Publication records

We consider a duopoly where firms compete on waiting times in the presence of an industry benchmark. The demand captured by a firm depends on the gap between the firm's offer and the benchmark. We refer to the benchmark effect as the impact of this gap on demand. The formation of the benchmark is endogenous and depends on both firms' choices. When the benchmark is equal to the shorter of the two offered delays, we characterize the unique Pareto optimal Nash equilibrium. Our analysis reveals a stickiness effect in which firms equate their delays at the equilibrium when the benchmark effect is sufficiently strong. When the benchmark corresponds to a weighted average of the two offered delays, we show the existence of a pure Nash equilibrium. In this case, we reveal a reversal effect, in which the market leader, i.e., the firm that offers a shorter delay, becomes the follower when the benchmark effect is sufficiently strong. In both cases, we show that customers' equilibrium waiting times are shorter with the benchmark effect than without it. Our models also capture customers' loss aversion, which, in our setting, states that demand is more sensitive to the gap between the delay and the benchmark when the delay is longer than the benchmark (loss) than when it is shorter (gain). We characterize the impact of this loss aversion on the equilibrium in both settings. Finally, we show numerically that the stickiness and reversal effects still exist when firms also compete on price.

© 2014 INFORMS

The case serves as an illustration of organizational behavior when it comes to the issue of silence in organizations. It describes a critical leadership situation that requires speaking up against the orders of a superior in a hierarchical structure – in this case, the armed forces. When the protagonist, a young Israeli officer leading a special-forces platoon, receives an order that would put his platoon in extreme danger, he has to make a decision. The case is not concerned with combat situations, but rather with how to act as a responsible leader. Given the setting of an army unit governed by command and control, the initial case discussion is likely to focus on typical leadership issues, such as motivation and followership. However, the more interesting aspect concerns the dual roles that leaders typically have to fulfill, that is, they may be both leaders and followers. The protagonist of the case is a captain who receives an order from a major that will have consequences for the captain’s platoon. The core issue of the case is the decision to reject the order in question. Participants will discuss why speaking up is an issue in organizations and usually does not occur. The case also allows us to look at situations in high-risk organizations that allow open communication.

The case may be used in a leadership course in MBA programs. It may also be used in executive education to support sessions on both leadership as well as crisis and error management. Apart from the main objective of highlighting the issue of speaking up, executives may also be asked to describe how to lead and motivate individuals beyond using the normal incentive tools (e.g., bonuses and promotions). On the whole, the case may be used to address the following subjects: speaking up, leadership, responsibility, motivation, and followership.

This note proposes a new set-up for the fund backing the Single Resolution Mechanism (SRM). The proposed fund is a Multi-Tier Resolution Fund (MTRF), restricting the joint and several supranational liability to a limited range of losses, bounded by national liability at the upper and the lower end. The layers are, in ascending order: a national fund (first losses), a European fund (second losses), the national budget (third losses), the ESM (fourth losses, as a backup for sovereigns). The system works like a reinsurance scheme, providing clear limits to European-level joint liability, and therefore confining moral hazard. At the same time, it allows for some degree of risk sharing, which is important for financial stability if shocks to the financial system are exogenous (e.g., of a supranational macroeconomic nature). The text has four parts. Section A describes the operation of the Multi-Tier Resolution Fund, assuming the fund capital to be fully paid-in (“Steady State“). Section B deals with the build-up phase of the fund capital (“Build up“). Section C discusses how the proposal deals with the apparent incentive conflicts. The final Section D summarizes open questions which need further thought (“Open Questions“).

The six vignettes in this case present situations that call for the application of one of the six leadership styles: coercive, pacesetting, authoritative, affiliative, democratic, and coaching. The vignettes, each demonstrating a correct, incorrect, or possible use of a particular style, can be used in class for the purpose of developing students’ leadership style, diagnostic skills, as a group discussion material, or as test material for post-class examination. Each of the vignettes is a generalized experience story based on examples shared by participants in executive education programs run over the course of the author’s eight years of teaching the leadership styles model as presented by Goleman (2000) at a leading European business school. The vignettes have been tested within the context of MBA and executive MBA programs, and executive education courses for high potentials, middle managers, and board level executives.

