Decomposing the Congestion Effect and the Cross-Platform Effect in Two-Sided Networks: A Field Experiment

This paper highlights how the provision of information about user participation can serve as a strategic marketing tool for firms seeking to grow two-sided exchange networks. A two-sided exchange network is a business model (such as Ebay or Craiglist) where revenue is generated from persuading people to buy and sell items through that particular exchange. It is not immediately clear whether broadcasting information about the number of sellers will grow further seller participation. On the one hand, a strong rival presence may dissipate payoff (a 'congestion effect'). On the other hand, a large number of rivals may signal high buyer demand (a 'cross-platform effect'). We use field experiment data from a B2B web site that brings together buyers and sellers of used equipment and real estate. Before each seller made a posting request, the web site randomized whether to disclose the number of buyers and/or sellers, and the exact number to disclose. We find that when presented together with the number of buyers, a larger number of sellers makes sellers less likely to list their products, indicating a negative congestion effect. However, when the number of sellers is presented in isolation, its negative impact on entry is significantly reduced, indicating a positive cross-platform effect. Higher buyer search intensity amplifies the moderating role of demand uncertainty. The results suggest that information on the number of users can be an effective tool to grow two-sided networks but should be used strategically. A network can attract more users by advertising dense competition when demand is not transparent, especially in search-intensive markets

Days on Market and Home Sales

In April 2006, the real estate listing service in Massachusetts adopted a new policy that prohibits home sellers from resetting their property's 'days on market' to zero through relisting. We study the effect of this new policy on single-family home sales along the Massachusetts-Rhode Island border, using homes in Rhode Island, which did not change its policy, as the control group. We find that the policy change leads to a relative sale price reduction of around $11,000 for affected homes in Massachusetts. Homes caught in the middle of the policy change are the hardest hit; the sudden release of the cumulative days on market information lowers the average sale price by$21,500. Sellers respond to the new policy by reducing the listing price to shorten their property's days on market

Investigating whether short-sellers exploit accounting-based pricing anomalies

Thesis (S.M.)--Massachusetts Institute of Technology, Sloan School of Management, 2005.Includes bibliographical references (leaves 30-31).This paper examines whether short-sellers (bears) exploit post-earnings-announcement-drift (PEAD) and the accruals anomaly. I first find that short interest is higher during the period that follows a negative earnings surprise and, to a lesser extent, the announcement of earnings that contains an abnormal income-increasing accrual component. Second, holding both anomalies constant, I find that prices decline more quickly in the presence of higher short interest. However, I do not find that higher short interest improves the pricing of information about future earnings contained in current earnings.y Bing Cao.S.M

Social Interactions, Network Fluidity and Network Effects

This paper asks how much the strength of network effects depends on the stability and structure of the underlying social network. I answer this using extensive microdata on all potential adopters of a firm's internal video-messaging system and their subsequent video-messaging. This firm's New York office had to be relocated due to the terrorist attacks of 2001 which lead to a physical re-organization of teams in that city but not in other comparable cities. I study the consequences of this disruption for adoption of video-messaging and the size of network effects. I find evidence that generally network effects are based on direct social interactions. Potential adopters react to adoption only by people they wish to communicate with: They are not affected by adoption by other people. However, when there is a disruption to the social network and communication patterns become less predictable, users become more responsive to adoption by a broader group of users

Decomposing the Congestion Effect and the Cross-Platform Effect in Two-Sided Networks: A Field Experiment

This paper highlights how the provision of information about user participation can serve as a strategic marketing tool for firms seeking to grow two-sided exchange networks. A two-sided exchange network is a business model (such as Ebay or Craiglist) where revenue is generated from persuading people to buy and sell items through that particular exchange. It is not immediately clear whether broadcasting information about the number of sellers will grow further seller participation. On the one hand, a strong rival presence may dissipate payoff (a 'congestion effect'). On the other hand, a large number of rivals may signal high buyer demand (a 'cross-platform effect'). We use field experiment data from a B2B web site that brings together buyers and sellers of used equipment and real estate. Before each seller made a posting request, the web site randomized whether to disclose the number of buyers and/or sellers, and the exact number to disclose. We find that when presented together with the number of buyers, a larger number of sellers makes sellers less likely to list their products, indicating a negative congestion effect. However, when the number of sellers is presented in isolation, its negative impact on entry is significantly reduced, indicating a positive cross-platform effect. Higher buyer search intensity amplifies the moderating role of demand uncertainty. The results suggest that information on the number of users can be an effective tool to grow two-sided networks but should be used strategically. A network can attract more users by advertising dense competition when demand is not transparent, especially in search-intensive markets

