Technological races and stock market value: evidence from the pharmaceutical industry

We provide estimates of the abnormal stock market returns associated with pharmaceutical firms’ announcements of technological and regulatory successes in drug development. On the basis of these estimates, we find empirical support for two key features of technological race models. First, we observe that leaders in the innovation race record higher abnormal returns than do latecomers when they announce a success. Hence, firms should indeed be racing to complete the innovation process before their rivals. Second, pharmaceutical firms are adversely affected by the technological and regulatory success of their rivals, implying that interfirm spillovers in drug development are not sufficient to offset technological rivalry. Additional results are also produced regarding the impact of competition on R&D racing and the extent of therapeutic competition.     

Predicting Consumer Behavior and Media Preferences: The Comparative Validity of Personality Traits and Demographic Variables

It is common practice for organizations selling a product to divide potential consumers into segments to allow them to target those most likely to buy their products. Two broad approaches to market segmentation can be delineated. The most common approach relies on segmenting by demographic variables (e.g., age, gender). The second approach (known as “psychographics”) identifies market divisions in terms of psychological variables such as values, attitudes, and personality traits. There has been little research comparing the efficacy of the two approaches. Based on analyses of over 45,000 participants, the present research empirically compares the effectiveness of the two approaches among segmentation variables ranging from cell phones and lottery tickets to newspapers and television shows. Overall, both approaches explained surprisingly small amounts of variance in consumer behavior. Nonetheless, for the variance that was predictive, the relative contribution of demographics and psychographics varied dramatically across consumer behaviors; for some behaviors (e.g., electronic purchases), demographics had superior predictive potential but for others (e.g., television shows) psychographics were more useful. Therefore, an approach that integrates both methods is recommended.     

Takeover Activity as a Response to Time-Varying Changes in Investment Opportunity Sets: Evidence from Takeover Sequences

We study takeover sequences that contain at least five acquisitions made over a period greater than 12 months, with no two acquisitions separated by more than 24 months. Acquisitions made within such sequences represent more than a quarter of aggregate takeover activity by U.S. public firms from 1982–1999. Our fi ndings are consistent with a proposition that takeover sequences occur in the context of time-varying changes in an acquirer's growth opportunity set. Takeover sequences begin (end) subsequent to an expansion (contraction) of this opportunity set.     

TIME, MONEY, AND OPTIMAL CRIMINAL PENALTIES

The economic approach to optimal criminal penalties measures the welfare effects of crime and punishment in dollar terms, ignoring differences in the marginal utility of money among people. This paper alternatively proposes using time as the unit of measure in determining optimal criminal penalties, measuring the costs and benefits of crime in hours or days instead of dollars. The policy implications differ substantially from those in the existing economic literature. Equal prison terms impose similar time costs on all individuals rather than being more costly for those with higher foregone earnings. Equal fines impose the same cost on all individuals in the dollar-based economic models but in a time-denominated system are costlier to those who require more time to earn the money to pay the fines. In principle, one can use either money or time in setting penalties. However, time-based penalties are more consistent with the fundamental and widely held principles of justice on which the U.S. legal system rests.     

Managing Individual Performance in Work Groups

This research was driven by the question, “In empowered work groups, who should be responsible for determining disciplinary actions in response to group member poor performance: the formal manager, a single group member, or the group as a whole?” Results in a study of 231 group members representing 41 groups from four diverse organizations showed that the severity of disciplinary actions made by formal managers is equivalent to actions taken by groups through consensus decision‐making. Selecting one member of the group, however, to handle a poorly performing member resulted in relatively lenient disciplinary actions. Consistent with this finding, the attitude survey results revealed that individual group members are reluctant to assume responsibility for disciplining a poorly performing group member. © 2001 John Wiley & Sons, Inc.     

The influence of product market dynamics on a firm's cash holdings and hedging behavior

Prior work suggests that if a firm shares a larger proportion of its growth opportunities with rivals, an inability to fully invest in these opportunities leads to predatory behavior on the part of rivals and losses in market share. We examine whether firms manage this predation risk. We find inter- and intra-industry evidence that the extent of the interdependence of a firm's investment opportunities with rivals is positively associated with its use of derivatives and the size of its cash holdings. Moreover, an analysis of investment behavior provides evidence that if this interdependence is high, the management of predation risk provides strategic benefits. Our results indicate that predation risk is an important determinant of corporate financial policy choices and investment behavior.     

Supply Chain Management and Retailer Performance: Emerging Trends, Issues, and Implications for Research and Practice

In an environment with increasing competition and a growing need for operational efficiencies and customer orientation, retailers are looking beyond their organizational boundaries to develop and leverage the resources and capabilities of their supply chain partners to create superior value and competitive advantages in the marketplace. In this article, the authors discuss how three recent trends—global sourcing practices, multichannel routes to market, and relationship-based innovation—are transforming the retail landscape and leading to a variety of performance improvements with regard to brand image, reputation, sales and profits, innovation, and relationships. For each of these major trends, this article highlights key issues, identifies relevant literature, and offers propositions for further research.