Working Papers

Working PapersPedada, Kiran., Shankar, Venkatesh.,Dass, Mayukh. "The Effects of International Marketing Joint Venture Dissolutions on the Shareholder Value of Emerging Market Firms"Read Abstract >Close >
Working PapersUppal, Abhinav., Bradlow, Eric T..,Yildirim, Pinar. "A Bayesian Learning Model for Product Hierarchies"
Working PapersUppal, Abhinav., Jerath, Kinshuk.,Raju, Jagmohan S. "A Theory of Selling Formats in Retailing: Direct versus Mediated Access"Read Abstract >Close >Retailers worldwide employ various selling formats characterized by different degrees to which customers can access and inspect products in the store. In the direct access format, all available products are stocked on shelves directly accessible to customers for inspection, while store associates offer minimal assistance. In the \"mediated access\" format, retail stores are manned by shopkeepers who offer one product at a time to customers and the customers decide whether to purchase an offered product or to ask for an alternative. We build a theoretical model in which a retailer makes selling format, product assortment and pricing decisions, and consumers have shopping costs. There are two products: a general purpose brand that provides the same utility uniformly to all consumers, and a specialized brand that gives ex ante uncertain utility to a consumer that can be higher or lower than the utility of the general purpose brand, and a consumer can resolve this by inspecting this brand. We find that the retailer chooses the mediated access selling format with the specialized brand offered first when customers' uncertainty about fit with the specialized brand is large (as long as the retailer's margin on the general purpose brand is not too high). If consumers' uncertainty about fit with the specialized brand is medium, the retailer chooses to internalize consumer shopping costs by employing the direct access format and carries both brands. If consumers' uncertainty about fit with the specialized brand is small, the retailer chooses the mediated access format carrying only the general purpose brand. Our model offers an explanation for the observation that the mediated access selling format is more popular in emerging markets (as compared to developed markets) where consumers' shopping costs (e.g., cost of time) are typically small, but in these markets this format is less popular for large, organized retailers (as compared to small, unorganized retailers) that may be able to obtain better trading terms, e.g., larger retail margins, from upstream sellers.

Working PapersPedada, Kiran., Shankar, Venkatesh.,Dass, Mayukh. "Determinants of International Marketing Joint Venture Dissolutions in Emerging Markets"Read Abstract >Close >
Working PapersSubramanian, Krishnamurthy., Bhowal Subhendu, Tantri Prasanna. "Costs Of Job Rotation: Evidence From Mandatory Loan Officer Rotation"Centre for Analytical FinanceRead Abstract >Close >We highlight the costs from a principal rotating agents among tasks when decision-making inside a firm is driven by soft information. These costs arise because (i) an incoming agent cannot verify the information set that the outgoing agent utilized, and (ii) neither agent receives the entire marginal benefit/penalty for her effort. We provide evidence of this cost using unique loan and officer level data from a large public sector bank in India. Using the bank's fixed-tenure-based policy of loan officer rotation for identification, we find that default probabilities are 8% higher for loans affected by job rotation when compared to other loans. This difference is not explained by differences in hard information or the loss of a lending relationship

Working PapersSubramanian, Krishnamurthy., Vaidyanathan. k.,Yadav Ajay. "Deregulation of Entry and Systemic Bank Failures"
Working PapersSubramanian, Krishnamurthy. "The Color of Money: A Startup's Choice among Venture Capitalists "Read Abstract >Close >Venture Capitalists (VCs) differ from one another in the non-financial resources they offer startups. This paper develops a model to study an entrepreneur's choice among disparate VCs. While greater non-financial resources foster specialization to the startup’s idea, they tempt the VC to hold up the entrepreneur. Such hold-up, however, adds value to the startup by engendering greater effort from the VC. VCs offering greater non-financial resources endogenously match with entrepreneurs possessing higher quality ideas. Therefore, unlike mutual funds that do not offer non-financial resources, performance persistence in VCs stems the non-financial resources and the VC’s ability to hold up the entrepreneur.

Working PapersSubramanian, Krishnamurthy. "Clicks Versus Bricks: A Theory of Differences between Intangible-asset-intensive and Tangible-asset-intensive Firms"Read Abstract >Close >
Working PapersSubramanian, Krishnamurthy. "The Optimal Locus of Innovation"Read Abstract >Close >I develop a unified theory to study five different organizational modes for developing an idea: corporate research alliance, venture capital financing, angel financing, intrapreneurship, and spinoff. I model these choices as a combination of access as defined by Rajan and Zingales (1998) and ownership of the idea as defined by the property rights theory. The optimal choice encourages the entrepreneur and the collaborator---venture capitalist, corporation or angel investor---to invest in developing the idea while discouraging them from investing to extract rents. This effect manifests because ownership has an asymmetric effect on the collaborator's and entrepreneur's incentives while access has a symmetric effect. The theory explains some empirical regularities and generates several new predictions.

Working PapersMangipudi, Chandrasekhar., Subramanian, Krishnamurthy., Vasu, Rajkamal. "Valuation of Private, Innovative Targets: Evidence from Cisco’s Acquisitions"Centre for Leadership, Innovation, and ChangeRead Abstract >Close >We study how the value paid for private, innovative targets is affected by its knowledge-related intangible assets. We use unique data from Google Patents for the targets acquired by serial acquirer Cisco. We minimize bias in estimates of the value paid by comparing across deals undertaken within the same year by an acquirer that represents the “gold standard for M&A practices.” We find that acquirers pay for the target’s (i) intellectual property rights, (ii) expertise/technology especially that overlapping with the acquirer’s, and (iii) employees’ human capital. Ours is the first study to examine the value paid for knowledge-related intangible assets in mergers and acquisitions.

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