Managing the Design Innovation–Brand Marketing Interface: Resolving the Tension between Artistic Creation and Commercial Imperatives*

The relationship between design and marketing is an uneasy one. Managing this tension is critical for luxury marketers, whose point of differentiation is a combination of design excellence and market execution. This article explores the tensions between marketing and design and the integration of design into the brand management process in luxury wine firms. The results of the investigation describe five design‐based values held by luxury winemakers: remaining true to craft, expressions of place, stylistic consistency, living up to the brand's heritage, and remaining current. Five methods of integrating design into the firm are identified. These are top leadership support and integration at the strategic level, simultaneous loose–tight coupling, being in the marketplace versus being of the marketplace, intergenerational teams, and deliberate decoupling. This last is a novel solution and involves designers walking a fine line between their commitment to their values and the ongoing evolution of the brand. Essentially, designers of luxury wine products downplay their scientific expertise, market knowledge, and responsiveness in favour of appealing to their five espoused values.     

Evidence on the Trade-Off between Risk and Return for IPO and SEO Firms

Do the low long‐run average returns of equity issuers reflect underperformance due to mispricing or the risk characteristics of the issuing firms? We shed new light on this question by examining how institutional lenders price loans of equity issuing firms. Accounting for standard risk factors, we find that equity issuing firms' expected debt return is equivalent to the expected debt return of nonissuing firms, implying that institutional lenders perceive equity issuers to be as risky as similar nonissuing firms. In general, institutional lenders perceive small and high book‐to‐market borrowers as systematically riskier than larger borrowers with low book‐to‐market ratios, consistent with the asset pricing approach in Fama and French (1993) . Finally, we find that firms' expected debt returns decline after equity offerings, consistent with recent theoretical arguments suggesting that firm risk should decline following an equity offering. Overall, our analysis provides novel evidence consistent with risk‐based explanations for the observed equity returns following IPOs and SEOs.     

A Rose.com by Any Other Name

We document a striking positive stock price reaction to the announcement of corporate name changes to Internet-related dotcom names. This "dotcom" effect produces cumulative abnormal returns on the order of 74 percent for the 10 days surrounding the announcement day. The effect does not appear to be transitory; there is no evidence of a postannouncement negative drift. The announcement day effect is also similar across all firms, regardless of the firm's level of involvement with the Internet. A mere association with the Internet seems enough to provide a firm with a large and permanent value increase.     

The Currency Ratio in Tanzania: An Econometric Analysis

Abstract: This study tested some key hypotheses on the determinants of the currency ratio in Tanzania. The econometric results suggest that real income is, as theorized, negatively related to and a significant determinant of the currency ratio in Tanzania. The estimated income elasticity coefficient, found to be far less than unity, suggests there is poor substitution between currency and demand deposits in Tanzania. The results also showed that expected inflation was negatively related to the currency ratio in Tanzania. While the structural adjustment programme was found to increase and shift upward the currency ratio function in Tanzania, the liberalization of the financial sector was found to shift decrease and shift downward the currency ratio function. Most institutional variables were found to lack the expected sign and significance in explaining the currency ratio in Tanzania, probably because of inadequacy of the proxies used.     

Implementation strategy and performance outcomes in related diversification

Strategy research has a long‐standing interest in the performance consequences of corporate diversification. In theory, resource sharing should yield economic benefits in related multi‐business firms, but the extensive empirical research remains equivocal. To explore this paradox, this paper examines the process of implementing a related diversification strategy. Working from existing theory, a formal model is constructed that describes the process and performance implications of a related diversification move. The model is analyzed using computer simulation, and the analysis suggests that successful diversification strategies require managerial policies that maintain organization slack. In the absence of such policies, related diversification can negatively impact firm performance even when substantial synergy opportunities exist. The analysis also demonstrates, contrary to existing theory, that diversification strategies based on a very high degree of relatedness can lead to lower performance than less related strategies in some circumstances. Counter‐intuitively, extracting potential synergies may require additional investment in shared resources. Copyright © 2005 John Wiley & Sons, Ltd.     

Typology Analysis of Performance Models of Small and Medium-Size Enterprises (SMEs)

A number of firm performance models are available. Reviewing these models and pointing out their individual strengths and weaknesses, would help both academic researchers and professional users to understand and appreciate how and when to use these various models. The theoretical models for Small and Medium-size Enterprise (SME) performance can be divided into two categories: firm dynamics theories and performance prediction models. In the first part of this paper we review, in a condensed manner, the most relevant firm dynamic theories, i.e. SME's performance models. These include: Stochastic Theories, Learning Model Theories and Hazard Modeling Theories. In the second part of this paper, we examine the performance prediction models of SMEs, which include Z-Scores, ZETA-Scores, Neural Networks (NN) and the SIV® models, among others. The strengths and weaknesses of each of these models are exposed and discussed.