Capability building through innovation for unserved lower end mega markets

Although product innovation for unserved lower end mega markets in large developing countries has been recognized as an opportunity for improving the competitiveness of local firms, limited research has been conducted that explicitly explores how innovation capabilities can be built for these markets. This study investigates Tata Motors' Nano as an exploratory case of building innovation capabilities. This paper shows that the building of innovation capability could be achieved through creating a process that overcomes ‘the deficiency problem’ in generating radically cheap priced original products.The study's contribution to the literature is that it addresses issues of building local firms' innovation capabilities through creating original products for the unserved lower end market, in which advanced country firms have limited experience.Nano, as an unprecedented innovation in the automobile industry, reveals a path to building innovation capability that has not previously been observed. We show that detailed processes involved in generating an original product for the lower end market provide insights on the strategy in terms of target price setting, initiating innovation process overcoming ‘the deficiency problem’, and creation of complementary resources.     

Stationary solution to the overlapping generations model of fiat money: Experimental evidence

Overlapping generations model of fiat money yields an infinity of competitive equilibrium solutions, only one of which is stationary. Economies reported in this paper involved a sequence of overlapping generations of three or four individuals; each individual lived for two periods. In their young age individuals were endowed with chips that could be traded for fiat money wish the individuals of the old generation. In their old age, individuals could exchange their units o flat money for the consumption good. Results of the experiments exhibit some support for the stationary solution. The results are robust to two designs of exchange institutions (double oral auctior and supply schedule auction) and to two different endogenous ways of converting money into chips at the end of the game (average price prevailing during the last period the game is actually played and the average price forecast made during the last period the game is actually played).A preliminary version of this paper was presented at the meeting of the Economic Science Association and at the Federal Reserve Bank of Minneapolis. The authors are grateful for comments received from various participants at both presentations. Financial support was provided by the McKnight Foundation, the Honeywell Foundation, National Science Foundation (SES 89-12552), and Richard. M. and Margaret Cyert Family Funds.     

Firm diversification and earnings management: evidence from seasoned equity offerings

Popular press suggests that diversified firms are more aggressive in managing earnings than non-diversified firms. We examine this claim in the seasoned equity offering (SEO) setting, where firms have been shown to have the incentive to manage earnings upwards. Using the cross-sectional modified Jones [(1991) J Accounting Res 29:193–228] model to measure discretionary current accruals, we find that discretionary current accruals are higher among diversified firms than in non-diversified ones. Our evidence is consistent with the view that the extent of firm diversification is directly related to the degree of earnings management. We further show that diversified issuers with high discretionary accruals underperformed other SEO firms.

Sketching: Friend or Foe to the Novice Designer?

Previous research by one of the authors showed that novice designers do not use sketching as a way to generate, develop and communicate design proposals, but move immediately to three-dimensional modelling. Neither do they generate multiple solutions.     

Cointegration analysis of quarterly tourism demand by Hong Kong and Singapore for Australia

Hong Kong and Singapore are two of the most important and fastest growing markets for tourists to Australia. The purpose of this paper is to investigate movements in the long-run demand for tourist travel by these two origin countries for Australia. Some of the leading macroeconomic variables examined to explain tourism demand are incomes in Hong Kong and Singapore, tourism prices in Australia, and transportation costs and exchange rates between the two countries and Australia. Seasonally unadjusted quarterly data are used for Hong Kong for the period 1975(1)–1996(4), and for 1980(4)–1996(4) for Singapore. Several proxy variables are used for the incomes of tourists from Hong Kong and Singapore to explain quarterly tourist arrivals to Australia. The augmented Dickey-Fuller test for unit roots is examined in the univariate framework, and Johansen's maximum likelihood procedure is used to test for cointegration and to estimate the number of cointegrating vectors. Error correction models are estimated to explain quarterly tourism demand by Hong Kong and Singapore for Australia.     

The effect of patient's asymmetric information problem on elderly use of medical care

It has been proposed that the patient's relative ignorance about medicine, ‘asymmetry of information between doctor and patient’, should place a patient in a disadvantaged position when purchasing medical care. Even if rapidly developing information technologies can enhance the patient's access to health information, a patient doesn’t have enough ability to understand, interpret and evaluate it. So, the doctor's effort at sincerely helping patient understand and utilize health information by effective communication with patient might improve the patient's asymmetric information problem and affect the patient's use of medical care by way of its being a source of patient's solid trust on doctor. This research seeks to determine whether a doctor's effort, mentioned earlier can affect the elderly use of medical care. This study used data from a survey sample of people aged more than 65 living in Seoul and Chuncheon, Korea. The results suggest the doctor's effort level has a statistically significant positive effect on the elderly use of medical care, which suggest a doctor's effort of effectively communicating with patient would ameliorate patient's information problem and it could be a source of patient's trust on doctor, so this trust would lead a patient to consume more medical care.     

Rethinking the effectiveness of asset and cost retrenchment: The contingency effects of a firm's rent creation mechanism

This paper posits that the efficacy of different retrenchment strategies depends upon the firm's core rent creation mechanism. We focus on two distinct mechanisms of rent creation: Ricardian rent creation based on the exploitation of resources and Schumpeterian rent creation based on explorative capabilities. We argue that cost retrenchment may have detrimental effects on firms with a relatively high Schumpeterian rent focus. On the other hand, asset retrenchment may erode the basis for future rent creation for firms with a higher Ricardian rent focus. Our findings based on a sample of large nondiversified Japanese firms highlight the differing degrees of fragility and recoverability of the two rent creation mechanisms in the context of different retrenchment strategies. Copyright © 2012 John Wiley & Sons, Ltd.     

Non-audit fees, institutional monitoring, and audit quality

We posit that the effect of non-audit fees on audit quality is conditional on the extent of institutional monitoring. We suggest that institutional investors have incentives and the ability to monitor financial reporting quality. Because of the reputation concerns and potential litigation exposure, auditors are likely to provide high audit quality, when they also provide non-audit services to clients, particularly when clients are subject to high institutional monitoring. We find evidence that, as non-audit fees increase, audit quality (measured by performance-adjusted discretionary current accruals and earnings-response coefficients) reduces only for clients with low institutional ownership but not for clients with high institutional ownership. Our results are robust after controlling for auditor industry specialization, firms’ operating volatility, size effect, and potential endogeneity between institutional ownership and audit quality.     

Implicit Leadership Theories of Bruneians

A leader's effectiveness is affected by the followers’ acceptance of the leader as their leader. Followers rely on their cognitive schema to judge whether someone deserves to be considered a leader. This cognitive schema is the implicit leadership theory (ILT) individuals have on the qualities of a leader. When leaders are perceived as conforming to this ILT, they are seen as leaders, and followers accept their influence attempt. This study examined the ILT of Bruneians. The findings indicate that Bruneians are associated with a distinct ILT and shows that gender and personality variables predict the variation in ILT.