Industrial New Product Launch Strategies and Product Development Performance

Just as reporters must answer a few fundamental questions in every story they write, decision-makers in the new product development (NPD) process must address five key issues: what to launch, where to launch, when to launch, why to launch, and how to launch. These decisions involve significant commitments of time, money, and resources. They also go a long way toward determining the success or failure of any new product. Deeper insight into the tradeoffs these decisions involve may help to increase the likelihood of success for product launch efforts. Erik Jan Hultink, Abbie Griffin, Susan Hart, and Henry Robben present the results of a study that examines the interplay between these product launch decisions and NPD performance. Noting that previous launch studies focus primarily on the tactical decisions (that is, how to launch) rather than on the strategic decisions (what, where, when, and why to launch), they explore not only which decisions are important to success, but also the associations between the two sets of decisions. Because the strategic launch decisions made early in the NPD process affect the tactical decisions made later in the process, their study emphasizes the importance of launch consistency—that is, the alignment of the strategic and tactical decisions made throughout the process. The survey respondents—managers from marketing, product development, or general management in U.K. firms—provided information about 221 industrial new products launched during the previous five years. The responses identify associations between various sets of strategic and tactical decisions. That is, the responses suggest that the strategic decisions managers make regarding product innovativeness, market targeting, the number of competitors, and whether the product is marketing- or technology-driven are associated with subsequent tactical decisions regarding branding, distribution expenditure and intensity, and pricing. The study also suggests that different sets of launch decisions have differing effects on performance of industrial new products. In this study, the greatest success was enjoyed by a small group of respondents categorized as Niche Innovators. Their launch strategy involves a niche focus, targeting innovative products into markets with few competitors. Tactical decisions made by this group include exclusive distribution, a skimming pricing strategy, and a broad product assortment.     

Stock Price Response to News of Securities Fraud Litigation: An Analysis of Sequential and Conditional Information

This study examines investor response to three events that help define a federal class action securities lawsuit, specifically, the announcement that names an issuer as a defendant in the lawsuit (at the class action filing date), the disclosure or accounting restatement that 'corrects' the information deficiency (at the end of the class period), and the date at which the fraud on the market allegedly begins (at the beginning of the class period). We document a significant and predictable stock price response at each of these three events. Our tests also indicate that the market interprets these events not in isolation but as sequential and conditional events. Investor response differs on the basis of the characteristics of the issuer, the allegations in the complaint, and the outcome of the litigation. These results and the fact that we observe no systematic price momentum in investor response beyond the announcement dates imply that the market is reasonably efficient with respect to information about securities fraud litigation. Our results are robust to alternative definitions and procedures, and are based on a proprietary database that includes almost all federal securities class action lawsuits since 1990.     

Stock and Bond Return Comovement as a Different Way to Assess Information Content: The Case of Debt Covenant Violation Disclosures

We propose a supplementary way to assess the information content of a financial statement disclosure based on the comovement of asset returns in different markets in response to information that has price implications for both. The influence of a signal that strongly influences at least two asset markets measures a dimension of information content less clearly reflected in single‐market responses. We apply our method to debt covenant violation (DCV) disclosures. These are the outcome of a debt renegotiation when the covenant promises in a debt agreement to manage the agency costs of debt are broken. We find that stock and bond return comovement is highest one day before DCV disclosure and differs depending on whether the debt covenant is waived or not waived. We find that stock and bond return comovement in the days following a DCV disclosure decreases more for non‐waiver disclosures than for waiver disclosures. This supports the theory that a non‐waiver outcome shifts control rights and bargaining power to the creditors. Consistent with this theory, single‐market tests show that bonds with a non‐waiver disclosure versus a waiver disclosure earn positive excess returns following a DCV disclosure whereas the reverse is true for stocks.     

