Patenting and the early‐stage high‐technology investor: evidence from the field

We discuss the importance of patenting to the venture capital investor in high‐technology firms. While literature suggests that patenting will have an impact on the nature and level of investment, the investors themselves are keen to suggest otherwise. We investigate this issue by the use of new primary‐source empirical data, gathered by fieldwork methods. Our results help explain a link between the existence of patenting and the level of investment made. We further support our analysis with illuminating quotes from investors currently active in the field.     

Active Labour Market Policy by a Profit‐Maximizing Firm

This article investigates the effectiveness of an employment programme exclusively run by a private sector firm in order to find out whether such a programme can be beneficial to both the participating individuals and the private firm. To answer these questions, we use a unique dataset on a private employment programme covering 23 years of operations and data on 1,000 participating unemployed individuals. Using conservative estimates, we show that a private employment programme is more effective in reintegrating the unemployed than public efforts, while providing tangible benefits to the firm.     

Institutional Investment,Asset Illiquidity and Post‐Crash Housing Market Dynamics

We examine institutional investors’ entry into the equity side of the single‐family detached housing market using an asset illiquidity framework. We find that institutional investors purchased owner‐occupied houses after the real estate crisis for approximately 6.3–11.8% less than owner‐occupiers. The large discount was in addition to distressed sale and cash purchase discounts which, when combined, highlight the low liquidation value for owner‐occupied housing. The results suggest that asset illiquidity is an important cost of leverage in the owner‐occupied housing market.     

Output‐Based Performance Pay,Performance‐Support Bias,and the Racial Pay Gap within a Large Retail Stock Brokerage

We measure sources of racial inequality in stockbroker pay. Pay differences arise from sales differences. We measure the extent to which sales differences are due to performance‐support bias, whereby African American brokers receive weaker firm supports, or to forces outside the firm, including client access, selection, and consumer discrimination. Data on firm policies are matched to sales results. Data on self‐generation of accounts measure access to wealthy clients. Sales generated from accounts with sales histories show racial differences in sales arising from selection or consumer discrimination.     

HRM Practices and the Within‐Firm Gender Wage Gap

The effect of HRM practices on the within‐firm gender gap in wages in manufacturing is investigated merging a 1999 survey on work practices among Danish firms to matched employer–employee panel data. Self‐managed teams, project organization and job rotation schemes are the most widely introduced practices. Accounting for non‐randomness in adoption, the pay gap is reduced among hourly paid workers but increases among salaried workers. Considering practices individually, wage gains from adoption accrue to males except for salaried workers in firms that adopt project organization and for hourly paid workers in firms that introduce quality control circles.     

The Geography of Real Property Information and Investment: Firm Location,Asset Location and Institutional Ownership

Using a sample of Real Estate Investment Trusts (REITs), we show that institutional investors exploit location‐based information asymmetries by overweighting firms headquartered locally and those with greater economic interests in the investor's home metropolitan statistical area (MSA). This asset allocation strategy is associated with superior portfolio performance. In a difference‐in‐difference‐in‐differences analysis of investor headquarters relocations, we find that investors tend to increase their ownership of REITs that have property holdings in the market to which the investor relocates. Our findings highlight the importance of understanding the relation between information advantages and the geography of firm's operations, as well as the implications on ownership patterns and portfolio construction.     

Collective Wage Contracts,Opt‐Out Clauses,and Firm Wage Differentials: Evidence from Linked Employer–Employee Data

Using a large linked employer–employee data set, this article studies whether the existence and use of flexibility provisions within centralized collective wage agreements alter the structure of pay across employers. Using level regressions and first‐difference methods, we find that—compared with contracts without any flexibility—wages under opt‐out clauses are more responsive to local profitability conditions in below‐average‐performing establishments. In contrast, the sensitivity of wages to local profitability is smaller in high‐performance establishments. Our results provide further evidence for a threat potential of the existence of opt‐out clauses whose impact on flexibility is larger than the real application.     

Firm resources,competitive actions and performance: investigating a mediated model with evidence from the in‐vitro diagnostics industry

Building on the resource‐based view (RBV) and competitive dynamics literatures, this paper proposes that considering resources or actions independently offers an incomplete understanding of the drivers of superior performance. Instead, we hypothesize that resources enable competitive actions and that when these actions leverage the firm's resources, superior performance results. We tested these hypotheses with panelized data on the technological resources and competitive actions of firms in the in‐vitro medical diagnostic substance manufacturing industry. The results provide substantial support for our hypotheses, specifically with respect to mediation. Our theory and results underscore how the integration of the competitive dynamics and RBV literatures can significantly improve our understanding of firm performance. Copyright © 2011 John Wiley & Sons, Ltd.     

