Efficient allocations under ambiguity

Important implications of the expected utility hypothesis and risk aversion are that if agents have the same probability belief, then consumption plans in every efficient allocation of resources under uncertainty are comonotone with the aggregate endowment, and if their beliefs are concordant, then the consumption plans are measurable with respect to the aggregate endowment. We study these two properties of efficient allocations for models of preferences that exhibit ambiguity aversion using the concept of conditional beliefs, which we introduce in this paper. We provide characterizations of such conditional beliefs for the standard models of preferences used in applications.     

From Invention to Innovation: Toward Developing an Integrated Innovation Model for Biotech Firms*

A review of extant literature reveals various theories on innovation, including technology push, market pull, and an organizational approach. All of these theories have been criticized for their lack of integration and inapplicability to today's competitive environment. An integrated view of innovation has emerged that synthesizes the variables in previous approaches. However, the application of this view has been restricted to investigating the innovation processes within the computer and manufacturing industries, whereas the biotechnology industry has been ignored. This is despite biotech managers' well‐acknowledged thirst for innovation and the ability of biotech to shape the way we live. The present article contributes to the literature by applying an integrated approach to the biotech industry, thereby extending understanding of innovation management beyond the traditional field of inquiry. An integrated approach is of particular relevance to biotech companies, given the complexities of managing the industry's long development cycle and intense collaborative activities. In‐depth interviews with eight organizations in Maryland formed the basis for an investigation into the challenges of managing the innovation process in biotechnology firms. The findings revealed that biotech entrepreneurs are ill prepared to lead their organizations through several transformations necessary along the product life cycle because of their fixation on a technology‐push approach and lack of an understanding of integrated innovation. These leaders also lack the commercialization knowledge necessary to push products to markets, resulting in avoidable delays and loss of productivity. The existing research has dispelled myths associated with biotech. Specifically, it suggests biotech entrepreneurs cannot rely solely on inventions but must invest in a timely application of knowledge to organizational and market forces to take full advantage of the innovation potential associated with the industry. This article presents a conceptual framework for applying the integrated innovation model to biotech firms and makes the case for incorporating market‐oriented mechanisms, building and using appropriate organizational capabilities, developing effective collaborations, and creating parallel interactions as major elements in a general strategy toward the success and improved efficiency of biotech companies. The limitations of current research are discussed, and avenues are highlighted for much‐needed future research into the biotech industry.     

The application of learning theories to improve cross-cultural training programs in MNCs

Cultural intelligence and intercultural competence are concepts that have been identified as antecedents for success in global management, and both depend on the acquisition of cultural knowledge. However, although a lack of cultural knowledge is cited in the international management literature as a frequent source of failure in expatriate assignments, there is scant research about how cultural knowledge is created and diffused within organizations. We cite evidence that cross-cultural training programs, which are widely utilized for cross-cultural knowledge transfer, tend to be ineffective in transferring cultural knowledge, and we examine in detail how cultural knowledge is acquired in MNCs and reveal the importance of its tacit component. Then, drawing upon five relevant learning models, we propose a framework for the effective transfer of cultural knowledge. Based on this theoretical underpinning, we offer four sets of effective cross-cultural training methods, as a function of the resources available, that the firm can apply to achieve more effective cross-cultural training for global managers.     

Hedging of a credit default swaption in the CIR default intensity model

An important issue arising in the context of credit default swap (CDS) rates is the construction of an appropriate model in which a family of options written on credit default swaps, referred to hereafter as credit default swaptions, can be valued and hedged. The goal of this work is to exemplify the usefulness of some abstract hedging results, which were obtained previously by the authors, for the valuation and hedging of the credit default swaption in a particular hazard process setup, namely, the CIR default intensity model.     

Bounds on expectations of small order statistics from decreasing density populations

For i > (n + 1)/2, Danielak (Statistics 37:305–324, 2003) established an optimal positive upper mean-variance bound on the expectation of ith order statistic based on the i.i.d. sample of size n from the decreasing density population. We show that the best bounds on the expected deviation of the ith order statistics from the population mean, i ≤ (n + 1)/2, expressed in more general scale units generated by pth absolute central moments with p > 1 amount to zero. We also determine the respective strictly negative bounds in the mean absolute deviation units.