Strategic Innovation and Technology Adoption in an Evolving Industry

We introduce a racing model with multiple product generations, product innovation, spin-outs, and licensing. Industry conditions and innovation characteristics affect who wins the race and who markets the resulting product. Small firms market their innovations when they pioneer a new generation or improve quality in a young generation and license their innovations in mature generations. If old generation leaders ever market improvements in young generation goods, they do so early on. Leadership in mature generations persists. Tests on the rigid disk drive industry (1977-97) provide empirical support. The results have implications for antitrust policies and policies governing employee non-compete agreements.industry dynamics; employee mobility; innovation market; convenant not to compete; spin-offs

R & D: Allocation: Reliability Vs. Customer Cost

The paper considers a monopoly firm with two possible R & D projects, one improving the product\u27s reliability and the second reducing the customers\u27 costs associated with product failure. The firm must choose one project or the other, and has a fixed budget for R & D expenditures. A condition on parameters is derived which indicates which project should be chosen. Monte Carlo analysis suggests that for the firm\u27s decision-making the most important parameter is a measure of the ambient level of technology. From society\u27s point of view, the most important parameter in determining the effect of the R & D choice on society is the size of the market being served by the firm

Hardware quality vs. network size in the home video game industry

This paper analyzes competition between multiple proprietary and incompatible hardware systems when indirect network effects are present and software is provided competitively by third party developers. A discrete-choice demand structure is employed within a game theoretic setting to allow for a continuum of market share possibilities. Empirical evidence supports the claim that excess inertia is not a pervasive problem. Two data sets covering the life of the home video game industry (yearly from 1976 to 2003 and monthly January 1995 to October 2007) yield three main results: (1) market share is 11.4 times more sensitive to hardware quality than network size, (2) the number of available games is 3.69 times more sensitive to hardware quality than network size, and (3) hardware quality has a larger impact than network size on the probability of hardware success.Indirect network effects Excess inertia Video games Quality vs. quantity

R&D Subsidies and Multinational Firm Ownership

Most industrialized countries subsidize private sector R&D, even under some circumstances when the firm is owned by foreigners. The present paper, using a simple theoretical analysis of a monopoly firm selling only to the U.S. market, argues that such subsidies are welfare enhancingas long, of courseas the funding agency chooses the projects it funds wisely. The paper suggests that a subsidy rate of 50% might be warranted under some circumstances.

Is everybody an expert? An investigation into the impact of professional versus user reviews on movie revenues

This study is the first attempt to examine the effect of electronic word of mouth (user reviews) relative to expert reviews on moviegoing decisions. For the first time, we use time-varying data on expert reviews. We find that expert ratings matter much more for moviegoing decisions than user ratings and volume. Our data also show that experts tend to be more critical but more consistent in their reviews than users. We find that experts, but not eWOM, affect wide release moviegoing, contrary to industry thinking. Finally, we show that experts’ reviews matter most when consumers and critics are in closer agreement about the quality of the film. The study uses OLS as well as instrumental variables analysis to account for possible endogeneity

The impact of advertising content on movie revenues

We analyze the contents of print ads in the motion picture industry (e.g., number of reviews quoted in the ad, the presence of a top reviewer, size of the ad, star, director, etc.). We find that external validation (a recommendation by a top reviewer) is more important to revenues than the informative content of the ad

When the green in green packaging backfires: Gender effects and perceived masculinity of environmentally friendly products

Previous research has emphasized the importance of product packaging to consumers’ attitudes and purchase intentions, but empirical studies that explore the specific mechanisms by which packaging color influences marketing-relevant downstream variables in relation to environmentally friendly products is scarce. The current research addresses this gap by building on insights from theories on consumption values, gender roles, and gendered products. In two studies, the current research shows (1) how color-induced perceptions of masculinity can trigger perceived product effectiveness and purchase intentions, (2) how competing mediation through masculinity and perceived fit with the product category influences perceived product effectiveness and purchase intentions for green products, and (3) that the positive influence of masculinity on perceived product effectiveness holds for male but not female consumers. These effects occur independently of color saturation and product positioning for two different product categories where strength and durability are relevant: washing detergents (Study 1) and motor oil (Study 2). The results of this research add a novel and differentiated perspective on the effects of color and gender roles in the context of environmentally friendly consumption and provide marketing managers with suggestions on how to increase perceived product effectiveness and purchase intentions related to green products