Resource-constrained product development: Implications for green marketing and green supply chains

While academic debates and practical approaches to green marketing have matured over the past few decades, one central conundrum that has remained unresolved has been the trade-off between the higher prices of green products and the objectives of environmental sustainability. In general, it has been observed that green products are priced at a premium to account for their environmentally friendly consumption and use. We argue that resource-constrained product development approaches (alternatively labeled jugaad) that are observed in emerging countries such as China and India have the potential to change the traditional models of green product development. In addition to the competitive advantage that resource-constrained product development approaches provide, we suggest that these practices have sustainability and supply chain benefits. We show that the innovation process relies primarily on frugal engineering that reduces material use (thereby reducing burden on supply chain) and meets green marketing objectives at much lower, and therefore, more affordable prices. We draw out several implications for theory and practice.     

Framing Effects Within the Ethical Decision Making Process of Consumers

There has been neglect of systematic conceptual development and empirical investigation within consumer ethics. Scenarios have been a long-standing tool yet their development has been haphazard with little theory guiding their development. This research answers four questions relative to this gap: Do different scenario decision frames encourage different moral reasoning styles? Does the way in which framing effects are measured make a difference in the measurement of the relationship between moral reasoning and judgment by gender? Are true framing effects likely to vary with the situation? and Are true framing effects likely to vary by gender? The conclusions reached were that (1) different scenario frames encourage both types of reasoning, but rule based moral reasoning is dominant regardless of frame, (2) accounting for formal equivalency in the measurement of true framing effects is likely to enhance the interpretation of studies in moral reasoning and judgment, (3) True framing effects are more likely to occur in situations with low to moderate perceived ethicality, and (4) true framing effects are not likely to vary by gender. Explanations as to why these results occurred are discussed.     

Motivation and ability in the decision to acquire

This study considers the decision to undertake an acquisition using a framework built around the concepts of motivation and ability to acquire. The paper develops an integrative model to examine how firm characteristics contribute to motivation and ability in predicting the likelihood of an acquisition and draws on two streams of literature to motivate the model: behavioral theory of the firm to explain a firm's motivation to acquire, and absorptive capacity to explain a firm's ability to acquire. Results from a publicly traded sample show that firms failing to meet aspirations (i.e., those with motivation) are more likely to acquire, as are firms that have a high absorptive capacity (i.e., those with ability). Most interestingly, absorptive capacity moderates the influence of performance shortfalls in the decision to acquire and is most important when the motivation to acquire is low.     

An Empirical Comparison of Two Stochastic Volatility Models using Indian Market Data

We conduct an empirical comparison of hedging strategies for two different stochastic volatility models proposed in the literature. One is an asymptotic expansion approach and the other is the risk-minimizing approach applied to a Markov-switched geometric Brownian motion. We also compare these with the Black–Scholes delta hedging strategies using historical and implied volatilities. The derivatives we consider are European call options on the NIFTY index of the Indian National Stock Exchange. We compare a few cases with profit and loss data from a trading desk. We find that for the cases that we analyzed, by far the better results are obtained for the Markov-switched geometric Brownian motion.     

Cost-effectiveness of delayed-release dimethyl fumarate for the treatment of relapsing forms of multiple sclerosis in the United States

Objective:

To assess the cost-effectiveness of delayed-release dimethyl fumarate (DMF, also known as gastro-resistant DMF), an effective therapy for relapsing forms of multiple sclerosis (MS), compared with glatiramer acetate and fingolimod, commonly used treatments in the US.

Methods:

A Markov model was developed comparing delayed-release DMF to glatiramer acetate and fingolimod using a US payer perspective and 20-year time horizon. A cohort of patients, mean age 38 years, with relapsing-remitting MS and Kurtzke Expanded Disability Status Scale (EDSS) scores between 0–6 entered the model. Efficacy and safety were estimated by mixed-treatment comparison of data from the DEFINE and CONFIRM trials and clinical trials of other disease-modifying therapies. Data from published studies were used to derive resource use, cost, and utility inputs. Key outcomes included costs, quality-adjusted life-years (QALYs), and incremental cost-effectiveness ratios. Alternative scenarios tested in a sensitivity analysis included drug efficacy, EDSS-related or relapse-related costs, alternative perspectives, drug acquisition costs, and utility.

Results:

Base-case results with a 20-year time horizon indicated that delayed-release DMF increased QALYs +0.450 or +0.359 compared with glatiramer acetate or fingolimod, respectively. Reductions in 20-year costs with delayed-release DMF were ?$70,644 compared with once-daily glatiramer acetate and ?$32,958 compared with fingolimod. In an analysis comparing delayed-release DMF to three-times-weekly glatiramer acetate and assuming similar efficacy and safety to the once-daily formulation, 20-year costs with delayed-release DMF were increased by $15,806 and cost per QALY gained was $35,142. The differences in costs were most sensitive to acquisition cost and inclusion of informal care costs and productivity losses. The differences in QALYs were most sensitive to the impact of delayed-release DMF on disease progression and the EDSS utility weights.

Conclusion:

Delayed-release DMF is likely to increase QALYs for patients with relapsing forms of MS and be cost-effective compared with fingolimod and glatiramer acetate.     

Payout flexibility and capital expenditure

Over the past two decades or so, repurchases have become an appealing method for disbursing cash to shareholders compared to the traditional dividends. Managerial perception as well as empirical evidence suggests that repurchases are inherently more flexible than dividends, which may account for their increasing popularity. The rigidity of dividends and the apparent flexibility of share repurchases could impact firm investments. Firms may forego profitable investment opportunities to maintain their dividend levels, while repurchases could be easily scaled back to fund profitable investment projects without fear of an adverse market reaction. We test the flexibility hypothesis of repurchases by regressing capital expenditures on repurchases and dividends in addition to other control variables. Consistent with our hypotheses, we find an inverse relationship between capital expenditures and repurchases but an insignificant relationship with dividends. Further, we find that the flexibility associated with repurchases is especially evident for firms that are financially constrained, and during the recent financial crisis period when external capital constraints were severe. Finally, we find that flexibility of repurchases with respect to capital expenditures is stronger in the more recent time period during which regulatory changes made repurchases more attractive as a mechanism to disburse cash back to shareholders.     

Not everybody wants to save the world

A consumer lens is used to examine investing behavior in this study. The study focuses on the importance given by investors to their economic and social investing goals (SIG). This approach redirects managerial attention from the investment to the investor and investing goals. The study finds that differences in environmental attitude, social investing efficacy, materialism, religiosity and protected values can explain disparities in investing goals. The findings suggest a segmentation approach based on differences in antecedent effects and economic and SIG.