The influence of business strategy on new product activity: The role of market orientation

In this paper, we propose that business strategy influences new product activity both directly and indirectly via its influence on market orientation. Accordingly, we develop a framework linking firms' relative emphasis on cost leadership, product differentiation and focus strategies to firms' customer and competitor orientation as well as their new product development and introduction activity. We use this framework to develop a simultaneous equations model that is tested on survey data from 175 Dutch firms of varying size and across different industries in the manufacturing sector. The surprising findings are that a greater emphasis on a focus strategy results in a decreased emphasis on customer orientation and that competitor orientation has a negative direct influence on new product activity and an indirect positive effect via customer orientation. We discuss the implications of these findings for theory and practice.     

Where the Water is Free but the Buckets are Empty: Demand Analysis of Drinking Water in Rural India

This paper examines how a policy of providing free domestic water can be unsustainable. Using a conditional logit model, this research looks at the demand side and identifies the determinants of choice. Under assumptions normally associated with developing societies, the model shows that the people's perception of benefits of safe water is significant, household variables like female literacy are important variables determining the choice of safe water and the capability to pay and willingness to pay already exists. The governments in poor countries need to have a fresh look at their policy relating to rural water supply.     

Asset divestiture following horizontal acquisitions: a dynamic view

Business acquisition, resource redeployment, and asset divestiture are elements of a dynamic process in which firms change their businesses by recombining internal and external resources. Analyzing 253 horizontal acquisitions, we show that post‐acquisition resource redeployment leads to asset divestiture from the business that receives the redeployed resources, but not from the business that contributes the new resources. Consistent with scale economies rationales, we find that strategic similarity also leads to greater asset divestiture from the target firms. Many theoretical perspectives are skeptical about the positive rationale for acquisitions and many of these believe that asset divestiture is evidence of acquisition failure. Our arguments and analysis help refine the accepted wisdom. In particular, the pattern of resource redeployment and asset divestiture in our analysis suggests that acquisitions provide a means of reconfiguring the structure of resources within firms and that asset divestiture is a logical consequence of this reconfiguration process. Copyright © 2001 John Wiley & Sons, Ltd.     

Ill‐Defined versus Precise Pre‐Play Communication in the Traveler's Dilemma

This article reports results from an experiment comparing the effects of vague versus precise pre‐play communication in a highly competitive two‐player game with conflicting interests. In the classic Traveler's Dilemma, non‐binding precise messages about intent of play are pure cheap talk. We conjecture that a form of imprecise pre‐play communication whereby subjects can submit ill‐defined messages may help foster cooperation because of their vagueness. Comparing behavior both across modes of communication and to a baseline case without communication, we find that cooperation is highest when players can communicate using precise numerical messages. When communication with ill‐defined messages is allowed, then conditional on receiving a message, subjects act more cooperatively than when no message is received. However, overall, the ability to exchange ill‐defined messages does not substantially improve cooperation.     

Specialist: The firm or the individual?: Empirical evidence from the options markets

This paper investigates the role of the individual specialist vis-à-vis that of the specialist firm on the quality of markets. While previous studies have not denied the importance of the individual, they have focused exclusively on the performance of the specialist firm. This study is the first empirical test of the specialist as an individual and his influence on market quality. By implication, it tests whether the firm is the appropriate level of analysis. Within specialist firms, we find significant differences in quoting behavior while the evidence on execution quality is mixed. Some firms are able to design an effective mechanism that enforces uniformity in goals of the members of the firm. Considering that exchanges are unable to impose such uniform performance, these firms appear to have better incentive or penalty systems in place. However, the existence of other firms where significant differences in execution quality exist, presents a challenge to policy makers, as differences in execution quality within a firm indicate that the disclosure of market quality needs to be at the post-level, not just at the firm level.     

Toward a unified theory of consumer acceptance technology

In the last few decades, scholars and practitioners have increasingly tried to understand the factors that influence technology acceptance. Theories and models developed by scholars have tended to focus on the role of cognition and have rarely included affect. The few studies that have incorporated affect have tended to measure a single emotion rather than modeling it comprehensively. This research addresses that inadequacy in our understanding of technology adoption by merging two previously unrelated models: TAM (the Technology Acceptance Model) and PAD (the Pleasure, Arousal, and Dominance paradigm of affect). This study also examines an enhanced view of cognition. The product of this unified theoretical framework is referred to as the Consumer Acceptance of Technology (CAT) model. The results of a test using structural equation modeling provide empirical support for the model. Overall, the CAT model explains over 50% of the variance in consumer adoption intentions, a considerable increase compared to TAM. These findings suggest that substantial improvement in the prediction of technology adoption decisions is possible by use of this model with its integration of affect and cognition. © 2007 Wiley Periodicals, Inc.     

Adopting bioenergy crops: Does farmers’ attitude toward loss matter?

We apply prospect theory to examining farmers’ economic incentives to divert a share of their land to bioenergy crops (miscanthus and switchgrass in this study). Numerical simulation is conducted for 1,919 rain‐fed U.S. counties to identify the impact of loss aversion on bioenergy crop adoption, and how this impact is influenced by biomass price, discount rate, credit constraint status, and policy instruments. Results show that ignoring farmer's loss aversion causes overestimation of miscanthus production but underestimation of switchgrass production, particularly when farmers are credit constrained and have a high discount rate. We find that establishment cost subsidy induces more miscanthus production whereas subsidized energy crop insurance induces more switchgrass production. The efficacy of these two policy instruments, measured by biomass production increased by per dollar of government outlay, depends on the magnitude of farmers’ loss aversion and discount rate.     

CHANGES IN TRADING ACTIVITY FOLLOWING STOCK SPLITS AND THEIR EFFECT ON VOLATILITY AND THE ADVERSE-INFORMATION COMPONENT OF THE BID-ASK SPREAD

We examine changes in trading activity around stock splits and their effect on volatility and the adverse-information component of the bid-ask spread. Even after controlling for microstructure biases, we find a significant increase in volatility after the split. Changes in total volatility and in its permanent component are positively related to changes in the number of trades. This suggests that both informed and noise traders contribute to changes in trading activity. Further, while the adverse-information component of the spread increases unconditionally after the split, the change is negatively related to the change in trading activity. The results suggest that a crucial determinant of liquidity changes after a stock split is the success of the split in attracting new trades in the security.     

Toward a theory of managing context in Six Sigma process-improvement projects: An action research investigation

In this paper, field studies, extant literature, and domain knowledge are used to develop a theory of managing context in Six Sigma process-improvement projects. By means of a participatory action research investigation involving ten projects in manufacturing and service firms, this paper examines the interrelationship among project context, elements, and success. Rich text-based information for each project was analyzed for the underlying patterns and relationships using the NVIVO 8 qualitative data analysis software package. The insights gained from this in-depth field investigation are presented in the form of 12 inductively derived research propositions that, when taken together, uniquely contribute to context-based theory-building in this area.