Gender, Race, and Promotions within a Private-Sector Firm

This article empirically tests the proposition that the gender-race composition of an employee's occupation significantly affects the likelihood of promotion. Using data obtained from the personnel files of a financial services firm, we find that a high concentration of white females in an occupation adversely affects the probability of promotion, but only for white females and minorities in that occupation. A similar, attenuated pattern exists in occupations with either high concentrations of minority females or high concentrations of minority males. Additional empirical evidence suggests that the system of rules governing the promotion of white males differs significantly from that of the other three gender-race groups.     

Home Alone: The Effects of Lone‐Insider Boards on CEO Pay,Financial Misconduct,and Firm Performance

Research summary: Corporate scandals of the previous decade have heightened attention on board independence. Indeed, boards at many large firms are now so independent that the CEO is “home alone” as the lone inside member. We build upon “pro‐insider” research within agency theory to explain how the growing trend toward lone‐insider boards affects key outcomes and how external governance forces constrain their impact. We find evidence among S&P 1500 firms that having a lone‐insider board is associated with (a) excess CEO pay and a larger CEO‐top management team pay gap, (b) increased likelihood of financial misconduct, and (c) decreased firm performance, but that stock analysts and institutional investors reduce these negative effects. The findings raise important questions about the efficacy of leaving the CEO “home alone.” Managerial summary: Following concerns that insider‐dominated boards failed to protect shareholders, there has been a push for greater board independence. This push has been so successful that the CEO is now the only insider on the boards of more than half of S&P 1500 firms. We examine whether lone‐insider boards do in fact offer strong governance or whether they enable CEOs to benefit personally. We find that lone‐insider boards pay CEOs excessively, pay CEOs a disproportionately large amount relative to other top managers, have more instances of financial misconduct, and have lower performance than boards with more than one insider. Thus, it appears that lone‐insider boards do not function as intended and firms should reconsider whether the push towards lone‐insider boards is actually in shareholders' best interests. Copyright © 2017 John Wiley & Sons, Ltd.     

Almost‐Maximization as a Behavioral Theory of the Firm: Static,Dynamic and Evolutionary Perspectives

Review of Industrial Organization - In this paper we consider the effect of epsilon maximization on firm behavior. In particular we focus on the dynamic behavior of firms with the use of the...     

Championship Behaviors and Innovations Success: An Empirical Investigation of University Spin‐Offs*

Despite the flurry of scholarly research on champions, no prior article has explicitly addressed how different dimensions of championship behavior actually contribute to innovation success. In this article, based on an extensive literature review, the authors argue that champions display four behaviors, namely (1) pursuing innovative ideas, (2) network building, (3) persisting under adversity, and (4) taking responsibility for the idea. The authors use data from 123 university spin‐offs to test proposed linear and curvilinear relationships between the four behaviors and an objective measure of innovation success, namely a longitudinal measure of sales growth. The results indicate that network building has the desired positive relationship with sales performance. Surprisingly, pursuing the innovative idea is not related to sales growth. Furthermore, the present study also reveals some dysfunctional effects of champion behaviors. Persisting under adversity and taking responsibility have the hypothesized inverted‐U relationship with sales growth. The present study provides a more refined discussion of the benefits and dangers of championing behaviors. Our results show that linking technology to markets can be planned and controlled only to a very limited extent even if champions are working hard to sell the idea to potential customers. Moreover, any new idea is often competing with existing products and pursuing such ideas may result in opposition to the idea. In contrast, network building has the desired positive relationship with innovation success. Effective championing behavior keeps an innovative idea alive by mobilizing support and building coalitions around the idea with critical individuals or important third parties. Moreover, this study challenges the widespread “heroic” discussion of championing as fundamentally positive “across the board.” The results show that persisting under adversity and taking responsibility are desirable up to some levels. Beyond such critical levels, these two champion behaviors may actually become detrimental to the innovation process. Being too persistent in the face of adversity or taking too much responsibility for the innovative idea might undermine the power of the champion's justifications for an innovation and thereby increase resistance to change. An “over‐performing” champion may interpret opposing communications as an unwarranted and injurious response. By taking overmuch responsibility for the innovative undertaking, the champion is likely to discourage contributions from other team members who see no valuable opportunity to bring their expertise and knowledge to the idea.     

