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
Optimization as Constraint: A Comment on Mazzoleni and Nelson
Capturing Economic Value from Innovation Investments
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
Movie piracy and sales displacement in two samples of Chinese consumers
Intellectual property piracy is widely believed, by authorities in both US industry and government, to be rampant in China. Because we lack evidence on the rate at which unpaid consumption displaces paid consumption, we know little about the size of the effect of pirate consumption on the volume of paid consumption. …Read More
The Dynamics of Wealth, Profit and Sustainable Advantage
This paper shows how idiosyncratic resources can drive sustained profitability and persistent heterogeneity under competitive conditions. Generic inputs purchased in the market become idiosyncratic resources as the result of firms’ investments in customization.…Read More
The Challenge of Revenue Sharing with Bundled Pricing: An Application to Music
Bundling can increase revenue and profits relative to selling products on a standalone basis, and this is an especially attractive strategy for zero-marginal-cost information products. Despite the clear benefits of bundling, it has one major problem: bundling produces revenue that is not readily attributable to particular pieces of intellectual property.…Read More
The Immaterial Text: Digital Technology, the Google Book Settlement, and the Distribution of Print Culture in the United States
In 2004 the Internet search firm Google announced an ambitious plan to scan and render searchable the contents of major research libraries. This amounted to a large-scale effort to render the contents of the books into immaterial and easily manipulated and transferred information.…Read More
Preference Minorities and the Internet
Offline retailers face trading area and shelf space constraints, so they offer products tailored to the needs of the majority. Consumers whose preferences are dissimilar to the majority — “preference minorities” — are underserved offline and should be more likely to shop online. The authors use sales data from Diapers.com, the leading U.S. online retailer for baby diapers, to show why geographic variation in preference minority status of target customers explains geographic variation in online sales.…Read More
Perspectives on Firm Decision Making During Risky Technology Acquisitions
A novel survey dataset on computed tomography (CT) machine acquisition is used to explore which theories best answer two questions from the decision making literature. First, what determines how much uncertainty a firm has when investing in updated technology? Second, what determines the value of the acquisition? In answering these questions, two theoretical comparisons are conducted.…Read More
Capacity Investment Timing by Start-ups and Established Firms in New Markets
We analyze the competitive capacity investment timing decisions of both established firms and start-ups entering new markets which are characterized by a high degree of demand uncertainty. Firms may invest in capacity early (when the market is highly uncertain) or late (when market uncertainty has been resolved), possibly at different costs.…Read More
Stuck in the Adoption Funnel: The Effect of Delays in the Adoption Process on Ultimate Adoption
Many firms have introduced Internet-based customer self-service applications such as online payments or brokerage services. Despite high initial sign-up rates, not all customers actually shift their dealings online. We investigate whether the multistage nature of the adoption process (an “adoption funnel”) for such technologies can explain this low take-up.…Read More
Emergence of new markets, distributed entrepreneurship and the university: Fostering development in India
University-industry partnerships facilitate socio-economic development by incubating innovations and diffusing entrepreneurial capabilities to create new markets in rural areas. Complexity theory based approaches are used to develop a process model of emergence based on a case study of a leading Indian technical institution involved in creating new technologies and markets.…Read More