Entrepreneurial beacons: The Yale endowment,run‐ups,and the growth of venture capital

Research summary : This article investigates the social context of entrepreneurship in organizational sectors. Prior research suggests that firm foundings are driven by collective patterns of activity—such as patterns of prior foundings in a given sector. Building on research on social salience and signals, we consider the influence of singular sector‐level triggers, which we call entrepreneurial beacons. We argue that the actions or outcomes of single, salient organizations attract and motivate entrepreneurs, thus increasing the rate of foundings. We test this logic by examining the impact of the Y ale U niversity endowment's investment choices and of venture‐capital‐backed IPO run‐ups on venture‐capital foundings between 1984 and 2011. We find support for the existence and influence of beacons and outline boundary conditions for their effects . Managerial summary : What leads entrepreneurs to found new companies in nascent sectors? In contrast to prior research, which emphasizes patterns of activity, we argue that entrepreneurial activity can sometimes be driven by the actions of a singular trigger—what we call an entrepreneurial beacon. We examine the influence of two such beacons, Y ale U niversity's endowment investments and exceptional venture‐capital‐backed IPO run‐ups, on the founding of new venture‐capital firms over a 28‐year period. We find that Y ale's increased allocations to the venture‐capital asset‐class has a significant influence on the founding of new venture‐capital firms, while exceptional venture‐capital‐backed IPO run‐ups only influence venture‐capital foundings under certain conditions. Overall, we offer an explanation for heretofore anecdotal accounts of certain organizations or events that appear to have an outsized influence on entrepreneurial activity . Copyright © 2016 John Wiley & Sons, Ltd.     

Retail Mergers and Food Prices: Evidence from France

This paper analyzes the impact of a merger in the French supermarket industry on food prices. Using consumer panel data, we compare the changes in prices for merging and rival firms in affected and comparison markets. We use a novel definition of affected markets when some firms have a local pricing strategy and others a more centralized pricing strategy. We find that prices increase significantly following the merger, and that the merging firms lose market shares. For the rivals, the price increases are larger in local markets, in which concentration increased and differentiation changed after the merger.     

The influence of attitudes towards healthy eating on food consumption when travelling

This study explores tourists' attitude towards healthy eating and its influence on their travel eating behaviour. Based on focus group interviews and literature review, two instruments were developed to measure healthy eating attitude and travel eating behaviour. Factor analysis results revealed two healthy eating attitude factors (‘food content and nutrients’ and ‘balanced diet and eating habit’), and five travel eating behaviour factors (‘novelty’, ‘risk avoidance’, ‘health steadfastness’, ‘familiarity’, and ‘food supplement and medicine’). The relationships among the factors were examined using structural equation modelling. The findings revealed that respondents who had a stronger attitude towards ‘balanced diet and eating habit’ tended to be more motivated by the ‘novelty’ factor; whereas ‘risk avoidance’, ‘health steadfastness’ and ‘familiarity’ were found to be associated with a stronger attitude towards ‘food content and nutrient’. The findings suggest that the healthy eating attitude construct is multidimensional and healthy eating conscious tourists should not be treated as a homogeneous group.     

Cross‐border mergers and acquisitions: The role of private equity firms

Research summary: We show that private equity ownership (“PE backing”) of the acquirer is a signal of deal quality in cross‐border takeovers. As such, PE‐backed acquirers experience higher announcement returns in cross‐border takeovers, but only if targets are in poor information environments. We show that PE backing is a positive market signal because of PE firms' experience and networks that result from prior deals in target countries. We document that the market correctly anticipates that operating performance of PE‐backed acquirers increases as a result of cross‐border mergers and acquisitions (M&A). Managerial summary: We study cross‐border acquisitions by acquirers that are partially owned by private equity firms (“PE backing”). Cross‐border acquisitions are challenging as acquirers often have little information about targets. We document that investors react positively to cross‐border deals of PE‐backed acquirers—their stock prices increase upon deal announcements. However, this is only the case if targets are in countries with poor information environments. This is because PE backing allows acquirers to access PE firms' deal experience and networks. This makes it easier to identify and evaluate good targets, making it more (less) likely that a deal eventually creates (destroys) value. Consistent with this, we find that earnings of PE‐backed acquirers increase after buying targets in poor information environments. Copyright © 2016 John Wiley & Sons, Ltd.     

Firm‐specific human capital investments as a signal of general value: Revisiting assumptions about human capital and how it is managed

Research summary : Prior scholarship has assumed that firm‐specific and general human capital can be analyzed separately. This article argues that, in some settings, this is not the case because prior firm‐specific human capital investments can be a market signal of an individual's willingness and ability to make such investments in the future. As such, the willingness and ability to make firm‐specific investments is a type of general human capital that links firm‐specific and general human capital in important ways. The article develops theory about these investments, market signals, and value appropriation. Then, the article examines implications for human resource management and several important questions in the field of strategic management, including theories of the firm and microfoundations of competitive advantage. Managerial summary : While managers don't often use the terms firm‐specific and general skills, they certainly recognize that investments employees make in their skill sets are more or less relevant to a specific firm. For instance, investing in specific relationships within a firm or learning a firm's proprietary software would be considered firm‐specific investments. While such skills may seem relevant only to the particular firm in which they were invested, these investments may also send valuable signals to competing firms that such employees are willing and able to make similar investments elsewhere. Hence, managers should be interested in determining if a potential hire has made prior firm‐specific investments to help them know whether that person might be likely to make such investments in his or her future place of employment. Copyright © 2016 John Wiley & Sons, Ltd.     