Pricing process as a capability: a resource‐based perspective

Strategists following the resource‐based view argue that firms can generate rents through value creation. To create value, firms develop and use resources and capabilities that other firms cannot imitate, trade for, or substitute other assets for. Even a firm that has created value, however, may not capture the potential rents associated with that value. To capture rents, a firm must set the right prices for what it sells. Most views of pricing assume that a firm can readily set appropriate prices. In contrast, we argue that pricing is a capability. To develop the ability to set the right prices, a firm must invest in resources and routines. We base our argument on a study of the pricing process of a large Midwestern manufacturing firm. We show that pricing resources, routines, and skills may help or inhibit a firm in setting the right price—and hence in appropriating value created. Our view of pricing as a capability contributes to the resource‐based view because it suggests that strategists should consider the portfolio of value creation and value appropriation capabilities a firm uses to create competitive advantage. Our view also contributes to economics because it suggests that strategic decisions about pricing capabilities have important implications for a fundamental economic action, determining prices. Managers in firms without effective pricing processes may be unable to set prices that reflect the wishes of its customers, so the customers may misuse their resources. As a result, resources may be used ineffectively. Our view of pricing as a capability therefore takes the resource‐based‐view straight to the heart of what is perhaps the central economic question: the best use of resources. Copyright © 2003 John Wiley & Sons, Ltd.     

Looking for a Needle in a Haystack: How to Search for Bottom‐Up Social Innovations that Solve Complex Humanitarian Problems

The worldwide increase in societal challenges is putting pressure on humanitarian organizations to develop sophisticated approaches to leverage social innovations in the humanitarian sector. Since humanitarian problems are complex problems, with the relevant knowledge being hidden, organizational search theory advocates the application of bottom‐up and theory‐guided search processes to identify the social innovations that solve these. Unfortunately, there has been no theoretical attention to understanding which approaches apply in this context. Further, established theory‐guided bottom‐up search processes, such as the lead user method, are unsuitable to the humanitarian sector, and we lack practice examples of adequate search processes. To start addressing this gap in theory and practice, procedural action research was done with the International Federation of Red Cross and Red Crescent Societies to develop a theory‐guided bottom‐up innovation search process for the real‐life humanitarian problem of recurring floods in Indonesia. It revealed that an innovation search process for this context must differ significantly concerning its objectives and the steps to be taken from the lead user method, which was used as a starting point. Further, a comparison of the technical quality and the social impacts of the identified social innovations with social innovations identified through a non‐theory‐guided bottom‐up search process (i.e., an innovation contest) suggests the superiority of this theory‐guided search process. With this conclusion and the insights derived throughout the development of the search process, this study makes important contributions to theory development in the social and open innovation literatures and delivers important recommendations for social innovation practice in the humanitarian sector.     

Necessity as the mother of ‘green’ inventions: Institutional pressures and environmental innovations

Drawing on institutional theory and innovation literature, we argue that greater regulatory and normative pressures concerning environmental issues positively influence companies' propensity to engage in environmental innovation. Analysis of environment‐related patents of 326 publicly traded firms from polluting industries in the United States suggests that institutional pressures can trigger such innovation, especially in those firms displaying a greater deficiency gap (i.e., firms polluting relatively more than their industry peers). Moreover, we find that this effect is stronger when asset specificity is high, and that the availability of resources plays different roles depending on the type of pressures (regulatory vs. normative).Copyright © 2012 John Wiley & Sons, Ltd.     

Reaching through the fog: Institutional environment and cross‐border giving of corporate foundations

Research Summary : Corporate philanthropy has long been recognized as an important part of multinational strategy, yet we know relatively little how charitable giving is allocated across countries. Using a sample of 208 U.S.‐based corporate foundations from 1993 to 2008, we find that the foundations give more in countries with opaque institutional environments, but they do so through international intermediaries. They also give more when the funding firms have new entries in countries with weak institutions—hence greater needs for the social license to operate—or when their operations require stronger connections with local suppliers or customers. These findings point to the use of corporate philanthropy as part of corporate diplomacy when the local institutions are ineffective and the importance of reaching out to local constituents is high. Managerial Summary : Corporate foundations play an important role in firms' charitable giving across countries. This article analyzes how foundation giving is associated with the funding firm's need to navigate the local business environments. Using a sample of 208 U.S.‐based corporate foundations from 1993 to 2008, we find that foundations give more in countries characterized by weak rule of law and high levels of corruption, and when the funding firms have newly established subsidiaries or stronger need to connect with local stakeholders there. However, donations to countries with weak institutions are more likely to go through international intermediaries to avoid potential liabilities. The results are consistent with the view that corporate foundations support corporate diplomacy and help obtain the social license to operate in the host countries.