Issues for Management Thought and Research

One of the tenets of the editors of The Journal of Product Innovation Management is the principle, probably first enunciated by social scientist Kurt Lewin, that there is nothing more practical than a good theory. That principle is one that draws together academics and practicing managers to the journal's task of advancing the management of product innovation. It is a principle that says to academics that their theories must meet the test of utility, and to managers that it can be useful to develop a theoretical perspective.
Questions of practice and theory emerged in the first two issues of the journal when members of the Editorial Board presented a series of viewpoints on the issues they thought would be significant for the future of product innovation management. These were viewpoints that questioned our current practices and suggested     

A note on vertical integration as entry

This paper examines the incentive for an intermediate product monopolist to integrate forward into a competitively-structured final product industry when that industry has failed to achieve a position of long-run equilibrium. It is shown that the upstream monopolist's profits are increased more by entering the downstream industry than are the profits of other firms unrelated to this industry. Consequently, the monopolist is more likely to overcome whatever entry barriers might exist at the downstream stage. The welfare effects of this form of integration are shown to be positive, and a theoretical foundation is provided for the policy distinction commonly made between vertical integration by a major acquisition versus integration through internal expansion or a toehold acquisition followed by expansion.     

Effects of shopping information on consumers’ responses to comparative price claims

This article describes three studies that examine the effects of shopping information on consumers’ responses to comparative price claims in retail advertisements. Results of the studies show that 1) the opportunity to shop across retail stores reduces the effect of comparative price claims on consumers’ estimates of lowest price for a particular item, but has less impact on their estimates of the store’s regular price; 2) access to advertising from competing retailers has the same pattern of effects; and 3) across exposure to a series of ad claims, these effects generalize from estimates of specific item prices to judgments of the store’s general pricing. For branded shopping goods, the results show that comparative price claims may prove counterproductive for retail advertisers by leading consumers to believe that the store’s regular prices are high without convincing them that its sale prices are low.     

Resale price maintenance: A managerial perspective

Managers can improve firm profits by selecting the appropriate pricing strategy. In this article, we show how managers can use one particular controversial pricing strategy—resale price maintenance (RPM)—to enhance firm profits. We first discuss the antitrust treatment of RPM, both in the United States and internationally. Then we examine the economic effects of implementing RPM in several key contexts: product promotion, quality certification, prestige goods, and online retail. We also discuss the effects of RPM on entry of new firms.     

A Note on the Consequences of Monopsony When Goods are Jointly Produced in Fixed Proportions

The usual analysis of joint supply presumes that all relevant markets are competitive. In this paper, we introduce monopsony into the market for one of two products jointly supplied in fixed proportions. We provide an analysis of the monopsonist’s profit maximizing behavior, the welfare effects of monopsony, and an adaptation of the Lerner Index to this case.     

Workplace Transformation and Worker Upskilling: The Perspective of Individual Workers

How common is workplace transformation in the American economy? What are its implications for work force skill requirements and training investments? The existing literature addressing these questions is based on firm-reported survey data. Using new data available in the 1993 wave of the National Longitudinal Survey of Youth (NLSY), this article examines the same questions from the perspective of individual workers. Our empirical results suggest that workplace transformation is commonplace. Fully 40 percent of private-sector workers surveyed report that in the space of just one year, a change occurred at work that required them to learn new job skills. About 23 percent of all respondents reported experiencing a workplace change we term anorganizational transformation. Incidence of formal training is positively related to indicators of organizational transformation, but the effect of these indicators is found to be sensitive to the inclusion of other important workplace change variables (namely, new products, new equipment, and new government regulations). While we expected to find strong positive relationships with product development and physical capital investment, government regulation has a surprisingly large impact on formal training.     

Group Purchasing Organizations,Monopsony, and Antitrust Policy

Group purchasing organizations (GPOs) consolidate the purchasing power of their members and negotiate contracts with input suppliers on their behalf. GPOs have received attention from the Department of Justice and Federal Trade Commission because of concerns over monopsony power and standardization of hospital production costs. GPOs have been criticized in the literature for their contracting practices, which may appear to be exclusionary, and their funding mechanism, which may lead to incentive incompatibility. We analyze these competitive concerns in turn. We find GPOs to be procompetitive and suggest an antitrust policy that preserves the benefits of GPO operations while protecting consumers from any competitive shortcomings. Copyright © 2013 John Wiley & Sons, Ltd.