What broad banks do, and markets don’t: Cross-subsidization

We show that interbank markets are a poor substitute for “broad” banks that operate across regions or sectors. In the presence of regional or sectoral asset and liquidity shocks, interbank markets can distribute liquidity efficiently, but fail to respond efficiently to asset shocks. Broad banks can condition on the joint distribution of both shocks and, hence, achieve an efficient internal allocation of capital. This allocation involves the cross-subsidization of loans across regions or sectors. Compared to regional banks that are linked through well-functioning interbank markets, broad banks lead to higher levels of aggregate investment, higher output, and less fluctuations within regions. However, broad banks generate endogenously aggregate uncertainty.     

Exploring the post-termination stage of consumer–brand relationships: An empirical investigation of the premium car market

This research extends customer lifecycle models to include a post-termination stage that bridges the dissolution stage of a consumer–brand relationship with a potential recovery stage. Drawing from 43 depth interviews with former customers of a car brand, this study relies on grounded theory and triangulation to explore consumer responses in the post-termination stage and finds evidence for both negative and positive customer responses after dissolution. The authors combine qualitative techniques with categorical principal component analysis (CATPCA) to explore the dimensionality of post-termination responses and extract relationship-related and termination-related response dimensions. They use these dimensions to identify four distinct post-termination customer clusters, which differ systematically with the customer's termination reasons, as demonstrated through a series of exact logistic regressions. In addition to providing evidence of a post-termination stage, this study offers implications for customer relationship management.     

The R and D/Marketing interface and single informant bias in NPD research: an illustration of a benchmarking case study

Analysing the performance of new product development (NPD) processes requires the reliable assessment of non-documented organizational characteristics. Based on key informant literature we discuss the difficulties of gaining reliable information from respondents and we identify potential sources for heterogeneous perceptions among different respondents. We assume that NPD research may be subject to response biases, if it is based on sole informants only. We apply an existing benchmarking approach for NPD processes in a comprehensive case study in order to illustrate sources and effects of single informant biases. We find that perceptions differ substantially among the individual respondents. In particular, we observe different functional perceptions between respondents from Marketing and Research and Development. The results are consistent with expectations from interface theory. These perceptual differences have a severe impact on the managerial conclusions drawn from benchmarking. There appears to be no single reliable source of information within an organization. Furthermore, variances among informants' assessments should be recognized and regarded as valuable information. It is our recommendation that multiple informants ought to be included in future NPD research and benchmarking studies.     

Investments in tracking and tracing systems in the food industry: A PLS analysis

Traceability and related concepts, such as trust and transparency have gained greatly in relevance in food supply chains. This study seeks to answer what exactly determines firms’ investments in traceability systems by developing and testing a theoretical framework using partial least squares methodology and empirical data from 234 companies of the German food industry.The results reveal that high external pressure to implement improves the image of tracking and tracing systems in the sense that their use enhances a firm’s status, increases the intention to use those systems and fosters their perceived usefulness in the eyes of agribusiness executives. The hypothesized negative effect of costs on perceived usefulness and the intention to invest could not be verified.     

Real options valuation: the new frontier in R&D project evaluation?

The real options approach has recently received growing attention in R&D and Technology Management research. Recent empirical findings by Ellis (1997) and Busby and Pitts (1997) also report growing attention and use in practical investment decisions. However, there is a certain concern about the applicability to a wide range of R&D related problems. The theoretical base behind options valuation is derived from the capital markets and thus assumes market conditions that are closer to the theoretical construct of 'perfect competition' than most other settings. Even under these conditions, several assumptions made and difficulties left are subject to controversial discussions. Of course these problems even gain importance when the R&D environment with its discontinuities and lack of regulation or institutionalized trade is assumed. This paper describes some basic properties of the real options approach and sheds light on existing problems for the application in R&D project evaluation. On the other hand, roads to application of the method are shown using the Geske model of option evaluation. One main goal of the paper is to broaden and deepen the discussion on real option models in R&D and Technology Management, which has in some cases been limited to stressing the advantages of the method rather than reflecting on applicability and concrete way of application of the method.     

DYNAMIC CDO TERM STRUCTURE MODELING

This paper provides a unifying approach for valuing contingent claims on a portfolio of credits, such as collateralized debt obligations (CDOs). We introduce the defaultable (T, x) ‐bonds, which pay one if the aggregated loss process in the underlying pool of the CDO has not exceeded x at maturity T, and zero else. Necessary and sufficient conditions on the stochastic term structure movements for the absence of arbitrage are given. Background market risk as well as feedback contagion effects of the loss process are taken into account. Moreover, we show that any exogenous specification of the volatility and contagion parameters actually yields a unique consistent loss process and thus an arbitrage‐free family of (T, x) ‐bond prices. For the sake of analytical and computational efficiency we then develop a tractable class of doubly stochastic affine term structure models.     

‘So,what is it? And do I like it?’ New product categorisation and the formation of consumer implicit attitude

Prior literature on knowledge transfer learning suggests that cognitive effort is required to categorise new products and to develop attitudes toward them. This study investigates whether a single exposure to category-related cues of a new product can trigger successful categorisation and lead to attitude formation. A total of 250 respondents were confronted with a fictitious new product, in condition of either high- or low-attention devoted to the new product. We found that a single exposure to category-related cues of a new product not only led to the participants’ categorisation of the new product into the targeted category independently of the attention level, but also shaped their implicit and explicit attitudes toward the new product. However, a minimum level of attention was required to observe the formation of implicit attitudes while explicit attitudes were not fully developed.