Cultural change : a comparative study of the change efforts of Douglas MacArthur and Carlos Ghosn in Japan

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management, 2005.This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections.Includes bibliographical references (p. 137-139).When an organization adapts to a changing environment and struggles through an organizational crisis, its organizational culture is sometimes challenged. At such a time, a leader who can change current culture and embed a new culture is needed for the organization to survive. Dealing with cultural changes is one of the most important roles of a leader. In this thesis, I examine the leadership of two leaders-General Douglas MacArthur and Nissan's CEO Carlos Ghosn-who came to Japan from the outside during organizational crises and conducted organizational reforms and cultural changes at two different levels-the country Japan and the company Nissan. Using Edgar H. Schein's (1992) frameworks, culture-embedding mechanisms and basic assumptions, I examine what has, and has not, been changed by the two leaders in terms of organizational culture. I will show how most of Nissan's problems came from basic assumptions of postwar Japan, and how the country has not been changed while the company has been successfully changed. My research was conducted mainly through historical studies and articles written by both American and Japanese writers in order to analyze various events from differing objective perspectives.by Koji Nakae.M.B.A

M28 Fixed wing transport aircraft cost reduction

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Engineering Systems Division; in conjunction with the Leaders for Global Operations Program at MIT, 2011.Cataloged from PDF version of thesis.Includes bibliographical references (p. 146-148).The M28 is a Polish short-takeoff-and-landing (STOL) light cargo aircraft developed in 1984 and currently built by PZL Mielec, a subsidiary of United Technology Corporation (UTC). There has been renewed interest in the product from military and commercial markets due to its impressive STOL capabilities. However, in order to become price-competitive, its cost would need to be reduced significantly. Multiple cost-reduction concepts have been proposed by the manufacturing and procurement groups. An Optimization Team was also formed to lead the cost-reduction effort. However, a more systematic approach is required in order to achieve the ambitious reduction goals. The proposed solution is to create a top-down systematic cost-reduction framework used to coordinate and prioritize the team's current bottom-up approach. A top-down cost reduction strategy was developed based on UTC Otis' Octopus Fishing concept. Such methodology, heavily finance driven, systematically breaks M28 into sub-systems, and prioritizes improvement recommendations based on cost-reduction potentials. It also leverages on the wealth of knowledge from global cross-functional teams to generate explosive amount of improvement recommendations. The sub-systems were benchmarked against competitors cost structures. The framework will be linked to concepts generated from the database to create a process that combine top-down and bottom-up approaches. After tasks were prioritized using the outlined framework, a three-prong approach was implemented to enhance cost reduction capability. Manufacturing of labor intensive parts such as nacelle deflection cover was automated using CNC machines. A set of commodity purchasing strategies were formulated for forgings, avionics, raw materials, interior and composite materials. Lastly, a discrete Kaizen event was described to aid redesign-for-manufacturing.by Yuxin Xia.S.M.M.B.A

The challenge of smooth transition from R&D business for innovation in a telecom company

