On the measurement of corporate diversification strategy: Evidence from large U.S. service firms

Actual, not potential, relatedness determines the results of diversification strategies. An external examination of a firm's businesses, products, markets and technologies permits an assessment of potential relatedness among its various businesses. Potential relatedness is, however, often not realized. Also, relatedness may be externally invisible. Hence, actual relatedness may diverge from externally measured potential relatedness. This paper provides evidence suggesting that measures of corporate diversification strategy based on internal data differ significantly from those based on externally available data.     

The future of technology and marketing: a multidisciplinary perspective

Journal of the Academy of Marketing Science -     

The impact of collinearity on regression analysis: the asymmetric effect of negative and positive correlations

The purpose of this paper is to ascertain how collinearity in general, and the sign of correlations in specific, affect parameter inference, variable omission bias, and their diagnostic indices in regression. It is found that collinearity can reduce parameter variance estimates and that positive and negative correlation structures have an asymmetric effect on variable omission bias. It is also shown that the effects of collinearity are moderated by the relationship between the dependent variable and the regressors, a consideration not incorporated into most commonly used collinearity diagnostics. The formulae derived enable researchers to assess the sensitivity of regression results to the underlying correlation structure in the data.     

Investment decisions in the wireless industry applying real options

The wireless industry is one of the most capital intensive high-technology industries. This paper applies real options techniques to estimate investments under uncertainty in two new ventures: (a) deferral of the expansion from 2.5G to 3G networks; and (b) expansion of a 2.5G network using Wi-Fi as an alternative technology. The cases are examined and analyzed both qualitatively and quantitatively, using realistic assumptions and parameters. Investment cost, number of subscribers, pricing of services, and risk are at the core of investment decision processing. In both cases, sensitivity analysis of the value of the (real) option considering the above key parameters was conducted, to extrapolate useful findings that should be taken into consideration by the decision makers in wireless companies.     

Decision delegation: A conceptualization and empirical investigation

This paper examines a purchase context in which consumers, instead of deciding on their own, delegate either a part of or the entire purchase decision to a surrogate. A path model linking the antecedent variables and delegation is tested in the context of personal computer purchases. It was found that the factors that ensure decision quality emanating from the surrogate's expertise differentials, trustworthiness, accountability, and willingness to customize increase the likelihood of decision delegation. In addition to its direct positive effect on delegation, trustworthiness mediates the effect of expertise difference, surrogate accountability, and customization on delegation. Perceived loss of control inhibits delegation, but only at the stage when the final choice decision is made. Also, if a decision task is repeatable, the high return on effort has a negative effect on delegation, but only at attribute set and choice set delegations. Contributions of the study and directions for future research are discussed. © 2008 Wiley Periodicals, Inc.     

The impact of external reference price on consumer price expectations

Comparative pricing practices are frequently used where actual product prices are accompanied by higher external reference prices. All types of stores, regular-price department stores as well as discount stores, use comparative price claims to frame price deals as attractive [Marketing Science 4 (1985) 199]. In this paper, a quadratic model is specified for the impact of external reference price (ERP) on consumer price expectations. Based on the research on communication discrepancy and advertising claim discrepancy, which in turn draw on assimilation-contrast, attribution, and prospect theories, we hypothesize a quadratic effect of external reference prices on consumer price expectations. An interactive, computer-controlled experiment using multiple levels of ERP is used to estimate the proposed model. As hypothesized, support for an inverted U-shape relationship is found between consumers’ updated price expectations and the difference between ERP and initial price expectations. That is, as the difference between ERP and subjects’ initial price expectations increases, subjects’ updated price expectations increase to a point and then start to decrease. We find that the fit of the quadratic model specification for the effect of external reference price on price expectations is noticeably superior to that of linear, logarithmic, square root, and S-shaped specifications. Finally, we provide implications of our results for both retail managers and for regulatory authorities alike.     

Asymmetric competition in retail store formats: Evaluating inter- and intra-format spatial effects

Our study aims to analyze the role of store format in retail competitive interactions, specifically, the relationship between growth, location strategy, and market response. To assess this relationship, we propose an extension of the classic models of spatial interaction, which incorporate the asymmetric competitive effects linked to the concept of store format. An empirical application allows us to confirm greater spatial rivalry within store formats (intra-format) than between store formats (inter-format). This implies a certain hierarchical organization when consumers select a retail store, first choosing the type of store at which they will shop and later a particular store within this format. The results are important for retailers who want to configure an optimal network of store locations as well as public administrators who must regulate commercial activity.     

Business Ethics versus Economic Incentives:<Emphasis Type="Italic">Contemporary Issues and Dilemmas</Emphasis>

Contemporary economic thought presumes that individuals in a society always act according to their self-interest or private economic incentives, while important ethical motivations for action, such as a concern for others and public interest, are largely ignored. This paper is based on my experience of teaching an undergraduate course that highlighted the divergence between economic incentives and ethical motives for action in present-day life and business. Teaching tools such as lectures, case and group discussions were employed to address important ethical dilemmas of individuals and managers in contemporary societies. Readings underscored the evolving relationship of business ethics and economic incentives, and the relevance of ancient ethical principles (e.g., Ethics of Interdependence, and Ethics of Prudence and Self-Development) to present-day business ethics. The course emphasized the imminent need in contemporary societies to reduce the divergence between economic incentives and ethical motives for action, and called for a greater understanding of business ethics today, given the complex ethical concerns that managers confront in the current global environment.