Economics at the Antitrust Division 2016–2017: Healthcare,Nuclear Waste,and Agriculture

This year the Antitrust Division of the U.S. Department of Justice litigated an unprecedented number of cases. Two mergers, Anthem with Cigna and Aetna with Humana, threatened to dramatically alter the face of commercial health insurance. The Anthem case raised questions of how to evaluate a claim that competition costs billions annually in potential medical cost savings. The Aetna case raised questions of how commercial insurers compete against the public programs—specifically Medicare. The Division also litigated numerous other civil matters including a proposed merger of nuclear waste disposal facilities. In that case, economists had to explore the scope and bounds of competition within a variety of regulatory regimes. And, in a merger of two new technologies that improve the efficiency of planting seeds, the emerging nature of the market led to interesting variations in the analysis. This overview of the economic issues in these particular cases is intended to provide insights into the challenges of enforcing antitrust law and the way in which economic analysis in particular is used to address those challenges.     

Cross-National Diffusion Research: What Do We Know and How Certain Are We?

To compete effectively in the global marketplace, marketing managers require insight into how a product gets adopted in different countries. For example, can international marketers identify specific cultural traits that may help them to forecast how quickly a new product will be adopted in a particular country or in a group of somehow related countries? Similarly, can they identify factors that suggest why the adoption process differs among countries?Although these diffusion-related questions address critical issues for international marketing managers, only a few studies have explored cross-national diffusion. To help fill this gap, V. Kumar, Jaishankar Ganesh, and Raj Echambadi present the results of a study that replicates and extends the findings of three previously published studies of cross-national diffusion. Their research aims to replicate four findings from the previous studies: the role of country-specific effects in explaining differences in diffusion parameters, the presence of a lead-lag effect, the use of cultural variables to explain systematically the diffusion patterns across countries, and the merit of country segmentation schemes based on diffusion parameters. They extend the previous research by integrating cross-sectional and time lag variables into a single framework, and they demonstrate how managers can apply this integrated framework for forecasting the diffusion of new products.They replicate the findings from the previous studies by using annual sales data for five product categories (VCRs, microwave ovens, cellular phones, home computers, and CD players) in the following countries: Austria, Belgium, Denmark, Finland, France, Germany, Italy, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the UK. The product categories and time periods covered differ from the ones in the previous studies; some overlap exists among the countries in this study and the ones in the previous studies.The findings in this study suggest that country-specific characteristics (for example, cosmopolitanism, mobility, percentage of women in the labor force) are useful for identifying the differences in diffusion patterns across countries and innovations. This study also suggests that the lead-lag effect helps to explain differences in diffusion across countries. Factors that this study identifies as possibly influencing the clustering of countries with similar diffusion patterns include timing of entry, geographical proximity, and cultural or economic similarity.     

Co-management of purchasing and marketing: Why,when and how?

This article discusses the theoretical and conceptual foundations for the co-management of purchasing and marketing and thereby provides some answers to the questions, why, when and how purchasing and marketing should be co-managed. It develops a conceptual framework distinguishing between internal and external co-management of purchasing and marketing. Improving value creation and value capture is identified as a necessary “pull factor” driving the co-management of purchasing and marketing. Based on resource dependence theory (RDT), we argue that dependence on critical resources is another important “push factor” for the emergence of external co-management. We present a RDT-based typology of co-management constellations showing that co-management is not a one-size-fits-all approach and summarize our findings in five propositions on the co-management of purchasing and marketing. In sum, we conceptualize co-management of marketing and purchasing as a bridging strategy that allows a focal firm to accommodate dependence on critical upstream and/or downstream resources and improves value creation within the supply chain.     

People,institutions, and technology: A personal view of the role of foundations in international agricultural research and development 1960–2010

In the 1940 and 1950s, the Rockefeller and Ford Foundations initiated overseas rural and agricultural development activities in a number of countries in Asia and Latin America. They began with country programs. These programs often involved creating new institutions in the recipient countries, and while the perspective was long term – as long as it took to achieve program goals – the foundations also explicitly sought to work themselves out of a job and turn over responsibility to nationals. By 1960 the two foundations had moved beyond national assistance programs to invent a new model, the international agricultural research center, designed to improve the lives of poor rural people by increasing the productivity of developing world agriculture. Some of the national programs were morphed into international centers. The international agricultural research centers proved attractive to other donors and by the 1970s international agricultural research had become institutionalized in the form of the CGIAR and its associate centers. The 1960s India agricultural program of the Rockefeller Foundation comprised a team of about a dozen American scientists working in India assisting Indian scientists to invent new approaches to agricultural technology development. At the same time and also in India, the Ford Foundation pioneered the integrated rural development model. By the mid-1970s integrated rural development projects were the approach of choice for many donors. In the 1980s the Ford Foundation moved away from agriculture concentrating on broader social issues; the Government of India and Rockefeller Foundation decided Foundation scientists had, indeed, worked themselves out of their jobs and Rockefeller’s India program was effectively closed down, although by then the international agricultural research centers, including ICRISAT in India, had attained a degree of maturity and stability. The Rockefeller Foundation invented another new model for agricultural research in the 1990s – the international rice biotechnology network, in which leading scientists from Asian countries, Western countries and the international centers worked together within a framework managed by Rockefeller scientists. In 2006, the Bill Melinda Gates Foundation entered the global agricultural scene in partnership with the Rockefeller Foundation to establish AGRA, yet another new model. By 2010 the Gates Foundation was annually spending about 10 times     

Effects of perceptions on LMX and work performance: Effects of supervisors’ perception of subordinates’ emotional intelligence and subordinates’ perception of trust in the supervisor on LMX and, consequently, performance

There are few studies on how the perception of supervisors by their subordinates contributes to high-quality leader-member exchange (LMX). We thus propose that the trust perception of supervisors by their subordinates can help explain the development of high-quality LMX. Furthermore, the trust perception may interact with supervisor-rated emotional intelligence to influence the quality of LMX, and, consequently, work performance. Using a longitudinal study on a sample of 285 supervisor-subordinate dyads from a manufacturing firm in China, we found that (1) supervisor-rated emotional intelligence of subordinates (Time 1) positively predicts the quality of LMX (Time 2); (2) this relationship is stronger when subordinates highly trust their supervisors (Time 1); (3) LMX (Time 2) positively predicts work performance (Time 3); and (4) LMX (Time 2) fully mediates the interactive effect of emotional intelligence (Time 1) and trust in the supervisor (Time 1) on work performance (Time 3).     

