Valuing GM technologies using real options: the case of drought tolerant wheat in Australia

ABSTRACT

In this article we seek to estimate the value of a partially-developed crop technology from the perspective of the firm developing the technology. Firms need this value estimation to decide whether their technology will earn a sufficient return in the market to justify investing in it. However, determining the (ex-ante) value of the technology before it is commercialised is challenging as the technology is not yet in the market and hence the demand function has not yet been defined. An alternative valuation method is required. We use risk premiums, Monte Carlo simulation and real options analysis and we demonstrate this combination of valuation tools on wheat that is currently being developed in Australia to be drought tolerant. The results indicate that this drought tolerant wheat variety is likely to be adopted by farmers in most regions and has a pre-commercialisation value that justifies continued investment in its development. We also identified South Australia as a region in which the new variety would not be sufficiently valuable to farmers to see them adopt it and we consider possible explanations for this outcome.     

Capturing the Evolution of Customer–Firm Relationships: How Customers Become More (or Less) Valuable Over Time

Few studies have examined the influence of marketing activities while accounting for customer dynamics over time. The authors contribute to this growing literature by extending the hurdle model to capture customer dynamics using a hidden Markov chain. We find our dynamic model performs better than static and latent class models. Our results suggest the customer base can be segmented into four segments: Deal-prone, Dependable, Active, and Event-driven. Each segment reacts differentially to marketing activities. Although catalogs influence both purchase incidence and the number of orders, this marketing activity has the largest impact on purchase incidence across all four segments. In contrast, retail promotions are more likely to influence the number of orders a customer will make for all of the segments except for the Deal-prone segment. For this segment, retail promotions have the strongest impact on purchase incidence.     

The Stability and Instability of Organic Expenditures in Denmark,Great Britain,and Italy

This article concerns demand for organic foods in 3 European countries: Denmark, Great Britain, and Italy. Based on extensive sets of household panel data we categorize households into 4 groups according to their levels of organic consumption. Importance of sociodemographics is estimated by applying multinomial logit models. In all 3 countries a high organic consumption is mainly found among the more well-situated households in urban areas. Although the relative size of the user groups is fairly stable over time, we find variation in the organic consumption of individual households.     

Multilateral Export Decompositions

We analyze exports along five margins to observe the changes of newly exported products, products removed from the export market, and continuously traded products to new, old, and exited destinations on export growth. We find export shares differ between developing and developed countries: 1) entering and exiting products are an important source of export value, but more so for developing than developed countries, 2) that continuously exported products to new destinations are a more important source of export value for developing than developed countries, 3) that though the removal of exiting products has a large impact on export value, the removal of products from one destination that continue to be exported elsewhere results in little loss to total export value, and 4) that larger and richer exporting countries have less opportunity to increase exports from new destinations than smaller and poorer exporting countries. Understanding the change in these margins across different types of countries may be important for formulating trade agreements and targeting of new trade partners.     

Proximity and Micro-Enterprise Manager’s Ethics: A French Empirical Study of Responsible Business Attitudes

This research article analyses the influence of micro-enterprise (ME) managers’ perception of their relationship to their environment on the nature of their ethics. We carried out a survey with the head managers of 125 French MEs, providing a large set of primary data. Two types of variables were defined: (1) variables related to the nature and intensity of the relationships between ME managers and their social environment, and (2) variables related to the ethical framework that the managers used. The results of univariate and bivariate analyses show significant statistical relationships between the variables that indicated perceived embeddedness in the community and ethical variables. This result underlines the idea that “communities of ethics” may have an important influence in MEs.     

The role of attributions in consumer perceptions of retail advertisements promoting price discounts

This study examines whether information in an advertisement promoting a price discount is capable of affecting attributions made about the price reduction and whether these attributions, in turn, affect consumer perceptions and evaluations of the sale. Findings show that price image of the retail advertiser had a strong effect on attributions pertaining to the merchant and a marginal effect on product attributions. The attribution variables, in turn, explained significant amounts of variance in criterion variables measuring consumer perceptions of value, attitude toward the ad, and shopping intentions, beyond the variance explained by the store and discount claim variables manipulated in the study. These results suggest the importance of the role of attributions made by consumers when exposed to ads promoting discounts.     

Altered Common Stock Offerings

This study examines share price behavior when firms alter the size of their primary common stock offerings subsequent to the announcement date. The empirical evidence supports the theory that, given asymmetric information between management and investors, equity issuance is a function of prior stock returns. Average prediction errors in the announcement and postannouncement intervals, taken together or separately, have relative magnitudes that may be logically related to subsequent management decisions concerning these issues. Logistic regressions document significant relationships between the announcement and postannouncement excess returns and managerial decisions.