This is a set of six vignettes designed to help undergraduate and graduate students, as well as participants in executive education programs, understand the differences in use of six different leadership styles identified by the work of Litwin and Stringer (1971) and further popularized by Goleman (2000), Goleman, Boyatzis, and McKee (2013), and the Hay Group (2009).

A firm that lacks the specialized complementary assets necessary to commercialize an innovation faces a trade-off between contracting with an incumbent to access those assets and integrating downstream into commercialization. According to the framework developed in the prior literature, under a strong appropriability regime the innovator is likely to be better off contracting with an incumbent (as long as it can negotiate reasonable terms). However, we argue that if the innovator can learn from its experience in product commercialization, and thereby build its own commercialization capabilities, then the benefits of integrating downstream may outweigh the opportunity costs of learning and foregone profits. Alternatively, by engaging in joint commercialization, the innovator may be able to avoid these opportunity costs, albeit at the expense of higher inter-organizational governance costs. We illustrate the relationship between the choice of commercialization mode, commercialization experience, and performance in the context of the pharmaceutical industry. Specifically, we study how commercialization mode and experience affects the likelihood of drug approval. We find that when innovators lacking commercialization experience participate in the commercialization process though either joint commercialization or by commercializing alone, the product is less likely to be approved. However, innovators that have participated in the commercialization process in the past are more likely to successfully commercialize subsequent innovations under joint commercialization than those which have only contracted the commercialization to an incumbent. The results suggest that in some circumstances participating in the commercialization process, either through self-commercialization or by engaging in joint commercialization, may be the optimal strategy even for firms without the requisite complementary assets.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

In 2008 Joe Justice saw the announcement for the Progressive Insurance X Prize—a $10 million prize aimed at the (im)possibility to build a 100 miles per gallon (mpg) car to road-legal safety specifications. Joe persuaded his wife to use their college grad savings of $5,000 to pay the registration fee. He started the work alone but blogged about what he was doing and what he was learning. Through social networking tools like Facebook and WordPress bloggers who shared his interest learned about his project. Some of these people joined Joe in his endeavor to tackle the challenge. Only three months later, Wikispeed had been formed. It counted 44 members in four countries, and had a functioning prototype which was entered in the X Prize competition. In 2010 they came in 10th in the mainstream class, outrunning more than one hundred other cars from well-funded companies and universities around the world. Following the press reaction to the success of team Wikispeed in 2011 they were invited to showcase their concept car at the Detroit auto show, the largest motor show in the world. Their car, the SGT01, was put on display in Cobo Hall right next to Ford and Chevrolet. Wikispeed was contacted by more than a hundred people who were interested in joining the team as well as in ordering the prototype. By 2013, more than five hundred people had joined team Wikispeed. They had also sold nine prototypes. The immediate issue of the case study is the decision whether the team should use a pair of existing axles, cut and weld them together to the right length for the next iteration of their prototype or develop their own pair of axles from scratch. More fundamentally, this case study looks at the way team Wikispeed used tools from the world of software development like modularity, which they call object-oriented architecture, scrum, and extreme manufacturing (XM) to organize their innovation efforts.

Depending on the scope of the course, the following teaching objectives can be emphasized: to discuss ways of how to coordinate product development efforts in the absence of traditional hierarchies; to understand the conditions when distributed innovation processes can be used in industries with physical products; to understand the key elements of agile development: modularity, scrum, and extreme manufacturing; to examine the principles and potential limitations of agile development for hardware development; to understand the roadblocks to agile product development in large established organizations.

Are you familiar with one of the following situations? You have developed this great strategy for your company, your product, or your department but for some reason, it does not get heard. You have a good team, but there are some who just do not seem to join forces and leave you out in the rain when the situation calls for action. There is your boss, a nice guy, but somehow he seems immune to all your efforts of convincing him of this new idea that you want to implement. Situations like this are common for managers on all levels. They make us feel powerless. They make us feel struck in the inertia of our organizations. They might make us see ourselves as victims of the circumstances we are operating in. When trapped in situations like this, we start blaming others for their incompetence or our company for its laziness or complacency. Situations like this tell us about the influence that we have on others and their influence on us: This is what this book is all about.

This paper summarizes the findings from a series of interviews between October 2012 & February 2013 with people at New Zealand companies that were founded in order to commercialize an innovation internationally. The interviews focused on the steps the companies had taken to commercialize their innovation on the international market and the issues they had faced in the process.