Abstract:
We use 6-digit bilateral trade data to document the effect of WTO/GATT membership on the extensive and intensive product margins of trade.We construct gravity equations for the two product margins where the specifications of these gravity equations are motivated by the Melitz-Chaney model. The empirical results show that standard gravity variables provide good explanatory power for bilateral trade on both margins. Importantly, we show that the impact of the WTO is concentrated almost exclusively on the extensive product margin of trade, i.e. trade in goods that were not previously traded. In our preferred specification, WTO membership increases the extensive margin of exports by 31%. At the same time, WTO membership has a negligible or even a negative impact on the intensive margin (the volume of already-traded goods).

Abstract:
We provide new insights into earnings quality from a survey of 169 CFOs of public companies and 12 indepth interviews of Chief Financial Officers (CFOs) and two standard setters. Our key findings are: (i) high quality earnings are sustainable, avoid one-time items, and are backed by actual cash flows; they also reflect consistent reporting choices over time and avoid long term estimates; (ii) CFOs estimate that about 50% of earnings quality is driven by innate factors, about 20% of firms manage earnings to misrepresent economic performance, and for such firms 10% of EPS is typically thus managed; (iii) CFOs believe that earnings management is hard to unravel from the outside but suggest numerous red flags that academics can use to identify managed earnings; and (iv) CFOs disagree with the direction the FASB is headed on a number of issues including the sheer number of rules promulgated, the top-down as opposed to the bottom-up approach to rule making, curtailed reporting discretion, de-emphasis of the matching principle, and the over-emphasis of fair value accounting.

Abstract:
We relate market stress to asset pricing by analyzing a large and systematic discrepancy among off-the-run Treasury securities: during the crisis, bonds traded far below otherwise identical notes, over five percent below at the peak, and orders of magnitude below what we find concurrent special repo rates to explain. This low lending revenue from holding the note begs the question why its current holders would not trade it for cheaper yet identical cash flows. To answer this question we look at the relative liquidity of the securities and the cross section of investors. New data on Treasury security trading find the notes more liquid than the bonds, and insurers’ transactions reveal that their note demand grows with their need for liquidity.

Abstract:
We examine firms' practice of providing forecasts using a comprehensive data set containing detailed attributes of management forecasts from 78 countries. We find that the incidence of management forecasts is (a) positively associated with country-level institutional characteristics related to the protection of private business, (b) negatively associated with country-level institutional characteristics related to investor protection, (c) negatively associated with the level of government involvement in the economy, and (d) positively associated with the quality of mandatory reporting. Various properties of management forecasts such as frequency, precision, horizon, attribution, and the type of news in the forecast are also systematically related to these country-level institutional characteristics. In examining whether management forecasts are informative to the stock market, we find that forecasts are informative in nearly all countries. Moreover, institutional characteristics related to protection of private business and investors, and the quality of the mandatory reporting systems appear to enhance the informativeness of management forecasts, and government involvement in the economy is negatively associated with the informativeness.

Abstract:
Recruitment into underground criminal and terrorist organizations is rendered difficult by the absence of formal institutions to protect agreements of non‐defection by entrants. Threats of violence, and punishments by informal norms are also difficult when defectors can vanish into anonymity in a large population. Ex-ante means of Spencian costly signaling allows prospective entrants to build trust to enter rebel organizations like the Maoists in India. Based on field interviews in forests and tribal villages in south India, it is discovered that costly to mimic signals play an important role in the recruitment of Maoists. It is also discovered that “bridge‐burning”, i.e., behavior that reduces alternative options of livelihood, and behavior that increases asset specificity of candidates, increases trustworthiness of prospective entrants.

Abstract:
A robust finding in brand extension literature is that perceptions of high similarity or fit with the extension result in favorable extension evaluations. In this research, we examine two different types of fit – based on a category prototype or a category exemplar, and suggest that consumers’ implicit theories regarding the changeability or fixedness of human traits will impact the evaluations of extensions that vary on prototype or exemplar fit. In the first two studies, we find that while entity theorists evaluate extensions with high prototypical fit higher, incremental theorists assess extensions with high exemplar fit more favorably (study 1), regardless of whether consumers organize brand and product information around a brand category or a product category (study 2). In study 3, we further show that a failed extension with high prototypical fit is evaluated lower by entity theorists, while incremental theorists’ evaluations remain unaffected. We conclude with a discussion on future research and managerial implications of our findings. Copy of the paper is attached:

Abstract:
This paper develops a theory of firm boundaries in knowledge-intensive firms as distinct from those in physical-asset-intensive firms. Since knowledge assets are non-rival in nature, owners cannot withdraw access to the asset ex-post once they have provided it ex-ante. Therefore, unlike physical-asset-intensive firms, where only the owner can hold up the user, the user of a knowledge asset can hold up the owner as well. We model these distinctions by endogenously specifying the joint profit and outside options and show that the incentive effects of ownership and, thereby, optimal ownership of knowledge assets differs substantially from those of physical assets

Abstract:
Government industrial policies are a controversial topic among economists, with their economic adherents as well as their skeptics. (Krugman 1986) Industrial policies, focused on specific industries, are not new, with Airbus, formed in the mid-seventies as a joint effort between the Governments of France, Germany, the UK and Spain, being one prominent example. Fifty years later, Airbus has become an equal member of a duopoly in the commercial jet aircraft industry, (though it is an open question whether Airbus has achieved economic returns on shareholder equity). (Esty and Kane 2004) Another example is Taiwan’s fostering of its semiconductor industry (Shih and Wang 2009). Taiwan has similarly benefited from its Government policies, to develop a globally dominant semiconductor industry. As Pierce et. al. (2009: 532) suggest, because strategy theory has developed in environments with more liberal markets and capable governments, “corporate strategy theorizing has placed less emphasis on the importance of governments”.

Abstract:
We examine world stock market comovement using data from 23 developed and 10 emerging market countries. We use a generalized factor model framework that allows for country, regional, and world factors. We show that the commonly used World Fama French (W-FF) factor model with world value-weighted portfolios as a proxy for global factors, is biased in calculating comovement. We develop an alternate approach, the Weighted-Generalized Canonical Correlation (W-GCC) method, to determine the factor model and classify the factors into world factors and regional/country-specific factors. Simulation studies show that our methodology is able to accurately identify the world and country-specific factors and is robust to varying market capitalizations, varying regions, and when the world factor is weak in some countries. Unlike the W-FF model, the W-GCC does not exhibit biases with respect to small and large stock portfolios, large capitalization countries, or over represented world regions. We test for changes in comovement over a 30-year period from 1981 to 2010 -- a period that has witnessed major changes in international trade institutions, capital market regulations, and the advent of the Internet era -- allowing for a structural change driven by world events. We find that stock price comovements is stable through the mid 1990s and then starts increasing from the mid 1990s through 2010. The bias in the W-FF model is however less important in recent times as world comovement has soared to over 70%. Finally, we separately examine the comovement of the Chinese A and Chinese B stock markets as they have different investor bases. The Chinese B stock market shows a dramatic increase in comovement over the time period but not the Chinese A stock market, suggesting that comovement is more likely driven by investment cash flows.

Abstract:
We study a worker's incentive to acquire costly skills when skills cannot be verified by a third party and thus cannot be contracted on. A firm's promise to reward the worker for skills is split into two parts: a promise to promote the worker for skills (promotion promise) and a promise to pay higher wages for a promotion (wage promise). Promoting a worker based on general skills, conveys information to a less informed labor market, bidding up wages. So the general skill helps the firm keep its wage promise. Promoting a worker based on firm specific skills, increases output without increasing wages offered by a labor market. So the firm specific skill helps the firm keep its promotion promise. To keep both promises, workers are promoted only when they acquire both types of skills, which in turn leads to multiskilling. Because promotions selectively reveal information about the general skill to the labor market, firms also earn a return on general training. This helps explain why many companies pay for training to develop general skills that workers need in higher level jobs.

Abstract:
We consider the non-cooperative choice of arrival times by individual users, or customers, to a service system that opens at a given time, and where users queue up and are served in order of arrival. Each user wishes to obtain service as early as possible, while minimizing the expected wait in the queue. We first analyze this problem within a simplified fluid model where we identify the unique Nash equilibrium arrival profile and show that the price of anarchy of the system equals 2, under the assumption of linear waiting and time to service costs. We then address the non-asymptotic stochastic system, assuming a finite number of homogeneous users and exponential service times. In this setting as well we show that there exists a unique Nash equilibrium, which is symmetric across users, and characterize the equilibrium arrival-time distribution of each user in terms of a corresponding set of differential equations. We further establish convergence of the Nash equilibrium solution to that of the associated fluid model as the number of users increases to infinity. We also show that the price of anarchy in our system exceeds 2, but approaches this value for a large population size.

Abstract:
Jugaad has been looked upon as a uniquely Indian management practice that is translated as ‘fast and frugal innovation’, or ‘creative problem solving’. Will this be India’s contribution to new management ideas, akin to the Japanese practices of kaizen or Kanban? In India, Jugaad can have a negative connotation. There is a call for India to move away from jugaad towards systemic innovation, to be able to realize it’s true potential. There are no empirical studies of jugaad, and the fieldwork is addressing this research challenge.

Abstract:
A rationed promotion occurs when a firm offers a limited quantity of product at a below market clearing price. Examples include airline supersaver fares and Black Friday discounts on consumer durables. We characterize the optimal pricing strategy for a monopoly firm with limited capacity facing generalized linear demand. Under a binding capacity constraint and a suitable convex demand function we show that it is optimal to offer a limited quantity at a price below the market clearing price, then sell the balance of inventory at a high reserve price. We consider duopoly competition in a similar environment and show that there is a unique dominant strategy Nash equilibrium in which discount prices are higher than optimal resulting in a loss of efficiency in market segmentation and corresponding decrease in total revenues. Nonetheless, by clearing excess inventory, promoting firms avoid direct competition for their most profitable customers and retain most of the revenues available to the monopolist. We extend these results to situations of asymmetric competition and horizontally differentiated products and find that in this context competition can lead to either higher or lower prices depending on the degree and nature of preference heterogeneity. Finally we relate rationed promotion to the second and third degree price discrimination strategies commonly used in yield management. For a monopolist seller we show that rationed promotions complement third degree price discrimination under appropriate conditions, but substitute for 2nd degree price discrimination when willingness to pay is only weakly correlated with preference for non-price attributes and demand exhibits the required convexity in price.

Abstract:
The retirement security landscape has changed drastically for most workers over the last thirty years – except for public school teachers and other state and local government employees. Many private-sector employers have stopped offering traditional retirement plans, while most state and local employees remain covered by defined benefit (DB) pension plans. Research shows that DB plans have had strong effects on worker retention in the private sector, as workers delayed retirement until they cash in on large pension wealth accruals late in their careers and then retire abruptly. We explore these effects for teachers, using data that includes measures of teacher qualifications and job satisfaction. We find that dissatisfied teachers respond much more to pension incentives than satisfied teachers do, first delaying retirement while pension wealth is still accumulating and then retiring abruptly

Abstract:
All the major economies in the world are now dominated by services. Developed economies have also become true “information economies”. Some of these changes can be justifiably described as “service industrialization” and they are visible from the sector and firm level down to processes and tasks. There are very significant opportunities for research at all levels. I will present an overview of our current research in areas including economic evolution, technology and competition, collaborative services, service experience and process design.

Abstract:
Transaction cost theory (TCE) scholars argue that MNEs exist due to failure of markets, a main stimulus of which is opportunism. On the contrary, proponents of the knowledge based view (KBV) claim that the opportunism assumption is redundant; the existence of the MNE can be explained without recourse to opportunism. This debate still persists (e.g., Fransson, Hakanson, &Liesch, 2011), but a key feature is that despite competing causal mechanisms, predictions of TCE and KBV are identical. We see this lack of predictive uniqueness as the prime bottleneck in resolving the question of whether opportunism matters, and contribute to the debate in two ways:(1) conceptually, we exploit the contingency logics inherent in KBV and TCE to build distinctive predictions from both theories and (2) empirically, we test the competing logics of both theories, bringing empirical evidence to the debate which has this far been largely on conceptual turf alone.Our results suggest that, subject to certain caveats, opportunism matters

Abstract:
Legitimacy Beyond Borders: Indian Software Services Firms in The United States 1984-2004 The organizational legitimacy of the multinational corporation (MNC) in host country institutional environments has been an ongoing concern for scholars in international management research. Notwithstanding a substantial literature on legitimacy as an outcome, our knowledge of legitimacy as a process, or legitimation, in the MNC context remains sketchy. We argue that the contemporary emergence of developing country MNCs (DMNCs) provides researchers a valuable opportunity to acquire a deeper understanding of the dynamics and mechanisms of the legitimation of MNCs. By means of a qualitative inquiry into the cultural-cognitive legitimation of Indian software services firms in the United States over the course of two decades from 1984 to 2004, we identify five core legitimation dynamics that explain how DMNCs acquire legitimacy in developed country markets. We also propose institutional bricolage as an alternative legitimating mechanism

Abstract:
This paper examines the performance impact of supervisor changes for workers within firms, and considers whether the magnitude of this effect depends upon a manager’s level within an organizational hierarchy. At lower levels in a hierarchy, codified rules dictating worker activities are typically implemented to a greater extent relative to higher levels, while managers at higher levels are given greater discretion to execute their role. As a consequence, the cumulative experience of managers and their subordinates working together may be more important in determining performance at higher levels. Using a proprietary dataset from a quick-service restaurant firm, I test for differences in the importance of this experience by estimating the short-term performance cost of supervisor changes at both upper and lower levels in the hierarchy. I find that supervisor changes at upper levels results in greater performance losses relative to lower levels, even after accounting for differences in assigned responsibility

Abstract:
In this study, we examined the relationship between diversity in positive state affect and the effectiveness of two-person flight crews. Using data collected from 93 flight simulations in two aviation courses, we found that diversity in positive state affect was positively related to crew effectiveness. Furthermore, we found that the agreeableness of crew members corresponded with susceptibility to emotional contagion, and therefore decreased the likelihood of them assuming diverse affective states during flight.

Abstract:
Does corporate lobbying simply add value by allowing firms to communicate expert information to policy makers, or does it also add value by facilitating potentially illegal quid pro quo arrangements, where lawmakers receive private benefits in exchange for favorable policy decisions? Using the corruption scandal involving the top Washington D.C. lobbyist Jack Abramoff as an exogenous negative shock to the ability of firms to lobby, we examine whether lobbying and illegal lobbying practices in particular, affect the market value of firms. The results suggest that firms that lobby more experience a significant decrease in market value following the guilty plea by Mr. Abramoff to bribery and corruption. A firm that spent $100,000 more on lobbying prior to the event year experiences an average decrease of $1.4 million in value in a 3-day event window around the guilty plea. To examine whether corrupt lobbying adds value, we use corporate social responsibility rankings to capture a firm’s propensity to engage in corrupt practices, and find that lobbying firms with a bad reputation experience a greater decrease in value following the scandal. We also find that legislation aimed at curbing corrupt lobbying practices significantly reduces firm value. A firm that spent $100,000 more on lobbying prior to the event year, experiences an average decrease of $0.84 million in value in a 3-day event window around the passage of the anti-corruption law. Our results indicate that lobbying creates shareholder value, and that part of this value can be attributed to corrupt lobbying practices.

Abstract:
As “modern” retail expands into emerging markets with promises of better quality, variety and lower prices, they face competition from millions of “traditional” mom-and-pop stores. This paper addresses a basic customer selection question facing a modern retailer entering an emerging market: Should the retailer begin by targeting higher socio economic classes or value conscious lower socio economic classes? The conventional wisdom is that lower socio-economic classes are likely to resist new shopping practices; hence modern retail should target the rich initially. Economic value-based arguments suggest that while modern retail’s better quality and variety may attract higher socioeconomic classes, lower prices will be attractive to lower socioeconomic classes; hence modern retail should also target the lower socioeconomic classes. Further, given the lower density of modern retail, would it be patronized by the rich with better transportation or the poor with lower opportunity costs of time? We address these questions using survey and household panel data on FMCG purchases from India. Household level models of store format and expenditure share choice show a nonlinear relationship between modern store patronage and socio economic status. Both high and low socioeconomic households adopt more often and spend more on modern retail relative to medium socioeconomic households. The results based on observational panel data are corroborated with self-reported reasons: high socio-economic households buy from modern retail for higher quality and variety, low socioeconomic households buy due to low prices and lower opportunity cost of time. We conclude that given the substantially larger size of lower socio-economic households in emerging markets, it is critical for modern retailers to appeal to lower middle class customers even in the early stages of entry.

Abstract:
Consumers, investors and other decision makers often rely on an expert to help choose among different actions that may also benefit the expert. To gain insight into such situations, we develop and test a model of an expert who recommends one of two actions to a decision maker who has the option to take neither action. For instance, a salesperson recommends one of two products to a customer who may purchase neither, or a consultant recommends one of two projects to a client who may pursue neither. Several phenomena previously identified in the theoretical literature on recommendations through costless, unverifiable "cheap talk" are captured together in this simple model. First, recommendations are "persuasive" in that recommending either action benefits the expert by reducing the probability that the decision maker takes neither action. Second, if the expert's incentives are biased toward one action then a recommendation for the more incentivized action is "discounted" and is less persuasive. Third, such discounting implies that if the expert's incentives are not transparent then an unbiased expert has a "political correctness" incentive to recommend the opposite action as a biased expert, so lack of transparency undermines the credibility of both biased and unbiased experts. Finally, if the decision maker is more easily pushed toward one action due to prior beliefs then the expert "panders" to the decision maker by sometimes recommending that action even when it is the worse action. These comparative static results are robust to the expert having a preference against lying. Experimental tests conducted with business students find that subject behavior is consistent with the comparative static predictions of the model, except that decision makers do not always anticipate that lack of transparency gives even unbiased experts an incentive to lie. The results suggest that full disclosure of expert incentives is even more important to successful communication than theory implies.

Abstract:
In social advertising, ads are targeted based on underlying social networks and their content is tailored with information that pertains to the social relationship. This paper explores the effectiveness of social advertising using data from field tests of different ads on Facebook. We find evidence that social advertising is effective, and that this efficacy seems to stem mainly from the ability of targeting based on social networks to uncover similarly responsive consumers. However, social advertising is \emph{less} effective if the advertiser explicitly states they are trying to promote social influence in the text of their ad. This suggests that advertisers must avoid being overt in their attempts to exploit social networks in their advertising.

