do firms differ much with finn profitability data for a cross section of geographic markets it is possible to determine the relative importance of firm and market effects on profitability analysis of variance from a panel of multihank holditig companies in texas suggests that finn effects are more important than market effects in determining profitability and that the magnitudes of the effects vary over time in a 1985 article schmalensee takes a new approach to analysis of the structure conduct performance paradigm schmalensee chooses a purely descriptive approach to distinguish among the classical tradition of bain 1956 which takes markets as the basic unit of analysis with a particular focus on market concentration the revisionist views of demsetz 1973 and peltzman 1977 who view the observed relation between profitability and concentration as reflecting underlying inter firm profitability differences and the managerial view that profitability is determined by firm wide management practices but not necessarily by differences in market share this descriptive approach has two advantages over a structural analysis a descriptive analysis avoids imposition of the troublesome maintained hypotheses inherent in structural models further as scott and pascoe 1986 point out the explanatory power of structural models is generally only a small fraction of that of descriptive models

supply capacity acquisition and allocation with uncertain customer demands we study a class of capacity acquisition and assignment problems with stochastic customer demands often found in operations planning contexts in this setting a supplier utilizes a set of distinct facilities to satisfy the demands of different customers or markets our model simultaneously assigns customers to each facility and determines the best capacity level to operate or install at each facility we propose a branch and price solution approach for this new class of stochastic assignment and capacity planning problems for problem instances in which capacity levels must fall between some pre specified limits we offer a tailored solution approach that reduces solution time by nearly 80 over an alternative approach using a combination of commercial nonlinear optimization solvers we have also developed a heuristic solution approach that consistently provides optimal or near optimal solutions where solutions within 0 01 of optimality are found on average without requiring a nonlinear optimization solver

on the simple economics of advertising marketing and product design we propose a framework for analyzing transformations of demand such transformations frequently stem from changes in the dispersion of consumers valuations which lead to rotations of the demand curve in many settings profits are a u shaped function of dispersion high dispersion is complemented by niche production and low dispersion is complemented by mass market supply we investigate numerous applications including product design advertising marketing and sales advice and the construction of quality differentiated product lines we also suggest a new taxonomy of advertising distinguishing between hype which shifts demand and real information which rotates demand

integrating replenishment decisions with advance demand information there is a growing consensus that a portfolio of customers with different demand lead times can lead to higher more regular revenues and better capacity utilization customers with positive demand lead times place orders in advance of their needs resulting inadvance demand information this gives rise to the problem of finding effective inventory control policies under advance demand information we show that state dependent s s and base stock policies are optimal for stochastic inventory systems with and without fixed costs the state of the system reflects our knowledge of advance demand information we also determine conditions under which advance demand information has no operational value a numerical study allows us to obtain additional insights and to evaluate strategies to induce advance demand information

asset stock accumulation and sustainability of competitive advantage given incomplete factor markets appropriate time paths of flow variables must be chosen to build required stocks of assets that is critical resources are accumulated rather than acquired in strategic factor markets barney barney j 1986 strategic factor markets expectations luck and business strategy management sci october 1231 1241 sustainability of a firm s asset position hinges on how easily assets can be substituted or imitated imitability is linked to the characteristics of the asset accumulation process time compression diseconomies asset mass efficiencies inter connectedness asset erosion and causal ambiguity

approximation algorithms for perishable inventory systems we develop the first approximation algorithms with worst case performance guarantees for periodic review perishable inventory systems with general product lifetime for both backlogging and lost sales models the demand process can be nonstationary and correlated over time capturing such features as demand seasonality and forecast updates the optimal control policy for such systems is notoriously complicated thus finding effective heuristic policies is of practical importance in this paper we construct a computationally efficient inventory control policy called the proportional balancing policy for systems with an arbitrarily correlated demand process and show that it has a worst case performance guarantee less than 3 in addition when the demands are independent and stochastically nondecreasing over time we propose another policy called the dual balancing policy which admits a worst case performance guarantee of 2 we demonstrate through an extensive numerical study that both policies perform consistently close to optimal

