher risks in step-up extensions than in step-down extensions, which consequently influences their evaluations of the extensions. This effect of extension direction is also found to be moderated by risk relievers such as service guarantee and consumers’ prior knowledge in the service category. Furthermore, we found that a parent brand receives more positive evaluations after the introduction of a step-up extension than that of a step-down extension.     

Competitive screening and information transmission

We consider a model in which schools and colleges compete for high-ability students, which are independently identified through a costly screening procedure. This independence creates a channel through which students' preferences affect the strategic interaction between schools: students with competing offers accept the most-preferred one, increasing the screening costs of unpopular schools. When preferences between schools are more heterogeneous, schools screen more, increasing the proportion of students with multiple offers, but paradoxically reducing the extent to which their preferences determine their outcomes. By observing the students' schools of origin, colleges can free-ride of the fierce competition that occurs during screening.     

Whom Should We Talk to? Investigating the Varying Roles of Internal and External Relationship Quality on Radical and Incremental Innovation Performance

Research suggests that close relationships with internal and external partners are likely to have a significant impact on new product development (NPD). What is unclear is how the effects of internal and external relationships influence development paths for different types of innovations. Prior literature indicates that the pathways for developing incremental innovations differ considerably from those for radical innovations. Thus it is plausible that the effects of external versus internal relationships vary across these two innovation types. This paper uses the 2012 Comparative Performance Assessment Study (CPAS) data set to investigate the roles of internal and external relationship quality on the development of both incremental and radical innovations. The results find that internal and not external relationship quality is beneficial for the development of incremental innovations. When driven by internal relationships, a flexible NPD process is advantageous for the financial performance of incremental innovations. Meanwhile external and not internal relationship quality is valuable for developing radical innovations. External relationship quality results in process flexibility, leading to project execution success and subsequent financial performance for radical innovations. As expected, project execution success consistently leads to increased financial performance. These findings indicate the critical differences in types of relationship quality required when developing new products based on radical versus incremental innovations.     

Banking efficiency in South East Europe: Evidence for financial crises and the gap between new EU members and candidate countries

In this study we compare the cost efficiency of banks in ten South East European countries and find out how differences in efficiency are related to EU membership. The results reveal a statistically significant cost efficiency gap between EU and non-EU banking systems in the region, where on average EU banking systems tend to be more cost efficient than their non-EU counterparts. In contrast to other similar studies analyzing banking efficiency in South East European countries, we also run β-convergence and σ-convergence tests, as proposed in the literature. Based on these tests we can draw conclusions concerning the existence of a catching-up effect, since the detected cost efficiency gap is closing predominantly because of adjustments on the side of the less efficient banks. Additionally, we found that during the 2008 global financial crisis, the average cost efficiency scores of banks in the region improved, which could be explained by enhanced incentives of bank managers for intensified cost optimization in banks in crisis times. Our results suggest that the institutional adjustments in the non-EU countries should continue towards EU standards, as the EU banking systems tend to dominate in terms of measured cost efficiency.     

Understanding donors: A case of university performing arts programs in the USA

• The purpose of the study was to: (a) to examine the factors that influence donor behavior, (b) to determine which specific perceived benefits are predictors of donor behavior, and (c) to examine the influence of gender, age, and income level of university performing arts program (PAP) donors. Secondary data from the Value and Impact Study, collected by 14 Major University Presenters (MUPs) was used. Results of data analyses using 1771 donor responses suggest that identification with the PAP, familiarity with planned giving options, and public recognition are important predictors of donor behavior. Donors highly value priority seating, advanced notice of programs, and ability to purchase single tickets in advance of public sale. Additionally, age, gender, economic status, and perceived benefits were found to be important variables for understanding donor behavior. Given these results, implications for future research and practice in relationship marketing are discussed.

Copyright © 2011 John Wiley & Sons, Ltd.     

Analytic collaboration in virtual innovation projects

Researchers attend to innovation and collaboration issues. Yet, the relevant literature devotes scant attention to the relationship between collaboration effectiveness and virtual innovation team context, while there are clear indications that both subjects relate with growing concerns in today's business setting. This article reviews extant literature and state-of-the art collaboration systems, and elucidate dynamic contextual factors among virtual innovation team members. The results show the antecedents and interrelationship among these factors, suggesting an optimal collaboration model for virtual innovation project teams. This paper documents the empirical observations of a virtual innovation project for advanced textile manufacturing technologies, and examines the due collaboration taking place among different project participants. Understanding the set of contextual factors emerging from virtual innovation projects can help managers classify, and employ the most effective collaboration mechanism for enhancing the corresponding project performance and effectiveness pragmatically.     

Appraisal Smoothing: The Other Side of the Story

Appraisal smoothing has been widely accepted as an important factor to consider when analyzing real estate returns using appraisal-based data. In this paper, we demonstrate that the general applicability of the appraisal-smoothing arguments developed so far in the literature is limited by the assumptions upon which the arguments are based. We further show that the use of appraisal-based data can result in a higher (not lower) variance than that of true returns. Given this, it might be more fruitful to analyze the unique characteristics of real estate markets as possible explanations for the seemingly low variance observed in appraisal-based (or transaction-based) return indexes.