Can Financial Economics Cure Cancer?

Funding for early-stage biomedical innovation has become more difficult to secure at the same time that medical breakthroughs seem to be occurring at ever increasing rates. One explanation for this counterintuitive trend is that increasing scientific knowledge can actually lead to greater economic risk for investors in the life sciences. While the Human Genome Project, high-throughput screening, genetic biomarkers, immunotherapies, and gene therapies have made a tremendously positive impact on biomedical research and, consequently, patient lives, they have also increased the cost and complexity of the drug development process, causing many investors to shift their assets to more attractive investment opportunities. This suggests that new business models and financing strategies can be used to reduce the risk and increase the attractiveness of biomedical innovation so as to bring new and better therapies to patients faster.

     

Are students customers? Tourism and hospitality students’ evaluation of their higher education experience

ABSTRACT

Research has suggested that higher education students assume multiple roles during their studies. Moreover, the student-as-customer model has been discussed for years and needs more in-depth discussions than other roles. Few studies have investigated education experiences from this perspective. This research contains two studies. Study one investigates faculty members’ perceptions on students’ roles in higher education and found students should not be considered purely as customers. Other roles were found. Study two investigates students’ perception of their roles in university education and how the education experiences influence their satisfaction towards university choice. A majority of the students see themselves as the “recipient of knowledge”. The six dimensions of higher education experience include “student-centred service” (SCS), “diversity and global citizenship” (DGC), “coproduction of learning experience”, “reliance on teachers” (ROT), “responsibility”, and “whole person development” (WPL). SCS, DGC, ROT, and WPL were found to have significant impact on student satisfaction.     

The strategic and cultural legitimacy of HR professionalization in Hong Kong

In Hong Kong, human resources (HR) practice has reached a point of professionalization not yet apparent in other parts of China creating opportunities for best practice diffusion across rapidly developing cities, provinces, and regions. The aim of this paper is to ascertain the strategic and cultural legitimacy of human resource management (HRM) in Hong Kong from the perspective of the occupation’s status as an emerging profession. Combining established theory on professions with documented insights from normative associational ideals, this paper derives four major sources of HR professionalization, which it entitles strategy, communication, administration, and discipline. Assuming that tasks performed by the most senior, qualified and experienced practitioners hold greatest empirical sway over the prospect of occupational association, this study finds that a combination of strategic and communication practices emerge as the two most likely routes to HR professionalization. Based on survey responses from a representative sample of 172 certified practitioners, the findings support the notion of HR as a strategic asset, raising important implications for the professional status of the occupation within an Asian management context.     

Finance,energy and the decoupling: an empirical study

This paper investigates the empirical and theoretical basis of the decoupling between energy throughput and economic growth, with a critical view of the use of the decoupling concept as a policy priority. We provide an analysis of the historical trends of the metabolic pattern of European economies over a period of 18 years focusing on the changes in energy throughput and financial assets. The results show that energy consumption per hour of labor has remained constant, suggesting that no significant changes in production processes or technology have taken place in the productive sectors of the economy. The contribution of this paper is to establish a bridge between the economic analysis of financialization and the societal metabolism analysis of the economic process from a biophysical point of view. We argue that this bridge is crucial to draw attention to the biophysical consequences of financialization (a relative decoupling) and critically assess the pertinence of policies aimed at encouraging the decoupling in the context of increasing inequality.     

An Open Innovation Decision Support System to Select a Biopharmaceutical R&D Portfolio

Drugs available in the market today, selected several years ago under very uncertain future scenario, have experienced a long and expensive process of research and development carried out following both a closed and an open innovation path. To support this critical selection process, we propose a Decision Support System, able to choose among different candidates the most promising drugs along their best development path. The Decision Support System, based on a real options portfolio optimization model, mapping tools, and what‐if rules as well, has been applied to a numerical example available in literature, and the research findings show interesting managerial and academic implications. Copyright © 2015 John Wiley & Sons, Ltd.     