Firms’ Beliefs and Learning: Models,Identification, and Empirical Evidence

Review of Industrial Organization - This paper reviews recent literature on structural models of oligopoly competition where firms have biased beliefs about the primitives of the model—e.g....     

Competitive dynamics in Polish telecommunications, 1990–2000: growth,regulation, and privatization of an infrastructural multi-network

This paper analyzes the relationship between governmental regulatory policies and competitive dynamics amongst private operators and the national monopolist, TP SA, in three network segments of the Polish telecommunications sector. Special attention is paid to the evolution of organizational strategies in a regulatory environment characterized by constant strategic indecision and reorientations of national policy makers. The paper finds that regulatory/competition coevolution has taken diverse forms in the three network subsegments, with asymmetric duopoly operating in the local fixed network, hidden competition at work in the long-distance fixed network, and oligopolistic technology-driven competition characterizing the high-growth cellular network. The conclusion reached is that Polish telecommunications to date has been stuck in a broad stage of pre-competitive market maneuverings by domestic and international capital, in preparation for privatization of the national operator and for full liberalization as part of EU integration.     

Economics at the FCC, 2017–2018: Internet Freedom,International Broadband Pricing Comparisons,and a New Office of Economics and Analytics

The Federal Communications Commission’s (FCC’s) current strategic plan lists four priority goals: closing the digital divide; promoting innovation; protecting consumers and public safety; and reforming the FCC’s processes. Economists at the FCC contribute toward the realization of each of these goals, through analysis of the nature and significance of the underlying problems that regulations are intended to solve, as well as assessments of alternative solutions. Three major FCC initiatives demonstrate the role that economic analysis played in Commission decisions in 2017–2018: the Restoring Internet Freedom Order; the new hedonic pricing model that was used in the International Broadband Data Report; and the order that reorganized Commission economists into the Office of Economics and Analytics.     

Moral judgment in a business setting: The role of managers’ moral foundation,ideology, and level of moral development

Despite the extensive research conducted on moral judgment, the role of moral foundations in moral judgment in business has largely been overlooked. Motivated by the increasing concern about the ethical issues observed in China, this study aims to examine the impact of moral foundations on Chinese managers’ moral judgment while simultaneously looking into the role of moral ideology and the level of managers’ moral development. A sample survey was conducted in Shanghai, China, which involved 451 practicing business managers who were pursuing their MBA degree in a nearby university at the time of data collection. Both structural equation modeling (SEM) and hierarchical regression were used in data analyses. The results reveal that individualizing moral foundations and moral idealism have significant positive impacts on moral judgment. Moreover, the findings indicate that moral relativism and levels of mangers’ moral development moderate the relationship between individualizing moral foundations and moral judgment with the impact of individualizing moral foundations being stronger when managers’ relativism is low rather high or when their moral development is high than it is low. The managerial implications of the research and future research direction are discussed.     

China’s telecommunications evolution,institutions, and policy issues on the eve of 5G: A two-decade retrospect and prospect

Over the past two decades, China’s telecommunications industry has witnessed drastic market reform, steadfast institutionalization, and volatile technological changes, which have driven exponential industry expansion. This paper offers an updated longitudinal and comprehensive review on this reform process on the eve of 5G (the fifth generation mobile communications networks). First, the paper segments the two-decade reform crusade into discernible phases, each of which is embedded with different policy drives. These reform phases are then pattern-matched against the subtleties of the overall institutional, technological, and market backdrop. A series of policy issues are identified through a systematic examination of industry phenomena over the reform course. Finally, the status of research is assessed regarding China’s telecom industry and reform, based on which, knowledge gaps are identified and future research agenda suggested. Conclusions are made regarding future reform and research imperatives. The paper advances the understanding of China’s telecom reform, development, and the underlying policy issues. It updates and expands previous works on similar topics. Overall, this study provides important theoretical, managerial, and policy implications.     

Excess capacity and the degree of collusion: The Norwegian experience, 1967–82

The short run interaction between capacity utilization and the price-cost margin is investigated. The findings indicate that the emergence of unplanned excess capacity will in most cases provoke an initial narrowing of the price-cost margin. However, the price-cost margin will often rise again when the excess capacity lasts for an extended time period. The total response is still likely to be a decrease of the price-cost margin.     

Performance of foreign subsidiaries “in” and “from” Asia: A review,synthesis and research agenda

The performance of foreign subsidiaries (FS) has been the topic of studies since the beginning of the international business (IB) field. However, research findings are contradictory because of the disparate foci of individual studies. In this review paper, we first identify key determinants of the performance of FS through a structured content analysis of 73 articles and 679 relationships since the year 2000. Second, we explain the effects of each determinant, and perform meta-analysis to determine which relationships are statistically meaningful. Third, we compare the effects of determinants across different combinations of home and host contexts, based on which, we provide possible explanations of previous inconsistent findings. We conclude by offering new theoretical directions to better understand determinants of the performance of FS.