Encroachment Patterns of the “Best Products” from the Last Decade*

Based on the examination of 239 “best products” (all those on Business Week's annual lists from the past decade), this article tests and validates a conceptual framework identifying six ways in which new products open new markets and/or encroach on original products. Three of these six scenarios involve high‐end encroachment (the new product first opens a new high‐end market, or enters at the high end of an existing market, and then diffuses down‐market), and three scenarios involve low‐end encroachment (encroachment starts at the low end, followed by diffusion up‐market). As illustrated in a 2 × 3 matrix, high‐end encroachment ensues when the new product enhances performance with regard to the market's core attribute (low‐end encroachment ensues when this performance is diminished). The three high‐end sub‐types and three low‐end sub‐types are determined by the strength of performance along an ancillary attribute dimension. If the ancillary attribute performance is week, then the encroachment of the new product on the old market is immediate (corresponding to immediate high‐end encroachment and immediate low‐end encroachment, respectively). If the ancillary performance is moderate, then the new product expands the market at the high or low end (corresponding to new‐attribute high‐end encroachment and fringe‐market low‐end encroachment, respectively). If the ancillary performance is strong, then the new product first opens an entirely new market at the high or low end (corresponding to new‐market high‐end encroachment and detached‐market low‐end encroachment, respectively). The reliability and comprehensiveness of the encroachment framework is tested by asking a panel of eight judges to categorize each of the 239 products. Results show inter‐judge reliability of 98%, with all products falling within one of the six encroachment categories. Each of the encroachment types has unique implications on product positioning and pricing, as further discussed in the paper. Thus the model helps firms identify and analyze the various possible strategies that they might choose from when introducing new products.     

Benchmarking in the Dutch Waste-Water Treatment Sector

The Dutch water boards have recently completed a performance measurement and evaluation project for waste-water treatment. This project was intended to strengthen the boards’ accountability to their stakeholders and to identify starting points for performance improvement. The Balanced Scorecard was used as a framework to develop a broad set of performance indicators. This article describes the benchmarking project and how the Dutch water boards intend to use the results to improve performance. Finally, the Dutch project is compared with the UK’s Best Value project.     

The effect of national culture on management control and incentive system design in multi-business firms: evidence of intracorporate isomorphism

This paper examines whether variations in national culture at the business-unit level of multi-business firms that operate internationally trigger adjustments in the corporate management control and incentive systems (MCISs) to fit local business-unit circumstances. Although the results show that selected MCIS characteristics are attuned to business-unit national culture, further analysis of multi-level data reveal small business-unit effects relative to corporate effects. The presence of dominant corporate effects suggests that MCISs tend to be uniformly implemented within firms, rather than to reflect local business-unit conditions.     

THE ROLE OF FEES IN PATENT SYSTEMS: THEORY AND EVIDENCE

This paper reviews the economic literature on the role of fees in patent systems. Two main research questions are usually addressed: the impact of patent fees on the behavior of applicants and the question of optimal fees. Studies in the former group confirm that a range of fees affect the behavior of applicants and suggest that a patent is an inelastic good. Studies in the latter group provide grounds for both low and high application (or pre‐grant) fees and renewal (or post‐grant) fees, depending on the structural context and policy objectives. The paper also presents new stylized facts on patent fees of 30 patent offices worldwide. It is shown that application fees are generally lower than renewal fees, and renewal fees increase more than proportionally with patent age.     

Evaluating Adaptive Policymaking using expert opinions

Adaptive Policymaking (APM) is a policymaking approach for dealing involving policy problems with deep uncertainty. Two barriers to getting APM used are that (1) there are few actual examples of adaptive policies developed by policymakers or domain experts, and (2) APM has rarely been used in a real-world policy setting. More specifically, there are questions that remain about the costs and benefits of APM, and the efficacy and performance of adaptive policies compared to traditional static policies. This paper addresses these questions and barriers by reporting on a workshop with experts that was aimed at developing an adaptive policy for the implementation of ISA in the Netherlands. We report on their evaluation of both the process of developing the policy and their assessment of the efficacy of the developed policy compared to that of the current policy under consideration by the Dutch national government. The experts indicated that APM increases the chances of reaching policy goals and makes better use of decision support information that is gathered during the policy analysis process. However, they also indicated that, despite these potential benefits of APM, it may be hard to implement adaptive policies due to institutional issues.     

Don't Trust Trust: A Dynamic Approach to Controlling Supplier Involvement in New Product Development

Prior literature stresses the importance for manufacturers to use formal and informal controls to coordinate collaborative new product development activities with suppliers. In doing so, the existence of trust between manufacturers and suppliers is believed to play a key role because it enables manufacturers to reduce investments in formal controls and rely more on less costly informal controls. Manufacturers and suppliers don't suddenly trust each other though: trust typically grows over time as the partners get to know each other. Trust may also decrease if manufacturers overuse formal controls or if suppliers underperform. These fluctuations in trust over the course of supplier–manufacturer relationships complicate the so‐called trust–control nexus and raise important questions about the impact of trust on the efficiency and effectiveness of formal and informal controls as coordination mechanisms. Therefore, this study examines how manufacturers should balance formal and informal controls over time to reap the full benefits of collaborative product development with suppliers. For that purpose, a conceptual and system dynamics model are developed, which incorporate the links among formal and informal controls, trust, and the supplier's development performance. In an empirical validation in the context of the shipbuilding industry, the results reject the notion that manufacturers must lessen formal controls and increase informal controls with trust. Instead, it is most efficient and effective to invest always in formal controls, particularly process control, to coordinate supplier involvement in new product development. These results have important theoretical and managerial implications: Informal controls are not as profitable as expected.