Abstract:
Using new data we investigate open-market repurchase execution of S&P 500 firms. We find that smaller firms repurchase less frequently than larger firms, and at prices which are significantly lower than average market prices. Their repurchase activity is followed by a positive and significant abnormal return which lasts up to three months after the repurchase. These findings do not hold for large S&P 500 firms. Consistent with these findings, we show that the market response to the disclosure of actual repurchase data is positive and significant only for small firms, and that insider trading is positively related to actual repurchases

Abstract:
Building on over a decade of research on firefighters, I report findings from three studies (two qualitative, one quantitative) that illustrate: (a) the fundamental nature of assessing others’ “work orientations” (e.g., do you have a calling or are you here for the paycheck?); (b) how perceived work orientations are used for determining trust and predicting performance; and (c) how disparate cues are used in building an understanding of others’ work orientations. Firefighters provide an interesting case study for this research as the need for trust at a fire scene is very high; however, the number of fires that firefighters actually fight has gone down dramatically in recent years. Consequently, issues of trust often have to be made based on “small cues” that may have very little direct relevance to fighting fires. I draw upon multiple literatures, including meaning of work and trust, and provide implications for both theory and practice.

Abstract:
To our knowledge, ours is the first study to offer non-experimental evidence on the effects of pay inequality on agent actions. We study how pay inequalities affect (i) the likelihood that an individual non-CEO manager (VP) will voluntarily resign, and (ii) a firm’s rate of VP turnover. We consider pay inequalities that a VP faces relative to (i) the CEO in her own firm, (ii) other VPs in the firm, and (iii) VPs in benchmark firms. We use a unique hand-collected dataset of over 1,000 voluntary managerial resignations and find that pay inequality is an important determinant of managerial turnover. We find that managers are more likely to resign when their pay relative to their peers in the firm and outside the firm is lower; and firms with greater levels of internal pay inequality and greater pay inequality relative to benchmark firms experience higher VP turnover.

Abstract:
Scientific pricing incorporates process and data-driven intelligence into a company’s selling process. It fundamentally uses the law of supply and demand; however, its applications vary considerably based on many factors, including product characteristics, data availability, business requirements, managerial objectives, and competitive environments. High-tech products are characterized by rapid price erosions, super high price sensitivity, short and unpredictable lifecycles, strong tendency of cannibalization and extreme competition. This presentation provides a brief overview of scientific pricing and discusses key challenges in its application for the high-tech products.

Abstract:
This paper explores commonalities across asset-pricing anomalies. In particular, we assess implications of financial distress for the profitability of anomaly-based trading strategies. Strategies based on price momentum, earnings momentum, credit risk, dispersion, idiosyncratic volatility, and capital investments derive their profitability from taking short positions in high credit risk firms that experience deteriorating credit conditions. Such distressed firms are highly illiquid and hard to short sell, which could establish nontrivial hurdles for exploiting anomalies in real time. The value effect emerges from taking long positions in high credit risk firms that survive financial distress and subsequently realize high returns. The accruals anomaly is an exception - it is robust amongst high and low credit risk firms as well as during periods of deteriorating, stable, and improving credit conditions

Abstract:
Cities are often modeled as thick and fluid environments in which individuals have better access to markets, public goods and services, and more diverse social networks. However, rapid urbanization in developing countries has created “mega cities” that cover large geographic areas and often have poor public transportation, segregated housing, and uneven provision of public goods. Does spatial and social distance within such cities affect the economic mobility and well-being of the urban poor? In this paper, we exploit a relocation program in a large Indian city, which used a lottery to select which households would be offered the opportunity to purchase a subsidized home in a relatively distant, residential complex, to examine how spatial and social distance shape networks and household ability to use networks for risk-sharing and collective action. We find that winners of the housing lottery are more spatially isolated from centers of economic activity and public services approximately 14 years after the relocation. Winners have more occupational ties but fewer caste/religious ties within neighborhoods compared to non-winners, and winners report greater collective action but less social insurance. We interpret this pattern as a change in the shape of networks, reducing costs for local cooperation, but increasing the correlation of risk within networks

Abstract:
This paper identifies the effect of corporate networks on firms’ financial investment and executive pay decisions. Corporate networks arise through board interlocks, which provide a frequent and important channel for non-market interactions amongst firms. Using panel data for all publicly traded companies in India I estimate peer effects in firm policies, defining each firm’s reference group as the set of all other firms with whom it shares one or more directors. Identification of dynamic network peer effects, which derive from endogenous associations, is achieved by exploiting natural breaks in network evolution that exogenously change the composition of peers. These breaks occur as a result of local network shocks – death or retirement of shared directors – that are stochastic and external to the network formation process. I find significant network peer effects that are positively associated with firms’ investment strategy and executive compensation.I also explore heterogeneity in peer effects by distinguishing between network peers who belong to the same industry from those that do not, and find a greater effect of across-industry network peers.

Abstract:
This paper examines whether a worker's wage is based in part on information about the performance of her personal contacts. Embedding a sibling model into an employer learning framework, I develop a theory of labor markets with symmetric but imperfect information among employers in which workers are organized into disjoint social groups and workers in the same reference group have correlated abilities. I study wage determination under two alternative belief formation processes: individual learning, under which employers observe only a worker's own schooling and performance, and social learning, under which employers also observe those of her personal contacts. Using data on the AFQT scores of siblings in the NLSY79, I test for a form of statistical nepotism in which a sibling's performance is priced into a worker's wage. If learning is social, then an older sibling's test score should typically have a larger adjusted impact on a younger sibling's log wage than vice versa. By contrast, if learning is individual, then no such asymmetry should be present. The empirical findings provide strong support for the central prediction of the social learning model. Furthermore, I perform several exercises to identify social learning as the leading explanation for the main results, largely ruling out other potential factors, such as asymmetric skill formation, human capital transfers, and role model effects.

Abstract:
We consider a flexible policy for a single location, single item inventory under rather general assumptions. Under the (Q,R,S) policy, orders are placed in multiples of Q units, at review epochs that are spaced R time units apart, and such that after ordering the inventory position is as close to but no larger than S units of product. By choosing Q = 0 (or 1 for discrete demand), the policy reduces to a base stock policy, and by choosing R = 0, continuous review results. Hence the general (Q,R,S) policy includes periodic review base stock and (r,nQ) policies and continuous review one-for-one and order point order quantity policies as special cases. The model therefore allows fair comparisons of costs between all these policies. We provide a unified derivation of the inventory related costs for the (Q,R,S) policy and completely characterize its (joint) convexity properties. We also study review and ordering costs incurred under the (Q,R,S) policy, and compare optimality conditions and costs for the periodic review base stock policy and continuous review order point-order quantity policies. Finally, we provide some real life examples where it is natural to use (Q,R,S) policies.

Abstract:
We develop a theoretical model of the pricing of a new durable good to determine the conditions under which the seller can utilize inferences about the buyer’s willingness to pay based not only on her decision to trade in the old good but also on its characteristics. We test the predictions of our theory using transaction data for new car purchases that includes information on the vehicles that new car buyers traded in. The results show that dealers infer a higher willingness to pay and charge higher prices to consumers who traded in a used vehicle than to those who did not. We also find that dealers charge even higher prices to those consumers who trade in used cars that were of the same make and model as the new one. We show that ignoring the information available in the type of trade-in can inflate the estimated value of the trade-in effect

Abstract:
Various theoretical models assume that information seeking behavior of investors has an impact on prices. However, it is very difficult to empirically test this, since the actual information acquisition process of the investors is unobservable. Using a unique data set from Google Trends, I construct a search index and use it to proxy for the information seeking behavior of retail investors. I find that abnormal search index predicts future buying pressure on the stock of a company. The portfolio with the highest increase in the search index has positive and significant alphas. The search index also predicts earnings surprises and is associated with the pre-earnings announcement drift. My results are robust to alternative specifications of CAR windows, past returns, news coverage, information available to investors prior to the release of earnings numbers, and the information environment surrounding the earnings announcements. Overall, my results are in line with the hypothesis that retail investors’ trades have information content relevant to stock prices.

Abstract:
Limit order revisions, which involve decisions about when and how to modify or cancel prevailing limit orders, account for a significant proportion of limit order activity in exchanges around the world. This paper examines the determinants of traders' decisions to revise orders, and the profitability of traders' order revision strategies using a unique dataset which provides complete information on trades, orders, trader identification codes, and trader categories. The analysis provides three important results. One, informed traders and traders who function as voluntary market makers revise orders most intensely. Two, along with changes in market prices and other market conditions, changes in traders' inventories, including inventories of correlated stocks, influence order revision strategies. Three, informed traders reduce the execution costs of their order portfolios through active order revisions; the benefit is especially pronounced on earnings announcement days, when the value of private information is high. That traders employ revisions to mitigate their order submission, inventory, and adverse selection risks indicates that order revisions are a valuable feature of the rapidly proliferating electronic limit order markets.

Abstract:
This paper investigates whether managers’ discretionary spending for political purposes enhances shareholder value. I exploit exogenous shocks to campaign finance regimes, in particular the McConnell v. FEC Supreme Court decision of 2003, to show that on average, restrictions on firms’ abilities to contribute to national political parties reduce shareholder value by $10.28 million to $87.67 million. Overall, the results suggest that political contributions are value-enhancing investment projects, and restrictions on managers’ discretionary spending for political purposes are detrimental to shareholder value.

Abstract:
Many judgments consumers make occur within a sequence of evaluations and therefore are likely to be influenced by context effects. Assimilation (contrast) refers to a positive (negative) relationship between the value people place on a target and the value they place on the context. Past work on assimilation and contrast in sequential evaluation presupposes only one or the other occurs. We propose that stimuli experienced within a sequence may be influenced simultaneously by assimilation and contrast to stimuli experienced earlier in the sequence, and we estimate a hierarchical Bayesian model that confirms these simultaneous effects within a unique, real-world dataset. We find individual evaluations (scores) are influenced by contrast effects to the scores of their immediate predecessors and to extreme scores within the sequence, while simultaneously influenced by assimilation to the first score. This work is the first to document that multiple assimilation and contrast effects simultaneously influence sequential hedonic evaluations.

Abstract:
Over the recent two decades substantial effort has been placed in expands our theoretical understanding of Analytics (machine learning, data mining, etc.). However, the necessity of a sound theoretical understanding of any analytical methodology is only a part of the overall vision. In thistalk we focus on the operationalisation of Analytics, that is how do we take these approaches and marry them into business requirements. What are the key ingredients to operationalise analytical methodologies? And why would one want to operationalise Analytics in the first place?

Abstract:
We study how the risk of disruption impacts the performance of a supply chain with a goal of identifying policy recommendations for designers. A classic example is that of a fire in a supplier plant shutting down production at Ericsson for 30 days and resulting in $400 million of lost revenue. There are two questions we focus on in a context like this. The first relates to the fact that the risk of disruption is very hard estimate. There is now way that Ericsson could have estimated the probability of this fire. How should it account for estimation error when designing its supply network? The second question relates to the idea of “integrating” supply chains using policies such as common parts, single suppliers, centralized inventories. In each case, the supply chain action improves performance when faced with recurrent risk (for example demand fluctuations) but makes the supply chain more fragile when faced with disruptive risk. We identify factors that influence the fragility of a supply chain. Sunil Chopra (joint with Achal Bassamboo, Mark Daskin, Michael Lim)

Abstract:
The literature suggests that brand equity can be split into two parts - an attribute-based equity and a non-attribute based one that captures consumer preferences beyond the utility offered by individual attributes. In addition to measuring attribute-based equity, firms deploying portfolios of products within complex branding structures often seek to measure the presence, distribution and evolution of these potentially heterogeneous non-attribute based unique branding associations - labelled 'residual equity' – at each distinct layer of a product’s brand hierarchy. The authors develop and operationalize a robust and flexible Bayesian semiparametric model to first separate the attribute-based equity from latent residual equity, to jointly estimate this multi-level residual equity and to allow residual equity to exhibit statedependence using a random-walk prior. The model is empirically illustrated on syndicated US national beer sales data. The authors find significant, heterogeneous and temporally stable residual equity presence across the brand hierarchy and highlight some substantive implications arising therein.

Abstract:
The defining figure of neoclassical economic theory, the homo oeconomicus, has long been challenged by both experimental economics and social psychology. People are, as we now know from many experimental studies on dictator games, ultimatum games or public good games, not own-payoff maximising egoists, but compassionate social beings who care about fairness and the well-being of others. However, the focus on kind behaviour in the literature may be inappropriately one-sided. In a series of experiments presented here we ask whether there is also adark side of human behaviour. We show that nastiness, which we define as a genuine pleasure derived from lowering the well-being of others, is a common trait in humans. We explore strategic situations in which spite and nastiness can result in disastrous outcomes, and which institutional arrangements exacerbate or harness the effects of nastiness.

Abstract:
We consider an approach for estimating substitute and lost retail demand when only sales transaction data are available and not all products are available in all periods (e.g., due to stock-outs or availability controls imposed by the seller). Our method combines a multinomial logit (MNL) demand model with a Poisson model of arrivals over multiple periods. The problem we consider is how to jointly estimate the parameters of this combined model using only sales transaction data. Our key idea is to view the problem in terms of primary demand (or first-choice) demand -- that is, the product choices that customers would have made if all products were available in all periods -- and to treat the observed sales as incomplete observations of primary demand. We then apply the expectation-maximization (EM) method to this incomplete, primary demand model and show that it leads to a simple, highly efficient iterative procedure for estimating the model which provably converges to a stationary point of the log-likelihood function. We illustrate the estimation procedure on several industry data sets and discuss extensions of the approach to non-parametric models of preference. Garrett van Ryzin (Joint work with Gustavo Vulcano, NYU and Richard Ratliff, Sabre Holdings)

Abstract:
Although firms spend substantial amounts of money to build and maintain brand equity, brand equity is fragile to product-harm crises such as product recalls. Product-harm crises can adversely affect consumer perceptions and preferences as well as weaken the effectiveness of marketing activities (Van Heerde et al. 2007). Despite the potentially devastating effects of these crises, most firms are inadequately informed and underprepared to handle them (Dawar and Pilluta 2000). How do product recalls affect brand equity? How do they influence the effectiveness of different types of advertising, such as product feature advertising, product model advertising and sponsorship advertising? How should firms allocate their advertising spending across different types? The answers to these questions will enable firms make better advertising allocation decisions and rebuild brand equity in response to product recalls. In this study, we develop a state space model of brand equity based on Kalman filtering to capture the dynamics related to spending on different types of advertising. We then integrate the Kalman filter with a random coefficient demand model based on Berry, Levinsohn, and Pakes (1995). The model allows us to capture the direct effects of product recall on brand equity as well as the indirect effects of recall on brand equity through the effectiveness of different advertising types. We estimate our model on a carefully compiled dataset on the automobile industry, comprising 35 auto companies that had a total of 1,206 recalls during 1997-2002. The dataset includes advertising data on five types, product feature advertising, recalled product model advertising, non-recalled product model advertising, promotional advertising, and sponsorship advertising. Using in a holdout sample, we perform counterfactuals to show how our proposed model and its parameter estimates can be used to improve the allocation of advertising budget across the different types.Our results reveal that product recall has no direct effect on brand equity. However, it has significant negative influence on the effectiveness of each advertising type, with sponsorship advertising suffering the most. The reallocated advertising budget based on our model is associated with higher sales and profits. In addition, our results have other important managerial implications. They suggest that, in response to product harm crises, firms should avoid advertising the recalled model, cut sponsorship advertising, and spend more on product feature advertising. Keywords: Advertising, Brand equity, Product harm crisis, Kalman filter, BLP approach.

Abstract:
Organizational knowledge management has become a critical competitive capability for professional services (engineers, doctors, lawyers, etc.). Professional service firms are grappling with how best to manage knowledge flows within the firm; and the flow of knowledge in and out of the firm. Understanding knowledge flows and leveraging it translates to faster (and cheaper) client solutions. Specifically, I will be talking about two on-going projects. The first involves the dynamics of the transfer of knowledge within business units of the firm. If one business unit of the firm is working on a client problem, for example, how well is it able to leverage not only all of its prior work, but by other business units in the firm. Another related project investigates if professional service firms are able to leverage the experience of their sub-contractors. They use but do not own the work product - can firms leverage this type of knowledge? The focus of this talk will be on the issues related to leveraging such “distributed knowledge” within the firm via empirical estimation of learning curve models. We will report preliminary results based on our experience with an Architectural/Engineering design firm. Ram Ganeshan (joint work with Tonya Boone and Robert L. Hicks)

Abstract:
If a government has ability and willingness to redistribute the surplus created by an external investor, why do we still observe resistance to such investment, sometimes in the form of destruction of productive assets? We explain such surplus destruction as a credible signal sent to the government by an affected group of its low valuation of investment. The information-constrained government values such a signal and uses it to implement a better redistribution scheme: thus resistance can be interpreted as a demand for redistribution. The extent of destruction is decreasing in the extent that the government cares for the affected group. While resistance has an informational value, it has two distinct costs: it directly reduces surplus and also reduces the investor’s incentives to create surplus. The government uses a tax/subsidy on the investment to maximize weighted social surplus, and we show that the possibility of destruction may force the government to be too soft in its negotiation with the investor. A protection for the investor either legal (banning signaling) or financial (compensation for losses incurred due to resistance) can improve the society’s welfare

Abstract:
This paper focuses on contractual provisions in external sourcing of innovative services. Such agreements require protection of key knowledge assets, whilst simultaneously providing incentives for heuristic search to enable problem solving and knowledge transfer. We conceptualize two distinct dimensions of knowledge in the inter-organizational context: problem solving complexity and the need for synthesis of knowledge bases across organizational boundaries. Integrating explanations from transaction cost economics, incomplete contracting theory and knowledge-based research, we analyze a sample of IT outsourcing contracts to investigate the role of three contractual provisions: joint decision making rights, intellectual property safeguards, as well as the intensity of the incentives. Contracts for bilateral agreements that involve high problem solving complexity contain stronger and more clearly elucidated joint decision rights, which rely less on measurable outcomes, in conjunction with strong IP safeguards and low powered incentives. When prior experience of the vendor is critical for fulfillment of the contracted task, contracts include joint decision rights. Exchanges characterized by complementarity in knowledge bases across firms are more likely to be governed by high powered incentives contracts while exchanges characterized by co-specialization are governed by contracting arrangements involving joint decision rights in conjunction with low powered incentives.

Abstract:
We propose an approach to prioritize service improvements based on the twin objectives of higher customer value and lower cost. The approach involves (1) conducting qualitative customer studies to identify a list of possible service improvements, (2) conducting a quantitative, conjoint-like survey to determine values customers attach to each of the improvements, (3) collecting data on the costs of making the service improvements, and (4) putting the data in (2)–(3) together to prioritize improvements using a “bang for the buck” rule. The approach also allows for maximizing the likely increased service usage resulting from any subset of service improvements subject to a budget constraint. We illustrate the proposed approach in the context of improving passenger train service between a pair of cities in India. An adaptive self–explicated approach is used for obtaining customer values and cost estimates. The customer values so elicited display substantial face validity.