Executives' Legal Records and the Deterrent Effect of Corporate Governance

We study whether the effectiveness of corporate governance mechanisms varies depending on the characteristics of the executives subject to these mechanisms, namely their “psychological type,” as proxied by their history of legal infractions. In particular, we examine insider trading, where we can compare the trading behavior of different types of executives in the same firm. We find that “recordholder” executives, that is, those with prior legal infractions, earn significantly higher profits from purchases and sales than nonrecordholder executives. Furthermore, the profitability of both purchases and sales is significantly increasing in the severity of the infraction. Governance mechanisms, such as blackout policies, lower profits of executives with only traffic infractions; however, profits for executives with serious infractions appear insensitive to blackout policies. Insiders with serious infractions are also more likely to trade during blackout periods and before large information events and are more likely to report their trades to the SEC after the filing deadline. Collectively, our evidence suggests that while governance mechanisms can discipline executives with minor offenses, they appear largely ineffective for those with more serious infractions.     

Reallocation and productivity growth in Japan: revisiting the lost decade of the 1990s

Hayashi and Prescott (Rev Econ Dyn 5(1):206–235, 2002) argue that the ‘lost decade’ of the 1990s in Japan is explained by the slowdown in exogenous TFP growth rates. At the same time, other research suggests that Japanese banks’ support for inefficient firms prolonged recessions by reducing productivity through misallocation of resources. Using the data on large manufacturing firms between 1969 and 1996, the paper attempts to disentangle the factors behind the slowdown in productivity growth during the 1990s. The main results show that there was a significant drop in within-firm productivity, the component that is not affected by reallocation of input and output shares across firms over time, during the 1990s. Although we find that misallocation among large continuing firms represents a substantial drag to overall TFP growth for these firms throughout the sample period, the negative impact of misallocation was least visible during the 1990s. The significant reduction in within-firm productivity growth suggests that, as the Japanese economy has matured, a policy which fosters technological innovations via greater competition, R&D, and fast technological adoption may have become increasingly important in promoting economic growth.

Marketing academicians’ perceptions of ethical research and publishing behavior

Many universities have increased the emphasis on faculty research and publication productivity as a means of enhancing their reputation. Such emphasis contributes to the increased competition for available journal space, heightened pressures on the efficiency of the editorial system, and increases the temptation to lower ethical research and publication standards. A survey of 328 marketing academicians about their perceptions of ethical and unethical research and publication practices for academicians, editors, and review board members revealed wide variation among respondents’ perceptions of what constitutes ethical academic conduct. In particular, the respondent’s level of publication experience was found to be significantly related to his/her assessment of the ethicality of research practices. The authors suggest that a recognized code of ethics for the marketing academic community would be valuable in maintaining professional standards, increase justice in the academic reward system, and further the growth of knowledge in our discipline.     

Comparison processes in task perceptions,evaluations, and reactions

The primary objective of this article is to present a social comparison model of how employees perceive, evaluate, and react to tasks. The model represents a synthesis of recent findings in the task design area and three social comparison theories. A three-stage process is described which suggests that employees first understand their tasks at an informational level, then understand their tasks at an evaluative level, and finally react to their tasks both affectively and behaviorally. Managerial implications and future research directions are discussed.     

Personalize your management development

Most organizations struggle with leadership development. They promote tope performers into management roles, put them through a few workshops and seminars, then throw them to the wolves. Managers with the ability to survive and thrive are rewarded; those without it are disciplined or reassigned. The problem is, an alarming number of people fall into the second category. This happens not because managers lack skills but because companies fail to realize that there is no single kind of leader-in-training. In this article, Natalie Shope Griffin, a consultant in executive and organizational development at Nationwide Financial, describes four kinds of manager-in-training, each embodying unique challenges and opportunities. Reluctant leaders appear to have all the necessary skills to be excellent managers but can't imagine themselves succeeding in a leadership role. Arrogant leaders have the opposite problem; they believe they already possess all the management skills they'll ever need. Unknown leaders are overlooked because they don't develop relationships outside of a small circle of close colleagues. Finally, there are the workaholics who put work above all else and spend 100 hours a week in the office. The author outlines specific training approaches tailored to each type of prospective leader. By focusing on the unique circumstances of individual managers, investing in them early in their careers, offering effective coaching, and providing real-life management experiences, Nationwide's leadership-development program has produced hundreds of successful leaders.