Innovation pathway to profitability: the role of entrepreneurial orientation and marketing capabilities

Drawing from the marketing capabilities and innovation literatures, we identify aprocess by which a firm’s entrepreneurial orientation impacts profits and show that it is dependent on marketing capabilities. Using a half-longitudinal design we integrate survey data with performance metrics over two time periods, from a sample of 190 firms. While the effect of entrepreneurial orientation (EO) on innovation is enhanced by architectural marketing capabilities, the effect of innovation outcomes on profits is enhanced by specialized marketing capabilities. Ultimately, the pathway from EO to performance, mediated by innovation, is positively significant at higher levels of both marketing capabilities. The results uncovered using Bayesian conditional process modeling, are robust to alternate model specifications, endogeneity tests, and provide insights into the capabilities-based understanding of entrepreneurism-marketing interface. We discuss resource allocation implications for managers as they attempt to maximize profits through innovation.     

Marketing and politics: Models, behavior, and policy implications

The American presidential election is one of the largest, most expensive, and most comprehensive marketing efforts. Despite this fact, marketing scholars have largely ignored this campaign, as well as thousands of others for congresspersons, senators, and governors. This article describes the growth of interest in research issues related to political marketing. This emerging research area lies at the crossroads of marketing and political science, but these fields have developed largely independent of one another with little cross-fertilization of ideas. We discuss recent theoretical, empirical, and behavioral work on political campaigns, integrating perspectives from marketing and political science. Our focus is on (1) the extent to which paradigms used in goods and services marketing carry over to the institutional setting of political campaigns, (2) what changes are necessary in models and methodology to understand issues in political marketing and voter behavior, and (3) how the special setting of politics may help us gain a better understanding of certain topics central to marketing such as advertising, branding, and social networks.     

Cournot competition in a differentiated oligopoly

This paper studies product-quantity equilibria in an oligopoly. Products are interpreted as “qualities” and each firm chooses a quality-quantity pair, simultaneously. It is well known that a pure-strategy equilibrium in product-price pairs does not exist in this model, but a pure-strategy equilibrium in product-quantity pairs exists. Furthermore, in an example widely studied in the literature, the equilibrium has nice asymptotic properties.     

Advertising Spending and Quality for Services: The Role of Capacity

In this paper we explore the relations among advertising spending, capacity and quality for services. Data from a sample of New York City restaurants show that mid-quality restaurants spend more on advertising than either high quality or low quality ones, contradicting the usual Nelson-type prediction that advertising spending increases with quality. Also, controlling for quality, restaurants with larger capacities advertise more. We present a model of services to explain these observations. The key features of the model are: (1) capacity constraints, (2) uncertain demand, (3) the presence of both informed and uninformed consumers, and (4) a technological link between capacity and quality. We argue that for services, advertising not only informs consumers, but it also can improve capacity utilization. Given this dual role, advertising is more valuable to firms with larger capacities and higher price-cost margins. The variation of these two elements with quality determines the advertising-quality relation.     

Incorporating Behavioral Anomalies in Strategic Models

Behavioral decision researchers have documented a number of anomalies that seem to run counter to established theories of consumer behavior from microeconomics that are often at the core of analytical models in marketing. A natural question therefore is how equilibrium behavior and strategies would change if models were to incorporate these anomalies in a consistent way. In this paper we identify several important and generalizable anomalies that modelers may want to incorporate in their models. We briefly discuss each phenomenon, identify a key unresolved issue and outline a research agenda to be pursued.     

Managing Channel Profits: The Role of Managerial Incentives

The existing literature has examined how manufacturers can enhance profits by employing specific channel structures and channel coordination mechanisms. In this paper, we examine the implications of strategically designed managerial incentives for channel performance in a duopoly. We first analyze how equilibrium outcomes (especially manufacturer profits) are altered when the manufacturers provide their channel managers with strategically designed incentives. Following that, we examine how optimal channel structure decisions are altered when manufacturers provide their managers with strategic incentives, i.e., we examine how strategic incentives moderate optimal channel structure decisions. In contrast with the existing literature, we find that an asymmetric channel structure with one manufacturer employing a profit-maximizing retailer and the other integrated manufacturer providing strategic incentives for the channel manager in charge of pricing, is an equilibrium outcome under certain conditions. We then compare how the implications of strategic incentives differ from those of channel structure decisions and channel coordination initiatives, and discuss when and why strategic incentives yield superior outcomes from the manufacturer’s perspective. Our results shed light on the sparsely researched role of managerial incentives in the channel context.     

Oil and the Stock Market: An Industry Level Analysis

I investigate the impact of daily oil price changes on the stock returns of a wide array of industries. I find that in addition to the stock returns of industries that depend heavily on oil, stock returns of some industries that use little oil also are sensitive to oil prices perhaps because their main customers are impacted by oil price changes. In addition, I present robust estimates of industries’ cost‐side and demand‐side dependence on oil. These measures can serve as reliable benchmarks when classifying industries into oil‐intensive and non–oil‐intensive groups, a distinction widely used in studies and media without any quantitative justification so far. Further, I find that the sensitivity of industries’ returns to oil price changes depends on both the cost‐side and demand‐side dependence on oil and that the relative effects of these factors vary across industries.     

Bank asset transparency and credit supply

Review of Accounting Studies - We employ the European Central Bank’s Loan-level Reporting Initiative as a shock to banks’ asset disclosures. We find that after the disclosure...     

The Impact of Smokers' Group‐Membership and Activist Gender on Tolerance for Smoking,Receptiveness and Perceived Susceptibility to Anti‐Smoking Messages,and Likelihood of Anti‐Smoking Activism

Using two experiments we demonstrate that people have lower tolerance for smoking and higher anti‐smoking activism likelihood when in‐group versus out‐group members smoke. The likelihood of anti‐smoking activism toward in‐group smokers was greater for men than women. Moreover, as social distance declined, men showed greater anti‐smoking message receptiveness, message susceptibility and activism likelihood, whereas, women displayed no significant differences in tolerance for smoking, message receptiveness, message susceptibility, and activism likelihood. Open‐ended responses indicated generally negative cognitive reactions to smokers, yet a broad unwillingness to confront them. While feelings of personal relevance and caring facilitated anti‐smoking activism intentions, beliefs in the freedom of personal choice and polite interpersonal interactions hindered these intentions.     

The Textual Contents of Media Reports of Information Security Breaches and Profitable Short-Term Investment Opportunities

Information security-related incidents continue to make headlines. Interestingly, researchers have found mixed results when attempting to associate reports of information security breaches with changes in the affected firm's stock price. This research delves further into this puzzle by investigating the association between the textual contents of information security breach media reports and the stock price, as well as the trading volume reactions of the affected firm(s) around the breach announcement day. Our findings suggest that when the textual contents of breach reports provide more detailed information regarding the incidents, a more consistent belief is formed by the market about the negative impact of the reported security incident on the firm's business value. However, when there is a lack of specific information regarding the reported breach, the market does not seem to reach consensus on the impact of reported security incidents. We further demonstrate that different perceptions exist among general and sophisticated investors regarding the impact of reported information security incidents on a firm's future performance as demonstrated by changes in trading volume. By exploiting the different perceptions among investors, we form a trading strategy to demonstrate that, on average, one can make about 300% annual profit around the breach announcement day.