Abstract:
In this session I will describe some of the projects that I’ve been working on while at ISB. They include the following: • Sustainability in Healthcare: Towards a Theory of Environmental Capabilities. This project draws on research in operations strategy and resource based view of the firm to develop a model that describes how healthcare organizations are developing capabilities that support sustainable operations. • Investigating the Alignment of Sustainability Perspectives in the Retail Fashion Supply Chain (with R. Batra). This project empirically examines the congruence in attitudes about sustainability among consumers, retailers and designers. • Exploratory Study of Sustainable Luxury (with R. Batra). This project uses qualitative methods to define sustainable luxury, identify the tradeoffs and the implications for service design and delivery.

Abstract:
The spread of social media has meant that User-generated Content (UGC) has become an important form of communication. Most of the past research in social media has concentrated on analyzing message virality or the causes of why certain messages go viral. We posit that accounting for media virality, a phenomenon where messages are transferred beyond the original media they were carried in, has become imperative. In this paper we argue that media virality is a function of product characteristics and propose a framework for capturing this type of virality using just two dimensions, the inter media elasticity and inter media duration, together referred to as an entity’s Inter Media Reactivity (IMR). We illustrate the application of our concept using data on movie stars across several media. We calculate the IMR for each star, and demonstrate how media virality differs across each, and also analyze the starspecific characteristics that drive media virality. Subsequently, we relate the media virality of stars to the performance of their movies. Our research thus provides a theoretical contribution to the literature by exploring media virality while also providing several managerially relevant substantive insights about the motion picture industry. Key Words: Social media, advertising, motion picture industry

Abstract:
It is possible for fingerprints from two different persons to be closely matched with each other. A spurious match such as this should be detected to avoid a false positive identification. Given a match between a fingerprint pair, we would like to quantify the extent of this match statistically. This is possible to do if the variability of the underlying processes are accounted for and modeled adequately. The extent of a match depends on two sources of variability: (1) inter-class variability arising from the spatial configuration of fingerprint features, and (2) intra-class variability arising from image quality, variability due to the fingertip placement on the sensor and elastic distortion of the skin. To adequately capture feature variability, we develop distributions on the feature space based on marked point processes that model clustering tendencies and spatial correlations between neighboring marks. Inference is carried out in a Bayesian MCMC framework. The proposed class of models is fitted to real fingerprint images to demonstrate the flexibility of fit to different kinds of fingerprint feature patterns arising in practice. Evidence of a Paired Impostor Correspondence (EPIC) is developed as a measure of fingerprint uniqueness, and its predictive value is obtained using simulation from the fitted models to quantify the extent of an observed match.

Abstract:
Abstract: Does information technology (IT) enable firms to globalize their operations and achieve higher foreign revenues and foreign profits? Although several studies have argued that IT can help firms globalize their operations, few studies have empirically tested this conjecture. We identify and discuss three mechanisms that explain why IT investments enable firms to globalize their operations – value chain coordination, value chain configuration, and local responsiveness. Using data on 259 multinational firms for an 8-year period (1999 – 2006), we find that aggregate IT investments are positively associated with higher levels of foreign revenues and lower levels of total costs. In turn, the increase in foreign revenues and reduction in total costs mediate profits from foreign operations. IT investments also help to increase domestic revenues and domestic profits. On the whole, we find that IT contributes to globalization both through higher revenues and lower total costs. These findings provide indirect evidence for the relative importance of underlying theoretical mechanisms that explain why IT helps firms to achieve higher foreign revenues and foreign profits, two key measures of a firm’s globalization. For example, results suggest that IT allows firms to increase foreign revenues through a local adaptation mechanism, and spread total costs over a larger revenues base through globalization efforts through value chain coordination and/or value chain configuration mechanisms. By documenting how IT creates value for firms through enabling globalization, we extend the business value of IT and international business literatures that have so far touched on firm-level globalization benefits from IT investments only in passing. This study is also important from a managerial perspective, because an understanding of how IT influences foreign revenues and foreign profits can help firms make appropriate changes in their IT strategies and IT investments to improve competitiveness. Key words: IT investments, globalization, multinational corporations, foreign revenues, foreign profits, value chain, coordination, configuration, responsiveness, business value of IT.

Abstract:
We study the impact of Corporate Social Responsibility (CSR) on bank loans. Findings suggest CSR has a negative impact on loan spread.In addition, CSR negatively moderates the effect of loan characteristics such as maturity, and firm characteristics such as leverage.We also findCSR positively moderates the effect of a firm’s growth opportunities on spread. Our study implies CSR acts as a form of collateral which the firm‘puts on the line’ when transacting with stakeholders including banks.But CSR also consumes scarce managerial resources which may temper its beneficial effects by leading to tradeoffs with economic opportunities.

Abstract:
I present three studies from our research program on dynamic cognitive network activation (Smith, Menon,& Thompson, 2011; Menon &Smith, working paper). Networks are not simply social structures, they are also cognitive structures that can dynamically shift as a function of people’s emotions and identities. Our first two studies show that high and low socioeconomic status people spontaneously activate, or call to mind, different subsections of their networks when faced with job threat. Using a multi-method approach (General Social Survey data and a laboratory experiment), we find that, under conditions of job threat, people with low status exhibit a winnowing response (i.e., cognitively activating smaller and tighter subsections of their networks), whereas people with high status exhibit a widening response (i.e., activating larger and less dense subsections of their networks). A third study theoretically and empirically links identity and emotional state to network activation. We show that confirmed identities (both high status people whose high power was confirmed and low status people whose low power was confirmed) lead to widen their networks, as compared to conflicted identities (people facing a mismatch between their socioeconomic status and primed power). The emotional signature of having confirmed identities was comfort and control, which mediated respondents' network activation. One implication is that narrowing the network in response to threat might reduce low-status group members’ access to new information, harming their chances of finding subsequent employment and exacerbating social inequality. We also consider the psychological challenges that empowerment-based policies may present.

Abstract:
Marketing science can claim many successes in directing management decision making in practice. Segmentation and mapping tools, conjoint and discrete choice models, and econometric analyses of promotional scanner data represent a few of the area in which analytical techniques have influenced the planning and execution of marketing activities. However, when one looks at the level of penetration of these tools, I argue that the picture is considerably less rosey. This seminar firstly examines the level of impact on practice that marketing science has had from the perspectives of academics, consultants and managers (Roberts, Kayande, and Stremersch 20111) and then digs deeper into the characteristics of that work which has had the most impact, as measured by the finalists in the Gary Lilien Marketing Science Practice Prize (Lilien, Roberts, and Shankar 20112). 1 Roberts, John H., Ujwal Kayande, and Stefan Stremersch (2011) “From Academic Research to Marketing Practice: Exploring the Marketing Science Value Chain” Working Paper, The Australian National University. 2 Lilien, Gary L., John H. Roberts, and Venkatesh Shankar (2011) “Effective Marketing Science Applications: Insights from ISMS–MSI Practice Prize Finalist Papers and Projects” Marketing Science Institute Working Paper Series, Report No. 11-101

Abstract:
After a decade of rapid globalization, there is increased interest to bring offshored production closer to home. A key driver behind global sourcing has been its ability to increase margins by using cheap labor and materials. However, those benefits do not come for free: offshoring suffers from higher transaction costs, long and complicated logistics that are sensitive to increased volatilities in demand, supply, currency exchange rates and oil prices, and political and environmental criticism. In addition, responding to customers' new-product requests, shorter delivery times, and swift corrections to improve designs and quality has magnified the need for responsive and agile supply chains. A complete reversal to local sourcing, however, is unlikely and ill-advised. Indeed, the concepts of global and local sourcing are not mutually exclusive. Rather, the combined use of multiple supply sources, each of which is different and possesses unique advantages, might be better than any single sourcing strategy. The main contribution of this paper is to provide the first exact and analytically-tractable analysis of a dual sourcing policy that is easy to implement. This policy allows us to design an ordering policy that allocates the order volume to both sources so as to optimally trade-off cost and responsiveness. We present a tight approximation for the optimal volume fraction ordered from the slow but cheap source, which we refer to as the strategic base or offshoring allocation, and its corresponding total landed cost. The strategic allocation is characterized by a simple formula that provides structural insight on the impact of financial, operational and demand parameters, and a starting point for data-driven decision making.

Abstract:
Although the short-run response of the financial markets to announcements of marketing investments has been well-established in the extant literature, less is known about how the basic information inherent in these announcements flows from the “black box” of the firm to external market participants. In response, we conceptualize that since marketing investments are determined by individuals with the best knowledge of the firm’s future environment, announcements of a marketing investment provide valuable information about the future productivity of that marketing investment. Our analysis yields two distinct predictions. First, market reaction to an investment decrease announcement will be less pronounced than market reaction to an investment increase announcement, a result that stands in sharp contrast to received theory. This is because the mean-shifting and uncertainty-reducing aspects of new information tend to mitigate each other for decrease announcements but reinforce each other for increase announcements. Second, the information content of marketing investment announcements will be intimately related to investors’ prior information; consequently, firms that announce similar marketing investments can provoke markedly different market reactions. Examining a sample of sales force size change announcements by 131 firms in the pharmaceutical industry, we find broad support for our analytical conceptualization.

Abstract:
This study proposes that the institutional environmentimpacts the level of female representation within a firm’s board of directors. Based on proxy data for the top 150 Fortune 500 companies of 2006, hypotheses concerning the three forms of isomorphism through which the institutional environment may impact a company’s board gender diversity are put forward and tested.Our results show support for the impact of two hypothesized forms of coercive isomorphism and for normative isomorphism on female board representation. Our findings contribute to furthering research onboard composition and institutional theory by helping to explain the integral role that institutional mechanisms play in shaping board composition and by identifying possible antecedents of female board representation that have previously been absent from the governance literature.

Abstract:
Entrepreneurship research is dominated by two theories of opportunity formation: discovery and creation. The specific entrepreneurial actions leading to identification and exploitation of each likely differ. We explore entrepreneurs’ alignment of human resources, and specifically advice networks. Extant research favors diversity within advice networks as a source of idea generation and pursuit. However, we argue that diversity may not always be advantageous. Drawing from literature on entrepreneurial opportunities, social network theory, and cognitive psychology, we suggest that diversity within advice networks may benefit entrepreneurs pursuing discovery opportunities but similarity within advice networks may benefit entrepreneurs pursuing creation opportunities. Further, we argue that proper alignment between opportunity type and advice network results in superior performance. We test these assertions using publically available survey data to classify entrepreneurial opportunities and advice networks.

Abstract:
In this paper we attempt to understand how capabilities may be developed so as to provide a sustainable basis for competitive advantage in the context of the global IT services industry. Using detailed project-level data from a large Indian IT services multinational we find that speed of project execution follows a quadratic relation with project margin and a linear relationship (negative) with project revenue productivity. Increasing offshore work increases project margin without impacting revenue productivity. Change of scope in the middle of project significantly increases revenue productivity, but does not impact project margin. The results indicate how service delivery capabilities can be used successfully by execution focused service providers to increase margin without increasing cost to customer even in the face of changing requirements.

Abstract:
Consumer reviews are becoming increasingly important in consumers’ purchase decision process and in the success of new products. Prior literature acknowledges that consumer reviews impact product sales but are divided on the impact of the three metrics – valence, volume, and dispersion of consumer reviews – on product sales. The underlying thesis of the current paper is that these differences in findings are driven by the evolution of these metrics over time. Traditional models, which do not account for this evolution(shape) may fail to incorporate potentially vital information, and thereby lead to divergent conclusions. In this paper, using 395,297 online movie reviews collected from Yahoo and IMDB on 405 movies released from Feb. 1999 to Dec. 2010, we seek answers to the following questions: 1) Do consumer reviews matter i.e. can consumer reviews be used to predict box office sales? 2) How to quantify consumer reviews? Which metric – valence, volume or dispersion is more informative? 3) How do consumer reviews evolve? Does the shape of one metric influence the shape of another? Does their shape matters? We use functional data analysis to study the above questions, including the interactions among these eWOM matrics

Abstract:
Firms are increasingly facing consumers with a heightened focus on the social, employee, and environmental consequences of their marketing activities and stakeholders with a greater capacity to exert influence on firm and customer behavior. This trend points to a need for marketers to find competitive advantage and differentiation by evolving from a single minded customer focus towards an understanding of a broader set of stakeholder requirements. The emerging Stakeholder Marketing literature has articulated such a need and proposed an initial formulation of its implications for firm behavior and performance. However, consensus on the capabilities required by firms to adopt a stakeholder orientation has not been reached nor the consequences of such actions tested. This research draws on depth interviews of managers and a theory-in-use approach to introduce Constituents-Based Marketing (CBM) as the capability to develop product offerings that can address the needs of multiple constituencies at the same time. An empirical test across 44 countries uses instrumental variable regression and finds CBM capability to be positively associated with sales growth, employee engagement, and company trust. The analysis finds the CBM effects to be stronger in highly networked as well as competitive conditions. External stakeholder pressures serve as a motivator, while firm cross functional processes and market orientation provide the ability for a firm to develop CBM capabilities. The results are robust to estimation methods and endogeniety concerns. We present theoretical implications and managerial guidelines for the generation of market intelligence and the design of marketing organizations.

Abstract:
In this paper we explore the role of related alliance experience, diversity in alliance experience, and information technology enabled knowledge integration capabilities in value creation in alliances. We conceptualize alliance experience in terms of relatedness and diversity and further identify the functional focus and industry of the partner as defining the nature of alliance experience. We theorize that both type-based and partner-industry based related experience will have a positive effect on alliance value. We also theorize that both type-based and partner-industry based diversity in alliance experience will have a positive effect on alliance value. Further, we theorize that while alliance experience enhances a firm’s knowledge, such knowledge has to be integrated, institutionalized and made accessible for it to be used effectively in future alliances. Hence firms with higher IT-enabled knowledge integration capabilities are more likely to do so and thereby enhance alliance value. Using data from 1030 alliances made by 89 firms across 11 industries, we test our research propositions. We find that type-based related experience is positively related to value gains in alliances whereas partner industry-based related experience affects alliance value negatively. We also find that a firm’s IT enabled knowledge integration positively moderates the effects of both related and diverse experience on value creation in alliances. Our findings highlight that while knowledge gained through learning by doing is important, complementary capabilities that enables firms to leverage and utilize such knowledge are also necessary for successful value creation in alliances. We interpret these findings and discuss their implications for research in both strategic management and information systems areas.

Abstract:
Multiple theoretical perspectives offer varied and often paradoxical accounts of women¹s incongruent status in male-dominated work groups. Integrating these varied perspectives, I tested distinct mechanisms by which women¹s incongruent status (i.e., situations where women have acquired high status) influences expertise identification and utilization in science and engineering research groups. Across three studies in this setting, applying hierarchical linear modeling techniques, I found that women were more likely than men to devalue the expertise of women in high status positions (Study 1). However, this in-group devaluation was mitigated by gender identification among women and exacerbated by perceived legitimacy of gender based status differences (Study 2). Further, perceived expertise predicted expertise utilization in groups and the demographic context of the group minimized the negative effects of incongruent status on women¹s expertise utilization. Women¹s expertise, in general, was more likely to be utilized in gender balanced groups and in academic units with a gender-balanced department faculty. At the group level, the presence of high status females in the group was associated with higher research productivity when groups were embedded in academic units with a gender-balanced faculty (Study 3). These findings provide compelling evidence that variations in the demographic context signal the legitimacy of individuals in incongruent status positions and shape both interpersonal attributions and information-processing in groups

Abstract:
We present an asymmetric information model to examine private placements issued to owner-managers. Our main conclusion is that allowing private placements to insiders can mit- igate, if not eliminate, the underinvestment problem. Our model predicts that announcement period returns for private placements should be: (1) positive; (2) dependent on regulatory constraints that determine the issue price; (3) positively related to volatility; (4) negatively related to leverage; (5) negatively related to owner-managers’ shareholdings (6) inversely re- lated to proxies of manipulation; and (7) negatively related to illiquidity. We empirically test our model’s predictions, along with others from literature, on a sample of private placements issued in the Indian capital markets during 2001-09 and report empirical evidence largely consistent with the model.

Abstract:
Many organizations (DMUs) are comprised of networked sub-DMUs or departments, i.e., the outputs of some departments serve as inputs to others and vice versa. For example, in media-platform firms like newspaper companies, the outputs of the editorial department are inputs to the advertising department and vice versa. Extant approaches for efficiency analysis either ignore the network effects or make parametric assumptions to enable statistical inference on the estimated efficiencies. Hence, we develop a new method that incorporates the network effects and furnishes nonparametric inference on efficiencies. Applying the proposed method to the US daily newspaper industry, we not only demonstrate that it outperforms existing approaches, but also that it yields new insights into department-level efficiencies. Keywords: Efficiency Analysis, Sliced Inverse Regression, Media-Platforms, Networked DMUs

Abstract:
Concierge Medicine is the most visible implementation of a new trend of introducing a fee-based premier option in a service offering. This is usually done for the purposes of segmenting customers based on their willingness or ability to wait for the service. Using a realistic yet representative model setup, we perform a detailed analysis to (i) determine the conditions (fees, cost structure, etc.) under which the concierge option is profitable for the service provider, (ii) quantify benefits accrued by the premier customers; and (iii) evaluate the resulting impact on the other customers. We show that, under a wide range of system parameters, introducing a concierge option benefits everyone and also compute the magnitude of these benefits. These benefits are larger when the variance in the customer waiting costs is high and the system utilization is high. We complement these results with data on the adoption of MDVIP (the most popular concierge medical service in the US) service and show that the service has been adopted in areas where the median income is significantly larger and the population is older. Both income and age are good proxies for the waiting cost that a customer attributes to waiting for receiving medical service.

Abstract:
A potential strength and weakness of the MNE is that it is characterized by a heterogeneous workforce that is geographically dispersed, and embodied by location-specific human capital. This paper develops a framework of the processes by which firms engage in knowledge retention, exchange and combination in order to create a firm-specific and globally relevant body of knowledge. We explore HR practices that may facilitate both new value creation and capture for subsidiaries and the MNE.

