Estimating the impact of rural investments in Nepal

As a largely rural society, most people in Nepal still depend upon agriculture as their major livelihood strategy. Therefore, it is important to improve the allocation efficiency of limited public expenditures to promote agricultural growth and poverty reduction. However, evaluating the returns of public investment is limited by methodological challenges. We use hedonic and panel data methods to examine the returns to different types of rural public investments including roads, irrigation and extension advice. The use of diverse identification strategies reduces the risk of using a narrower set of results driven primarily by a particular methodology. We find that rural roads and irrigation are one of the most productive public expenditures according to the benefit-cost ratio calculations, though the magnitudes of these ratios depend on methodology.     

Linking Product Development Outcomes to Market Valuation of the Firm: The Case of the U.S. Pharmaceutical Industry*

The purpose of this research was to examine empirically the effects of new product development outcomes on overall firm performance. To do so, first product development and finance literature were connected to develop three testable hypotheses. Next, an event study was conducted in order to explore whether the changes in the stock market valuation of firms are influenced by the outcomes of efforts to develop new products. The pharmaceutical industry was chosen as the empirical context for the present study's analysis largely because the gate‐keeping role played by the Food and Drug Administration (FDA) provides a specific event date on which to focus the event study methodology. As such, this study's events were dates of public announcements of the FDA decisions to approve or to reject the New Drug Applications submitted by the sponsoring firms. Consistent with the efficient market hypothesis, this study's results show that market valuations are responsive strongly and cleanly to the success or failure of new product development efforts. Hence, one of this study's key results suggests that financial markets may be attuned sharply to product development outcomes in publicly traded firms. This study also finds that financial market losses from product development failures were much larger in magnitude than financial market gains from product development successes—indicating an asymmetry in the response of financial markets to the success and failure of new product development efforts. Hence, another implication of this study's results is that managers should factor in a substantial risk premium when considering substantial new development projects. The present study's results also imply that managers should refrain from hyping new products and perhaps even should restrain the enthusiasm that the financial community may build before the product fully is developed. The effect on firm value is severe when expectations about an anticipated new product are not fulfilled. Managers in effect should take care to build reasonable and realistic expectations about potential new products.     

Analysis of marginally specified semi-nonparametric models for clustered binary data

Generalized linear mixed models are widely used for analyzing clustered data. If the primary interest is in regression parameters, one can proceed alternatively, through the marginal mean model approach. In the present study, a joint model consisting of a marginal mean model and a cluster-specific conditional mean model is considered. This model is useful when both time-independent and time-dependent covariates are available. Furthermore our model is semi-parametric, as we assume a flexible, smooth semi-nonparametric density of the cluster-specific effects. This semi-nonparametric density-based approach outperforms the approach based on normality assumption with respect to some important features of 'between-cluster variation'. We employ a full likelihood-based approach and apply the Monte Carlo EM algorithm to analyze the model. A simulation study is carried out to demonstrate the consistency of the approach. Finally, we apply this to a study of long-term illness data.     

The Effect of Bank Debt Downgrades on Stock Prices of Other Banks

We find that debt downgrades of money center banks elicit negative stock price responses in nondowngraded money center banks. Stock prices of larger regional banks also react to these downgrades. Although downgrades of regional banks evoke negative stock price responses for regional banks in the same geographic region, the importance of geographic region as a factor determining the extent of intra‐industry reactions has diminished since 1989. Our results indicate that the merger and expansion activities triggered by interstate banking have blurred differences between regional and money center banks as interstate banking activity has moved towards nationwide banking     

Why integrating purchasing with marketing is both inevitable and beneficial

The shift away from manufacturing in Western developed economies has resulted in economies in which service industries are dominant. Marketing itself has undergone a paradigmatic shift from a focus on the exchange of goods to the provision of capabilities. This paper examines the relationship between marketing and purchasing as a result of the shift from product- to capability-focused commerce. We suggest that the marketing and purchasing departments will become closer due to two major reasons. First, as marketers increasingly become solution-oriented rather than product-focused, they will need to source products and services from third-party vendors and will require deeper involvement of the purchasing department. Second, with the emergence of customer-centric marketing coupled with build-to-order manufacturing, marketing and purchasing will have to be better aligned to deliver solutions to customers. These new dimensions in the marketing–purchasing interaction will also lead to changes in the selection, training, and recruitment of marketers and purchasers as well as their roles in the supply chain. We elaborate on these changes likely to occur in business-to-business organizations and along with implications for managers.     

Marketing in the emerging era of build-to-order manufacturing

Build-to-order (BTO) and lean manufacturing processes are changing the paradigms under which businesses-to-business marketers operate. For example, BTO processes allow marketers to customize products to a greater degree, creating a competitive advantage over traditional manufacturing. Business-to-business (B2B) marketers who take advantage of the operational efficiencies and effectiveness that emerge from BTO are outperforming firms that utilize traditional manufacturing processes in multiple industries, such as office furniture, personal computers, and windows. This paper examines the long-term impact of the adoption of build-to-order manufacturing strategies on the marketing function and identifies marketing strategies associated with successful BTO companies. Throughout, the paper highlights managerial implications and proposes directions for future research.     

Constitutionalism and credibility in reforming economies1

There has been relatively little investigation of the effect of constitutional transformations on the economic transition in post‐communist countries. We develop a simple signalling model in which constitutionalism – a commitment to limit political power and provide judicial defence of basic rights – reinforces the credibility of pro‐market candidates’ electoral promises and boosts public support for economic reforms. These findings are tested using opinion poll data on public support for reform in Central and Eastern Europe, and in the former Soviet Union, in the 1990s. In a two‐stage procedure we show that public support for market reforms is higher in countries where incumbents have taken deliberate steps to increase political accountability and judicial independence. Public support also spurs actual economic reform.