servitization in mergers and acquisitions manufacturing firms venturing from emerging markets into advanced economies abstract we investigate servitization by manufacturing firms that have ventured from emerging markets into advanced economies through mergers and acquisitions m a the study seeks to answer two questions a what is the relationship between m as and servitization in the case of manufacturing firms and b what are the factors influencing the configuration of servitization strategies and their implementation the study provides a nuanced and contextualized understanding of servitization in m as existing research on servitization has paid insufficient attention to collaborative partnerships there is a need to examine the role of servitization in the context of collaborative partnerships our empirical setting consists of chinese manufacturing firms acquisitions in germany using qualitative research methods we reveal a typology of servitization strategies adding utilizing and reconfiguring that underpin the combined influences of different levels of services of both acquirer and target firms in the m a we identify integration mode and absorptive capacity as factors influencing service capability development our findings contribute to the literature on alternative approaches to servitization by firms from emerging markets venturing into advanced economies we discuss the theoretical and managerial implications and suggest future research directions for servitization in collaborative partnerships in general and in m a in particular

outsourcing and capacity planning in an uncertain global environment firms employing offshore outsourcing strategies may face both exchange rate and demand uncertainties in this paper we show that the firms may benefit from operational option to switch production by keeping capacities with both domestic and foreign suppliers the value of the operational option increases as the exchange rate uncertainty or demand uncertainty increases in addition when the firms become risk averse they may use domestic capacity to hedge against offshore capacity as a result the firms may choose to hold local capacity even if it exhibits negative marginal contribution to the profit furthermore risk averse firms may keep more total capacity than risk neutral firms

the conditioning effect of time on firm survival an industry life cycle approach in an effort to reconcile theoretical blind spots we integrated research in technology management organizational ecology and evolutionary economics the central premise underlying the resultan

customer satisfaction productivity and profitability differences between goods and services there is widespread belief that firms should pursue superiority in both customer satisfaction and productivity however there is reason to believe these two goals are not always compatible if a firm improves productivity by downsizing it may achieve an increase in productivity in the short term but future profitability may be threatened if customer satisfaction is highly dependent on the efforts of personnel if so there are potential tradeoffs between customer satisfaction and productivity for industries as diverse as airlines banking education hotels and restaurants managers in these types of service industries as well as goods industries in which the service component is increasing need to understand whether or not this is the case for example if efforts to improve productivity can actually harm customer satisfaction and vice versa the downsizing of u s and european companies should be viewed with concern it follows that developing a better understanding of how customer satisfaction and productivity relate to one another is of substantial and growing importance especially in light of expected continued growth in services throughout the world economy the objective of this paper is to investigate whether there are conditions under which there are tradeoffs between customer satisfaction and productivity a review of the literature reveals two conflicting viewpoints one school of thought argues that customer satisfaction and productivity are compatible as improvements in customer satisfaction can decrease the time andeffort devoted to handling returns rework warranties and complaint management while at the same time lowering the cost of making future transactions the second argues that increasing customer satisfaction should increase costs as doing so often requires efforts to improve product attributes or overall product design a conceptual framework useful in resolving these contradictory viewpoints is developed the framework serves in turn as a basis for developing a theoretical model relating customer satisfaction and productivity the model predicts that customer satisfaction and productivity are less likely to be compatible when 1 customer satisfaction is relatively more dependent on customization the degree to which the firm s offering is customized to meet heterogeneous customers needs as opposed to standardization the degree to which the firm s offering is reliable standardized and free from deficiencies and 2 when it is difficult costly to provide high levels of both customization and standardization simultaneously to move forward from the model s propositions to the development of testable hypotheses we argue that services are more likely than goods to have the preceding characteristics hence tradeoffs between customer satisfaction and productivity should be more prevalent for services than for goods although this classification is not precise many services are standardizable and many goods have a service component it has the advantage of allowing an initial test of the propositions the empirical work employs a database matching customer based measures of firm performance with traditional measures of business performance such as productivity and return on investment roi the central feature of this database is the set of customer satisfaction indices provided by the swedish customer satisfaction barometer scsb the scsb provides a uniform set of comparable customer based firm performance measures and offers a unique opportunity to test the study s hypotheses the findings indicate that the association between changes in customer satisfaction and changes in productivity is positive for goods but negative for services in addition while both customer satisfaction and productivity are positively associated with roi for goods and services the interaction between the two is positive for goods but significantly less so for services taken together the findings suggest support for the contention that tradeoffs are more likely for services hence simultaneous attempts to increase both customer satisfaction and productivity are likely to be more challenging in such industries of course this does not imply that such firms should not seek improvements in both productivity and customer satisfaction for example appropriate applications of information technology may improve both customer satisfaction and productivity simultaneously the findings should provide motivation for future research concerning the nature of customer satisfaction and productivity as well as appropriate strategy and tactics for each one it is worth emphasizing that this is an issue that is not only important today but certainly will become even more important in the future as the growth of services continues and world markets become increasingly competitive the importance of customer satisfaction will also increase to compete in such a world firms must strike the right balance between their efforts to compete efficiently and their efforts to compete effectively