Abstract:
Should embankments be used to control floods? This is a question of great importance in the eastern Gangetic plain where embankment breaches cause severe flood damage every year, and huge damages due to major breaches every few years. Critics of the embankment policy have called for a strategy of living with floods by building dispersed infrastructure to cope with floods. However, no cost-benefit analysis of alternative strategies is available.This paper makes a first pass at evaluating embankments. Using two years or more of data from 504 households in 28 villages in the floodplain of the Kosi river in north Bihar, I compare agricultural output, wage incomes, unemployment, and other indicators of well-being between villages subject to flooding from rivers and villages not subject to such flooding. I find that, for the most part, villages subject to river flooding are no worse off than villages not subject to such flooding. Thus, the evidence provides no support for the embankment strategy.

Abstract:
Public policy in modern Indian features affirmative action—policies intended to reduce persistent inequality stemming from a centuries-old caste structure. We study the effects of one such affirmative action program. Specifically, we examine the consequences of an admissions policy to engineering colleges that fixes percentage quotas, common across 214 colleges, for each of six disadvantaged castes. We have obtained access to exceptionally rich data for study of this affirmative action program—data that include the test scores that were used to administer admissions decision rules, as well as detailed independent ability metrics that did not influence admissions decisions. Our analysis indicates that for targeted students the program has significant and substantial positive effects both on college attendance and first-year academic achievement.

Abstract:
Are employees that use flexible work arrangements (FWAs) good organizational citizens? Business and scholarly discourse suggest that flexible workers risk being labeled as bad organizational citizens: employees using FWAs are perceived as lacking dedication to their organization and as unavailable when their colleagues need help. However, research so far has not empirically examined the impacts of FWAs on citizenship behaviors. Our study develops and tests a theoretical model linking FWAs to employee contextual performance. Findings suggest that FWAs have positive effects on employee contextual performance by enhancing perceptions of autonomy.

Abstract:
Economic performance of the illegal immigrants is a central issue in the debate over illegal immigration. In this paper I estimate the wage gain from legalization of a previously illegal immigrant in the U.S. I use propensity score matching and data from New Immigrant Survey 2003. The wages of legal immigrants provide a valid control for the wages of illegal immigrants. Since the wages of the treatment and the control group both before and after the legal permanent residency are available, Difference-in-Difference matching estimators are implemented to account for potential (time invariant) unobserved heterogeneity. Estimates suggest a wage gain of 19% to 32% from legalization of previously illegal immigrants. Finally I discuss potential policy implications of this result

Abstract:
This paper analyses whether in developing countries mass education is the key or a highly well educated elite should be more beneficial for growth. Using the Indian census data as a benchmark and enrollment rates of different levels of schooling we compute annual attainment levels for a panel of 16 Indian states from 1961 to 2001.Results show that one standard deviation increment in the share of population with tertiary education is 3 times more beneficial for growth than a one standard deviation increment in literacy. Using simulations we consider two alternate policies: one that doubles the increments to the literacy rates (relative to its baseline rate of increase)and another that doubles the annual increments to the share of adult population with tertiary education. We show that at the end of 35 years, the state following the latter policy has a per capita GDP 1.5 time more than the state that emphasizes the former.

Abstract:
With the recent explosion of choices available to us in every walk of our life, capturing the choice behavior exhibited by individuals has become increasingly important to many businesses. At the core, capturing choice behavior boils down to being able to predict the probability of choosing a particular alternative from an offer set, given historical choice data about an individual or a group of "similar" individuals. For such predictions, one uses what is called a choice model, which models each choice occasion as follows: given an offer set, a preference list over alternatives is sampled according to a certain distribution, and the individual chooses the most preferred alternative according to the sampled preference list. Most existing literature, which dates back to at least the 1920s, considers parametric approaches to choice modeling. The goal of this thesis is to deviate from the existing approaches to propose a nonparametric approach to modeling choice. Apart from the usual advantages, the primary strength of a nonparametric model is its ability to scale with the data -- certainly crucial to applications of our interest where choice behavior is highly dynamic. Given this, our main contribution is to operationalize the nonparametric approach and demonstrate its success in several important applications. Specifically, we consider two broad setups: (1) solving decision problems using choice models, and (2) learning the choice models. In both setups, data available corresponds to marginal information about the underlying distribution over rankings. So the problems essentially boil down to designing the `right' criterion to pick a model from one of the (several) distributions that are consistent with the available marginal information. First, we consider a central decision problem in operations management (OM): find an assortment of products that maximizes the revenues subject to a capacity constraint on the size of the assortment. Solving this problem requires two components: (a) predicting revenues for assortments and (b) searching over all subsets of a certain size for the optimal assortment. In order to predict revenues for an assortment, of all models consistent with the data, we use the choice model that results in the `worst-case' revenue. We derive theoretical guarantees for the predictions, and show that the accuracy of predictions is good for the cases when the choice data comes from several different parametric models. Finally, by applying our approach to real-world sales transaction data from a major US automaker, we demonstrate an improvement in accuracy of around 20% over state-of- the-art parametric approaches. Once we have revenue predictions, we consider the problem of finding the optimal assortment. It has been shown that this problem is provably hard for most of the important families of parametric of choice models, except the multinomial logit (MNL) model. In addition, most of the approximation schemes proposed in the literature are tailored to a specific parametric structure. We deviate from this and propose a general algorithm to find the optimal assortment assuming access to only a subroutine that gives revenue predictions; this means that the algorithm can be applied with any choice model. We prove that when the underlying choice model is the MNL model, our algorithm can find the optimal assortment efficiently. Next, we consider the problem of learning the underlying distribution from the given marginal information. For that, of all the models consistent with the data, we propose to select the sparsest or simplest model, where we measure sparsity as the support size of the distribution. Finding the sparsest distribution is hard in general, so we restrict our search to what we call the `signature family' to obtain an algorithm that is computationally efficient compared to the brute-force approach. We show that the price one pays for restricting the search to the signature family is minimal by establishing that for a large class of models, there exists a "sparse enough'' model in the signature family that fits the given marginal information well. We demonstrate the efficacy of learning sparse models on the well-known American Psychological Association (APA) dataset by showing that our sparse approximation manages to capture useful structural properties of the underlying model. Finally, our results suggest that signature condition can be considered an alternative to the recently popularized Restricted Null Space condition for efficient recovery of sparse models.

Abstract:
Abstract: The current studies examine the effects of excuses on reactions to misbehavior. Results indicated that excuses reduce the likelihood that behavior is perceived as wrong and reported when the event clearly violates prescribed rules or norms but actually increases the likelihood that the behavior is perceived as wrong and reported when the situation is ambiguous

Abstract:
Using a unique dataset we provide new evidence on the impact on client fund performance of cross trading related conflicts of interest (CINT)experienced by mutual fund advisers. Our results suggest that the cross trading practices of advisers impose a significant performance penalty on their client funds. A portfolio of funds managed by advisers in the top CINT quintile significantly underperforms the portfolio of funds managed by advisers in the bottom CINT quintile by 0.83% per year, over the period 1995-2007. We evaluate the response of investor flows to different CINT measures and document that flows are generally insensitive to them. We also show that the incentives of advisers to engage in cross trading are directly related to their opportunities for generating revenues from trading operations, and that adviser governance plays an important monitoring role for cross trading. Our results highlight the need for heightened awareness among investors and regulators of the potential costs associated with these transactions.

Abstract:
Stores often follow a certain pricing strategy. They vary their prices because of several reasons – as a response to changing inventory levels, competitor pricing, change in costs on the supply side, nearing expiration date of perishable goods, manufacturer’s promotion or at times as a strategy to increase store foot-falls. This varying of prices is reflected as – EDLP (Every Day Low Price, where prices are kept at a constant level and Wal-Mart is one successful example) or Hi-Lo (where prices fluctuate due to frequent promotions and this is followed by well-known grocery chains like Dominick’s Finer Foods in Chicago). Stores also differ in the frequency by which they change prices. A pricing decision may be both short term and long term (Shaffer and Zhang, 2002). For instance, on a short-term, a retailer could use price discounts to compete against weaker brands, price discriminate among brand switchers or increase consumption (Bronnenberg, et al, 2006). On a long-term, the price change could reflect the changes in overall cost structure, demand or market structure. A retailer might also use discounts to drive category or store level profitability. Often the frequency of price change is also a result of the planning horizon set by a particular retailer (Bronnenberg, et al, 2006). Of late, researchers like Kadiyali, Sudhir and Rao (2001); Pauwells, et al, 2004; Bronnenberg, et al, 2006 have emphasized the need to study this frequency of price change. Pauwells, et al, 2004, for instance mention “as there is increasing evidence that the same relationship need not hold among two variables at different frequencies, various substantive marketing problems may warrant further investigation along that dimension”. From a customer’s perspective, she is able to explain some of this variability while not able to explain other. For instance, a customer is likely to explain why the price of milk is the highest close to the date of manufacture and why is it at a huge discount closer to the date of expiration. She is likely to have an explanation for seasonal discounts during festival times. However, other instances of price variations go unexplained. In this study we examine only unexplained variability (both depth and frequency of price change) From a customer’s perspective, unexplained volatility, both magnitude (depth) and frequency in price, is likely to be perceived as bad. It is likely to erode the ‘trust’ a customer has on the store and its offerings. A customer is likely to doubt the store’s quality, integrity or benevolence as a consequence of unexplained volatility. This is also likely to affect her decision to buy the store’s own brand. Some evidence of this effect can be found in the existing literature like Dhar and Hoch, 1995 who look at EDLP (low price variability) vs. Hi-Lo (high price variability) strategy of stores’ impact on store brand penetration. They find a significant relationship between the two. Using scanner panel data (from IRI) of two categories – diapers and deodorants, we also found a significant negative correlation between weekly price variation and store brand penetration. The literature on store brands penetration has focused on two aspects – understanding the cross category variation in store brand penetration through analysis of scanner panel data (Dhar and Hoch, 1995; Hoch and Banerjee, 1993; Sethuraman, 1992) and understanding the store brand customer using consumer-level data (Ailawadi and Neslin). When we say volatility is ‘generally’ is perceived by consumers as bad, we say this because certain consumers may not regard it as bad. For instance, Deal-prone consumers have been shown to value transaction utility rather than, or in addition to, the acquisition utility associated with buying on deal (i.e., buying on deal has psychological benefits irrespective of the financial consequences, Lichtenstein, Netemeyer, & Burton, 1990). Such customers are likely to welcome variability in pricing rather than look at it as an irritant. Customers are reluctant to buy store brands in product categories where the perceived risk is higher (Batra and Sinha 2000; Narasimhan and Wilcox 1998). Some of the product categories have well-established higher perceived risk (for example, cold and flu medicine) than others (for example, gift wrap). The effect of variability in pricing and frequency of price change on trust and subsequently store brand purchase is likely to be greater in product categories where trust is relatively more important. Based on the above, this study proposes to ask the following questions: Does store price volatility (magnitude, frequency, explained/ unexplained) effect store brand penetration? 1. Does ‘Trust’ play a mediating role between them? 2. Do customer characteristics (deal-proneness) play a moderating role in the relationship? 3. Does the trust associated with the product category also moderate the relationship?

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Prof. Sharique Hasan, Assistant Professor - Stanford University will present a talk on 12th Sep, 2011 Abstract: In this article, we study the career effects of getting diverse versus specialized experience. Existing research on social categorization in labor markets has found that specialized experience is privileged in external labor markets. That research has suggested that in internal labor markets characterized by managerial rotation, generalists should not be penalized. We examine the relationship between specialized experience and career outcomes using rich longitudinal data on the careers of Indian Administrative Service Officers, members of the Republic of India’s elite bureaucratic organization. Contrary to prior theory, our results show that diversified experience is penalized at both early and late career stages. We theorize that the differentiation of jobs is sufficient to introduce bias in favor of specialists even in the presence of full information and collective norms that favor generalists

Abstract:
Professor Luis Martin, Associate Professor - McCombs School of Business will present a talk on ‘Bridging Difference and Distance in Global Virtual Work: The Role of Social Identification’ Abstract Global virtual work arrangements have been growing in prominence over the last three decades. Research and anecdotal findings suggest that such arrangements struggle for effectiveness against the forces of dispersion and demographic difference. However, the processes underlying those challenges are not well understood. To address the gap, this research uses social identity theory and the contact hypothesis to examine the role played by interpersonal identification in explaining the effects of nationality differences on performance in global virtual supervisor-subordinate dyads. It proposes that a difference in nationality between a supervisor and subordinate will have a negative effect on subordinate performance, which will be mediated by subordinate identification with the supervisor. Furthermore, based on the contact hypothesis, it proposes that the effects of nationality difference on identification will be moderated by the nature of contact between the subordinate and supervisor. It introduces the idea of “contact richness” as an important construct in virtual work, and proposes that it will explain additional variance over and above that explained by the primary dimensions of contact proposed by the contact hypothesis. Support for the research model was found in two field studies conducted using global virtual dyads in the software development industry. The findings suggest several implications for future theoretical development on the effects of demographic diversity in virtual settings, and provide actionable guidelines for managers engaged in global virtual work.

Abstract:
Team formation is investigated in two studies that use sport-related archival data culled from the Internet. Unlike team formation in organizational decision-making situations, when individuals form teams they tend to use their relational ties as a heuristic even when the decision-making is unconstrained. Thus there appears to be a relational bias in team formation decision making that is more generic than is suggested by sociology and entrepreneurship research. In line with the leadership literature this relational bias is more pronounced when the decision maker is also the team leader. Further, the leader’s role interdependence impacts the extent to which there is a relational bias, both to the team as a whole, and to the sub-unit that “backs up” the leader’s role.

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While product modularity is often advocated as a design strategy in the operations management literature, little is known about how customers respond to modular products. In this research we undertake several experiments to explore consumer response to modularly upgradeable products in settings featuring technological change. We consider both the initial product choice (between a modularly upgradeable product and an integral one) and the subsequent upgrade decision (replacement of a module vs. full product replacement). We uncover the following paradox: while modularity might seem to be most-advantageous for a short life-cycle product (because a modular design would avert having to fully replace the product after only a short time), such a product faces two strikes: first, consumers tend to excessively discount the cost savings associated with the modular upgrade, and second, we observe a preference reversal between the initial purchase and the point of upgrade (at the point of initial purchase, people foresee making a full product replacement in the future, yet, when faced with the actual upgrade decision, they are more likely to revert to a modular upgrade). On the other hand, consumers insufficiently discount cost savings when the time-to-upgrade is long. Finally, we discuss and test several pricing and product design strategies that the firm can use to respond to these cognitive biases.

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We look for necessary properties of shareholder-value maximizing corporate boards when shareholders face a trade-o¤ between improving information sharing between the board and management and reducing distortions in decision-making arising out of managerial agency. We draw a distinction between the alignment of preferences of the board with management (which a¤ects information ‡ows) and the allocation of authority to the board or management (which a¤ects ex-post decisions). We show that it is in general suboptimal to allocate authority to management. Authority should be held by a supervisory board that may be imperfectly aligned with both shareholders and management. Indeed, even when management has captured all au- thority and the board only has an advisory role, the optimal board may be designed to withold information from management. An optimal advisory board must however be su¢ ciently aligned with management in order to create ex-post consensus and ensure authority is irrelevant. Given optimal board alignment, the value of the board’s authority equals the cost of requiring consen- sus. Shareholders may hold ultimate decision-making authority within an optimal supervisory board without any loss in welfare and in many cases this is strictly optimal.

Abstract:
Many hospitals in the United States seek to lower their procurement costs by joining Group Purchasing Organizations (GPOs). GPOs operate as supply chain intermediaries - they do not buy or sell products; instead, they establish contracts with vendors on behalf of member hospitals. In a typical scenario, hospitals become members of a GPO; the GPO negotiates product prices with vendors on behalf of all its member hospitals in order to get deeper volume discount. However, there is evidence that some member hospitals further negotiate directly with the same vendors and contract at a price lower than the GPO price. Such contracts established directly between the same vendor and member hospitals are commonly known as custom contracts. The common perception is that hospitals benefit from these custom contracts because they yield lower prices. Using a game-theoretic model, we surprisingly find that exactly the opposite is true: the provision for custom contracts benefits vendors at the expense of hospitals. We also find that uncertainties in market prices largely drive the market outcomes. When the GPO shares indicative information on market price with its member hospitals in an effort to better educate them, it increases not only the social surplus but also the profitability of the GPO vendor. Our research makes significant contribution towards the literature on group buying as well as intermediaries - we show how with the provision for custom contracts, GPOs expectedly act as demand aggregators for relatively small hospitals, while for the rest, they unexpectedly play the role of information intermediaries. We drew our example from the healthcare sector; however, our results can be applied to any other industry in the context of group purchasing.

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We examine transshipment incentives in a decentralized supply chain where a monopolist distributes a product through independent retailers. A key insight is that the transshipment price determines whether the firms benefit from, or are hurt by, transshipment. In particular, we show that the manufacturer prefers to set the transshipment price as high as possible, while retailers prefer a lower transshipment price. Given the important role of the transshipment price in determining the benefits that each firm gets from transshipment, it is useful to consider transshipment in the case where retailers are under joint ownership (a “chain store”) and the transshipment price does not play a role. This comparison yields two surprising results. First, if decentralized retailers control the transshipment price, they will choose a relatively low transshipment price as a way to mitigate the manufacturer's ability to extract profits by increasing wholesale prices; therefore, the manufacturer may prefer dealing with the chain store which does not have a transshipment price rather than with decentralized retailers. Similarly, the decentralized retailers can use a low transshipment price to achieve higher total profits than a chain store.

Abstract:
We examine resource allocation issues in a setting with uncertain task resolution times. Using software maintenance requests as a context, we model task resolution times in corrective software maintenance process using multiple hazard distributions. we present a hazard model to capture the decrease in the marginal likelihood of successful resolution of a task as the number of effort-cycles expended on the task increases. We estimate the model parameters using real-life data from a systems software product. We demonstrate that the model fits real-life data very closely. Using the model, we numerically analyze implications for capacity planning and service execution in the context studied. Specifically, we demonstrate that imposing temporal cut-off policies in task resolution substantially reduces waiting times for incoming MRs in the system while minimally impacting the rate of successful MR resolution. Further, we show that these approaches can be used to improve productivity and resource utilization, and reduce the occurrence of “firefighting” behavior commonly encountered in this environment. We demarcate the diverse tradeoffs that managers need to evaluate during resource allocation in order to enhance the overall performance of the software maintenance operations. Finally, we discuss other managerial settings in which the modeling approach can be applied.