Short Sales and Price Discovery in the Hong Kong Real Estate Market

Indirect real estate (IRE) returns are often shown to lead direct real estate (DRE) returns. Apart from differences in liquidity, transaction costs, and management skills, the DRE market is also less complete than the IRE market—when negative shocks arrive, one can only short IRE (e.g., real estate stocks or REITs), but not DRE. This study investigates if short sales in the IRE market convey any information to the DRE market. Based on high‐frequency (weekly) property price data in Hong Kong from 2000 to 2012, we find that short sales in the IRE market led DRE returns, even after controlling for the lagged IRE returns in a VAR model. This supports an information spillover mechanism in which the DRE market learns private information that is not reflected in IRE returns. The spillover effect, however, weakened after the recent global financial crisis because the increased uncertainty over the credibility of individual firms made short sales more reflective of firm‐specific information than real estate market fundamentals.     

Unethical use of wildlife in tourism: what's the problem,who is responsible,and what can be done?

Wildlife tourism is a huge global market, the revenue from which can promote local livelihoods and tourist education, enact conservation, and improve animal welfare. Such benefits arise if wildlife tourist attractions (WTAs) prioritise ethical deliverables above financial profit, but recent work has shown that the majority of WTAs have substantial negative animal welfare and conservation impacts. In the absence of global regulatory authorities, tourist revenue has become the ultimate arbiter of what constitutes acceptable use of animals in WTAs. Tourists, however, are not adequate assessors of WTAs’ animal welfare and conservation impacts: they lack the specialist knowledge required and are subject to a number of psychological biases that obscure the ethical dimensions of decisions to attend particular WTAs. This inadequacy is evidenced, and compounded, by overwhelmingly positive reviews on TripAdvisor (the industry-leading review site), even for WTAs with objectively poor ethical standards. Our suggested solution is to empower tourists by presenting unequivocal assessments of WTAs' animal welfare and conservation impacts, hosted in the fora that tourists already use to make their travel decisions. We would thereby promote a subjective norm that tourists should consider and limit their individual negative impacts when choosing which WTAs to visit.     

Utilizing environmental information and pricing strategies to reduce externalities of tourism: the case of invasive species in the Galapagos

The increase in demand for nature-based tourism brings economic and educational benefits but risks the introduction of invasive species. Increasing the length of tourist trips can better balance these benefits and risks by maintaining revenues while reducing the number of unique contacts with tourists. Changing the relative prices of trips can induce tourists to take longer trips. We hypothesized that providing information about the negative externalities of tourism could improve the effectiveness of such pricing strategies.

We administered one of two discrete choice surveys to tourists considering a trip to the Galapagos. One of the surveys described the Galapagos as a fragile ecosystem susceptible to invasive species; the second described it as a standard nature-based destination. For each sample, we estimated the probability of the tourist choosing a short versus long trip, given the tourist's personal information and trip options presented to him. We then simulated the demand for trips using three pricing strategies. We found that providing information on invasive species significantly increased the efficacy of strategic pricing. We propose using a two-prong approach to tourism management: educate potential tourists about the islands’ vulnerabilities, and simultaneously increase the per-day cost of short trips relative to that of longer trips.     

To go or not to go: travel constraints and attractiveness of travel affecting outbound Chinese tourists to Japan

The fast growth of the Chinese economy has transformed Chinese outbound tourism into one of the major players in the tourism industry worldwide. However, Chinese outbound tourists may still encounter travel constraints in some countries, such as Japan, which has had a close and complicated relationship in history with China. This study adopted the qualitative approach by applying focus group and in-depth interviews to investigate and triangulate the travel barriers affecting Chinese outbound travel to Japan. The findings indicated that domestic nationalist sentiment played a key constraining role in influencing Chinese outbound travel decision-making, followed by current political factors, while quality products and service, as well as social environment encouraged tourists to travel. This research also found that visitors and non-visitors have perception differences in terms of travel barriers and attractiveness of travel.     

B2B relationship calculus: quantifying resource effects in service-dominant logic

Increasingly, knowledgeable business-to-business (B2B) customers and evolving customer needs are leading to seismic shifts in vendor–client interactions. Across industries, sellers are changing their business models from a simple goods orientation to a hybrid goods–services model, placing greater emphasis on delivering complete customer solutions. In such an environment, companies must find ways to prioritize investments in resource development. The service-dominant (S-D) logic framework offers significant insights into this challenge; however, these effects have not been tested quantitatively. This study addresses that gap, examining the influence of various seller resources on buyer satisfaction. An empirical analysis of buying organizations that purchased and implemented business intelligence systems finds that “augmented” operant resources that the buyers ascribe to the software’s sellers—resources that go above and beyond expectations—are the most significant predictors of both successful technology assimilation and overall customer relationship quality. In particular, an augmented operant resource reflecting a seller’s ability to see value creation opportunities from the buyer’s perspective (value mindset) has up to three times the effect on relationship satisfaction as “core” operant resources such as product-specific expertise or basic interpersonal service skills. These results can help sellers prioritize resource investments.