Stochastic Technology, Risk Preferences, and Adoption of Site-Specific Technologies

A model of farmer decision making is developed to determine the extent to which uncertainties about soil fertility and weather affect the value of site-specific technologies (SSTs) using jointly estimated risk and technology parameters. Uncertainty can lead risk-averse farmers to apply more fertilizers and generate more pollution than in the certainty case. Ignoring uncertainty and risk aversion would overestimate the economic and environmental benefits of SSTs and underestimate the subsidy required to induce adoption. Accounting for uncertainties and risk preferences might explain the low observed adoption rates of SSTs. Improving the accuracy of SSTs would increase the incentives for adoption.     

CREATING VALUE WITH MERGERS AND ACQUISITIONS

This report addresses two key questions for today's top executives: Do acquisitions create value for acquirers? And under what circumstances have acquisitions created the most value for acquiring shareholders?
The authors' analysis of over 1,500 completed deals by non-financial companies in the United States over the past 12 years shows that, at announcement, acquirers' shareholders suffer small losses, on average, in the short term around the initial deal announcement. Over longer intervals, such as one or two years following the announcement of the transaction, acquirers tend to slightly outperform industry peers.
The average or median market response hides tremendous variability in how the market has reacted to individual deals, however. This article provides evidence that the "right" M&A transaction can create substantial value for acquirers. One-quarter of the transactions lead to market-adjusted gains in excess of 5% for the acquirer and oneeighth of the transactions lead to gains in excess of 10% in the short term. However, some deals have also destroyed substantial shareholder value.
Financing structure is a key driver of the stock market reaction. Stock-financed transactions, on average, have a negative stock market reaction, while cash-financed transactions have benefited acquirers in both the short term as well as the long term.
Acquisitions of private companies or assets and units of public companies have consistently generated higher returns for acquirers than purchases of public companies.
Moreover, EPS dilution is not a major driver of how the stock market reacts to a deal. Although "accretive" deals perform slightly better than "dilutive" ones in the short and long run, the difference is small and not statistically significant. Over the long run, acquiring shareholders have benefited the most from deals within the same industry and that avoid targets with relatively optimistic earnings growth projections.     

The quality and effectiveness of marketing strategy: Effects of functional and dysfunctional conflict in intraorganizational relationships

By examining only dysfunctional conflict and ignoring functional conflict, empirical research in marketing has presented only part of the story. This research offers the first systematic look at the antecedents and consequences of both functionaland dysfunctional conflict in intraorganiational relationships. The authors develop and empirically test a causal model for key organizational antecedents of new product strategy quality and market performance. They find that dysfunctional conflict in the decision-making process has deleterious consequences for quality of strategy and market performance, whereas functional conflict improves both quality of strategy and performance. Specifically, organizational design characteristics such as formalization, interdepartmental interconnectedness, low communication barriers, and team spirit improve new product performance by enhancing functional conflict, whereas centralization and high communication barriers lower new product performance by increasing dysfunctional conflict. A post hoc test for common method bias or variance suggests that bias or variance alone cannot explain these findings. His general research interests focus on strategic issues relating to internal relationships, market learning, and organizational context of marketing strategy. His research has been published in theJournal of Marketing, Journal of Business Research, Journal of Advertising Research, Journal of Advertising, andJournal of Services Marketing, among others. His general research interests focus on strategic issues relating to relationship marketing, firm performance, sustainable competitive advantage, timing of market entry, and information technology. His past research has been published in theJournal of Marketing, Journal of Business Research, Journal of Services Marketing, andMarketing Education Review, among others. His research interests are in the areas of marketing research methods, structural equations modeling, cellular automata theories and methods, and Taoist methodologies for marketing strategy. His research has been published in theJournal of Marketing, Journal of Marketing Research, andJournal of the Academy of Marketing Science, among others.     

Willingness to Pay to Reduce Mortality Risks: Evidence from a Three-Country Contingent Valuation Study

Valuing a change in the risk of death is a key input into the calculation of the benefits of environmental policies that save lives. Typically such risks are monetized using the Value of a Statistical Life (VSL). Since the majority of the lives saved by environmental policies are those of older persons, there has been much recent debate about whether the VSL should be lower for the elderly to reflect their fewer remaining life years. We conducted a contingent valuation survey in the UK, Italy and France designed to answer this question. The survey was administered in these three countries following a standardized protocol. Our results suggest that the VSL is €1.022 million or €2.264 million, depending on whether we use median or mean WTP. The VSL is not significantly lower for older persons, but is higher for persons who have been admitted to a hospital or emergency room for cardiovascular and respiratory problems. Income is positively and significantly associated with WTP. The income elasticities of the WTP increase gradually with income levels and are between 0.15 and 0.5 for current income levels in EU countries. We use the responses to the WTP questions to estimate the value of an extension in remaining life expectancy. The value of a loss of one year’s life expectancy is €54,000 or €163,000.     

Industrial relations law,employment security and collective bargaining in India: myths,realities and hopes

This article examines the debate on reforms in industrial relations law in India, needed to support its economic liberalisation programme. Analysing a distinctively Indian experience of state intervention in industrial relations, it concludes that the thrust of the reform should be towards entrusting union recognition and promotion of dispute settlement to an authority that is independent of the state executive.     

Enhancing Vertical Efficiency Through Horizontal Licensing

This paper examines the role of patent licensing in the age of outsourcing. When firms rely on outsourced inputs, a patent holder’s decision to license has both competitive and supplier pricing effects. By issuing a license, the firm increases competition in the product market. At the same time, the need to make royalty payments “weakens” the firm’s rival, making it more sensitive to supplier pricing. The supplier responds by softening pricing terms, and the firm benefits by siphoning some of these gains via the license fee. Not only can the licensor gain, but all other parties (the licensee, supplier, and consumers) can also benefit. This role of licensing presents additional considerations for regulators shaping patent laws. We thank Michael Crew, John Fellingham, Sharon Oster, David Sappington, Doug Schroeder, and two anonymous referees for helpful comments. Anil Arya acknowledges support from the John J. Gerlach Chair.     

Experiencing change and the evolution of adaptive skills: Implications for economic growth

We distinguish learning in a static environment from that in a dynamic environment to show the existence of an important interaction between the development of new technologies and human capital accumulation. Because technological progress creates a more dynamic environment, it complements education in the production of human capital by enhancing adaptive skills. Higher levels of adaptability and human capital in turn determine the profitability of new inventions and the incentive to invest in new R&D. Differences in the history of technological progress produce different levels of adaptability and our results suggest why countries that have comparable levels of education and per capita incomes may differ significantly in their growth performance.     

The Manipulability of Matching Rules via Segmentation

Our matching problems feature agents with endowments facing certain division rules. At any matching, the endowments of agents are reallocated between the matched pairs according to some given division rule, and this opens doors to an iterated matching problem and rematching, and to manipulation of some matching rules via segmentation. In this form of manipulation a coalition breaks off from the rest, matches within itself and rejoins the complementary coalition for a rematching at the new endowment profile. Under certain division rules this may benefit the coalition who breaks off without hurting the complementary coalition. Furthermore, both may benefit by first matching internally and then rejoining for a new match.