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This paper modeled the dynamic inter-relationships between average salary, bonus, and stock options granted to top executives of 700 U.S. firms in 1996-2005 using a merged ExecuComp and Compustat database. Comprehensive models were also estimated for firms’ share repurchases and research and development and investment expenditures, taking into account simultaneity and distributional misspecification issues. Simple autoregressive models showed that while salaries increased steadily, time profiles of bonus and stock options were complex. Second, firms’ total assets, intangible assets, market-to-book value, and share repurchases were positively associated with the values of stock options granted. Third, stock options exercised in the previous year were significant predictors of share repurchases indicating that firms avoided dilution of earnings per share. Fourth, share repurchases were negatively associated with expenditures on research and development and short-term investments. From a policy standpoint, the results suggest that high levels of stock options granted to executives and share repurchases by U.S. firms are unlikely to have beneficial effects for raising future productivity.

Abstract:
A major constraint in scaling up large scale treatment programs in resource-limited settings is the unavailability of appropriate diagnostic devices that can inform clinical decisions in a timely manner. Most existing devices, due to their technical complexity, are placed in a few central laboratories serving hundreds of remote health facilities. Such centralized diagnostic networks are characterized by long delays in providing results and consequent poor patient retention. Several point-of-care (POC) devices that aim to obviate the need for such complex diagnostic networks are under development. Occasional attempts at evaluating POC devices have focused on technical dimensions such as accuracy. However, this approach does not incorporate the key value proposition of POC devices{improved access through timely provision of test results. In this paper, we develop a mathematical model that explicitly incorporates the tradeoff between accuracy and access to evaluate the network-level effectiveness of POC devices. Using this framework, we argue that the key operational decision at the policy maker's disposal is placement of the devices: Which facilities should receive the device under resource constraint? We compare the optimal placement solution with rules of thumb that are followed in practice and/or are suggested in practitioner literature. Our analysis suggests that these heuristics can result in significant loss of effectiveness in general. However, their relative performance depends on device characteristics and network characteristics. We characterize conditions under which these rules of thumb are optimal. We apply our methodology to infant HIV diagnosis and calibrate our model using representative data from a sub-Saharan country.

Abstract:
We develop an economic model that examines whether a vendor or client should own the assets underlying service delivery in an IT outsourcing relationship. Prior research has argued that the vendor should own the assets to provide incentives for investment on the production assets. We allow for investment in innovation that can benefit both client and vendor in the relationship. Our model offers an explanation for the empirically observed heterogeneity in asset ownership structure using Incomplete Contracts Theory. We find that optimal ownership structure can vary due to the different incentives of the client and vendor and differences in the available set of investment opportunities. Interestingly, we find that scenarios exist where both the client and vendor agree on the ownership structure and where they disagree. When investment in innovation enables new services and features, the client should retain ownership of the assets. When investment leads to cost savings, the vendor should own the assets. The parties disagree on asset ownership structure when the investment opportunities yield similar levels of benefits to both vendor and client. In this case neither party wants to own the assets. When there are multiple investment opportunities with payoffs in new services and in cost reduction, both client and vendor prefer to own the assets. We extend the model to allow renegotiation and find, counter-intuitively, that when renegotiation is allowed the parties always disagree on the ownership structure. In contrast, in the absence of renegotiation, the client and vendor agree on the ownership structure in most cases. We find that allowing renegotiation leads to greater investment in innovation but also results in more gaming between the parties with ex post surplus extraction and more free-riding.

Abstract:
Manufacturers typically sell consumer products through retailers and the presence of intermediaries has interesting ramifications for their product variety and pricing decisions. Retailers may want higher variety to help reduce price competition but the costs of variety are borne by the manufacturer. The increased variety may increase demand and profits for the manufacturer too but this depends on market-specific factors as well as costs. We explore these interactions through a model wherein a manufacturer sells multiple product variants at a wholesale price to two retailers who in turn compete for consumers. Consumers choose between the retailers based on the price and variety offered by each retailer. Several insights emerge from the analysis. We find that some retailer differentiation benefits the retailers (not the manufacturer) but too much differentiation hurts both the retailers and the manufacturer. If the market is fully covered, then the channel is coordinated even with a simple wholesale pricing contract. If the retailers incur costs to sell the product, the manufacturer loses out more than the retailers and in fact absorbs some or all of the retailer costs. Finally, asymmetry between retailers has some interesting consequences.

Abstract:
Using a linear principal agent model with endogenous status concerns, the paper shows that it is individually rational for agents in a rm to develop and exhibit status concerns vis-a-vis each other. Workers are, by their choices of status concerns, able to transfer surplus from the the rm to themselves. Further, relative concerns are shaped by the relative strengths and weaknesses of the workers in the rm. Finally, and surprisingly, a rm's prot is reduced (relative to the benchmark moral-hazard model) by workers who exhibit such \endogenous" relative concerns.

Abstract:
In this paper, we investigate the causal effect of position in search engine advertising listings on outcomes such as click-through rates and sales orders. Since the position is typically determined through an auction, there are significant selection issues in measuring position effects. Correlational results are likely to be biased due to the selection in position induced by strategic bidding by advertisers. Additionally, experimentation is rendered difficult in this situation by competitors’ bidding behavior, which induces selection biases that cannot be eliminated by randomizing the bids for the focal advertiser. We show that a regression discontinuity approach is a feasible approach to measure causal effects in this important context, where other approaches to obtaining causal effects are typically infeasible. and apply it to a dataset of 23.7 million daily observations containing information on bids, search advertising results and linked outcomes. Our data set is unique in that it contains information not only for the firm but also its major competitors who are advertising in the same category. We find in our empirical application that causal position effects are significantly underestimated if the selection of position is ignored. The data set also contains information on two advertising targeting options offered by Google: Exact and Broad match and our causal estimates provide insights into the value of this type of semantic targeting. We find important differences in the effects of position for exact vs. broad match keywords, with exact match keywords showing strong position effects at the top most position, and broad match keywords having strong position effects only lower down.We are also able to study weekday and weekend effects and find that position effects are lower on the weekend than on weekdays.

Abstract:
This paper investigates the common but unproven claim that firm performance suffers because managers are myopic about long-term investments. We use accounting data on the expected life of equipment purchases to measure temporal orientation for over 1000 publicly-traded US manufacturing firms, and find a positive relation between temporal orientation and financial returns. As predicted, however, we also find diminishing marginal returns for temporal orientation. In addition, we show that firms in relatively short horizon industries fall farther short of optimal levels of temporal orientation than firms in long horizon industries. These results confirm the intuition that myopia hurts performance, but also identify important limits on the value of lengthening a firm's temporal orientation.

Abstract:
Algorithmically matching items to users in a given context is essential for the success and profitability of large scale recommender systems like content optimization, computational advertising, web search, shopping, movie recommendation and so on. Developing such match-making algorithms is a new scientific sub-discipline that involves strong interactions among several disciplines like computer science, statistics, machine learning, economics, optimization. This talk will discuss mathematical formulations, the progress made, and the big challenges that lie ahead. Throughout, I will use examples from real-world recommender systems in content optimization and computational advertising at Yahoo!

Abstract:

Abstract:
In this presentation, we deal with the issue of how the continued growth of peer-to-peer (P2P) used goods markets for durable products interacts with channel returns policies and affects pricing and product introduction strategies. We do so through two separate papers - while a P2P used goods market is there in both papers, they differ in terms of returns policies that are considered. In the first paper we focus on extra-channel returns policies, i.e., returns policies offered to the end customers by the retailer, while in the second one we concentrate on intra-channel returns policies, i.e., those offered by the manufacturer to the retailer. Our analysis in the first paper establishes that frequent product upgrades and rising retail prices in many durable product sectors are indeed due to the emergence of the P2P used goods market and how this market interacts with the extra-channel returns policy in altering the relative powers of the channel partners. We also provide empirical support for our theoretical result regarding product upgrades using data from the college textbook industry. In the second paper, we show that a stronger P2P used goods market generally increases the likelihood of an intra-channel returns policy to be the equilibrium strategy. This insight contradicts the burgeoning managerial trend to replace returns contracts with price-only ones for products having rapidly growing used goods markets. Furthermore, we show that when the customers are forward-looking, viability of a manufacturer returns policy is, in fact, negatively impacted by such behavior.

Abstract:
This study focuses on the impact of the California Non-Profit Integrity Act (2004) (hereafter, the Act or regulation) on executive compensation in affected non-profit organizations in California. The Act, closely modelled after the Sarbanes-Oxley Act (SOX) of 2002, requires charitable organizations in California reporting to the Attorney General’s office to compulsorily form an audit committee and get their financial statements audited by a practicing public accountant. The Act also requires boards of directors of non-profit organizations to approve the compensations of the chief executive officer and the chief financial officer and ensure that the compensation paid is just and reasonable. This study examines whether the Act has really been able to reign in excessive executive compensation in affected non-profits. The issue of the impact of regulation on non-profits is a very interesting one. This is because the absence of an alienable residual claimant makes agency conflict issues in the not-for-profit sector different to those of for-profit sector, making the mechanical extension of latter sector’s research findings to the former questionable. Also, the not-for-profit sector forms a significant part of the US economy, generating $ 1.9 trillion in revenue (about 13% of the US GDP) in 2008. Using Ohio firms as a control for California charities, we find that not only has executive compensation not reduced in the wake of the Act, non-profits seem to be paying more to their executives, on the contrary, after the enactment of the Act. Recognizing that increase in executive compensation is not necessarily bad if non-profits can achieve cost savings elsewhere, we then examine changes in administrative costs and program ratio after the Act. We do not find any evidence to suggest that these two cost items have changed significantly after the Act. We also rule out cost shifting as a potential explanation for the increased compensation costs. Thus, our results call into question the necessity for imposing SOX-like regulation on a sector which clearly has different dynamics than the for-profit sector, for which SOX was intended. Our results have serious policy implications since many states in the USA have already implemented or are planning to implement similar legislation.

Abstract:
We investigate the relative influence of human capital, distribution, opening week revenues and movie attributes on how long movies last in theaters. The focus of our investigation is the Italian market. We use a survival model with a parametric proportional hazards specification for our analysis. We also account for unobserved heterogeneity, endogeneity of opening week revenues, and a stochastic censoring mechanism, in our model and take a Bayesian approach for our analysis. Our results suggest that the quality and breadth of experience of actors, and the number of screens that a movie is initially released in, have a negative effect on longevity. Opening week revenues and attributes such as the quality of screenwriters, running time, some genres and some types of content ratings such as PG-14 , however, have a positive effect. Implications of the research and opportunities for future research are also discussed. Keywords: movies, playability, survival analysis, proportional hazards, stochastic censoring, Bayesian analysis.

Abstract:
In this paper we examine the learning rates of individuals working under normal workload conditions vs. those working under time-pressure conditions. We find that those working under time pressure learn much less than those working under normal time. We also find evidence for significant forgetting by individuals. We suggest that this is one mechanism by which time compression diseconomies affect capability accumulation processes in firms. We also discuss implications for the literature on learning curves: specifically to our understanding of why learning curves may be heterogeneous across organizations and to our understanding of why knowledge may depreciate even in organizations that are continuously operating.

Abstract:
We analyze the choice of delivery system for a firm that sells make-to-order physical goods and/or services. The market consists of two segments that differ in their preference for product quality as well as their disutility from waiting time. The firm chooses between -- two dedicated delivery systems one for each market segment, and a flexible (pooled) delivery system that serves both segments. While pooled system allows firm to reduce operational cost of delivering products, dedicated systems allow firm to increase revenues by price discriminating customers more effectively. We characterize the optimal choice as a function of market scale, segment ratios, and performance deterioration that may result from mix variability. Our research highlights the effect of market cannibalization on the operations strategy decision of delivery system design.

Abstract:
Consider the estimation problem for the multiple linear regression (MLR) setup, under balanced loss function (BLF), where both goodness of fit and precision of estimation are modeled using either squared error loss (SEL) or linear exponential (LINEX) loss functions. We derive the minimum risk estimates for two different variants of BLF and prove for both the cases the existence of the ubiquitous SEL and LINEX estimates at the boundary conditions. Conclusions draw from the exhaustive simulation runs prove the general nature of our proposed theorems.

Abstract:
We estimate the joint impact of frequency reward and customer tier components of a loyalty program on customer behavior and the corresponding sales. We provide an integrated analysis and measurement of a loyalty program incorporating customers’ purchase and cash-in decisions, points pressure and rewarded behavior effects, heterogeneity, and forward-looking behavior. We focus on measuring these effects for a hotel loyalty program. The results suggest interesting insights: for example, both components produce net gains in sales, but do not synergize, i.e., they are not complements in terms of incremental sales. We find strong evidence for points pressure, for both the customer tier and frequency reward components, using both model-based and model-free evidence. We find a two-segment solution revealing a “service-oriented” segment that highly values cash-ins for room upgrades and staying in “luxury” hotels, and a “price-oriented” segment that is more price sensitive and highly values the frequency reward aspects of the loyalty program. We conduct policy simulations that vary the reward structure and use the results to recommend adjustments in frequency reward and customer tier program requirements that improve firm revenues. We predict that compared with the existing program, an alternative design more stringent in awarding the frequency-based reward but more generous in awarding the tier-based reward increases the revenue by 8.99%.

Abstract:
Revenue management practices often include overbooking capacity to account for customers who make reservations but do not show up. In this paper, we consider the network revenue management problem with no-shows and overbooking, where the show-up probabilities are specific to each product. We propose a randomized linear program to jointly make the capacity control and overbooking decisions with product-specific no-shows. We establish that our formulation gives an upper bound on the optimal expected total profit and that this upper bound is tighter than a deterministic linear programming bound that appears in the existing literature. We describe how the randomized linear program can be used to obtain a bid price control policy. Numerical experiments indicate that our approach is fast, able to scale to industrial-size problems, and can provide significant improvements over standard benchmark methods. This is joint work with Kalyan Talluri(UPF) and Huseyin Topaloglu(Cornell).

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Recent papers have shown that, in contrast to ―the Long Tail‖ theory, movie sales remain concentrated in a small number of hits. These papers have argued that concentrated sales can be explained, in part, by he-terogeneity in quality and increasing returns from social effects. Our research analyzes an additional ex-planation: how incomplete information may skew sales patterns. We use the movie broadcast on pay-cable channels as an exogenous shock to the availability of information, and analyze how this shock changes the resulting sales distribution. Our data show that the pay-cable broadcast shifts the distribution of DVD sales toward ―Long Tail‖ mov-ies, suggesting an information spillover from the broadcast. We further develop a learning-based model of DVD demand to precisely quantify the lost DVD sales due to incomplete information. Our study contri-butes to the academic literatures on information provision and market outcomes, and the dynamics of long tail markets. Keywords: Incomplete information, product discovery, multichannel distribution, movie indus-try, learning model, Long Tail.

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We study competitive positioning and pricing strategies in conspicuous goods markets. For conspicuous products, each consumer values the product less as more consumers own it, thus exhibiting negative consumption externalities. We incorporate the effect of consumption externality for each consumer to be dependent on their location vis-à-vis the location of the firm. Specifically, we assume that a customer ‘closer’ to a firm may feel more let down if that firm caters to too many customers. Our work extends the existing literature by formally recognizing that consumers are heterogeneous in their sensitivity to product exclusivity. We find that for conspicuous goods, product differentiation is lower; a finding that explains otherwise counterintuitive empirical results in the literature. We also show that under some conditions, price competition can be higher in markets with negative consumption externalities. When firms are asymmetric with respect to consumption externality effects, we show that a firm which exerts higher externality tends to charge lower prices. Finally, firms may be better off if they reduce heterogeneity in their consumers’ sensitivity to consumption externality. Keywords: Negative Consumption Externalities, Conspicuous Goods, Pricing, Hotelling Models.

Abstract:
Indian immigrants in the United States and other wealthy countries are successful in entrepreneurship. Using Census data from the three largest developed countries receiving Indian immigrants in the world -- the United States, United Kingdom and Canada -- we examine the performance of Indian entrepreneurs and explanations for their success. We find that business income of Indian entrepreneurs in the United States is substantially higher than the national average and is higher than any other immigrant group. Approximately half of the average difference in income between Indian entrepreneurs and the national average is explained by their high levels of education while industry differences explain an additional 10 percent. In Canada, Indian entrepreneurs have average earnings slightly below the national average but they are more likely to hire employees, as are their counterparts in the United States and United Kingdom. The Indian educational advantage is smaller in Canada and the United Kingdom contributing less to their entrepreneurial success. Keywords: entrepreneurship, immigration, Indian migrants

Abstract:
Internet retailers have been making significant investments in advanced technologies, e.g., zoom, color swatch, and alternative photos, that are capable of providing detailed product-related information and, thereby, mitigating the lack of “touch-and-feel,” which, in turn, is expected to lower product returns. However, a clear understanding of the impact of these technologies on product returns is still lacking. This study attempts to fill this gap by using several econometric models to unravel the relationship between product-related technology usage and product returns. Our unique and rich dataset allows us to measure technology usage at the product level for each consumer. The results show that zoom usage has a negative and weakly significant coefficient, suggesting that a higher use of the zoom technology leads to fewer returns. Color swatch, on the other hand, does not seem to have any impact on product returns. Interestingly, we find that the use of alternative photos increases the likelihood of returns. Thus, our findings show that different technologies have different effects on product returns. Moreover, with a higher use of alternative photos, loyal consumers are more likely to return, whereas the effect on non-loyal consumers is insignificant. We provide explanations for all these findings based on the extant literature on customer satisfaction. We also conduct a number of tests to ensure the robustness of the findings.

Abstract:
How firms draw boundaries is a topic of significant interest to management scholars. A firm’s boundary represents a simple demarcation between the organization and its environment (Santos & Eisenhardt, 2005). This study examines the co-evolution of a firm’s capabilities and boundaries in the context of a radical product introduction. It highlights specific antecedents that drive the particular choice of boundaries a firm adopts. Specifically, drawing on multiple theoretical conceptions of boundary choice, it examines Boeing's introduction of the 787-Dreamliner airplane and the impact of this product introduction on boundary choice and capability development. The study’s important contribution is to highlight how firm capabilities and boundaries co-evolve at the product level (often through trial and experimentation). It highlights “patch-work” mechanisms that Boeing has introduced in order to coalesce into a coherent configuration.

Abstract:
Prior work that has examined flight-to-quality (FTQ) influences on stock returns has primarily focused on the stock market at the aggregate level. We present the cross-sectional evidence on this issue over the 1986 to 2008 period, coinciding with availability of the Volatility Index (VIX) from the Chicago Board Option Exchange. We create different disaggregate stock portfolios comprised of individual stocks with different values for their market-betas, their betas with respect to the change in stock market risk, their total volatility, their illiquidity, and their market capitalization. We compare the cross-sectional variation in these disaggregate portfolios during the times of extreme VIX-changes with that during more `normal' times. We examine the cross-sectional variation in terms of the: (a) differences in contemporaneous mean portfolio returns, (b) differences in the subsequent mean portfolio returns, and (c) differences in subsequent comovement with T-bonds. We find that the larger and the more-liquid stocks exhibit greater responsiveness to the extreme VIX-changes. Our findings suggest that FTQ influences the prices of larger and more liquid stocks relatively more, presumably because: (1) larger stocks comprise the substantial majority of the market's capitalization and, thus, take the brunt of stock-bond asset class FTQ effects, and (2) larger, more liquid stocks are less expensive to trade in stressful times.