blood inventory management an overview of theory and practice blood inventory management has attracted significant interest from the operations research profession during the last 15 years a number of methodological contributions have been made in the areas of inventory theory and combinatoric optimization that can be of use to other products or systems these contributions include the development of exact and approximate ordering and issuing policies for an inventory system the analysis of lifo or multi product systems and various forms of distribution scheduling in addition many of these results have been implemented either as decision rules for efficient blood management in a hospital or as decision support systems for hierarchical planning in a regional blood center in this paper we attempt a review of the recent operations research contributions to blood inventory management theory and practice whereas many problems have been solved others remain open and new ones keep being created with advances in medical technology and practices our approach is not to present an exhaustive review of all the literature in the field but rather to address several important issues from a unified perspective of theory and practice and point out new areas for further research

economies of scale and economies of scope in multiproduct financial institutions a study of british columbia credit unions this paper investigates the production technology facing computerized credit unions in canada a full system of translog cost equations is estimated in order to test for economies of scale economies of scope and other production characteristics in a multiproduct context the regression results indicate that most of the credit unions in our sample experience significant increasing returns to scale as they expand their level of output there is also evidence of cost complementarity or economies of scope in their mortgage and other lending activities as a result legislation which limits the ability of credit unions to grow and diversify will likely raise the operating costs of this important group of financial institutions additional structural tests of the most general translog specification suggest that none of the restrictive production conditions commonly imposed by other researchers using cobb douglas and ces specifications provide a valid representation of credit union technology the results of many earlier studies are therefore open to question this paper presents a number of structural tests of the production technology facing large computerized credit unions in canada a full system of translog cost equations is estimated using detailed cross sectional data on british columbia credit unions the parameter estimates obtained from our multiproduct specification allow us to test for economies of scale economies of scope and factor substitution unlike many earlier studies the present paper introduces the various outputs as separate variables instead of crudely proxying them with a single output measure such as total assets the total number of loans or the number of depositors by explicitly recognizing the multiproduct nature of the intermediation process we are able to address more interesting production questions and remove some of the bias caused by misspecification and measurement error in simpler approaches the flexible translog specification allows us to estimate the sensitivity of costs to proportionate increases in all outputs economies of scale as well as the cost savings firms realize by producing several outputs jointly rather than specializing in the production of one economies of scope the test results reported in the latter part of the paper suggest that increasing returns to scale exist in almost all of the credit unions in our sample though

the shape of advertising response functions revisited a model of dynamic probabilistic thresholds prior work in marketing has suggested that advertising threshold effects levels beneath which there is essentially no sales response are rarely encountered in practice because advertising policies settle into effective ranges through early trial and error thresholds cannot be observed directly and arguments for their existence must be based primarily on a statistical footprint that is on relative fits of a range of model types to detect possible threshold effects we formulate a switching regression model with two regimes in only one of which advertising is effective mediating the switch between the two regimes is a logistic function of category specific dynamic variables e g order of entry time in market number of competitors and advertising levels nesting a variety of alternative formulations among them both standard concave and s shaped responses a sequence of comparisons among parametrically related models strongly suggests that threshold effects exist that market share response to advertising is not necessarily globally concave that superior fit cannot be attributed to model flexibility alone and that dynamic environmental competitive and brand specific factors can influence advertising effectiveness these effects are evident in two evolving durables categories suvs and minivans although not in the one mature nondurable category liquid detergent studied

