High Leverage and Willingness to Pay: Evidence from the Residential Housing Market

I document a strong correlation between paying the full listing price on homes and borrowing 100% loan‐to‐value. Homebuyers who do both overpay by 2.8% to 3.9% ($4,800 to $6,700) and are 22.7% more likely to have their properties foreclosed within one year. The correlation is not mechanical: there is a discontinuity in the average leverage around the full listing price. The correlation is stronger in areas with a high fraction of financially constrained and unsophisticated residents, and in areas of high past price growth (potentially indicative of buyer optimism).     

Building relationship innovation in global collaborative partnerships: big data analytics and traditional organizational powers

This study examines how relationship innovation can be developed in global collaborative partnerships (alliances, joint ventures, mergers, and acquisitions). The recently emerging theory of big data analytics linked with traditional organizational powers has attracted a growing interest, but surprisingly little research has been devoted to this important and complex topic. Therefore, after developing the theoretical foundations, our study empirically quantifies the links between the theoretical constructs based on the data collected from chief executive officers, managing directors, and heads of departments who work in contemporary global data‐and‐information driven collaborative partnerships. The results from structural equation modeling indicate that the relationship innovation depends on the power of big data analytics and non‐mediated powers (NMP, expert and referent). The power of big data analytics also mediates the correlation between NMP and relationship innovation. However, mediated powers (coercive and manipulative) negatively affect the power of big data analytics and relationship innovation. The interaction effects further depict that analytically powered partnerships have better relationship innovation compared with those which focus less on the analytical power. Consequently, the contributions of this study provide a deeper understanding of mechanisms of how modern collaborative partnerships can use big data analytics and traditional organizational powers to co‐create relationship innovation.     

The impact of earnings pressure on exploratory innovation

While earnings expectation has been shown to determine a firm’s investment decisions, the knowledge about how such expectation influences a firm’s investment horizon for innovation is still blurred. This study therefore addresses this research issue by examining the relationship between earnings pressure and exploratory innovation while investigating the moderating effects of cross‐rival effect and resource availability. By examining high‐tech industrial firms in S&P 1500 from 2000 to 2012, the results indicate that stock analysts, as information intermediaries between innovation firms and the capital market, impose pressure through earnings forecasts on firms’ exploratory innovation. Our findings also reveal that the earnings pressure‐exploratory innovation relationship can be mitigated when its competitors encounter a higher level of earnings pressure. However, a firm’s financial slack shows less significant association to moderate the earnings pressure‐exploratory innovation relationship. Possible explanations for the results in regard to their theoretical and practical implications are discussed in this study.     

R&D Partnerships and Innovation Performance: Can There Be too Much of a Good Thing?

R&D collaboration facilitates the pooling of complementary skills, learning from the partner as well as the sharing of risks and costs. Research therefore stresses the positive relationship between collaborative R&D and innovation performance. Fewer studies address the potential drawbacks of collaborative R&D. Collaborative R&D comes at the cost of coordination and monitoring, requires knowledge disclosure, and involves the risk of opportunistic behavior by the partners. Thus, while for lower collaboration intensities the net gains can be high, costs may start to outweigh benefits if firms perform a higher share of their innovation projects collaboratively. For a sample of 2735 firms located in Germany and active in a broad range of manufacturing and service sectors, this study finds that increasing the share of collaborative R&D projects in total R&D projects is associated with a higher probability of product innovation and with a higher market success of new products. While this confirms previous findings on the gains for innovation performance, the results also show that collaboration has decreasing and even negative returns on product innovation if its intensity increases above a certain threshold. Thus, the relationship between collaboration intensity and innovation follows an inverted‐U shape and, on average, costs start to outweigh benefits if a firm pursues more than about two‐thirds of its R&D projects in collaboration. This result is robust to conditioning market success to the introduction of new products and to accounting for the selection into collaborating. This threshold is, however, contingent on firm characteristics. Smaller and younger as well as resource‐constrained firms benefit from relatively higher collaboration intensities. For firms with higher collaboration complexities in terms of different partners and different stages of the R&D process at which collaboration takes place, returns start to decrease already at lower collaboration intensities.     

Design principles of hybrid approaches in new product development: a systematic literature review

Setting the right approach for new product development (NPD) in the presence of uncertainty remains an ongoing debate in innovation management. Stage-gate systems (SGS) and agile methodology (AM) are the dominant approaches. Recently, hybrid approaches (combining SGS and AM) have been proposed. Although these hybrid approaches represent a significant development in NPD, combining them without considering their design principles might lead to contradictory and competing conceptual formulations, thus increasing the difficulty of comparison among studies. Moreover, scholars and practitioners may struggle to understand when, why and how a certain configuration of the NPD process provides the right response to different manifestations of uncertainty. The current literature faces problems regarding the clarity of design principles (e.g. flexibility and adaptability), and this has led to research gaps concerning the uncertainty contingency and outcomes of hybrid approaches. This study combines bibliometric and content analyses to identify four design parameters and principles of NPD hybrid approaches: flexibility, adaptability, velocity and integration. Our findings might help advance the development and comparison of different hybrid approaches.     

