Preventives Versus Treatments Redux: Tighter Bounds on Distortions in Innovation Incentives with an Application to the Global Demand for HIV Pharmaceuticals

Kremer and Snyder (Q J Econ 130:1167–1239, 2015) show that demand curves for a preventive and treatment may have different shapes though they target the same disease, biasing the pharmaceutical manufacturer toward developing the lucrative rather than the socially desirable product. This paper tightens the theoretical bounds on the potential deadweight loss from such biases. Using a calibration of the global demand for HIV pharmaceuticals, we demonstrate the dramatically sharper analysis achievable with the new bounds, allowing us to pinpoint potential deadweight loss at 62% of the global gain from curing HIV. We use the calibration to perform policy counterfactuals, assessing welfare effects of government policies such as a subsidy, reference pricing, and price-discrimination ban. The fit of our calibration is good: we find that a hypothetical drug monopolist would price an HIV drug so high that only 4% of the infected population worldwide would purchase, matching actual drug prices and quantities in the early 2000s before subsidies in low-income countries ramped up.     

Investor behaviour and reaching for yield: Evidence from the sterling corporate bond market

We provide evidence on how corporate bond investors react to a change in yields, and how this behaviour differs in times of market‐wide stress. We also investigate ‘reaching for yield’ across investor types, as well as providing insights into the structure of the corporate bond market. Using proprietary sterling corporate bond transaction data, we show that insurance companies, hedge funds and asset managers are typically net buyers when corporate bond yields rise. Dealer banks clear the market by being net sellers. However, we find evidence for this behaviour reversing in times of stress for some investors. During the 2013 ‘taper tantrum’, asset managers were net sellers of corporate bonds in response to a sharp rise in yields, potentially amplifying price changes. At the same time, dealer banks were net buyers. Finally, we provide evidence that insurers, hedge funds and asset managers tilt their portfolios towards higher risk bonds, consistent with ‘reaching for yield’ behaviour.     

Alliances and the innovation performance of corporate and public research spin-off firms

We explore the innovation performance benefits of alliances for spin-off firms, in particular spin-offs either from other firms or from public research organizations. During the early years of the emerging combinatorial chemistry industry, the industry on which our empirical analysis focuses, spin-offs engaged in alliances with large and established partners, partners of similar type and size, and with public research organizations, often for different reasons. We seek to understand to what extent alliances of spin-offs with other firms (either large- or small- and medium-sized firms) affected their innovation performance and also how this performance may have been affected by their corporate or public research background. We find evidence that in general alliances of spin-offs with other firms, in particular alliances with large firms, increased their innovation performance. Corporate spin-offs that formed alliances with other firms outperformed public research spin-offs with such alliances. This suggests that, in terms of their innovation performance, corporate spin-offs that engaged in alliances with other firms seemed to have benefitted from their prior corporate background. Interestingly, it turns out that the negative impact of alliances on the innovation performance of public research spin-offs was largely affected by their alliances with small- and medium-sized firms.     

Modularization of hybrid censoring schemes and its application to unified progressive hybrid censoring

In this paper, a structural analysis of hybrid censoring models is presented. This new modularization approach to hybrid censoring models enables a convenient derivation of distributional results. For instance, it allows to derive the exact distribution of the MLEs under an exponential assumption for very complex hybrid scenarios. In order to illustrate the benefit of this idea, we apply it to four new unified progressive hybrid censoring schemes. They are extensions of already proposed unified Type-I/II/III/IV hybrid censoring schemes to progressively Type-II censored data. The resulting analysis shows that the modularization approach provides a powerful, efficient, and elegant tool to study even more complex hybrid censoring models.     

Can investors time their exposure to private equity?

Private equity performance, both for buyouts and venture capital, has been highly cyclical: periods of high fundraising have been followed by periods of low performance. Despite this seemingly predictable variation, we find modest gains, at best, to pursuing realistic, investable strategies that time capital commitments to private equity. This occurs, in part, because investors can only time their commitments to funds; they cannot time when commitments are called or when investments are exited. There is a high degree of time-series correlation in net cash flows even across commitment strategies that allocate capital in a very different manner over time.     

Nonfinancial Considerations in Eco-Innovation Decisions: The Role of Family Ownership and Reputation Concerns

Societal pressures for greater sustainability can encourage firms to target part of their innovation activities at ecological initiatives (i.e., eco-innovation). Yet, depending on their value function, firms can respond differently to such pressures and exhibit variance in their eco-innovation activities. In this paper, we investigate the idea that a firm’s ownership structure may play a significant role in determining its engagement in eco-innovation. Specifically, we propose that ownership by family blockholders increases the value attached to the company’s reputation and that this, in turn, stimulates higher levels of eco-innovation. In other words, we model the company reputation motive as a key mediator in the relationship between family ownership and firm-level eco-innovation. To account for family firm heterogeneity, we also model the moderating role of owners’ intention to pass the business on to the next family generation (transgenerational intentions) and of the extent to which these owners reside in the firm’s local community (local embeddedness). As theoretical backdrop, our study builds on institutional theory and the mixed gamble logic. To test our hypotheses, we use a large sample of German firms and nonlinear moderated mediation regression analysis. Results reveal that family ownership is positively related to the introduction of eco-innovations by firms, in part because of the stronger emphasis being placed on the company’s reputation. We find that this effect is strongest when the owning-family has transgenerational intentions. As such, this study advances our understanding of firm-level drivers of eco-innovation. In view of the prevalence of family-owned firms and the mounting importance of ecological sustainability, it is valuable to extend knowledge on the contingent and indirect effect of family ownership on eco-innovation.     

Interorganisational project dynamics: A longitudinal study of perceptual distance and client-contractor collaborative relationships

Despite the importance of good collaborative relationships in interorganisational projects, clients and contractors often develop adversarial relationships due to perceptual distance about key project issues. In this case study research, we investigated how perceptual distance emerges and changes over time, and how the collaborative relationship between client and contractor develops alongside these dynamics. In this exploration, we built upon agency theory and stewardship theory as complementary perspectives for understanding client-contractor collaborative relationships. We gathered quantitative and qualitative data in two projects, conducting three assessments in about one year. We found that perceptual distance increased and decreased over time, and that a reduction was typically associated with the collaborative relationship being characterized by stewardship rather than agency. These findings suggest that a regular assessment and evaluation of partners’ perceptions of critical project issues is warranted to timely detect and counteract perceptual distance. Moreover, partners would best adopt a stewardship orientation to reduce perceptual distance, although this may take considerable effort given the distributive nature of many pre-project negotiations.     

Technologies in caregiving: professionals’ strategies for engaging with new technology

This article explores the adoption of new technology in organisations that provide senior citizen care. Inspired by Niklas Luhmann’s systems theory, we study how technology reduces complexity by identifying client needs and ensuring predictability in service delivery. However, how technologies are adopted in practice is not determined by technology since it is also structured by care-workers' continuous decision-making. Against this backdrop, we explore how technologies alter the conditions for decision-making in two settings of elderly care, and we describe how care workers seek to adapt technologies to their practical needs as well as conception of care ethics. Developing a systems theory approach, the article eschews a priori assumptions of technological constraint on care-workers’ professional autonomy, offering a more open-ended exploration of diversified strategies for coping with new technology. Our case studies show that employees develop diversified strategies for technology adoption, including both non-usage, heated resistance, excessive embrace, and creative adaption.