when is servitization a profitable competitive strategy abstract although servitization has emerged as a new competitive strategy for manufacturers there has been little research about product level servitization we investigate the competition between two channels one separately providing both goods and services and the other providing inseparable servitized goods through a game theoretic approach two critical parameters to understand competition between the two channels will be proposed 1 service dependency a degree of dependency of physical goods upon services and 2 channel substitutability a degree of substitution between conventional channels and servitized one the study reveals that the servitization strategy is a better choice for a manufacturer selling physical goods only when the goods require a higher level of service i e high service dependency and when the competition between the two channels is more severe i e high channel substitutability in addition obtaining cost efficiency is found to be an important factor to achieve higher competitive advantage over the other channel

who benefits from transshipment exogenous vs endogenous wholesale prices this paper studies how transshipments affect manufacturers and retailers considering both exogenous and endogenous wholesale prices for a distribution system where a single manufacturer sells to multiple identical cost retailers we consider both the manufacturer being a price taker and the manufacturer being a price setter in a single period setup under multivariate normal demand distribution in the case of the manufacturer being a price taker we provide several analytical results regarding the effects of key parameters on order quantities and profits in the case of the manufacturer being a price setter we characterize the stackelberg game that arises and provide several insights into how the game dynamics are affected by transshipments specifically we find that risk pooling makes retailers order quantities less sensitive to the wholesale price set by the manufacturer hence in general the manufacturer benefits from retailers transshipments by charging a higher wholesale price while retailers are often worse off the paper captures the effect of demand correlation and the effect of the number of retailers throughout and it illustrates the findings by a numerical example we also provide an interactive web page for numerical experiments

the persistence of profits a european comparison this paper is concerned with modeling the movements in profits of firms over time at the heart of the emp irical model is a latent variables problem which arises from the fact that entry and imitation do not actually have to occur to have an ef fect on profits a solution to this problem is explored and then emp irical results are presented comparing a sample of firms from the uni ted kingdom france and west germany copyright 1988 by royal economic society

economies of scale in services a study of multinational insurers this study investigates whether multinational insurers achieve economies of scale using a time series cross sectional design it analyzes the relationship between expenses and output of multinational insurers the study finds that multinational insurers achieve economies of scale only up to a point and rather than benefitting from scale the most internationally diverse insurers suffer diseconomies the conclusion is that the benefits of extensive foreign acquisitions by insurers are questionable

the moderating role of submarket dynamics on the product customization firm survival relationship in this paper we examine how the provision of product customization services affects firm survival integrating literatures on industry evolution product related adapting services and entry deterrence we hypothesize that the relationship between product customization the costly modification of a product to cater to customer needs and firm survival differs across industries based on the extent of submarkets we argue that in industries that feature submarkets more prominently the positive association between product customization and firm survival is stronger for two conceptually distinct and empirically distinguishable mechanisms customizing firms enter new submarkets and also deter potential entry we conclude that offering product customization services has strategic benefits that sometimes outweigh the cost of coordinating with customers

integrated demand and procurement portfolio management with spot market volatility and option contracts abstract the newsvendor problem aims to optimally choose a level of order quantity to respond to a known demand distribution with the objective of maximizing expected return in practice the decision maker is often challenged with more complex settings involving multiple decisions and uncertainties for instance firms may benefit from choosing the set of customer orders to satisfy it may also be worthwhile for many firms to select a supply portfolio instead of relying on a single procurement mode this paper provides novel optimization models and solution techniques that can help businesses to achieve the maximum performance from a given production system by optimally selecting customer demands procurement quantity spot market purchase and option contract usage we specifically focus on the special case of normally distributed random variables and provide an exact solution method when the primary procurement quantity is not a decision variable the problem becomes a version of a stochastic knapsack problem for this case we present an efficient heuristic solution algorithm based on properties of an optimal solution and empirically show that it provides high quality solutions we also provide a broad numerical study to examine the sensitivity of integrated procurement and demand selection strategies to key problem parameters

technical note approximation algorithms for perishable inventory systems with setup costs we develop the first approximation algorithm for periodic review perishable inventory systems with setup costs the ordering lead time is zero the model allows for correlated demand processes that generalize the well known approaches to model dynamic demand forecast updates the structure of optimal policies for this fundamental class of problems is not known in the literature thus finding provably near optimal control policies has been an open challenge we develop a randomized proportional balancing policy rpb that can be efficiently implemented in an online manner and we show that it admits a worst case performance guarantee between 3 and 4 the main challenge in our analysis is to compare the setup costs between rpb and the optimal policy in the presence of inventory perishability which departs significantly from the previous works in the literature the numerical results show that the average performance of rpb is good within 1 of optimality under i i d demands and within 7 under correlate