Cognitive flexibility and adaptive decision‐making: Evidence from a laboratory study of expert decision makers

Research Summary : How can strategic decision makers overcome inertia when dealing with change? In this article we argue that cognitive flexibility (i.e., the ability to match the type of cognitive processing with the type of problem at hand) enables decision makers to achieve significantly higher decision‐making performance. We show that superior decision‐making performance is associated with using semiautomatic Type 1 cognitive processes when faced with well‐structured problems, and more deliberative Type 2 processes when faced with ill‐structured problems. Our findings shed light on the individual‐level mechanism behind organizational adaptation and complement recent work on strategic inertia. In addition, our findings extend management studies that have stressed the relevance of cognitive flexibility for responding to the demands of increasingly open, flexible, and rapidly changing organizations. Managerial Summary : Humans are creatures of habits. We tend to prefer known courses of action over new ones. In many cases, habits are good. However, when things change in unpredictable ways, the past may not be good guidance for the future. We argue that “cognitive flexibility”—the ability of understanding when to rely on habits vs. when to explore new courses of action—enables managers to switch from a “fast” decision mode, based on habits, to a “slow,” more deliberate decision mode that facilitates the exploration of new courses of action. Managers high in cognitive flexibility reflect on the situation at hand, recognize and value diversity in viewpoints, and integrate such diversity in their own decision processes. By valuing diversity, they are more likely to overcome inertia.     

Experience matters: The role of academic scientist mobility for industrial innovation

Research Summary: A learning‐by‐hiring approach is used to scrutinize scientists' mobility in relation to the recruiting firms' subsequent innovation output. Our starting point is that among firm hires, individuals with university research experience—hired from universities or firms—can be particularly valuable. However, conflicting institutional logics between academia and industry makes working with academic scientists challenging at times for firms. We suggest two solutions to this difficulty: hiring “ambidextrous” individuals with a mix of experience of university research and working for a technologically advanced firm, and a strong organizational research culture in the recruiting firm reflected by the presence of a scientist on the top management team. We track the mobility of R&D workers empirically using patent and linked employer‐employee data. Managerial Summary: An important way to make organizations more innovative is hiring individual researchers with the right types of skills and experience. We show that individuals with university research experience beyond their final degree are particularly likely to help boost firm‐level innovation output after hiring compared to R&D workers with other types of skills and experience. However, to obtain good returns to innovation from hiring such individuals, firms need a university research–friendly organizational culture when hiring individuals with university research experience, from either firms or academia.     

The impact of earnings expectations on corporate downsizing

Research Summary: We propose that due to financial market pressures, managers are forward‐looking in their search and decision processes and focus on meeting performance targets set by the financial community. Using panel data on S&P 100 companies, we find that pressure felt by management to meet the analyst consensus earnings estimate influences the extent of corporate downsizing. Moreover, our results show that high levels of institutional investor stock ownership and CEO power attenuate managers’ sensitivity to financial market pressures, while high levels of analyst coverage increase their sensitivity. Managerial Summary: In this study we examine how financial market pressures influence managers’ downsizing decisions. We argue that investment analysts’ earnings estimates represent important performance targets to which managers aspire. If firms fail to meet analysts’ expectations, the stock price will suffer. This study shows that managers utilize corporate downsizing to address the potential shortfall between a firm's future performance and the analyst consensus earnings estimate. In addition, we find that managers’ concerns over meeting analysts’ earnings estimates are influenced by various contextual factors such as institutional investor stock ownership, CEO power, and high levels of analyst coverage.     

Effects of Collaborative Communication on NPD Collaboration Results: Two Routes of Influence

Although NPD collaboration with external partners has become the next generation in NPD practice, the discussion concerning how to organize collaboration so as to obtain better results is far from over. Since communication is the most important element in successful interfirm exchange, this study focuses on the impact of collaborative communication and its facets—frequency, formality, reciprocal feedback, and rationality—on NPD collaboration results. In order to explain how collaborative communication can best be managed to enhance NPD collaboration results, this research combines the relational and resource‐based views, proposing the existence of two routes of influence: the direct resource‐based route and the indirect relational route mediated by trust. Using a sample of 207 NPD collaboration projects of innovative firms, empirical findings indicate that reciprocal feedback–rationality and frequency play an important role in product quality and adherence to budget and schedule, respectively, even without trust. Moreover, the trust between partners substantially reinforces the positive influence of reciprocal feedback–rationality on NPD collaboration results and makes the effect of formality significant. Therefore, the two alternative routes are confirmed as important paths to new product success, which provides relevant managerial implications.     

The effects of strategic and market complementarity on acquisition performance: evidence from the U.S. commercial banking industry, 1989–2001

Most traditional research on mergers and acquisitions tends to focus on the role of similarity in explaining acquisition performance. While scholars have recently begun to examine acquisition complementarity, there is still little evidence concerning how complementarity influences acquisition performance. Further, previous research has not drawn the connections between related contexts and the potential benefits from complementarity. In this article, we move the study of acquisition complementarity forward by investigating the effects of strategic and market complementarity on acquisition performance in the context of related horizontal acquisitions. We also propose that two key attributes of acquirers—strategic focus and out‐of‐market acquisition experience—will moderate this relationship. We investigate our research questions in the context of all 2,204 acquisitions made by publicly traded U.S. commercial banks during the 12‐year period from 1989 to 2001. Our findings are generally supportive, suggesting complementarity is an important antecedent of acquisition performance, and raising important issues on the nature of acquisition research in general. Copyright © 2009 John Wiley & Sons, Ltd.