The product development process of an enterprise from an SSME perspective

This study empirically explores a real-world manufacturer product development process from a service science perspective. In this era of keen global competition, the process of product development is crucial for companies before the final product is launched to the market. The poor development of a product can fail to meet customer needs and result in product failure, which can even lead to significant losses for manufacturers. However, traditional product development processes are much more manufacture-oriented rather than customer-involved. In this paper, we aim to use the Service science, management, and engineering (SSME) perspective, proposed by IBM, to improve product demand asymmetries by discovering true user requirements in order to enhance customer involvement and lead to better product development. We show how SSME is applied in the context of product development and in the discovery of customer needs, and propose a modified process based on SSME to the product development process.     

Exploring the influence of industries and randomness in stock prices

This study explores the behavior of time series of historical prices and makes two additional contributions to the literature. In summarized form, we present an overview of each of the financial theories that discuss the movements of stock prices and their connection with industry trends. Within this theoretical framework, we first propose that prices be distinguished by following stock prices and a random-walk approach, and second, that the analysis of historical prices be broken down by industries. Similarities among price series are extracted through a clustering methodology based on an approach to non-computable Kolmogorov complexity. We model price series by following geometric Brownian motion and compare them to historical series of stock prices. Our first contribution confirms the existence of hidden common patterns in time series of historical prices that are clearly distinguishable from simulated series. The second contribution claims strong connections among firms carrying out similar industrial activities. The results confirm that stock prices belonging to the same industry behave similarly, whereas they behave differently from those of firms in other industries. Our research sheds new light on the stylized feature of the non-randomness of stock prices by pointing at fundamental aspects related to the industry as partial explanatory factors behind price movements.     

On optimal regimes of knowledge exchange: a model of recombinant growth and firm networks

Journal of Economic Interaction and Coordination - The literature has documented two patterns of knowledge exchange: free sharing of knowledge and barter exchange. The former has been coined as...     

Advertising non-premium products as if they were premium: The impact of advertising up on advertising elasticity and brand equity

Non-premium brands occasionally emulate their premium counterparts by using ads that emphasize premium characteristics such as superior performance and exclusivity. We define this practice as “advertising up” and develop hypotheses about its short- and long-term impact on advertising elasticity and brand equity respectively. We test the hypotheses in two large-scale empirical studies using a comprehensive dataset from the automotive industry that includes, among others, the content of 2317 television ads broadcast over a period of 45?months. The results indicate that advertising up increases (decreases) short-term advertising elasticity for non-premium products with a low (high) market share. The results also show that an intensive use of advertising up over time leads to long-term improvements (reductions) in brand equity for expensive (cheap) non-premium products. Furthermore, an inconsistent use of advertising up leads to reductions in brand equity. The results imply that managers of non-premium products with a low market share can use advertising up to increase advertising effectiveness in the short run. However, advertising up will only generate long-term improvements in brand equity for expensive non-premium products. Finally, to avoid long-term reductions in brand equity, advertising up should be consistently used over time.     

Foreign direct investment and the correlation between cost and revenue

This paper studies irreversible investment in the presence of uncertain revenue and uncertain cost of production. Using methodology of real options, we find the threshold markup of price over cost that triggers investment. When the processes for revenue and cost are negatively correlated, the standard result that uncertainty delays investment always holds. However, when these two processes are positively correlated, greater uncertainty of revenue or cost might accelerate investment. As less correlated cost and revenue, vertical FDI is less desirable than producing at home, but horizontal FDI that brings production to the output market is an advantage.     

The determinants of service offshoring: Does distance matter?

The importance of distance for international trade remains an unsettled issue. Innovations in information technology have reduced the costs of offshore outsourcing of services. However, empirical studies using the gravity model continue to demonstrate that distance is important for merchandise and service trade. We estimate a gravity model of the determinants of service trade. After we properly control for all non-transport trade costs, including information barriers, and multilateral resistance terms as suggested by Anderson and van Wincoop (2003), we show that the remaining influence of distance is negligible.     

Chinese Farmers in the Russian Far East and Local Rural Development

The Russian Far East (RFE) is still a backward region of Russia. Per capita agricultural output is lower than the national average. Chinese agricultural entrepreneurs are farming in the region. The business environment is challenging for both Chinese and Russians. We analyze possible ways for agriculture to develop in the RFE with Chinese agricultural entrepreneurs as the main agents of development. We discuss the investment environment in the RFE, the role and impact of Chinese agricultural entrepreneurs, their ability to assist in rural development, and the challenges they face. We examine the current state of agriculture in the RFE, the experience of Chinese and Russian farmers, and the impact of Chinese farmers on Russian farmers. Agriculture can improve in the RFE with better communication and better coordination mechanisms among governments and with more training to help businesses understand existing policies and regulations.