measuring market power in the ready to eat cereal industry the ready to eat cereal industry is characterized by high concentration high price cost margins large advertising to sales ratios and numerous introductions of new products previous researchers have concluded that the ready to eat cereal industry is a classic example of an industry with nearly collusive pricing behavior and intense nonprice competition this paper empirically examines this conclusion in particular i estimate price cost margins but more importantly i am able empirically to separate these margins into three sources i that which is due to product differentiation ii that which is due to multi product firm pricing and iii that due to potential price collusion the results suggest that given the demand for different brands of cereal the first two effects explain most of the observed price cost margins i conclude that prices in the industry are consistent with noncollusive pricing behavior despite the high price cost margins leading firms are able to maintain a portfolio of differentiated products and influence the perceived product quality it is these two factors that lead to high price cost margins

managing an available to promise assembly system with dynamic short term pseudo order forecast we study an order promising problem in a multiclass available to promise atp assembly system in the presence of pseudo orders a pseudo order refers to a tentative customer order whose attributes such as the likelihood of an actual order order quantity and confirmation timing can change dynamically over time a unit demand from any class is assembled from one manufactured unit and one inventory unit where the manufactured unit takes one unit of capacity and needs a single period to produce an accepted order must be filled before a positive delivery lead time the underlying order acceptance decisions involve trade offs between committing resources production capacity and component inventory to low reward firm orders and reserving resources for high reward orders we develop a markov chain model that captures the key characteristics of pseudo orders including demand lumpiness nonstationarity and volatility we then formulate a stochastic dynamic program for the atp assembly system that embeds the markov chain model as a short term forecast for pseudo orders we show that the optimal order acceptance policy is characterized by class prioritization resource imbalance based rationing and capacity inventory demand matching in particular the rationing level for each class is determined by a critical value that depends on the resource imbalance level defined as the net difference between the production capacity and component inventory levels extensive numerical tests underscore the importance of the key properties of the optimal policy and provide operational and managerial insights on the value of the short term demand forecast and the robustness of the optimal policy this paper was accepted by martin lariviere operations management

estimating the performance effects of business groups in emerging markets business groups confederations of legally independent firms are ubiquitous in emerging economies yet very little is known about their effects on the performance of affiliated firms we conceive of business groups as responses to market failures and high transaction costs in doing so we develop hypotheses about the effects of group affiliation on firm profitability affiliation could either boost or depress firm profitability and members of a group are likely to earn rates of return similar to other members of the same group using a unique data set compiled largely from local sources we test for these effects in 14 emerging markets argentina brazil chile india indonesia israel mexico peru the philippines south africa south korea taiwan thailand and turkey we find evidence that business groups indeed affect the broad patterns of economic performance in 12 of the markets we examine group affiliation appears to have as profound an effect on profitability as does industry membership yet strategy scholars have a much clearer grasp of industries than of groups moreover membership in a group raises the profitability of the average group member in several of the markets we examine this runs contrary to the wisdom conventional in advanced economies that unrelated diversification depresses profitability overall our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts conclusions drawn in one context may well not apply to another copyright 2001 john wiley sons ltd

the persistence of shocks to profitability in this study we use data for 1981 through 1994 on a large sample of u s companies to examine the persistence of incremental industry corporate parent and business specific effects on profitability our results indicate that the incremental effects of industry on profitability persist longer than the incremental effects of the corporate parent and of the specific business changes in industry structure have a more persistent impact on profitability than do changes in firm structure

a closer look at the effect of market growth on industries profits everybody talks about the relation of industries profit rates to their markets rates of growth but nobody does anything about it specifically researchers have confirmed the effect of the growth of nominal output on profits in many multivariate studies without specifying closely the hypothesis under test or the measure of demand growth appropriate to test it a profits growth relationship could stem from several mechanisms the lagged adaptation of capacity to unexpected changes in demand reactions of oligopolists to disturbances in their consensus etc these mechanisms how and where they work hold their own normative interest therefore knowing what behavior and what structure lying behind it accounts for the profits growth relationship should do more than improve the specifications of our studies of allocative efficiency it should also expand our knowledge of adaptive processes that are important and hard to observe directly in this paper we shall synthesize the available explanations of why changes in market demand should affect an industry s profits then present a statistical test of the relative significance of the competing explanations

