The Determinants of Seller‐Buyer Interactions during New Product Development in Technology‐Based Industrial Markets

A growing body of literature indicates that the new product development (NPD) process in technology‐based, industrial markets is characterized by collaborative seller‐buyer relationships. Unfortunately, the extant literature is deficient in some significant ways. For example, there is no theoretical framework that explicates the content of these relationships. Also, there is little empirical research on the antecedents or consequences of these relationships. Therefore, managers seeking guidance on how to manage their NPD relationships have lacked appropriate insights. Not surprisingly, ineffective relationship management is a major contributor to new product failure in such settings. Against this background, this study develops and tests a model of seller‐buyer interactions during NPD. The model is based on the relationship marketing literature and is rooted in Transaction Cost Analysis (TCA). It was tested using data from 296 small to mid‐sized firms in a variety of technology‐based, industrial markets. It specifies product co‐development, education, and post‐installation product knowledge generation as three key behavioral dimensions that characterize seller‐buyer interactions during NPD. Our results indicate that the intensity with which these dimensions are undertaken vary with buyer‐related (i.e., perceived buyer knowledge and prior relationship history) and innovation‐related (i.e., product customization and innovation discontinuity) characteristics. For example, perceived buyer knowledge has a positive impact on product co‐development while innovation discontinuity has a positive impact on education. Further, we find that a seller's satisfaction with undertaking these behaviors is moderated by the technological uncertainty in the seller's industry. As a case in point, satisfaction with undertaking product co‐development is reduced when technological uncertainty is high. Collectively, the overall support we find for our model can help NPD managers optimize their relationships with buyers during NPD.     

U.S. Family-Run Companies–They May Be Better Than You Think

Despite the common perception of public family-run companies as poor investments, the evidence shows that they actually perform quite well. And there may be some good reasons for this: A family that both owns and controls a company avoids the classic agency problem—the natural tendency of professional managers to pursue some private interests at the expense of their shareholders—that confronts most publicly traded companies. The family's concentrated, long-term investment in the company and knowledge of the business make them potentially effective and highly motivated monitors.
Using a sample of "true" family firms from the S&P 500 (one that deliberately excludes "founder companies" like Microsoft and Dell), the authors show that these companies have in recent years produced considerably higher stock returns than their non-family counterparts. At the same time, family companies with dual-class share structures produced lower returns than those with a single class of shares, and the returns to dual-class firms with insider-dominated boards were still lower. Specific examples highlight the different ways that families maintain control, the consequences of the CEO choice (family member versus professional manager), and the potential benefits of the family's permanent presence, including a long-term investment focus and reputation for fair dealing with corporate stakeholders.     

ADAPTIVE MESH MODELING AND BARRIER OPTION PRICING UNDER A JUMP‐DIFFUSION PROCESS

The computational burden of numerical barrier option pricing is significant, even prohibitive, for some parameterizations—especially for more realistic models of underlying asset behavior, such as jump diffusions. We extend a binomial jump diffusion pricing algorithm into a trinomial setting and demonstrate how an adaptive mesh may fit into the model. Our result is a barrier option pricing method that employs fewer computational resources, reducing run times substantially. We demonstrate that this extension allows the pricing of options that were previously computationally infeasible and examine the parameterizations in which use of the adaptive mesh is most beneficial.     

A Cross-Validity Comparison of Conjoint Analysis and Choice Models at Different Levels of Aggregation

Several (ratings-based) conjoint analysis and experimental choice (choice-based conjoint) models are compared on their ability to predict both aggregate choice shares among the sample and individual choices in an availability validation task. While there was a weak relationship between validations at the individual and aggregate levels, several models stand out. In general, models capturing individual differences validated well at both the individual and aggregate level. The hierarchical Bayes choice and conjoint models validated particularly well.Among choice models, the hierarchical Bayes choice model had the highest aggregate and individual level-validations. It was followed by the hybrid and seven segment latent segment choice models. Overall, the highest validating ratings-based conjoint model was the hierarchical Bayes model. However, the seven segment latent segment conjoint model produced better aggregate choice share validations than any other conjoint model. These results indicate that validations can be improved either by using benefit segment models and/or merging different types of data to estimate more individualized models.In most cases, rescaling improved the ratings-based, but not the choice-based choice share validations. This suggests that one might adjust for differences between ratings and choice tasks before making choice share predictions.     

Relationship between franking credits and the market risk premium: a reply

We have previously documented an inconsistency between the dividend yield implied by the Officer (1994) model with standard Australian regulatory parameters and actual dividend yields of Australian companies. We have shown that, within the Officer framework, this inconsistency can be resolved by setting the assumed value of franking credits (γ) to zero, consistent with the practice of Australian firms and independent valuation experts. Truong and Partington (2008) and Lally (2008) recognize this same inconsistency and propose alternate ways of resolving it. In this paper, we demonstrate that these proposals are outside the Officer framework. The standard set of regulatory parameters cannot be resolved with observed dividend yields within the Officer framework. Whichever method is used to resolve the inconsistency, the effect will be an increase in the estimated after‐tax cost of equity.     

The New Deal Order

This essay explores how historians and others have used theconcept of political economy, arguing that its application toUnited States history between the 1920s and 1940s helps to clarifythe relationships between politics, the economy, and liberalism.     

CEO Regulatory Foci,Environmental Dynamism,and Small Firm Performance

This research proposes and tests that regulatory foci of small business chief executive officers (promotion focus and prevention focus) relate to firm performance differentially when levels of environmental uncertainty vary. Results suggest that a promotion focus is positively related to firm performance, whereas a prevention focus is negatively related to firm performance. Further, these relationships are moderated by the degree of environmental dynamism such that in more dynamic environments, the relationship between promotion focus and firm performance is strengthened, whereas the relationship between prevention focus and firm performance is negatively affected. The reverse was found for less dynamic environments. Theoretical and practical implications as well as future research avenues are offered.     

When does electronic word-of-mouth matter? A study of consumer product reviews

Online consumer product reviews, a form of electronic word-of-mouth (eWOM), have attracted increased attention from researchers. This paper examines the persuasiveness of eWOM. Drawing on regulatory focus theory, the authors propose that the consumption goals that consumers associate with the reviewed product moderate the effect of review valence on persuasiveness. Data from lab experiments and actual online retailers suggest that consumers who evaluate products associated with promotion consumption goals perceive positive reviews to be more persuasive than negative ones (i.e., a positivity bias). Conversely, consumers who evaluate products associated with prevention consumption goals perceive negative reviews to be more persuasive than positive ones (i.e., a negativity bias).     

INCOME INEQUALITY,MEDIA FRAGMENTATION,AND INCREASED POLITICAL POLARIZATION

The increasing polarization of congressional voting has been linked to legislators' inability to reach consensus on many pressing economic issues. We examine two potential factors driving polarization: greater income inequality and the increasingly fragmented state of American media. Using cointegration techniques, we find evidence indicating that media fragmentation has played a more important role than inequality. Periods of rising media fragmentation are followed by increased polarization. If recent patterns of media structure and income inequality persist, a polarized policymaking environment will likely continue to impede efforts to address major challenges, such as the long‐run fiscal imbalances facing the United States. (JEL D72, D31)