Abstract:
Mobile Marketing and Location-Based Services: Exploring Consumer Perceptions on Privacy, Utility, and Willingness-to-Pay I would like to present the results of two studies related to location-based marketing on mobile phones. Study 1 is under preparation to be submitted to ‘Information Systems Research’ and Study 2 at the AMA Summer Ed. Conference, 2011. I would like to obtain valuable feedback from your faculty. Study 1: Location-based services and applications (apps) on mobile devices are becoming increasingly popular because of the added value to personal productivity and entertainment. However, along with the added value comes a much greater (perceived) threat to personal privacy. Now, not only can technology track and use our personal information, but our location information as well. For example, some mobile applications visualize the real-time traffic congestion on a user’s commute to and from work. Because the latest smart phones are also equipped with an accelerometer which senses the user’s speed, the mobile application could sell its user’s speed and location data to the local police department in order to place speed cameras in the most strategic locations. On the other hand, the new open mobile platform has created a market place for many new developers and small businesses to enter the marketplace or move into the mobile arena. But if they want to succeed, they must be able to overcome the privacy concerns of mobile application consumers. Privacy has turned out to be the key concern of modern consumers in this 24/7 connected environment (Peltier et al, 2009). The purpose of this study is to empirically examine the significance of this increasingly relevant privacy dimension. Through two separate simulation experiments of over 800 consumers, we examine how the assurance of location information privacy (as well as mobile app quality and network size) influences users' perceptions of location privacy risk and the utility associated with the app which, in turn, affects their adoption intentions. The results indicate that location privacy assurance is of great concern and that assurance is particularly important when the app’s network size is low or if it’s quality cannot be verified. Study 2: Pay What You Want (PWYW) pricing has become a popular pricing strategy, and has attracted increasing interest from both academics and practitioners in the recent past (Kim et al, 2009). Yet, few studies have directly examined consumer behavior when sellers use this pricing across various products and distribution channels. In this study, we apply the theories of social norms, reference prices and privacy assurances to test various factors that affect consumers' willingness to purchase and pay (WTPP) for mobile applications in a PWYW condition. It is our conjecture that app designers can creatively activate social norms to positively influence mobile users’ intent to purchase an app and willingness-to-pay (WTP) than what they originally intended. The conceptual core of the paper is based on the rich stream of research pertaining to social norms and social influences (e.g., Cialdini et al. 2004). The research model and the hypotheses in this study are built on this platform and supported by multi-disciplinary theories on reference prices (Muzumdar et al. 2005; Dholakia and Simonson 2005), and network effects and privacy calculus (Culnan and Armstrong 1999; Laufer and Wolfe 1977). Two experiments with about 1200 consumers show that social information positively affects WTPP while reference prices negatively affect willingness to pay. In this, consumers tend to be greatly influenced by social information from local groups when compared to global groups. Further, privacy assurances significantly enhance consumers' willingness to pay.

Abstract:
We consider the problem of determining the optimal assortment of products to offer in a given product category when customers have heterogeneous tastes. Each customer is characterized by a type, which is a list of products he or she is willing to buy in decreasing order of preference. We assume that customers arrive sequentially over one period and choose from the set of products remaining in inventory at the time of their visit. This is called consumer-driven, dynamic, stock-out based substitution. It is conventional to assume that the type of a customer is known only upon arrival and is independent of the type of other customers. This is called the random proportions demand model. This problem has been shown to be very hard to solve and no efficient method to obtain the optimal solution is known to our knowledge. However, if the number of customers of each type is a fixed proportion of demand there exists an efficient algorithm for solving for the optimal assortment. In this paper, we show that the fixed proportions model gives an upper bound to the optimal expected profit for the random proportions model. This bound may be used to compare the performance of the many heuristics that have been suggested by various authors to solve the assortment planning problem with consumer driven, dynamic, stock-out based substitution and random proportions of customers of each type. We also provide a bound for the componentwise absolute difference in expected sales between the fixed proportions and the random proportions models, which is asymptotically tight as the inventory vector is made large, while keeping the number of products fixed. This result provides us with a lower bound to the optimal expected profit. When the optimal assortment under fixed proportions is large, the lower bound and upper bound are very close to each other.

Abstract:
A two-sided market describes a situation in which a “platform” facilitates an economic transaction between two distinct types of market participants. A key aspect of any two-sided market is the presence of cross-type and possibly intra-type network externalities under the influence of the platform. The extant two-sided market literature has focused primarily on the platform pricing decision. This article posits that frictional aspects of two sided markets that facilitate matching are also extremely important and the tremendous flexibility that Internet-enabled two-sided markets have in market design gives the platform a significant opportunity to influence these frictions.This article theoretically and empirically examines the impact of a platform design feature on the equilibrium behavior of a two sided market that enables person-to-person (P2P) or peer-to-peer loans. More specifically I examine how introducing pre-defined automated bidding agents to a P2P lending market affect prices, volume, and welfare. I provide theoretical analyses showing that introducing such automated agents can help the market clear each period, reduce price dispersion, and increase total market surplus. Interestingly, it is possible for the introduction of these agents, which may help lenders extract surplus form borrowers, to simultaneously drive some borrowers out of the market and increase total market volume and surplus generation. This apparent contradiction is possible because there is an increase in the successful matching of borrowers who remain in the market. The empirical section looks at the actual impact of introducing pre-defined bidding agents to the Prosper.com P2PL marketplace. Mirroring the theoretical predictions, there is evidence of increased loan originations in submarkets where the bidding agents are active. The agents can also be linked to a decrease in price dispersion further suggesting the bidding agents enhanced market efficiency.

Abstract:
International migrants have unique opportunities to form business networks in their home countries and in their countries of origin. Several studies have shown that migration flows increase bilateral trade and investment flows between countries. This takes place through two channels - first, the migrants have a taste for the consumption goods from their home countries and second, the migrants create networks that transmit information. The latter reflects the potential of diaspora networks in reducing information barriers and search costs in international trade. This paper disentangles the two effects in order to quantify the information effect of migration. Further, this paper addresses the issue of direction of causality between migration and trade. The study uses a panel data set of bilateral migration stocks with origins in over 200 countries migrating into 30 OECD countries between the years 1990 and 2000. A corresponding panel data set is constructed that classifies bilateral trade data into intermediate and final goods and then sub-classifies each of these categories into homogeneous and differentiated goods. I use this data set to distinguish between the ‘taste for home goods effect’ and ‘information effect’ of migration. I show that the migrants’ role in exchange of information through business networks does lead to a significant increase in bilateral trade among countries. Moreover, I find that this effect is greatest in the trade of differentiated goods and that the highly educated migrants are most effective in business networking. Migrants also play a crucial role in the flow of foreign direct investment between different countries. Finally, this paper constructs an instrumental variable based on citizenship laws of the countries of destination. I use this instrument to demonstrate that migration can potentially lead to an increase in the flows of commodities and capital.

Abstract:
This paper examines how the unit sales (or demand) of a manufacturer are affected by the variance in its prices (due to promotions or various incentive schemes) and by the fixed ordering cost of its industrial customers in the maintenance, repair and operations (MRO) industrial context. Unlike existing models in the literature, we consider the case when both the order size and the order interval are “endogenously” determined by rational customers. In our model, the customer consumption rate of these MRO products – light bulbs, cleaning solution, lubricant, cutting tools – is constant and it is independent of the purchasing price. We develop closed-form expressions for the variance of unit sales, and we examine the impact on unit sales when the firm offers price promotions for multiple products and when there are multiple customer segments with different consumption rates.

Abstract:
This paper combines unique survey and experimental data to examine the determinants of self-selection into vocational training programs. Women residing in selected slums in New Delhi, India were invited to apply for a 6-month long free training program in stitching and tailoring. A random subset of applicants and non-applicants were invited to participate in a set of behavioral experiments and in a detailed socio-economic survey. We find that applicants and non-applicants differ both in terms of observables (captured using survey data) and also in terms of a number of intrinsic traits (captured via the behavioral experiments). Overall our results suggest that there is valuable information to be gained by dissecting the black box of unobservables using behavioral experiments.

Abstract:
Recognizing that initial public offerings (IPOs) represent the debut of private firms on the public stage, this study investigates how pre-IPO customer and competitor orientations (CCOs) affect IPO performance. Building on signaling theory, the authors propose that both orientations influence investors’ sentiments toward an IPO and that IPO-specific variables and facets of the organizational task and institutional environments moderate the influence of CCOs. The authors test the framework using data collected from computer-aided text analysis, expert coders, and secondary sources for 543 firms (IPOs) across 43 industries between 2000 and 2004. A Bayesian shrinkage model, which accounts for industry-specific effects and uses latent instrumental variables to account for CCO endogeneity in the IPO context, shows that these orientations positively influence IPO performance. As for the moderating role of IPO-specific variables and facets of the organizational task and institutional environments, the authors find that (1) underwriter reputation and venture funding positively moderate the effects of CCOs, (2) technological and market turbulence positively moderate and institutional complexity negatively moderates the effect of customer orientation, and (3) technological turbulence, competitive intensity, and institutional complexity positively moderate the effect of competitor orientation. The results also show that accounting for endogeneity using latent instrumental variables substantially improves the predictive validity of the model relative to alternate model specifications.

Abstract:
Most discussions of reform focus on economic policy. However, economic policy is based on a legal environment and without an efficient legal environment, growth cannot move to a higher trajectory. Within the legal environment, there are issues of harmonizing statutes, eliminating old statutes, introducing new ones where gaps exist, reducing compliance costs, making administrative law flexible and improving the speed of dispute resolution. These have not received the attention they deserve. The paper will describe these issues in general first, and then illustrate specific problems within the labour law segment, the last often simplistically identified with changes in the Industrial Disputes Act alone.

Abstract:
We examine whether CEO equity incentives are related to firm risk. Our study differs from prior research in two important ways. First, we distinguish between upside and downside firm risk. This research focus is prompted by the simple observation that variance is a symmetric and unconditional risk measure that may not capture how CEOs judge risk. Second, we distinguish between CEO incentives that arise from holdings of stock versus options because these compel CEOs to act differently. For a sample of about 2,600 firms from 1992 to 2008, we find that CEO incentives created by stock and options are differentially related to risk. In particular, both stock and option-based incentives are positively associated with upside risk but only stock-based incentives are negatively associated with downside risk. Our findings are consistent with the notion that CEOs perceive potential losses to their stock holdings as riskier than potential gains. Two conclusions emerge from our findings: 1) CEO incentives reflect risk asymmetrically, and 2) the effect of firm risk has a markedly different impact on CEO’s stock versus option incentives. To the extent that they are not already doing so, compensation committees might tailor contracts to reflect the differential importance of downside and upside risk. From a research perspective, failing to separately consider upside versus downside risk or the differential incentives induced by stock versus options, could lead to false inferences about the efficacy and efficiency of CEO equity incentives.

Abstract:
Marketing scientists often focus on the concept of “similarity” among brands to understand processes involved in brand switching, competition, brand loyalty, and market structure analysis. The spatial representation of “similarity” serves as a convenient method for describing, summarizing, and displaying such marketing data. Marketing researchers and managers have squeezed increasing levels of insights from such geometric configurations, also called perceptual maps. These maps have implications for definition of market segments and product positioning. This paper presents a new model of similarity, which is theoretically sound and lends itself to geometric representation of brands in a multidimensional metric space. We also provide an empirical test of the new model, and later develop a novel algorithm, which employs “similarity” type of marketing data to construct perceptual maps based on the proposed model. An empirical comparison of the results obtained from the new perceptual mapping technique versus a traditional technique previously used by marketing researchers is also presented.

Abstract:
Little is known about whether powerful investors are affected by, or subsequently influence, the management practices of their investees. To examine this question, we rely on the public statements of a well-known powerful investor, Warren Buffett, “the oracle of Omaha,” and test whether investees of Berkshire Hathaway exhibit more timely and transparent financial reporting, stronger governance and superior investing decisions relative to our control firms. Our findings indicate that, consistent with Buffett’s publicly stated preferences, Berkshire investees often make transparent conservative accounting and disclosure decisions, measured as timely disclosure of good and bad news, better mapping of accruals to cash flows, voluntary expensing of stock option expense and a lower assumed rate of return on pension assets. In the area of governance, some of Buffett’s preferred compensation practices are followed by BH investees (notably higher CEO pay for performance sensitivity and lower “excess” CEO compensation), but board composition is generally inconsistent with his publicly expressed views. BH investee boards tend to be larger and are no different from the average control firm in terms of proportion of outside directors and directors share holdings. Consistent with Buffett’s statements, his investees enjoy substantially higher rates of return on equity, longer periods when firms’ sales growth and ROE growth outperforms their industry, lower volatility in such rates of return, lower leverage and have stock prices that trade closer to their estimated intrinsic values. However, there is little evidence of change in investees’ practices subsequent to Berkshire’s initial investment, suggesting that Buffett does not appear to be especially active or influential in the decisions of BH investees. Berkshire’s stock returns outperform the Fama-French four-factor model over 1977-2006, but not over the most recent decade (1997-2006). Berkshire’s equity investments and a portfolio of equity holdings that statistically mimics the attributes that Buffett favors beats the market but not the fourfactor model over most of the sample period. However, the statistically mimicking portfolio is able to identify firms that report improvements in operating performance five years out.

Abstract:
The economic consequences of disclosure regulation have been the subject of much debate. This study contributes to the debate by examining the informational effect of disclosure regulation and the extent to which the disclosure effect is altered by institutional and firm-level factors in the context of international IPO markets. Our empirical analysis uses a unique sample of 6,025 IPOs from 34 countries over the period from 1995 to 2002. We show for the first time that the stringency of disclosure requirements for IPO prospectuses is negatively associated with the extent of IPO underpricing, after controlling for various country- and firm-level determinants of underpricing. Moreover, we find that the mandatory disclosure effect on IPO underpricing is more pronounced in countries whose capital markets are less integrated and for IPO issuers whose prospectuses are audited by lower-quality auditors. Taken together, our findings are consistent with the view that increased disclosure regulation reduces IPO underpricing in international IPO markets, consequently lowering the cost of equity financing, and that both institutional and firm-specific factors play an important role in understanding the economic consequences of mandatory disclosure in international IPO markets. Key Words: Disclosure Regulation, Mandatory Disclosure, International IPO Underpricing, Cost of Equity, Auditor Quality

Abstract:
The key idea explored in this paper is that private establishments take both the location and income mix of people into account while making strategic decisions like entry and the price and quality of their products and services. We develop a model that integrates consumers' income distribution with the spatial distribution of their location and look at the consequence of an increase in income inequality on the welfare of the poor. We find an inverted-U shaped relationship between income inequality and the welfare of the poor: if we compare a cross-section of societies, the poor community as a whole is initially better-off living in relatively richer societies, but, beyond a point, the aggregate consumer surplus of the poor starts declining as the society becomes richer. Interestingly the same inverted-U shaped relationship is also observed between income inequality and market access of the poor. There exist multiple equilibria: a bad equilibrium where all the poor are excluded exists simultaneously with a good equilibrium where at least some poor (if not all of them) get served by the market. We have isolated the higher income gap between the rich and poor as the key factor that exposes the poor to this complete exclusion possibility. Finally we compare a mixed-income economy where rich and poor live side by side with a single-income economy inhabited only by a single income group and show that poor are better-off staying in the mixed-income economy as long as the poor income is below a feasibility threshold.

Abstract:
Over the past 50 years, many studies have analyzed the response of sales and market share to advertising expenditures. Some other studies have examined this research and attempted to draw generalizations about whether advertising "works" or not. These meta-analyses have used a variety of sources of data including field experiments, market response models using aggregate time-series data, and single-source scanner panel data with information on household-level advertising exposure. The focus has generally been on the advertising-sales elasticities. However, none of the studies that have formed the meta-analysis databases have used the variable that managers really care about--profits--as the dependent variable. In this talk, I will review what we know about short-term advertising elasticities and include some new analyses of a proprietary database of over 270 brand case studies including data on the profitability of the media campaigns. I will compare the resulting advertising elasticities by different media (TV, online, magazine, outdoor, radio, newspapers) to prior findings.

Abstract:
In customer relationship management, firms manage customer value over the entire duration of the customer-firm relationship (i.e. customer lifecycle) through managing purchases, returns, and lifecycle duration. The extant literature has primarily focused on the amount ($) of purchases and returns in specific types of contexts and recognizes that investigations in other contexts are needed. In addition, the purchase and return quantity (units) decisions over customer lifecycle are not well understood in most contexts. Finally, firms commonly use explicit purchase commitments to manage customer behaviors but these have not been investigated empirically. This study investigates several issues concerning the quantities (units) of purchase and return, and purchase commitments, over entire customer lifecycle in an important contractual context that has not been investigated in depth before. The issues tested are: (1) Do customers purchase more quantity as their lifecycle progresses? (2) Do customers return more quantity as their lifecycle progresses? (3) What is the relationship of purchases and returns with customer defection? (4) Do more purchases imply more returns? (5) What is the relationship of returns with subsequent purchases and returns? And (6) What is the relationship between purchase commitments and customer behaviors of purchase, return, and defection? To answer the research questions, the paper jointly investigates purchase and return quantities, customer defection, and interpurchase time using data from a membership based direct marketing company where customer behaviors are stochastic. A comparison of the findings with those in the extant literature in other contexts reveals that many of the results are surprising and important. The paper also discusses the significance of the findings for customer management strategies of firms.

Abstract:
Measuring the causal effects of online advertising (adfx) on user behavior is important to the health of the WWW publishing industry. In this paper, using three controlled experiments, we show that observational data frequently lead to incorrect estimates of adfx. The reason, which we label "activity bias," comes from the surprising amount of time-based correlation between the myriad activities that users undertake online. In Experiment 1, we track account sign-ups at a competitor's (of the advertiser) website and find that most people sign-up the day they saw an advertisement, but that the true "competitive effect" was minimal. In Experiment 2, users that are exposed to an ad on a given day are much more likely to engage in brand-relevant search queries as compared to their recent history for reasons that had nothing do with the advertisement. In Experiment 3, we show that activity bias occurs for page views across diverse websites. In all three experiments, exposure to a campaign signals doing "more of everything" in given period of time, making it difficult to find a suitable "matched control" using prior behavior. In such cases, the "match" is fundamentally different from the exposed group, and we show how and why observational methods lead to a massive overestimate of adfx in such circumstances.

