"When expertise becomes know-how": Technology management in financial services

Turning skills into competitive performance is a difficult, long term process. An understanding of the firm's business needs has to be married to technical skills. Yet technology is often treated in a cavalier fashion by firms. Successful management fosters organisational procedures which can co-ordinate the incremental building of skills and experience with business need. This is "know-how".     

Learning, Cascades, and Transaction Costs

The paper analyzes the effect of transaction costs on sociallearning in an asset market with asymmetric information, sequentialtrading, and a competitive price mechanism. Both fixed and proportionaltransaction costs reduce the information content of tradingorders and lead to informational cascades. If transaction costsare very high, an informational cascade may occur not only whenbeliefs converge on a specific asset value but also when thereis extreme uncertainty about the asset's fundamental value.Finally, if the value in the bad state is sufficiently low,proportional transaction costs lead to an informational cascadeonly when prices are very high.     

Increasing Intellectual Bandwidth: Generating Value from Intellectual Capital with Information Technology

An organization's Intellectual Bandwidth (IB) is its capacity to transform External Domain Knowledge (EDK) into Intellectual Capital (IC), and to convert IC into Applied Knowledge (AK), from which a task team can create value. An organization's IB is an upper boundary on its ability to solve complex problems. To create value, members of an organization must search for knowledge, share it, and, bring it to bear on the issue at hand. The Intellectual Bandwidth of an organization must therefore be, to a certain extent, a function of the ability of its members to access data, information, and knowledge that is relevant in the context of the task at hand in order to understand the causes and consequences of their problem. They must reason about possible solutions and their potential consequences. Throughout the task they must communicate with other stakeholders and subject matter experts as they make a joint effort toward their goal. This paper develops a model of IB based on these and other concepts. It posits that IB is the product of a Hierarchy of Understanding and a Hierarchy of Collaboration. The paper suggests that the model may be useful for analyzing and deploying IT in ways that reduce the cognitive load of bringing EDK and IC to bear on the task at hand. Future research must focus on refining and validating constructs and developing measures of IB, and using those measures to find ways to increase the value derived from EDK and IC.     

Inter industry and occupational wage differentials in Italy

The vast literture on wage determination in the post-war era extensively documents the existence of large and persistent wage differentials among industries and workers of comparable skills. This paper addresses the issue of wage dispersion in the context of the Italian economy. The stability over time of industry relative wages confirme previous results obtained for the other countries. A wide class of earings equations is estimated using microdata for the Italian manufacturing industry. The results provide little evidence in support of the view that wage dispersion can be explained by either unmeasured workers' charcteristics or by compensating wage differentials. Conversely, the estimated pattern of industry-occupation wage differentials is consistent with the existence of rent sharing mechanisms and fairness considerations.     

Gales of creative destruction and the opportunistic incumbent: The case of electric vehicles in California

This paper explores the introduction of electric vehicles in response to Californian regulatory pressures as an example of a disruptive technology. The central thesis is that this disruption may open the automobile market to new entrants but only if they collaborate with incumbent automobile manufacturers. This appears to support Schumpeter's argument that large incumbent firms possess innovation advantages over the small entrepreneurial entrant. However, these innovatory advantages lie in the downstream complementary assets required for success in the automobile market.     

Organizing for Inbound Open Innovation: How External Consultants and a Dedicated R&D Unit Influence Product Innovation Performance

Firms increasingly acquire technological knowledge from external sources to improve their innovation performance. This strategic approach is known as inbound open innovation. The existing empirical evidence regarding the impact of inbound open innovation on performance, however, is ambiguous. The equivocal results are due to moderating factors that influence a firm's ability to acquire technological knowledge from external sources and to transform it into innovation outputs. This paper focuses on a relevant yet overlooked category of moderating factors: organization of research and development (R&D). It explores two organizational mechanisms: one informal and external‐oriented (involvement of external consultants in R&D activities) and one formalized and internal‐oriented (existence of a dedicated R&D unit), in the acquisition of technological knowledge through R&D outsourcing, a particular contractual form for inbound open innovation. Drawing on a capabilities perspective and using a longitudinal dataset of 841 Spanish manufacturing firms observed over the period 1999–2007, this paper provides a fine‐grained analysis of the moderating effects of the two organizational mechanisms. The involvement of external consultants in R&D activities strengthens the impact of inbound open innovation on innovation performance by increasing marginal benefits of acquiring external technological knowledge through R&D outsourcing. Moreover, it reduces the level of inbound open innovation to which the highest innovation performance corresponds. Instead, the existence of a dedicated R&D unit makes the firm less sensitive to changes in the level of inbound open innovation, by reducing marginal benefits of acquiring external technological knowledge through R&D outsourcing, and increases the level of inbound open innovation to which the highest innovation performance corresponds. The results regarding the role of informal and formalized R&D organizational mechanisms contribute to research on open innovation and absorptive capacity, and also inform managers as to what organizational mechanism is recommended to acquire external technological knowledge, depending on the objectives that the firm pursues.     

Internal and External R&D: A Sample Selection Approach*

This study underlines that the decision to enter into an external R&D relationship is related to an antecedent decision to carry out R&D. This calls for an empirical approach that permits the joint analysis of the determinants of the two decisions, correcting for sample selectivity. Based on a sample of Italian manufacturing firms, the results confirm the need to adopt this approach. Another contribution made by this study is the managerial implications that can be derived from its empirical model, which provide a better understanding of the factors associated with a firm's decision to engage in R&D both independently and with external partners.     

Predatory intent under uncertainty

Current analyses of predatory behavior neglect uncertainty. Its presence complicates a firm's evaluation of profits and risks associated with various pricing strategies. Using a price leadership model (with the supply of the competitive fringe not known in advance), we show that a risk averse dominant firm will price lower than the price which maximizes expected profits. Such behavior could be misconstrued as being predatory if marginal and average variable cost rules are used for establishing the proof of predation.