New research indicates that individuals’ investment decisions may outperform those of the group. How can firms make better decisions?…Read More
In the VC World, Collective Wisdom Isn’t Always So Wise
Capturing Economic Value from Innovation Investments
Managerial Compensation and Corporate Spinoffs
This article investigates how corporate spinoffs affect managerial compensation. These deals are found to improve the alignment of spinoff firm managers’ incentive compensation with stock market performance, especially among spinoff firm managers that used to be divisional managers of the spun-off subsidiary, and particularly when the spun-off subsidiary performs better than or is unrelated to its parent firm’s remaining businesses.…Read More
The First Step to Successful Innovation? Choosing the Right Partners
Wharton management professor Exequiel Hernandez searches for the optimal mix of domestic and foreign partners in a firm’s network. The answer depends on what type of innovative solution a firm is trying to produce.…Read More
The NPE: Benevolent Middleman or Stick-Up Artist?
How do non-practicing entities impact innovation? This question has enormous relevance to industrial policy, with virtually no direct evidence to inform it. There are two dominant theoretical perspectives, one of which views Non-Practicing Entities (NPEs) as benevolent middlemen reallocating intellectual property (IP) to where it can be best used.…Read More
How to Win in an Omni-channel World
Retail customers are now “omnichannel” in their outlook and behavior — they use both online and offline retail channels readily. To thrive in this new environment, retailers of all types should reexamine their strategies for delivering information and products to customers.…Read More
Location Is (Still) Everything: The Surprising Influence of the Real World on How We Search, Shop, and Sell in the Virtual One
Conventional wisdom holds that the internet makes the world flat and reduces friction by erasing the impact of the physical world on our buying habits. But Wharton professor David Bell argues that the way we use the internet is still largely shaped by the physical world we inhabit.…Read More
The Double-Edged Sword of Recombination in Breakthrough Innovation
We explore the double-edged sword of recombination in generating breakthrough innovation: recombination of distant or diverse knowledge is needed because knowledge in a narrow domain might trigger myopia, but recombination can be counterproductive when local search is needed to identify anomalies.…Read More
Reversing course: Competing technologies, mistakes, and renewal in flat panel displays
The study explores renewal in a novel but understudied context—an era of ferment with competing technological options. It focuses on IBM’s transition from market leadership in a failed path (plasma) to leadership in the emerging dominant technology (LCD) in the 1980s. Interviews and internal documents offer two primary factors explaining renewal at IBM.…Read More
What Became of Borders?
Economists have suggested at least since Mandeville and Smith that the virtues of capitalism lie in giving consumers what they want, and cheaply, through the vehicle of incentives to businesses and, in particular, their owners. It was the central task of economic theory in the twentieth century to show the precise sense in which, and conditions under which, this might be true.…Read More
Optimization as Constraint: A Comment on Mazzoleni and Nelson
This comment is an in-depth exploration of the neoclassical commitment to the idea that economic actors are appropriately modeled as optimizers—of profit, utility, or whatever.…Read More
The Importance of the Raw Idea in Innovation: Testing the Sow’s Ear Hypothesis
How important is the original conception of an idea—the “raw” idea— to an innovation’s success? In this article, the authors explore whether raw ideas judged as “better” fare better in the market and also determine the strength of that relationship.…Read More
Portfolio Management in New Drug Development
The pharmaceutical industry leads all industries in terms of R&D spend. Portfolio management in new drug development is extremely challenging due to long drug development cycles and high probabilities of failure.…Read More
The Impact of New Product Introduction on Plant Productivity in the North American Automotive Industry
Product launch—an event when a new product debuts for production in a plant—is an important phase in product development. But launches disrupt manufacturing operations, resulting in productivity losses. Using data from North American automotive plants from years 1999–2007, we estimate that a product launch entails an average productivity loss of 12%–15% at the plant level.…Read More
Competing Technologies and Industry Evolution: The Benefits of Making Mistakes in the Flat Panel Display Industry
This article investigates the post-entry implications of pre-entry technological choices made during the uncertain period before a dominant design. Building on work on technological dynamics and organizational inertia, I argue that too early commitments to the winning technology may impede the ability to bring the best product to market, but delaying investment too long limits the ability to accumulate useful knowledge.…Read More
Differentiated Bidders and Bidding Behavior in Procurement Auctions
Why do bidders in buyer-determined procurement auctions often bid above the lowest observed bid over the course of the auction? Are such bidding patterns meaningful? In this research, the authors propose that bidders infer their potential quality advantage or disadvantage through their observation of competitive bids and incorporate this information into their responses and price bids.…Read More
Resources as Dual Sources of Advantage: Implications for Valuing Entrepreneurial-Firm Patents
Why and how do resources provide sources of competitive advantage? This study sheds new light on this central question of resource-based theory by allowing a single resource—entrepreneurial-firm patents—to play distinctive roles in different competitive arenas. As rights to exclude others, patents serve a well-known role as legal safeguards in product markets.…Read More
Falling Flat: Failed Technologies and Investment Under Uncertainty
This study theorizes about the behavioral and knowledge creation implications of betting on the losing technology in a competing technology situation and focuses on three main outcomes. First, in a situation with competing technological options, firms that invest initially in the losing technology will be less successful subsequently in building new knowledge.…Read More
When Do Firms Divest Foreign Operations?
Extant literature on divestment has repeatedly found that firms are likely to divest their poorly performing operations. In this paper, I consider how product market relatedness and geographic market differences in growth, policy stability, and exchange rate volatility can moderate the negative relationship between performance and divestment.…Read More
Coordinating and Competing in Ecosystems: How Organizational Forms Shape New Technology Investments
We consider firms in the context of their business ecosystems and explore how differences in the ways in which firms are organized with respect to complementary activities affect their decision to invest in new technologies.…Read More
Media Multiplexing Behavior: Implications for Targeting and Media Planning
There is a growing trend among consumers to serially consume small, incomplete “chunks” of multiple media types—television, radio, Internet, and print—within a short time period. We refer to this behavior as media multiplexing and note the key challenges for integrated marketing communications media planners.…Read More