The American Inventors Protection Act: A Natural Experiment on Innovation Disclosure and the Cost of Debt

We examine the impact of innovation disclosure through patenting on firms' cost of debt, focusing on the American Inventors Protection Act (AIPA) as an exogenous shock in innovation disclosure regulation. Post‐AIPA, firms have an incentive to apply for patents only if commercial success is likely. Accordingly, we expect post‐AIPA patents to be a better proxy for successful innovation activity, and thus to have a stronger effect on reducing the cost of debt than pre‐AIPA patents. Indeed, we find that pre‐AIPA patents reduce the cost of debt only for the most innovative firms, while post‐AIPA, this effect holds for all firms.     

The Low‐Quality Advantage in Vertical Product Differentiation

By assuming a triangular distribution of consumers' willingness to pay for quality, this paper makes use of the stylized fact that low‐income households are more numerous than high‐income households, and thus, income distributions are right‐skewed. Accordingly, we present a straightforward two‐firm, two‐stage vertical product differentiation model with quality‐dependent marginal production costs, where the firm offering the low‐quality product has the larger market share and profit than the top‐quality competitor. This can be termed low‐quality advantage and may explain the success of large retailers serving the masses by offering low‐quality products. Copyright © 2016 John Wiley & Sons, Ltd.     

Eye-tracking evidence that happy faces impair verbal message comprehension: the case of health warnings in direct-to-consumer pharmaceutical television commercials

Risk warning or disclosure information in advertising is only effective in correcting consumers’ judgments if enough cognitive capacity is available to process that information. Hence, comprehension of verbal warnings in TV commercials may suffer if accompanied by positive visual elements. This research addresses this concern about cross-modality interference in the context of direct-to-consumer (DTC) pharmaceutical commercials in the United States by experimentally testing whether positive facial expressions reduce consumers’ understanding of the mandated health warning. A content analysis of a sample of DTC commercials reveals that positive facial expressions are more prevalent during the verbal warning act of the commercials than during the other acts. An eye-tracking experiment conducted with specially produced DTC commercials, which vary the valence of characters’ facial expressions during the health warning, provides evidence that happy faces reduce objective comprehension of the warning.     

When is the risk of cooperation worth taking? The prisoner’s dilemma as a game of multiple motives

This experimental article helps to understand the motives behind cooperation in the prisoner’s dilemma. It manipulates the pay-off in case both players defect in a two-player, one-shot prisoner’s dilemma and explains the degree of cooperation by a combination of four motives: efficiency, conditional cooperation, fear and greed. All motives are significant but some become only significant if one controls for all remaining ones. This seems to be the reason why earlier attempts at explaining choices in the prisoner’s dilemma with personality have not been successful.     

„Controlling muss vor Ort wahrgenommen werden.“

Praxis / ArtikelInterview Titelthema

„Controlling muss vor Ort wahrgenommen werden.“ Interview mit Manfred Paul, Leiter Zentrales Controlling der Knauf Gruppe     

Anticipating converging industries using publicly available data

Industry convergence, described as the blurring of boundaries between industries, plays an increasingly pivotal role in shaping markets and industries. Traditionally, this phenomenon has been discussed in respect to telecommunications, information technologies and electronics, but more recently also the chemical and its related industries find themselves affected by a larger convergence process. With the primary example of phytosterols in the two converging industries of Cosmeceuticals and of Nutraceuticals and Functional Foods, we analyze 7455 scientific and patent references in respect to first indicators for signs of convergence. Furthermore, we present and discuss a multiple indicator concept for monitoring convergence in an R&D-intensive field on the basis of publicly available data.     

Research opportunities in supply chain management

Since its introduction as a concept in the 1980s, supply chain management (SCM) has undergone significant modification and expansion. A qualitative analysis of 166 unique definitions of SCM published in the literature identified three major themes associated with the supply chain and SCM: (1) activities; (2) benefits; and (3) constituents/components. Utilizing these themes, key research questions and issues within the supply chain and SCM are identified that could be examined by marketing scholars.     

The performance of venture capital investments: Do investors overreact?

Using a unique proprietary data set of over 5400 realized and unrealized venture capital investments between 1980 and 2005, we examine the impact of demand-related factors, e.g. entrepreneurial activity, as well as supply-related factors, i.e. money provided by VC investors, on the return of individual VC investments. This way, we are able to shed more light on the question whether volatile VC investment returns are rather driven by fundamental changes with regard to the number of attractive investment opportunities or by the overreaction by investors. We find that rising demand for VC, i.e. an increase in entrepreneurial activity, results initially in higher returns. However, our results also indicate that overreaction on the supply side can be observed, destroying deal-level results. Overfunding, specifically overinvesting seems to be a recurring characteristic of the VC industry. In fact, contra-cyclical investment strategies yield highest deal-level returns.