Does venture capitalist activism improve investment performance?

We investigate whether venture capitalist (VC) activism is associated with higher investment returns. Advising portfolio firms is time consuming and creates tradeoffs between intensity of VC activism and portfolio size. As the number of assisted firms expands, advice can be stretched too thin, reducing portfolio company prospects. We test the hypothesis that increasing the number of investments while intensely assisting portfolio companies is negatively associated with investment returns (the profit destruction effect). We find that aggressive VC activism does predict higher investment returns, but the profit destruction effect operates as well. Portfolio size growth thus risks overextending scarce VC resources and lowering returns.     

Innovation's Second Step

Innovative companies often place their emphasis on invention, research, and new product development, even as they neglect the process of bringing products to the marketplace in a way that is advantageous over the long term. Small to medium‐sized businesses that are scaling up are particularly vulnerable to entering into unfavorable distribution arrangements with large mass‐market retailers. Often, managers assume their firm will automatically benefit from a technological or creative breakthrough. Rather than focusing solely on new innovations and viewing distribution as an afterthought, we suggest that innovative firms make channel management a priority as their products are discovered and they attempt to reach more customers. In this article, strategies are offered as paths managers should consider as they use their innovations to scale up from small or medium‐sized firms into large companies. Steps for implementation as well as concurrent risks are also presented. © 2014 Wiley Periodicals, Inc.     

What is the Value of Luxury? A Cross‐Cultural Consumer Perspective

International luxury businesses are challenged by the identification and satisfaction of the common needs and desires of global market segments. Although luxury goods have become available to a wider range of consumers, the traditional conspicuous consumption model has been transformed into a new experiential luxury sensibility that is marked by a change in the way that consumers define luxury. Based on an empirical study in collaboration with American, European, and Asian researchers, the results provide evidence that consumers in various parts of the world purchase or wish to purchase luxury products for varied reasons but that such consumers generally possess similar values. Regardless of their countries of origin, the basic motivational drivers of luxury consumers are similar among the financial, functional, personal, and social dimensions of luxury value perceptions, although the relative importance of these dimensions varies.     

The games people play: How the entertainment value of online ads helps or harms persuasion

This research examines consumer reactions to online ads varying in levels of entertainment value. Results show that more favorable brand attitudes and more positive purchase intentions are formed when consumers are exposed to an ad that generates a high (game ad), rather than a low (banner ad) level of entertainment value. However, such effects are qualified by consumers' shopping goals. When consumers have access to their goals to seek specific product information, affect transfer is impaired, such that the advantage of entertaining ads dissipates. This research also documents moderating roles of individual differences in need for cognitive closure and Internet usage versatility. © 2011 Wiley Periodicals, Inc.     

Maize-legume intercropping in central Malawi: determinants of practice

In Malawi, population growth has reduced opportunities for farmers to expand and cultivate new land. The country's primary farming population is comprised of smallholders, many who cultivate monocultures of maize (Zea mays). To reduce negative outcomes from this practice, intercropping maize with legumes has been promoted. The sustainable intensification (SI) practice was once widely used, but has declined in recent decades. Little is known about the determinants of intercropping or its role in agricultural development. The objective of this study was to examine the drivers of intercropping among smallholders. We used multiple logistic regression analysis to estimate the determinants of intercropping based on a survey of 324 households. Smallholders who sold legumes were more likely to intercrop, contrary to literature positing intercropping as a practice primarily intended to enhance food security. In addition, complementary SI practices such as fertilizer, manure and compost application were more likely to have occurred on intercropped fields relative to sole maize fields. Furthermore, smallholder farmers appeared to apply more fertilizer to their intercropped fields relative to their sole maize fields. The study highlights the value of including field-level characteristics and household socioeconomic survey data to understand farming practices as a means to inform agricultural policy.

Abbreviations: SI: sustainable intensification; MLI: maize-legume intercrop; DL: doubled-up legumes     

Do farm operators benefit from direct to consumer marketing strategies?

Using farm‐level data this study investigates factors associated with the choice of three direct marketing strategies (DMSs). Particular attention is given to the role of management and marketing skills in selection of DMSs. Additionally, the study applies a selectivity‐based approach for the multinomial logit model to assess the relationship between DMSs and the financial performance of the business. Results suggest that both management and marketing skills significantly affect direct‐to‐consumer sales. Farmers choosing the strategy of sales only through direct‐to‐consumer outlets report earnings that are significantly lower than earnings from the other marketing strategies. Marketing skills prove to be beneficial to direct‐to‐consumer (DTC) earnings. Finally, the selectivity correction terms in the direct sales model are significantly negative in the choice of DTC, indicating the presence of sample selection effects. Accounting for selectivity is essential to ensure unbiased and consistent estimates.     

Existing Self-Employment: An Analysis of Asian Immigrant-Owned Small Businesses

Part of the uniqueness of the immigrant Asian business community in the U.S. lies in the fact that many among the highly educated pursue self-employment in small-scale, low-yielding retail and personal service fields. This study analyzes owner departure for a nationwide sample of small businesses owned by Asian Indian and Filipino immigrants and a comparison group of Asian nonimmigrant firm owners. Controlling for firm and owner traits, highly educated Asian immigrant owners are more likely than others to exit self-employment over the 1987--1991 period; exit from traditional fields (retail and personal services) is pronounced. These exit patterns do not typify the comparison group. Findings are consistent with the hypothesis that self-employment is often a form of underemployment among Asian immigrants.     

Decentralized borrowing and centralized default

In the past, foreign borrowing by developing countries was comprised almost entirely of government borrowing. However, private firms and individuals in developing countries now borrow substantially from foreign lenders. It is often asserted that this surge in private sector borrowing generates excessive borrowing and frequent sovereign defaults in developing countries. This paper analyzes the impact of decentralized borrowing using a quantitative model in which private agents decide how much to borrow and the government decides whether to default. Relative to a model in which the government determines both the level of borrowing and whether to default, decentralized borrowing drives up aggregate credit costs and sovereign default risk, and reduces aggregate welfare. Interestingly, decentralized borrowing may lead to either too much or too little debt in equilibrium depending on the severity of default penalties.     

Out of Africa? Using the Past to Project African Emigration Pressure in the Future

The paper uses analysis of the mass emigration from poor Europe in the late nineteenth century to project the future mass emigration potential from Africa, especially to the economically more mature Mediterranean economies. The economic and demographic fundamentals driving both experiences are likely to be the same, but their magnitudes are likely to be far bigger in the African case over the next few decades. Efforts to restrict the migration and to seal porous borders may be partially successful; but, if so, they are certain to create unpleasant side–effects. European restrictions will create a greater share of illegals and thus greater absorption problems in recipient nations: European restrictions will create more poverty in African sending regions. And European restrictions will create considerable diplomatic problems between the two regions.