The double‐edged effect of knowledge acquisition: How contracts safeguard pre‐existing resources

Research summary : Acquiring knowledge on a partner's pre‐existing resources plays an important yet ambiguous role in collaborative relationships. We formally model how contracts trade off productive and destructive uses of knowledge in a buyer‐supplier relationship. We show that, when the buyer's pre‐existing resources are vulnerable to the revelation of sensitive knowledge, the supplier overinvests in knowledge acquisition as it expects to use the knowledge as a threat in price negotiations. A non‐renegotiable closed‐price contract prevents such overinvestment and reduces the supplier's ability to expropriate the buyer ex post. Our results extend to the cases of renegotiable closed‐price contracts, repeated interactions between a buyer and a supplier, and the use of nondisclosure policies. We draw theoretical, empirical, and managerial implications from our model. Managerial summary : This study yields new insights regarding the use of contract design in protecting pre‐existing, nonrelationship specific assets in buyer‐supplier arrangements. Anecdotal examples illustrate the “dark side” of these arrangements where opportunistic suppliers exploit knowledge of buyers' pre‐existing resources to seek rent and appropriate value. When a supplier is likely to act harmfully, a closed‐price contract that specifies the price of the supplier's component upfront may reduce the supplier's incentives to overinvest in acquiring and exploiting knowledge of the buyer's pre‐existing resources. As such, when a buyer's pre‐existing resources are highly valuable, and thus more vulnerable to use by the supplier outside of the arrangement, a non‐renegotiable closed‐price contract is more efficient. Additionally, limited disclosure policies and informal agreements based on repeated interactions complement indirect governance via price contracts. Copyright © 2015 John Wiley & Sons, Ltd.     

The persistence of economic profit

Recently, as practitioners and researchers from developed countries have increasingly probed the activities of emerging economies, what exactly drives the long-term economic profitability of firms in China has become the most salient issue in the above fields. However, a study dedicated to the persistence analysis of profitability differentials among firms in China has not yet been proposed. This study thus employs China’s business database to examine the persistence in the incremental components of the industry and firm effects on economic profitability and tests the hypotheses that conform to the conventional wisdom of relative rates of persistence. A persistence partitioning model is fitted to a new data set, and the results show that the incremental effects of industry on economic profitability persist longer than the incremental effects of the firm. In other words, the long-term competitive advantages of firms in China are more predictable and sustainable based on industry influences compared to firm factors. These findings support the predictions of industrial organization economics, and provide some implications for corporate strategy.     

The moderating effects of knowledge characteristics of firms on the financial value of innovative technology products

The development of innovative technology products is both costly and risky, and their economic value is highly uncertain. Based on a sample of 312 innovative technology products introduced between 1987 and 2006 in the U.S. and a long-horizon event study with control firms, we study the impact of innovative technology products on the long-term financial performance of a firm. In particular, we examine how the knowledge characteristics of the firm, which embrace its knowledge absorptive capacity, knowledge impact, and knowledge diversity, moderate such an impact. We find that on average an innovative technology product increases the firm's return on assets (ROA) (relative to control firms) by 2.18% in the second year after product introduction. However, the value of an innovative technology product varies with the knowledge characteristics of the firm that invented it. We find that the financial impact of technology products is stronger when firms have higher knowledge absorptive capacity, and more impactful and less diversified knowledge (as measured by patents). We classify firms into three categories based on their knowledge characteristics. We find that firms with a high knowledge fit increase their ROA by 4.55% after product introduction, while those with a low knowledge fit receive no benefit from the innovative technology products at all.     

Theories of the Firm and the Relationship between Different Perspectives on the Division of Labour

This paper explores the tension between the organisational learning, market and hierarchies rationales for the firm. It is not clear, from the organisational learning and market-hierarchies literatures, what role exists for the different approaches. The paper suggests that this reflects the fact that each paradigm is premised on a particular notion of the division of labour but, at the same time, does not recognise that the division of labour is multifaceted. The paper suggests one possible approach to reconcile the various rationales for the firm. To do this, the different paradigms are placed in the context of different growth patterns that support different conceptions of the division of labour.