Leading through rough times. An interview with Novell's Eric Schmidt. Interview by Bronwyn Fryer

Few large companies have soared as high, sunk as low, and struggled as long as the 18-year-old networking software maker Novell. For years, the company dominated the market for local area networks, but by 1997, it had faltered due to misguided acquisitions, product missteps, and large unsold inventories. That's when Eric Schmidt arrived from Sun Microsystems to take over as Novell's third CEO. He turned the company around with a deft combination of cost reductions, divestitures, and new product rollouts, and by 1998, it was back in the black. Unfortunately, the good times didn't last, and like most technology companies, Novell is once again struggling with a slowdown in demand. But Schmidt is optimistic about returning Novell to good health, and his strategies suggest ways for other organizations to handle themselves during downturns. He counsels against being overly cautious during such times. It may be necessary to eliminate excess inventory, cut costs, and reduce the size of the staff and the management team in order to stabilize a company. Working to retain those employees whom he calls the "smart people" and keeping them motivated will have long-term payoffs. Further, Schmidt says it is necessary to acknowledge and overcome a "culture of fear," the deadening environment of cynicism in which employees suppress thoughts and feelings because they're worried about layoffs. His additional advice: keep new products coming out to sustain the interest of customers and the press, pay attention to your cash position, stay focused on your desired outcomes, and take heart from other industry leaders.     

The Effects of Competition in Short Product Life‐Cycle Markets: The Case of Motion Pictures*

It is critically important to understand the relationship between new product launch strategies and their interaction with the competitive environment, which results in the successful introduction of new products. Deciding when to launch new products is among the most significant issues facing managers when formulating new products strategy, especially for products with short product life cycles. However, little extant research has focused on the interaction of product launch timing and the competitive market environment. This study explores the effects of four types of competitive threats on the market performance of short product life‐cycle products. Threats from new products and incumbents are possible. Also, products in the same category and those in related product categories exert competitive pressures. In this paper, a framework of competitive threats is developed, and research questions are constructed and empirically tested using the motion pictures industry as the focus of this research. A set of simultaneous equations was estimated using a sample of 2,948 movies introduced in the U.S. market between 1997 and 2004. The results show that all competition types have negative direct, indirect (as mediated by distribution intensity), and total effects on the performance of a new product. For a focal product, incumbent products exert a greater negative impact on performance than new entrants. Surprisingly, products in different, but related, categories are more harmful to the performance of products than products in the same category. The results have important implications for launch timing and new product performance.     

Savings and Investment: Some International Perspectives

Consistent with neoclassical growth models, recent estimates of the close association between domestic saving and investment rates may allow policy makers the opportunity to alter investment through the introduction of polices that alter domestic savings. However, such an interpretation presumes an endogenous investment response. Equally likely, at least theoretically, is that the close association is maintained by movements in domestic savings. The present paper explicitly examines the endogeneity of domestic saving and investment rates. For a subset of countries, including the United States, the results suggest that saving adjustments make up only a small portion of investment behavior.     

Can recipients of sales flyers be segmented?

This paper investigates the possibility of identifying clusters among consumers receiving sales flyers from retailers (supermarkets, etc.). First, flyers are defined and then consumers’ perception of flyers is analysed, based on a representative panel. According to the analysis, three clusters are identified. The clusters possess quite different characteristics – not just in relation to their perceptions and attitudes towards flyers, but also when looking at demographic characteristics.     

Relational View

Ohne Zusammenfassung     

Habilitation von Dr. Erich Lamp in Mainz

Ohne Zusammenfassung     

How to promote R&D-based growth? Public education expenditure on scientists and engineers versus R&D subsidies

This paper compares the positive and normative implications of two alternative measures to promote R&D-based growth: R&D subsidies to firms and publicly provided education targeted to the development of science and engineering (S&E) skills. The model accounts for the specificity of S&E skills, where individuals with heterogeneous ability choose their type of education. Although intertemporal knowledge spillovers are the only R&D externality, the analysis suggests that R&D subsidies may be detrimental to both productivity growth and welfare. Moreover, they raise earnings inequality. In contrast to R&D subsidies, publicly provided education targeted to S&E skills are found to be unambiguously growth-promoting and neutral with respect to the earnings distribution.     

Long-Term Care Insurance and Life Insurance Demand

This article investigates the interaction between life insurance and long-term care insurance markets on the demand side. In the model utility depends on both consumption and bequest, and utility from consumption is contingent on the state of health. While the demand for life insurance increases both with decreasing income and with a rising degree of altruism, the influences of these two parameters on the demand for long-term care insurance are ambiguous. If the utility shock arising from disability declines, both insurance demands will rise.