Abstract:
Using a sample of firms accused of corporate wrongdoing between 1996 and 2006, we find that CEO structural ower is positively related to the ikelihood of committing wrongdoing and egatively related to the likelihood of etection. CEO power is measured by the abnormal fraction of top executives hired or promoted during the incumbent CEO’s tenure. This measure is positively related to the number of executives charged in litigation, suggesting that some wrongdoing requires team work and CEO power facilitates it. In industries where the wrongdoing involves teamwork and coordinated action (e.g., banking and securities fraud), the positive relation with wrongdoing and the negative relation with detection are particularly strong. These results cannot be explained by excessive incentive compensation and are robust to alternate specifications of CEO power. CEO power is not always bad news, however. In some sectors, CEO power appears to reduce the incidence of wrongdoing and increase the likelihood of its detection. The evidence suggests that regulators, investors, and auditors should pay close attention to CEO power and the industry type in assessing the likelihood of wrongdoing and its detection.

Abstract:
Many industries feature a vertical distribution channel structure in which a downstream player (retailer) sells a bundle, composed of products from multiple upstream producers (manufacturers). For example, cable or satellite TV carriers bundle dozens of channels from multiple studios and programming networks. The bundling literature oers deep insights about the economic benets of bundling, but is limited to a direct manufacturer-buyer set- ting. Conversely, marketing and supply chain studies on channel management have not con- sidered the possibility of product bundling by the retailer. How do the economic incentives of the manufacturers and retailers in a vertical channel impact the mechanics of bundling? We develop a unique two-stage model to capture the competitive dynamics between the upstream manufacturers and the downstream retailer, which combines the horizontal competition be- tween manufacturers with the strategic choice of selling mechanism (bundle or components) by the retailer. We show that bundling need not emerge as an equilibrium outcome in a vertical channel, even under conditions ripe for its prevalence in a direct manufacturer-buyer market. If the retailer were forced to bundle, the manufacturers exploit this restriction and over-price their components, leading to substantial economic losses especially to the retailer. The retailer's threat to unbundle the products does not negate these losses, rather it veers the system to a component-selling equilibrium. Despite this failure of a bundling equilib- rium, bundling has the Pareto-improving property of raising the surplus of all rms and the collective consumer surplus. Bundling outcomes may, therefore, yet emerge due to alterna- tive industry dynamics. However, these outcomes will be subject to constant pressure due to individual rms' self-interest and desire to grab a greater share of the gains from bundling, as indeed is frequently witnessed in the form of \carriage disputes" within the TV industry. Other mechanisms must therefore be sought that lead to bundling as a natural competitive outcome.

Abstract:
Is the relationship between corporate governance mechanisms and corporate social responsibility (CSR) contingent on satisfaction with firm performance? Research Findings/Insights: Our results suggest that while effective corporate governance discourages both positive (proactive stakeholder relationship management) and negative (violation of regulations and standards) CSR, higher slack and positive attainment discrepancy lead to higher positive and lower negative CSR, respectively. More significantly, we find that the association between effective corporate governance and both positive and negative CSR depends on satisfaction with firm performance as indicated by the levels of slack and attainment discrepancy. Put simply, the impact of corporate governance on positive CSR is more pronounced under low slack/negative attainment discrepancy conditions, and that on negative CSR is more pronounced under high slack/positive attainment discrepancy conditions. Theoretical/Academic Implications: Our study provides robust support for the behavioral theory of the firm. Previous research has not adequately considered the role of satisfaction with firm performance in studying the impact of corporate governance on managerial decision-making. We show that the association between corporate governance and CSR dimensions depends on differences in decision-making latitude originating from relative firm performance compared to those of peer firms. Practitioner/Policy Implications: First, to understand how effective corporate governance can constrain positive CSR and more importantly reduce negative CSR. Second, to appreciate that the effectiveness of an organization’s governance mechanisms is contingent on slack and performance and the marginal returns from improving governance mechanisms when things are going well may be low.

Abstract:
We reassess the theoretical underpinnings and associated empirical findings of the three-staged sigmoid-curve relationship between degree of internationalization (DOI) and performance. Our empirical results, based on 5542 observations of 551 US firms over the period 1979-1996, and a re-examination of the findings reported in one of the prominent studies in the literature, show that while the relationship between DOI and performance conforms to a monotonically-negative sigmoid curve, it does not support the three-stage theorization. Further examination reveals that even after incorporating enhanced scale of operation as a mediating mechanism (through which internationalization contributes to performance) and controlling for liability of newness to international business as a confounding variable, at no degree of internationalization does an internationalized firm outperform the domestic counterpart. We debate the conceptualization of enhanced profitability as the primary motivation underlying firm international diversification

Abstract:
I examine the sensitivity of CEO cash compensation to fair value gains and losses in derivatives for a sample of U.S. oil and gas producers from 2007 to 2009. I provide evidence that CEO cash compensation is less sensitive to derivative gains/losses than to other earnings components. Further, CEO cash compensation is nearly three times more sensitive to derivative gains than to derivative losses, suggesting that compensation committees reward CEOs for fair value gains but shield their compensation from fair value losses. I also find that the asymmetric treatment of derivative gains/losses in CEO cash compensation decreases in the presence of strong corporate governance, specifically the presence of an accounting financial expert on the compensation or audit committee; and higher proportion of independent directors on the board

Abstract:
This paper introduces a novel method for examining the effects of vertical integration. The basic idea is to estimate the parameters of a vertical entry game. The econometric model is used to measure vertical rival effects and to make inferences about the effect of vertical integration on market outcomes and market structure formation. Application of the model to the US generic pharmaceutical industry, which consists of vertical oligopolistic markets that open up sequentially, yields the following result: vertical integration has significant efficiency effects that spill over to unintegrated downstream firms. This implies that vertical integration is procompetitive from a static point of view. The parameter estimates are used to simulate the impact of a hypothetical policy that bans vertically integrated entry. The simulation result indicates that such a ban reduces the equilibrium number of downstream entrants. In other words, allowing vertically integrated entry results in a greater number of downstream entrants. Combined with the finding that vertical integration has strong efficiency effects, this suggests that the dynamic effects of vertical integration are also likely to be procompetitive for the generic drug industry.

Abstract:
The appointment scheduling problem arises in health care services, where two conflicting costs need to be minimized: the cost of under-utilization of high-cost installations (such as MRI scanners and operation rooms), and the cost of inconvenience to patients and the medical staff if a particular medical procedure starts late. Traditionally, the problem has been studied as a stochastic optimization problem. We present a novel robust optimization model for the problem. For each job, we are given its minimum and maximum possible execution times. The objective is to find an appointment schedule for which the cost in the worst case scenario is minimized. We present a simple heuristic, called the global balancing heuristic, which gives an optimal schedule when the underage costs of the jobs are non-decreasing. We also give a closed form optimal solution for the problem for this case. The advantages of our model over the traditional stochastic optimization models is that it provides more insight into the structure of the optimal solution, and it can be used even when historical data about the processing times of the jobs is not available.

Abstract:
Do employment protection laws hinder privatization? Using privatization deals in fourteen European countries from 1977-2003 and within-country variation in employment protection laws, we find that stringent employment protection laws significantly deter privatization. The fear of job cuts apparently leads organized labor in the state-owned enterprises to vehemently oppose privatization. We find that stringent employment protection laws inhibit privatization disproportionately more in industries that are less productive and require lower level of job skill, consistent with the fear of retrenchment being greater in the less-productive and low-skilled sectors. We also find that stringent employment protection laws inhibit privatization disproportionately more in unionized industries, consistent with the fact that workers in these industries exert considerable political pressure. To obtain these results exploiting inter-industry differences, we use industry-level measures for the United States as an instrument to alleviate potential endogeneity concerns. We employ panel regressions that include fixed effects to control for unobserved factors at the country, industry and year levels. We also examine specifications including country-specific and industry-specific trends to account for spurious correlations stemming from such trends in privatization and in enacting employment protection laws. Our results are also robust to controlling for endogenous changes in employment protection laws due to: (i) changes in a country’s government, specifically its left-of-center political stance; (ii) trade liberalization; and (iii) country-level economic growth.

Abstract:
Beginning with Anderson, Banker, and Janakiraman (2003), a rapidly growing literature attributes the short-run asymmetric cost response to activity changes (i.e., sticky costs) as resulting from managerial choices. We show that fixed costs induce non-stationarity in the elasticity of Sales, General and Administrative costs, affecting the interpretation of estimates from the standard specification used in the literature. We develop suggestions for how future research might control for the effects of cost structure. Empirically, we find that cost structure confounds results usually interpreted as reflecting short-run managerial actions. Further, after adjusting for the effects of fixed costs, we find that the results are unstable across alternate sub-samples.

Abstract:
Does the financial industry expend money and influence to shape financial regulation and make its own rules? This paper explores the political economy factors underlying the alleged failure of financial regulation to prevent the financial crisis of 2007-08. We construct a detailed dataset that documents the politically targeted activities of the financial sector from 1999 to 2006, which includes the bills targeted, votes by politicians in favor/against the bills, lobbying expenditures and campaign contributions by firms that lobbied for these bills, and measures of network connections of lobbyists and firm executives with politicians. We find that the probability of a bill advocating regulations and rules less favorable to the financial industry being passed was lower than that of a bill promoting deregulation. Furthermore, lobbying expenditures by the financial industry were directly associated with how politicians voted on the key bills that preceded the crisis. Finally, whether a lobbyist worked for a politician and whether a politician worked in the financial industry in the past influence the vote in favor of lax regulation. These results give support to the notion that political influence of the financial elite has influence in shaping the regulatory landscape.

Abstract:
We consider the dynamic risk management problem for a commodity processor facing uncertain commodity prices. In each period over a multi-period horizon, the firm procures an input commodity and processes it to produce an output commodity. The processed commodity is sold using forward contracts while the input itself can be traded at the end of the horizon. The firm can also trade financial derivative instruments to manage the commodity price risk. We propose a dynamic risk measure DCVaR, based on the conditional value at risk (CVaR), to model the firm's risk aversion in a time-consistent manner over the planning horizon and obtain the optimal procurement, processing and financial trading policies. We show that the optimal procurement and processing policies are characterized by price dependent inventory thresholds and conditional on optimal financial hedging decisions, the operational policies can be calculated without knowing the details of the financial hedging itself. However, these optimal thresholds are hard to compute and we develop efficient heuristics to obtain the operational and financial decisions in each period. Using numerical studies, we show that a) these heuristics are near optimal and b) optimizing a time-consistent risk measure provides a better mean-risk tradeoff for the total profits and reduces the probability of extreme losses in intermediate periods, compared to optimizing the CVaR of total profits. Please click here for more details.

Abstract:
Demand often exceeds capacity at the congested airports. Airline frequency competition is partially responsible for the growing demand for airport resources. We propose a game-theoretic model for airline frequency competition under slot constraints. The model is solved to obtain a Nash equilibrium using a successive optimization approach, wherein individual optimizations are performed using a dynamic programming-based technique. The model predictions are validated against actual frequency data, with the results indicating a close fit to reality. We use the model to evaluate different strategic slot allocation schemes from the perspectives of the airlines and the passengers. The most significant result of this research shows that a small reduction in the total number of allocated slots translates into a substantial reduction in flight and passenger delays, and also a considerable improvement in airlines’ profits.

Abstract:
While home and host country institutions and policies protecting property rights have long been shown to influence strategic choices of MNEs, the literature has largely ignored the proliferation of international institutions – the macro rules or principles negotiated among countries either bilaterally or multilaterally. We examine the effectiveness of agreements governing foreign investment (International Investment Agreements or IIAs), focusing on investor willingness to pay for foreign assets. This should be higher for IIA-protected investments if investors perceive IIAs as effective in providing property-rights protection. Using detailed transaction level data for sale of petroleum reserves in 52 countries, we find that investors pay significantly higher amounts for assets protected by IIAs – but only in countries with relatively low political risk. Our results contrast with those of previous researchers, who related IIAs to FDI flows, with inconclusive results.

Abstract:
We study pricing of two competing manufacturers who choose uniform wholesale prices and sell through a retailer maximizing category profits. Departing from extant work we model brand demand as continuous in retail prices, not lumpy with a mass of consumers exhibiting discontinuous switching behavior. This demand model is based a model of brand choice by heterogeneous consumers. We find that retail pass-through depends on wholesale price difference between brands, not just a brand’s wholesale price. Moreover, the wholesale price difference must exceed a threshold determined by price sensitivity. We also show that if demand is sufficiently price sensitive, even if it is continuous in retail prices, equilibrium manufacturer pricing is in mixed strategies, which we interpret as trade promotions. This is in contrast to prior work that establishes the outcome of mixed strategies when demand is lumpy. We further show that in the absence of a strategic retailer that maximizes category profits, in our model there would be no trade promotions. Thus, we establish a connection between trade promotions and the presence of a strategic retailer. We also find that not unexpectedly, with low price sensitivity, no trade promotions occur, while under high price sensitivity, trade promotions occur with equilibrium in mixed strategies. The more interesting result is that price sensitivity affects both regular and promotion prices. Finally, competitive trade promotions in our model act as a check on raising regular prices, and so competition is about choosing regular prices, not just formulating a promotions strategy.

Abstract:
It is common for procurement managers to frequently organise auctions among qualified suppliers to stay abreast of current supply-market pricing. The process of qualifying suppliers is expensive to the buyer; as a result, a buyer often maintains a pool of qualified suppliers, the supply base. In traditional auction models, the buyer uses the auction to ¯nd and award the business to the lowest-cost supplier in the supply base. In practice, however, sole awards can alienate losing suppliers and cause them to defect from the supply base. Therefore, to maintain the supply base | and thereby control supplier qualification costs | buyers often employ split awards. Hence, there is a trade-o® between the e®ective purchasing cost on the one hand, and the qualification cost paid to maintain the supply base on the other. We model and investigate this trade-o® and characterize (1) the optimal split award that minimizes long-run costs (purchasing and qualification) and (2) the optimal supply base size that the buyer should maintain. We also determine that higher per-supplier qualification cost leads to a smaller supply base but does not necessarily increase the extent of multi-sourcing. Finally, we show that when variability in supplier cost increases, the buyer maintains a larger supply base but does not necessarily decrease the extent of multi-sourcing.

Abstract:
This study investigates the influence of information asymmetry on the cross-sectional variation of volume-return relation in the context of Australian stock market. In particular, this paper extends current research by incorporating informed traders’ trade-size preference as well as its impact on the relation between information asymmetry and volume-return dynamics into analysis. After classifying trading volume according to the size of trade, we find that the dynamic volume-return relation within medium-size trades has the most significant response to the degree of information asymmetry. Our findings are consistent with the notion that informed traders concentrate in the trades of medium-size. JEL classifications: G10, G20, G24 Keywords: Trade-size, Information Asymmetry, Volume, Return

Abstract:
In this essay, we outline the provocative argument that in the realm of human affairs there exists an “entrepreneurial method” analogous to the scientific method spelled out by Francis Bacon and others with regard to the natural realm. We then suggest a series of open questions that we believe will help future scholars spell out the contents of such a method and ways in which it can be put to work in the design and achievement of socio-economic ends. At least one normative implication of accepting the argument would be to teach entrepreneurship not only to entrepreneurs but to everyone, as a necessary and useful skill and an important way of reasoning about the world.

Abstract:
We study the economics of sharing demand information between a dual sourcing firm and its retailer. Our analysis demonstrates that employing Advance Purchase Discount (APD) scheme in the supply chain synchronizes the timeline of the dual sourcing firm’s decisions with that of its retailer. This enables accurate, timely, and self-enforcing information sharing, which reduces the demand–supply mismatches, and improves the profitability of each of the agents in the supply chain. We provide prescriptions on the appropriate design of the contract that enables this Pareto-improving information sharing. Next,we extend this analysis to incorporate realistic constraints on the dual sourcing firm’s limited knowledge of its retailer’s administrative cost and information quality. We characterize “certainty-equivalent” values of the unknown retailer parameters, which facilitate analogous prescriptions for the design of APD contracts in these realistic settings. It is interesting that the unobservability of retailer parameters leads to an asymmetric and “degree-of-unobservability dependent” departure from the full-observability design of the APD contract. If the uncertainty in the unobserved parameter is small, then the optimal discount is higher compared to the case of full observability; conversely, when the uncertainty is large, the optimal discount is lower. It is significant that, despite the departure in the design of the APD contract, this analysis reiterates that the benefit of the APD persists even under this practical constraint.

Abstract:
We conduct a thought experiment of what would happen if a marketer were to really care about his/her customers’ welfare (not merely because the customer brings revenue.) We examine a duopoly where one of the firms does not maximize profit, but instead maximizes customer surplus subject to a profit constraint. (Customer surplus for a firm is the sum of its customers’ individual customer surpluses, i.e., the dollar value the customer attaches to the product minus its price.) For the surplus-maximizing firm, profit is constrained to be at least X percent (where X% might be, say, 80-90%) of the profit it would have obtained under a profit maximization objective. The model assumes customer willingness to pay for quality is uniformly distributed and that customers follow a simple decision rule: when presented with two products of known quality and price, purchase one unit of the product which maximizes surplus, or if surplus is negative for both products, elect not to purchase any product. We further assume that both firms have the same marginal cost of production that is convex (quadratic) in quality. Competition between firms is modeled as a two-stage game, which is solvable by backward induction. In the first stage, one of the firms, whose identity is exogenously specified, moves first and decides its quality level fully anticipating the quality response of the second firm and the subsequent price competition. The second firm observes the first firm’s quality level and then decides its own quality level, anticipating the subsequent price competition. In the second stage, firms take qualities as given and choose prices simultaneously in accordance with a Nash equilibrium. Two possibilities are considered: (a) the first mover is the profit maximizing firm, and (b) the first mover is the customer-surplus maximizing firm. We compare the results to the corresponding base case of Moorthy (Marketing Science 1988) where both firms are profit maximizing. We find that firms can deliver significant additional value to their customers by forgoing small amounts of profit. The effectiveness of this strategy depends upon which firm is the first mover. In the case that the surplus-maximizing firm moves first, 5%-10% increases in customer surplus “cost” 6%-12% of potential profits. By contrast, when the surplus-maximizing firm moves second, we find that sacrificing 20% of profits is sufficient to more than triple the customer surplus it would have provided under a profit-maximizing objective. This is accomplished by the surplus-maximizing firm leapfrogging the first mover to become the higher quality producer.

