Technology Exploitation Paths: Combining Technological and Complementary Resources in New Product Development and Licensing

Technological resources in the form of patents, trade secrets, and know‐how have become key assets for modern enterprises. This paper addresses a critical issue in technology and innovation management, namely, the commercial exploitation of technological resources resulting from research and development (R&D) investments. Extracting economic value from these resources by maximizing the benefits for shareholders is an extremely challenging task because technological resources are intangible, idiosyncratic, uncertain, predominantly tacit, and with poorly defined property rights. In their attempt to extract the maximum value from their technological resources, firms increasingly combine their internal exploitation through new product development (NPD) with external exploitation through licensing. However, most existing studies on NPD and technology licensing have treated the two exploitation paths independently and in isolation, which has resulted in two separate research streams using different theories and addressing different managerial challenges. The purpose of this paper is to contribute to filling this gap by developing and testing a comprehensive conceptual framework that simultaneously considers the antecedents affecting the successful implementation of NPD and licensing strategies as well as their consequences on firm profitability. The paper in particular investigates the effects of the interplay between technological resources and three types of complementary resources, marketing, manufacturing, and relational. We test the model using structural equation modeling on a sample of 733 Spanish manufacturing firms observed from 2003 to 2007. The data provide support for the existence of different paths to market firm technologies: an internal path, whereby the ownership of technological resources fully explains NPD performance, and an external path, whereby high intensity of marketing and relational resources reinforces the positive effect of technological resources on licensing performance. This sustains the relevance of the resource‐based value‐enhancing effects of complementary resources in licensing, as opposed to the motivation‐reducing effects advanced by transaction cost‐based literature. Moreover, the empirical analysis shows a substitution effect between NPD and licensing, whereby their simultaneous pursuit at intense levels is associated with lower profit margins. This provides evidence of the much theorized, but seldom tested, rent dissipation effect. These findings offer several contributions to research on licensing, NPD, open innovation, and the resource‐based view of the firm. On a managerial level, they suggest that achieving maximum value from proprietary technologies may not entail exploiting them both through external and internal paths. Managers are also informed that the resource combinations that enhance licensing performance include marketing and relational resources.     

Countercyclical Bank Capital Requirement and Optimized Monetary Policy Rules

Using BoC-GEM-Fin, a large-scale dynamic stochastic general equilibrium (DSGE) model with real, nominal, and financial frictions featuring a banking sector, we explore the macroeconomic implications of various types of countercyclical bank capital regulations. Results suggest that countercyclical capital requirements have a significant stabilizing effect on key macroeconomic variables, but mostly after financial shocks. Moreover, the bank capital regulatory policy and monetary policy interact, and this interaction is contingent on the type of shocks that drive the economic cycle. Finally, we analyze loss functions based on macroeconomic and financial variables to arrive at an optimal countercyclical regulatory policy in a class of simple implementable Taylor-type rules. Compared to bank capital regulatory policy, monetary policy is able to stabilize the economy more efficiently after real shocks. On the other hand, financial shocks require the regulator to be more aggressive in loosening/tightening capital requirements for banks, even as monetary policy works to counter the deviations of inflation from the target.     

Examining the Patterns of Goodwill Impairments in Europe and the US

We examine the patterns of goodwill impairments in Europe and in the US over the period from 2006 to 2015, for a sample of more than 35,000 firm-year observations. We define the timeliness of goodwill impairments as the frequency of accounting impairments conditional to indications of economic impairments. We measure indications of economic impairment with three metrics: equity market value minus equity book value less than goodwill, market-to-book smaller than one and negative earnings before interest, tax, depreciation and amortisation (EBITDA). Our research strategy leads us to draw very different conclusions than those in the recent EFRAG (2016) study. While median levels of goodwill on the books between US and European firms are relatively similar, we find several indications that US firms recognise timelier impairments, at least during 2008 and 2009, that is, the early years of the financial crisis. We further document that US impairers write down a much greater percentage of their beginning balance of goodwill than European impairers. During the financial crisis, the median level of impairment by US firms was 63% of opening goodwill in 2008 and 40% in 2009, whereas median European write-downs were only 6% and 7% of opening goodwill, respectively. Even though European firms are more likely to impair over multiple years, the cumulative impairments never come close to the level of US firms, be it in a single year or cumulative over multiple years. We also find that the frequency of accounting impairment is small compared to the number of firms presenting evidence of economic impairment: only 20–25% of firms recognise impairments depending on the measure of economic impairment. This has often been interpreted by academics as a sign of untimely write-offs. Accounting differences between US Generally Accepted Accounting Principles and International Financial Reporting Standards are unlikely to explain our results. One caveat of our analysis is that it does not allow us to draw conclusions on whether the observed differences between US and European firms are driven by differences in conditional conservatism and/or big bath accounting practices.     

Credit cycles and macro fundamentals

We use an intensity-based framework to study the relation between macroeconomic fundamentals and cycles in defaults and rating activity. Using Standard and Poor's U.S. corporate rating transition and default data over the period 1980–2005, we directly estimate the default and rating cycle from micro data. We relate this cycle to the business cycle, bank lending conditions, and financial market variables. In line with earlier studies, the macro variables appear to explain part of the default cycle. However, we strongly reject the correct dynamic specification of these models. The problem is solved by adding an unobserved dynamic component to the model, which can be interpreted as an omitted systematic credit risk factor. By accounting for this latent factor, many of the observed macro variables loose their significance. There are a few exceptions, but the economic impact of the observed macro variables for credit risk remains low. We also show that systematic credit risk factors differ over transition types, with risk factors for downgrades being noticeably different from those for upgrades. We conclude that portfolio credit risk models based only on observable systematic risk factors omit one of the strongest determinants of credit risk at the portfolio level. This has obvious consequences for current modeling and risk management practices.     

Kriging methodology for regional economic analysis: Estimating the housing price in Albacete

Because of the socioeconomic importance of the housing subsector in the local, regional, and national economy and its implications for housing policy, this paper attempts to analyze the spatial behavior of the free housing price in the city of Albacete. To achieve this aim, the authors have used the models and estimators imported from geology called kriging. To do this, it is necessary to know the spatial dependence structure of the process, which is shown in the variogram.     

Long-range forecasting within organisations

The article describes a method for testing and developing personal and organisational strategies. It suggests the establishment of a group which includes the organisation's partners and competitors (the author outlines why and how objections to the latter should be overcome) and which would progress through initial “unrealistic” games to more realistic scenarios. When combined with role playing, some “uncomfortable” scenarios can lead to members leaving the group and, where they pinpoint weaknesses, can either strengthen the organisation or hasten its decline. By including the organisations' decision makers, the exercise can lead to a rehearsal of the future.     

Production in incomplete markets: Expectations matter for political stability

In the present paper we study voting-based corporate control in a general equilibrium model with incomplete financial markets. Since voting takes place in a multi-dimensional setting, super-majority rules are needed to ensure existence of equilibrium. In a linear–quadratic setup we show that the endogenization of voting weights (given by portfolio holdings) can give rise to – through self-fulfilling expectations – dramatical political instability, i.e. Condorcet cycles of length two even for very high majority rules.     

Relaxing the limits to growth

Intereconomics - The following contribution is essentially based on the author’s presentation to the Club of Rome’s recently held world conference on “Alternatives to...