Differentiating Major and Incremental New Product Development: The Effects of Functional and Numerical Workforce Flexibility*

This study seeks to explain the differential effects of workforce flexibility on incremental and major new product development (NPD). Drawing on the resource‐based theory of the firm, human resource management research, and innovation management literature, the authors distinguish two types of workforce flexibility, functional and numerical, and hypothesize differential effects on NPD outcomes. A large‐scale sample of 284 Dutch firms across various manufacturing goods and business services industries serves to test these hypotheses. The results suggest that functional flexibility positively influences incremental NPD only, internal numerical flexibility negatively influences incremental NPD only, and external numerical flexibility positively influences major NPD only. Thus, differences between major and incremental NPD are grounded in the human resource flexibility of the firm. This complements research that found that such differences lie in critical development activities, learning processes, and capabilities. It also complements product innovation research on flexibility in NPD processes and on flexibility in organizational structures and routines. It extends the resource‐based theory of the firm suggesting that human resource flexibility is part of the dynamic capabilities that allow firms to reconfigure existing competencies. The conclusions imply that managers of manufacturing and service firms may use training and education and create a functional flexible workforce that can progressively enhance incremental NPD outcomes. They may want to avoid paying overtime, because such internal numerical flexibility hampers incremental NPD, but use fixed‐term contracts to expand external numerical flexibility to enhance major NPD.     

Contextual Innovation Management Using a Stage‐Gate Platform: The Case of Philips Shaving and Beauty

To improve its innovation process, Philips Shaving and Beauty (S&B) designed a blueprint for its innovation process. Although it has proved to be quite effective, it has experienced a lack of efficiency, in terms of frequent cost and time overruns, in the fuzzy front end of this process. We suggest a contextual innovation management approach to set up a stage‐gate‐based innovation process platform and thus improve the efficiency in the fuzzy front end, which means that, for different contexts, stage‐gate process variants will be designed from which unnecessary activities are removed and important activities are emphasized. The design is based on the identification of relevant contextual factors to develop variations of the common innovation process within Philips S&B. We distinguished different variants of the innovation processes within Philips S&B that can increase the efficiency in the fuzzy front end. Based on interviews within and outside Philips S&B, we identified problems and potential solutions with regard to efficiency in eight recently finished innovation processes. The results indicate that the most important contextual factors are the distinction between incremental and radical innovations, and between market and technology‐based innovations. We used these factors to design three variants on the basic platform of the stage‐gate process.     

Measuring the Impact of Longevity Risk on Pension Systems: The Case of Italy

This article estimates the impact of longevity risk on pension systems by combining the prediction based on a Lee-Carter mortality model with the projected pension payments for different cohorts of retirees. We measure longevity risk by the difference between the upper bound of the total old-age pension expense and its mean estimate. This difference is as high as 4% of annual GDP over the period 2040–2050. The impact of longevity risk is sizeably reduced, but not fully eliminated, by the introduction of indexation of retirement age to expected life at retirement. Our evidence speaks in favor of a market for longevity risk and calls for a closer scrutiny of the potential redistributive effects of longevity risk.     

Business Cycles Around the Globe: Some Key Facts

We document massive heterogeneity in basic cyclical patterns within groups of developed and emerging market economies. While we detect marked differences between developed and emerging countries as well, the distributions of key business cycle statistics tend to overlap across different country groups.     

Randomised Mixture Models for Pricing Kernels

Numerous kinds of uncertainties may affect an economy, e.g. economic, political, and environmental ones. We model the aggregate impact by the uncertainties on an economy and its associated financial market by randomised mixtures of Lévy processes. We assume that market participants observe the randomised mixtures only through best estimates based on noisy market information. The concept of incomplete information introduces an element of stochastic filtering theory in constructing what we term “filtered Esscher martingales”. We make use of this family of martingales to develop pricing kernel models. Examples of bond price models are examined, and we show that the choice of the random mixture has a significant effect on the model dynamics and the types of movements observed in the associated yield curves. Parameter sensitivity is analysed and option price processes are derived. We extend the class of pricing kernel models by considering a weighted heat kernel approach, and develop models driven by mixtures of Markov processes.     

Power‐Sharing in Monetary Policy Committees: Evidence from the United Kingdom and Sweden

Committees may make better monetary policy decisions than individuals; however, the benefits of group decision making could be lost if committee members cede power to a chairman. We develop an econometric model to describe intracommittee power‐sharing across members. Estimation of the model permits us to classify monetary policy committees into the typology developed by Blinder ( 2004 , 2007 ). We estimate our model for the United Kingdom's Bank of England (BOE) and Sweden's Riksbank. Results for the BOE suggest that the Governor has little influence over other committee members, while those for the Riksbank indicate that the Governor is highly influential.     

Management Guidance Pre‐ and Post‐Restatement

We examine whether the quality of restating firms’ management guidance differs in periods before and after restatement announcements. While characteristics of restating firms and the consequences of restatement have been a central topic in accounting and auditing research, the quality of management guidance around restatements is less well understood. We consider two competing characterizations of the link between management forecast accuracy and bias and restatement (an event that tends to signal poor financial controls): “Forecast–Opportunism Explanation” and “Forecast–Ability Explanation”. Under the Forecast–Opportunism Explanation, pre‐restatement weaknesses in financial controls enable managers to manipulate earnings toward forecasts and to meet or exceed opportunistically biased forecasts, and the post‐restatement strengthening of financial controls constrains opportunistic behavior. Under the Forecast–Ability Explanation, pre‐restatement weaknesses in financial controls impede managers’ ability to issue accurate forecasts, and post‐restatement improvements remove impediments so that the accuracy of forecasts improves; forecast bias remains unaffected. Evidence indicates that before a restatement, restating firms’ forecasts are more accurate and relatively more downwardly biased than control firms’ forecasts. Post‐restatement, restating firms have less accurate and less downwardly biased management guidance. Our overall results are consistent with the Forecast–Opportunism Explanation.     

Minimum Pay Scale and Career Length in the NBA

We use data from the National Basketball Association (NBA) to analyze the impact of minimum salaries on an employee's career length. The NBA has a salary structure in which the minimum salary a player can receive increases with the player's years of experience. The NFL has a similar minimum wage policy; research suggests that the introduction of this system shortened career length in the NFL. Using duration analysis, we fail to find evidence that the new multi‐tiered minimum wage scale in the NBA increased the probability of exit.