Abstract:
We model a firm whose owner benefits from its reputation for producing high quality goods. The firm's manager, however, benefits from diverting resources that are necessary to sustain high quality production for personal consumption. The owner can use compensation to incentivize the manager or reform the firm's organisational structure to constrain the manager. Under the optimal compensation scheme, the owner can ensure that the manager will choose to produce high quality goods for a limited period of time. The manager diverts resources and jeopardizes the firm's reputation for the remainder of the firm' life. Organizational structure reform, unlike incentive compensation cannot guarantee high quality production. The owner may reform the organization multiple times. In some instances she may choose to preempt the manager and reform the organization while the firm still has a reputation for high quality goods. Typically, however, unlike incentive compensation, the owner will choose to reform the organization after the firm's reputation is threatened because it has sold consumers low quality goods.

Abstract:
The Simulation Optimization Problem (SOP) is an optimization problem where the objective and constraint function(s) are observable only using a Monte Carlo simulation. Likewise the Stochastic Root Finding Problem (SRFP) is the Monte Carlo analogue of the problem of solving a nonlinear system of equations. Owing to their flexibility, both of these problems have recently found enormous expediency in a wide variety of application settings where the functions involved cannot be specified in closed-form, but are instead expressed conveniently and implicitly using a simulation. Sample-path methods, i.e., methods that generate an approximate deterministic problem using a “large enough” sample size and solve it to “adequate” tolerance, are currently amongst the attractive methods for solving SRFPs and SOPs. In this talk, we first answer the question of how to choose sample sizes and error tolerances within sample-path methods for finding some solution to an SRFP (or a local minimum in SOPs). We will characterize a class of error-tolerance and sample- size sequences that are superior to others in a certain precisely defined sense. Second, and time permitting, we will visit the question of finding all solutions to an SRFP (or a global extremum in SOPs). Specifically, we will demonstrate that a simple relationship between the number of random restarts and sample size should be in effect for maximum efficiency. We will provide motivating applications and a numerical example to illustrate key results.

Abstract:
We propose and empirically examine a comprehensive measure of institutional trading frictions to include the dimensions of price impact, quantity of execution, return dynamics, speed of execution or order splitting, and trading commissions. Our empirical analysis reveals that various hidden components of institutional trading frictions such as adverse selection and clean-up costs are persistent and could add significantly to previously measured directly observable components of transaction costs. Our simultaneous system of equations accounts for the endogeniety in institutional order aggressiveness based on potentially superior information as well as order splitting strategies in the implementation stage to reduce transaction costs. Order aggressiveness, market conditions and other stock characteristics are associated with the significant variations in trading frictions.

Abstract:
Prior research has shown that firms who generate earnings growth by improving profitability create value for shareholders, while firms who generate earnings growth through investment destroy value. This paper examines whether compensation committees take this into account while determining CEO compensation. We first confirm the results from prior research that internally generated growth is perceived by markets to add value while investment-driven growth does not. We find that while internally generated growth is positively associated with compensation, so is investment-driven growth. There is evidence to suggest that the weight placed on investment-driven growth in earnings is higher despite such earnings growth not delivering value to shareholders. We find partial support for the hypothesis that institutional investors act as monitors to ensure that managers are compensated efficiently. The presence of institutional ownership increases the weight on internally generated growth, but does not reduce the weight on investment-driven growth. We further show that value oriented institutional ownership increases the sensitivity of compensation growth to internally generated earnings growth and reduces the sensitivity to investment-driven earnings growth. Contrary to this, growth oriented institutional ownership increases the sensitivity of compensation growth to investment-driven earnings growth. Our results indicate the importance of understanding the different sources of earnings growth in the determination of executive compensation.

Abstract:
In this research seminar, I seek to shed some light on a relatively under-researched phenomenon viz. knowledge-intensive SMEs’ local network relationships with foreign MNCs. Prior research has not examined MNCs as a source of social capital for smaller firms. I report findings from two exploratory studies. First, a dataset of 107 Scottish software SMEs is analyzed to explore antecedents of such ties. A key finding is that alliance proactiveness is a significant predictor of whether an SME establishes links with MNCs as customers/partners rather than merely as suppliers. Second, a study of 102 Indian software SMEs examines consequences of such ties. A key finding is that social capital emanating from such ties is significantly associated with SMEs’ internationalization capability. The results of these studies improve extant understanding of SME internationalization given the tendency for academics – and perhaps even practitioners – to overlook local networks as a facilitator of international expansion. Recognition of SME-MNC links as an important locus of value creation has significant implications for public policy where efforts targeted at SME development and FDI attractions typically operate in parallel.

Abstract:
Financial engineering offers the potential to significantly reduce consumption fluctuations faced by individuals, households, and firms. Yet much of this promise remains unrealised. In this paper, we study the adoption of an innovative rainfall insurance product designed to compensate low-income Indian farmers in case of deficient rainfall during the primary monsoon season. We first document relatively low levels of adoption of this new risk management technology: only 5-10% of households purchase insurance, even though rainfall variability is overwhelmingly cited by households as the most important risk they face. We then conduct a series of randomised field experiments to test theoretical predictions of why adoption may be low. Insurance purchase is sensitive to price, with an estimated extensive price elasticity of demand between -0.66 and -0.88. Credit constraints, identified through the provision of random liquidity shocks, are a key barrier to participation, a result also consistent with household self-reports. Several experiments find an important role for trust in insurance participation. We find mixed evidence that subtle psychological manipulations affect purchase, and no evidence that modest amounts of financial education changes participation decisions. Based on our experimental results, we suggest preliminary lessons for improving the design of household risk management contracts.

Abstract:
The research study investigates the conditions under which alliances with large firm create value for the small firm. Using a resource dependency perspective, it is hypothesized that high power differences between the alliance partners may create instabilities in the alliance, negatively affecting the value which the small firm may gain from the alliance operations. On the other hand, it is argued the degree of mutual interdependence between the partners fosters an atmosphere of cohesion, trust and information exchange positively affecting the value which the small firm may gain from their alliance operations. Data is tested on 142 small firm-large firm alliances in the biotechnology industry. The results suggest that high power differences between the alliance partners negatively affect the value which the small firm may gain from the alliance operations. The results also suggest that small firms were able to overcome the problem of their power handicap when they established repeat alliances and when firms established coalitions or multi-partner alliances. Finally, the study offers implications to small firm managers to be extremely cautious and prudent when they establish alliances with larger firms.

Abstract:
Marketing expenditures are often treated as short term costs rather than long-term investments. This is especially true when marketing managers are faced with the trade-offs of competing marketing strategies such as focusing on customer satisfaction or brand value. Previous research linking customer attitudinal and behavioral metrics to financial outcomes is characterized by analyzing single linkages of the ‘customer value chain’. This narrow focus leads to lack of causal evidence, inconclusive results and incorrect priorities for marketing managers. The purpose of this study is to provide valid results linking attribute performance perceptions and behavioral intentions to behavioral and financial outcomes. Survey data as well as longitudinal transaction data for 736 customers were matched. In this study, a recently developed technique called, latent growth mixture modeling was used to analyze the proposed chain of effects and to test for customer heterogeneity. Not only did the findings support the conceptual framework, but the results showed an 80:20 split in the growth curve of customer profitability (low/high). Subsequent analyses yielded a significant higher effect of brand attachment on customer lifetime value than satisfaction and a weak positive multiplicative effect of both constructs on the slope of the customer profitability trajectory.

Abstract:
In this paper we extend the literature on multiple directorships by investigating the relationship between busy outside directors and firm performance for the top 500 Indian firms during the period of 2003-2006. We study the Indian corporate market since reputational capital (the argument that multiple board appointments signal director quality) is more important in emerging markets, such as India, where there are significant institutional voids. The presence of such institutional voids precludes a simple extrapolation of findings reported within a developed market such as the US to be applicable to emerging markets. We find busy boards are positively associated with firm performance. We strengthen our conjecture regarding the reputational capital of busy directors by showing that directors’ qualifications and their age determine their busyness. We also find that standalone firms needing more reputational capital tend to have a significantly greater number of busy directors. These findings confirm the notion that busy directors add significant value to corporations in emerging economies even if they do not add value in developed markets.

Abstract:
Replicating portfolio and risk-neutral pricing has long been the dominating idea in pricing financial derivatives. Risk-neutral pricing and the accompanying trading strategy is optimised for the best performance and hence is extremely susceptible to model inaccuracies. While in ideal situation, such pricing and the accompanying trading strategy will be able to generate risk-free profit (arbitrage), it can turn out to be disastrous under even small model perturbations.In this talk we focus on a trading strategy involving a call option on an asset that will perform stably under small model inaccuracies. The strategy is a switching one between the asset, buying the call option and writing the option. Our motivation comes from safeguarding performance under the worst conditions. The stability of our strategy comes from the fact that the functions used to trigger the switches are relatively stable under model perturbations. Given an asset we compute two critical thresholds for option premium determined by the performance of the option systems. Below the lower critical threshold, the strategy is to buy the call option. Above the upper threshold, one should write the asset. And between the thresholds one should go with buying and holding the asset. Although the strategy is motivated by simple examples, it can be generalised to any profitable asset. We implemented our strategy on S&P-500 index market data to test its performance. We performed 56 months ex-ante trend-following tests. We will present the results and some interesting observations about behavior of option premiums. We shall also take a quick glance into the stable strategies involving several options.

Abstract:
Economic reforms have resulted in China and India emerging as the world's fastest-growing economies. Both economies have moved from inward-looking regimes to outward-oriented policies allowing greater space to market forces. However, the approaches to economic reforms have been markedly different between the two economies. These differences are noticeable in the pattern and sequencing of reforms in both product and factor markets. The seminar focusses on the reasons leading to such differences in terms of economic and non-economic factors. It also studies the challenges facing both economies and the core objectives of future reforms.

Abstract:
Regulatory and media concern has recently focussed heavily on the potentially manipulative distortion of market prices associated with naked short selling. While manipulation through the creation of a spurious phantom supply of stock is plausible, naked short selling can also have beneficial effects for pricing efficiency and for liquidity. We empirically investigate, for the first time, the impact of naked short selling on pricing efficiency, liquidity and other measures of market quality. We find that, while naked short selling involves a significant proportion of securities, phantom shares amount to less than 0.1% of shares outstanding for NYSE-listed securities. Focussing on a randomly selected sample of 300 NYSE securities during the first semester of 2007, we find that a one percentage point increase in the incidence of naked shorting has lead to an approximately 4% reduction in the standard error of stock price returns, a 1% reduction in bid-ask spreads, a 50% decline in order imbalances, a 3.5% decline in absolute pricing error and a 30% decline in positive pricing errors. We find that results hold even under adverse market conditions by replicating the study with a 2008 sample. We also examine naked short selling surrounding the demise of Bear Stearns, and find that naked short sellers, while active in trading the stock of the firm, were responding to public domain information about the firm rather than triggering the observed precipitous price decline. Overall, the negative regulatory and media concern about naked short selling is not supported by our empirical evidence.

Abstract:
Studies of competitive entry into new businesses, technological or international domains are common in strategic management research. This research has provided important results on the implications of market structure and heterogeneous resources for entry decisions. But most such empirical studies are not modeled to accommodate strategic interaction and, therefore, implicitly assume sustainability of competitive advantage upon entry. This is un- fortunate since this setting also oers a fertile ground for the debate on sustainable vs temporary competitive advantage. Firm advantages could be temporary on account of strategic interaction between entrants and incumbents as in a hypercompetitive environment. Previous research has been constrained by traditional empirical approaches which do not easily permit the analysis of such strategic interactions. In this paper we propose a new empirical methodology to analyse entry decisions that allows the analysis of strategic interactions while also taking into account resource heterogeneity among rms. Following the derivation of this empirical model, we use simulated data to illustrate our results. We contrast the use of our suggested approach with that used in previous research under different conditions of sustainable or temporary advantages. It is shown that in conditions where rivals react to outmaneuver entrants, traditional empirical approaches provide biased results. Future studies can use our empirical model to answer fundamental questions about sustainability of competitive advantage and firm entry in the strategic management literature.

Abstract:
This paper presents new evidence for the effect of financial integration on the sen-sitivity of business growth to local credit supply. I estimate the marginal reduction in the dependence of business growth on local credit growth after an increase in market-level financial integration. To consistently identify these effects, I exploit the timing of intra and inter-state bank-branch deregulation by (1) using a difference-in-differences framework and (2) using deregulation as an instrument for measures of within-state and across-state financial integration. Analyzing a comprehensive market-level panel data set from the United States for the years 1977 to 1997, I find that intra-state deregulation results in an 80% reduction in the effect of local credit supply growth on mid-sized establishment growth (20-99 employees) in MSA markets. The marginal reduction in the sensitivity of firm growth to a fall in the deposit growth rate of .05 is 12% of the average firm growth rate. For inter-state deregulation in non-MSA markets, these figures are 80% and 12.5%. These effects are economically significant at the margin of business growth. The magnitude and statistical significance of these estimates are similar across difference-in-differences and IV specifications. I also find effects of similar magnitude using employment growth and payroll growth as measures of firm growth. These results suggest that an increase in financial integration lowers the volatility of growth for bank-reliant firms and that insufficient financial integration leads to allocative inefficiencies in the expansion and contraction of firms in response to local credit supply shocks.

Abstract:
We study multi-unit auctions where each bidder has a private value for each unit, and a private budget which is the total amount of money she can spend. We propose a mechanism which is semi-truthful, i.e. the only way that a bidder can possibly benefit from lying is by overstating her value (i.e., it is weakly dominant strategy for agents to state their true budget and not understating their value). We prove that some equilibrium of the proposed mechanism optimize the revenue over all pareto-optimal (allocation) mechanisms. We show that every equilibrium of the mechanism, under some natural assumptions, differs by at most the budget of one bidder from this optimum revenue. Finally, we show that a natural greedy bidding strategy in the repeated version of the mechanism converges to an equilibrium that generates optimal revenue.

Abstract:
This study examines sources of firm-level innovation capabilities in developing economies in the post-liberalisation era characterised by institutional changes and global competition. Drawing from evolutionary economics, we develop a model incorporating the role of internationally acquired knowledge on indigenous innovation capabilities. We empirically test the hypothesised relationships on longitudinal data on 206 Indian pharmaceutical firms from 1995-2004. Our results show that while participation in global resource and product markets independently influence innovation capabilities, the relationship between resource internationalisation and innovation is partially mediated by product market internationalisation. More fine grained analysis of firms in our data set also suggests the conditioning role of a unique institutional aspect of developing economies namely business groups, on these relationships with firms’ development of innovation capabilities.

Abstract:
This study examines Transaction Cost Economics (TCE) predictions between asset specificity and firms’ boundary choices. In particular, we demonstrate that value imputed to the resources in the transaction, incremental cost of hierarchy, ex-ante opportunity cost, and bilateral considerations may non-trivially influence extant TCE predictions. We reproduce the extant predictions under only subsets of necessary and sufficient conditions, and reveal implicit assumptions and limits that may be difficult to reveal by the chains of verbal logic. While considering asset specificity alone may lead to firms’ boundary choices that deviate from extant TCE predictions, integrating asset specificity with costly to copy resource perspective may result in situations where increasing asset specificity leads to non-integration.

Abstract:
As firms offer their products through multiple channels such as store, the Web, and catalog or direct mail and as more consumers buy them through different channels, the allocation of marketing efforts targeted at customers across channels is becoming a critical issue for many marketers. We propose a decomposition approach and a forward-looking model for optimal allocation of marketing efforts to each customer-channel segment of a multichannel direct marketer. We first develop response models for each component of firm profit, purchase frequency, purchase quantity, product return propensity, and contribution margin. We capture purchase frequency using the extended Beta Geometric/Negative Binomial Distribution model, purchase quantity and product return propensity using the Conditional Negative Binomial Distribution model, and contribution margin using the Gamma-Gamma model. We extend prior work by including the effects of marketing and other relevant covariates on purchase frequency, purchase quantity, return propensity, and contribution margin and by using a forward-looking optimisation model. The optimal marketing effort allocation to each customer-channel segment is a function of the model parameters for that segment. We jointly estimate the models through copulas, using customer level purchase, cost, and promotional data from a large marketer of shoes and apparel accessories across multiple channels, namely, the catalog, the store, and the Web. We solve the optimisation model using simulation. The results show that consumer response to firm marketing efforts varies significantly across the customer-channel segments for the different profit components, leading to differential allocation of marketing efforts to these segments. Using a holdout sample analysis, we show that firm profits can be substantially improved by optimally reallocating marketing efforts across the different customer-channel segments. In the revised allocation, the multichannel segment exhibits the highest percentage growth in budget and profit, highlighting the high profit potential of the multichannel segment. Our model outperforms alternative models, is generalizable and can be implemented by managers through an “easy-to-use” decision support system.

Abstract:
This study analyses the role of disclosure in trust settings. It examines both theoretically and experimentally how the opportunity to make voluntary disclosures enhances the building of trust and trustworthiness to facilitate institutions for exchange and investment. If there are some trustworthy managers who always disclose their private information (or there is simply a belief that there are some trustworthy managers), then a sequential equilibrium predicts that a rational manager will choose to disclose her private information in an attempt to earn a reputation for being trustworthy. However, the manager does so selectively instead of indiscriminately in order to ensure credibility associated with her choice. By allowing for such reputation building, an economy with disclosure will have higher investment as compared to one without disclosure. Disclosure allows rational agents to develop a reputation for being trustworthy types and thereby sets stage for greater investor confidence resulting in higher investment. A rational manager‟s strategic choice of selectively mimicking a trustworthy manager is corroborated by the experimental data. The experiment also introduces a screening round to identify trustworthy managers and thereby enable comparison of investment in economies with identical proportion of trustworthy agents but different disclosure institutions. The data corroborates higher investment in economies with disclosure.

Abstract:
Though marketers are well aware that typical consumers have difficulty estimating the usefulness of really new products (Hoeffler 2003), little research has focused on which consumers to use in the new product development process, particularly in developing radical innovations in the consumer goods industry. We develop a methodology to identify these “right” consumers and show that in a new product setting in two categories, they are more likely to develop new product concepts that typical consumers would find it more appealing. We argue that the right consumers possess what we call an “emergent nature,” i.e., an ability to have foresight with respect to new product ideas. Our approach involves a calibration and validation phase of scale development and construct measurement, along with six studies for concept development and market reaction that show that the product concept developed by the emergent group is found most appealing by mainstream consumers. Our conclusions are based on the results from two product categories: home delivery of goods and oral care, and provides an initial test of using emergent consumers in improving concept development. In both categories, the concept developed by the high emergent group was rated significantly higher than the concepts developed by three other concept development teams: lead users, dispositionally innovative, and average.