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management, 2005.Includes bibliographical references.The environment surrounding telecom companies has changed dramatically since most were privatized in the 1980s. Under the influence of regulations, they had faced globalization and have repeatedly divided and consolidated to improve competitiveness. From the technology and marketing points of view, two disruptive innovations occurred in the 1990s: IP and wireless communications. Originally, IP was used only for data communications, but it has now evolved to include voice communications as VolP. This had a huge impact on telecom companies because IP has destroyed the legacy cost structure that was based on a pay-as-you-go system; the new demand is for a flat rate fee structure. IP also moved forward the commoditization of communication network services. At the same time, demand for cellphone service grew exponentially, and the number of cellphone subscribers surpassed that of fixed phone in 2000 in Japan. As a result, competitive superiority is shifting from long- distance companies to local and wireless companies. In this thesis, I discuss the telecom industry's situation, and compare three major carriers: AT&T, BT and NTT.(cont.) I describe the organizational structures of each company to determine where there are-or if there is a requirement to improve- smooth transitions from R&D to business as one way to enhance the telecom companies' competitiveness. My research found that their strategies regarding the acquisition of competence are totally different: AT&T did internal development; BT purchased necessary technologies from the market; NTT led joint development with manufacturers. From the comparison and analysis, I determined that the R&D structure should be changed from the legacy linear model to a circular model that produced fast clock speed. In addition, companies must have relationships with external companies and universities in order to purchase products or technologies quickly and efficiently. Managing NTT Group effectively is another key issue to be executed. If NTT can turn these changes into an opportunity, the company can transform itself into an IP communication services company that is able to use its huge technical resources to give themselves a marketing advantage.by Yukari Tsuji.M.B.A

How Kirin can maximize the synergies of its group companies to attain sustainable growth

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management, 2005.Includes bibliographical references (leaves 105-109).At the end of twentieth century, Kirin Brewery Co. began a strategic move to break out of the saturated domestic market by adopting an international orientation and diversification effort to become a leading company in the Asia and Oceania markets. Following consolidation of its distribution channels and plant networks in the target region through successful strategic alliances with Lion Nathan Ltd. and Sun Miguel Corporation, Kirin Group has now grown into a large corporate group. However, history is full of examples of food/beverage companies that encountered difficulties achieving sustainable growth after early experiences of rocketing sales at takeoff-even though many such companies know that the key to success is taking advantage of group synergies. This thesis identifies a corporate strategy for Kirin that can be realized by creating two kinds of synergies of resource sharing in various phases of the value chain in order to upgrade Kirin Group's set of resources, and a synergy in the company's strategic thrusts. My research found that sharing intangible resources could play an important role in attaining architectural innovation.(cont.) Each resource sharing idea builds on three strategic thrusts that could counter the external environment in the target geographic region. I address how to create synergies across multiple positive feedback loops that consist of the three strategic thrusts as a virtuous cycle. I stress that kicking on path dependence of the multiple loops could snowball Kirin's growth. Then I discuss ways to shift a leading organization in order to achieve a new strategy. Possible methods for managing this proposed organizational change include invigorating group dynamics by managing the Communication Loop, Career Anchor, and Creative Tension; activating organization dynamics by controlling Informal Network, Inquiry and Advocacy; and treating deep-rooted organizational culture by tracing the steps of each individual's Ladder of Inference. I argue that upgrading Kirin's resources to enable it to compete through sharing intangible resources, firing up the company's development engines to encourage growth by linking multiple positive feedbacks, and reinforcing the organization by invigorating human resources, will enable Kirin Group to build strong customer bonding through Total Customer Solution.(cont.) The central focus of Kirin's corporate strategy in this thesis is its alcohol business, which accounts for 74% of sales and 75% of operating income within the alcohol and soft drink business in 2004. The market scope is the off-premise market in which opportunities and threats grow larger as global retailers continue to expand their reach beyond their own national borders.by Kei Watanabe.M.B.A

Asymmetric Network Effects

When platforms compete for consumers, two types of consumer heterogeneity will matter: consumers value the presence of other consumers on a platform differently, and consumers contribute to the value of the platform differently. The optimal discriminatory pricing policy for platforms will depend on whether those two dimensions of consumer heterogeneity are positively or negatively correlated, which is an empirical question. In a companion paper (Cantillon and Yin, 2008), we study membership decisions of trading firms for two competing exchanges: LIFFE and DTB. Our analysis shows that different traders care about liquidity differently. In this paper, we estimate the heterogeneous contribution to liquidity by different types. We combine the estimates from both papers of heterogeneous preferences and contributions to liquidity