The effects of business–university alliances on innovative output and financial performance: a study of publicly traded biotechnology companies

Companies in the biotechnology industry face major challenges in developing and commercializing new products. Focusing on publicly traded biotechnology firms that are not members of university incubators or research parks, this paper argues that the links these companies develop with universities can have beneficial effects on a company's operations. Analysis of 2457 alliances undertaken by 147 biotechnology firms shows that companies with university linkages have lower research and development (R&D) expenses while having higher levels of innovative output. However, the results do not support the proposition that companies with university linkages achieve higher financial performance than similar firms without such linkages.     

Regulation, Corporate Social Responsibility and Activism

This paper analyzes the interplay between firms' self-regulation (often denoted as corporate social responsibility) as opposed to the formal regulation of a negative externality. Firms respond to increasing activism in the market (conscious consumers that take into account the external effects of their purchase) by providing more socially responsible goods. However, because regulation is the outcome of a political process, an increase in activism might imply an inefficiently high externality level. This may happen when a majority of non-activist consumers collectively free-ride on conscious consumers. By determining a softer than optimal regulation, they benefit from the behavior of firms, yet they have access to cheaper (although less efficient) goods .     

Worker turnover at the firm level and crowding out of lower educated workers

This paper investigates whether employers exploit cyclical downturns to improve the average skill level of their work force. We use a unique dataset that contains information on workers, jobs as well as firm characteristics. Our findings are that at each job level mainly lower educated workers leave during downturns. Furthermore, at each level of job complexity, workers with a higher education are not more productive than lower educated workers. We find no evidence that higher educated workers crowd out lower educated workers during recessions.     

Does manufacturer advertising suppress or stimulate retail price promotions? Analytical model and empirical analysis

Does manufacturer advertising for a brand stimulate or suppress retail price promotions? This study addresses this controversial issue. The authors develop an analytical model that shows that the relationship between manufacturer advertising and retail price promotion depends on the role of advertising. If advertising differentiates brands and suppresses consumer response to retail promotion, then the relationship is negative. But, if advertising is informative enough to increase consumer response to retail promotions, then the relationship is positive. A follow-up empirical analysis shows a strong positive relationship between category advertising expenditure and size of retail price discount, and between advertising and discount frequency. The finding supports the informative role of advertising in the context of retail price promotions. The implications of these findings and directions for future research are discussed.     

Monitoring Job Offer Decisions,Punishments, Exit to Work,and Job Quality

Unemployment insurance systems include the monitoring of unemployed workers and punitive sanctions if job search requirements are violated. We analyze the causal effect of sanctions on the ensuing job quality, notably on wages and occupational level. We use Swedish data and estimate duration models dealing with selection on unobservables. We also develop a theoretical job search model that monitors job offer rejection versus job search effort. The empirical results show that, after a sanction, the wage rate is lower and individuals move more often to a part‐time job and a lower occupational level, incurring human capital losses.     

Stock Market Returns to Financial Innovations Before and During the Financial Crisis in the United States and Europe

Prior studies have focused on innovations in various contexts but largely excluded financial innovations, despite their notable importance. Not surprisingly, financial innovations account for a substantial portion of world economies and the huge market capitalization of banks. Therefore, the authors focus on studying the type, success, and causes of success of financial innovations. Using an event study and financial expert ratings, this study analyzes the types of and payoffs to 428 financial innovations by 39 major banks in North America and Western Europe between 2001 and 2010. The results indicate that security and credit instruments constitute the most common and insurance innovations the least common financial innovations, which vary substantially by economic cycles and location. The average cumulative abnormal stock market returns to a financial innovation are $146 million. They are twice as high in the United States as in Western Europe. Thus, the market considers financial innovations profitable, not harmful, despite their apparent responsibility for the financial crisis. Surprisingly, the cumulative abnormal stock market returns to financial innovations are higher in recessions than in expansions. The authors find that riskiness and radicalness of the innovation increases abnormal returns, while complexity decreases cumulative abnormal stock market returns. Two interaction effects stand out: Riskiness of financial innovations has higher cumulative abnormal stock market returns in the United States than in Western Europe. Radicalness has lower cumulative abnormal stock market returns in recessions than in expansions. The authors discuss important implications of the findings.     

Category Divergence,Straddling, and Currency: Open Innovation and the Legitimation of Illegitimate Categories

The organizational literature is increasingly interested in the origins and consequences of category emergence. We examine the effects of being affiliated with categories initially considered illegitimate (‘divergence’), and of organizational attempts to blur the boundaries between categories (‘straddling’), on capital market reactions to firm announcements. We develop arguments for how these effects likely vary with increasing legitimation (‘currency’) of the category. We apply event study methodology to the complete population of firms' announcements of open source activities, an open innovation model for software development that is novel and defies the extant dominant logic of software production and valorization. Over a ten‐year period, we find negative effects of divergence, positive effects of straddling, and that the magnitude of both these effects diminishes with increasing category currency. The implications for theories of organization and open innovation in the context of category emergence are discussed.     

Why Global Policy Co-ordination Is Crucidl？

How times change! Months ago, world leaders gathered at the London Summit and agreed to co-ordinate economic policies. Acting together, they pulled the world economy back from the brink. Depression was avoided. Recovery followed.