Reputation Without Repeated Interaction: A Role for Public Disclosures

This paper conductsan experiment to investigate the economic effect of public disclosureswithin a multi-move adaptation of the Prisoner's Dilemma game.The game, which has multiple equilibria, is characterized by:(1) a stochastic endpoint, (2) random, repeated pairings withanonymous partners, and (3) public disclosures concerning thecurrent partner's previous strategies. In the experiment, cooperationis improved by the disclosures. In addition, subjects cooperatemore frequently when encountering a player who has tended tocooperate in the past, and less frequently when encounteringa player who has tended to defect in the past. Delayed disclosureleads to levels of cooperation only slightly less than thoseobtained with timely disclosure.     

Delegation in Multi‐Establishment Firms: Evidence from I.T. Purchasing

Recent contributions to a growing theory literature have focused on the tradeoff between adaptation and coordination in determining delegation within firms. Empirical evidence, however, is limited. Using establishment‐level data on decision rights over information technology investments, I find that a high net value of adaptation is strongly associated with delegation, as are local information advantages and firm‐wide diversification; in contrast, a high net value of within‐firm coordination is correlated with centralization. Variation across establishments within firms is widespread: most firms are neither fully centralized nor fully decentralized. Delegation patterns are largely consistent with standard team‐theory predictions; however, certain findings, such as a negative correlation between delegation and firm size, call for a consideration of agency costs as well.     

Gender differences in time preferences

This paper reports the results from a large online experiment in which we examine gender differences in time preferences. Subjects choose in different situations between receiving an immediate payment and receiving a different sum later. We find that more men than women are impatient and choose to receive the immediate payment, at least if the implicit interest rate of the “late” option is neither too high nor too low.     

Does Distance Matter Less Now? The Changing Role of Geography in Biotechnology Innovation

Using patent citation data for the U.S., we test whether knowledge spillovers in biotechnology are sensitive to distance, and whether that sensitivity has changed over time. Controlling for self-citation by inventor, assignee, and examiner, cohort-based regression analysis shows that physical distance is becoming less important for spillovers with time.     

Exploring Portfolio Decision‐Making Processes*

Portfolio management is the set of activities that allows a firm to select, develop, and commercialize a pipeline of new products aligned with the firm's strategy that will enable it to continue to grow profitably over the long term. To appropriately manage the firm's new product portfolio, decisions must be made about which projects to fund, to what levels, at what point in time. Previous research has investigated portfolio management decisions as individually discrete decisions. Significant streams of research have investigated both project selection and project termination decisions. This research project shows, however, that portfolio decision making may be better understood if it is considered as an integrated system of processes that considers these decisions simultaneously, along with other decisions such as those to continue a project with reduced funding. Using in‐depth data from four diverse case studies, we use a grounded theory approach to develop a general model of how firms make new product portfolio decisions. According to the findings from these cases, effective portfolio decision‐making processes produce a portfolio mindset, focus effort on the right projects, and allow agile decision making across the portfolio's set of projects. Effective portfolio decision making is the result of the interaction between three types of decision‐making processes that managers use in making decisions: evidence‐, power‐, and opinion‐based. Being able to use each of these types of processes to make decisions depends upon having the data inputs that they require. Three domain‐based decision input‐generating processes (i.e., cross‐functional collaboration, practices of critical thinking, and practices of market immersion) are associated with making evidence‐based portfolio decisions. In addition, organizational politics produces the inputs that are associated with power‐based portfolio decision making, while managerial intuition is associated with opinion‐based portfolio decision making. Firm cultural factors, including trust, collective ambition, and leadership style, are associated with how these evidence‐, power‐ and opinion‐based processes are combined into an overall portfolio decision making process, and whether the firm's processes are more rational and objectively made, or more politically and intuitively made. The article presents propositions for how the decision‐making processes interact in their associations with decision‐making effectiveness.     

BACKDATING AND DIRECTOR INCENTIVES: MONEY OR REPUTATION?

We investigate how director incentives affect the occurrence of firms' backdating employee stock options. Directors with more wealth tied up in stock options may pursue activities that lead to personal gain, such as option backdating, which potentially increases the option recipient's compensation. We document a positive and significant association between director option compensation and the likelihood that firms backdate stock options. Our results question the effectiveness of director option compensation in aligning the interests with those of shareholders and help to explain the recent decline in the use of director option grants by many firms.