the inverse newsvendor problem choosing an optimal demand portfolio for capacitated resources the classical newsvendor problem is one of optimally choosing a level of capacity to respond to a known demand distribution the inverse newsvendor problem is one of optimally choosing a demand distribution with fixed capacity the applications of the inverse problem include industrial settings where demand management is relatively less costly than capacity adjustments demand distributions are chosen from an opportunity set which reflects the set of market opportunities for the firm we analyze the firm s profit as a function of these demand alternatives provide solution methods and insights and identify inefficient and dominated distributions we provide results when the opportunity set is known or only partially known we extend the results to cases in which there are multiple prioritized customer classes that share the firm s productive capacity this paper was motivated by an industrial application in a firm selling a semicommodity product into three prioritized industrial sectors we review the application of our methods to this setting

risk and return on long lived tangible assets abstract assuming rational expectations a specialization of ross arbitrage pricing theory is used to obtain a simple securities market valuation formula when dividends follow linear stochastic processes the implications of this model for the use of accounting data to measure risk and for capital budgeting are explored a new measure of riskiness based on accounting data is derived and the use of risk adjusted discount rates is evaluated

dynamic capabilities what are they this paper focuses on dynamic capabilities and more generally the resource based view of the firm we argue that dynamic capabilities are a set of specific and identifiable processes such as product development strategic decision making and alliancing they are neither vague nor tautological although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence they have significant commonalities across firms popularly termed best practice this suggests that they are more homogeneous fungible equifinal and substitutable than is usually assumed in moderately dynamic markets dynamic capabilities resemble the traditional conception of routines they are detailed analytic stable processes with predictable outcomes in contrast in high velocity markets they are simple highly experiential and fragile processes with unpredictable outcomes finally well known learning mechanisms guide the evolution of dynamic capabilities in moderately dynamic markets the evolutionary emphasis is on variation in high velocity markets it is on selection at the level of rbv we conclude that traditional rbv misidentifies the locus of long term competitive advantage in dynamic markets overemphasizes the strategic logic of leverage and reaches a boundary condition in high velocity markets copyright 2000 john wiley sons ltd

requirements planning with pricing and order selection flexibility past requirements planning research has typically assumed that the firms demands are determined prior to production planning in contrast we explore a single stage planning model that implicitly decides through pricing decisions the demand levels the firm should satisfy in order to maximize contribution to profit we briefly discuss solution methods and properties for these problems when production capacities are unlimited the key result of this work is a polynomial time solution approach to the problem under time invariant finite production capacities and piecewise linear and concave revenue functions in price

target market selection and marketing effort under uncertainty the selective newsvendor abstract we consider a firm that markets procures and delivers a good with a single selling season in a number of different markets the price for the good is market dependent and each market has an associated demand distribution with parameters that depend on the amount of marketing effort applied given long procurement lead times the firm must decide which markets it will serve prior to procuring the good we develop a profit maximizing model to address the firm s integrated market selection marketing effort and procurement decisions the model implicitly accounts for inventory pooling across markets which reduces safety stock costs but increases model complexity the resulting model is a nonlinear integer optimization problem for which we develop specialized solution methods for the case in which budget constraints exist we provide a novel solution approach that uses a tailored branch and bound algorithm our approach solves a broad range of 3000 test instances in an average of less than 2 seconds significantly outperforming a leading commercial global optimization solver

the newsvendor problem review and directions for future research in this paper we review the contributions to date for analyzing the newsvendor problem our focus is on examining the specific extensions for analyzing this problem in the context of modeling customer demand supplier costs and the buyer risk profile more specifically we analyze the impact of market price marketing effort and stocking quantity on customer demand how supplier prices can serve as a coordination mechanism in a supply chain setting integrating alternative supplier pricing policies within the newsvendor framework and how the buyer s risk profile moderates the newsvendor order quantity decision for each of these areas we summarize the current literature and develop extensions finally we also propose directions for future research

do markets differ much this essay reports the results of a crosssection study of differences in accounting profitability that sheds light on some basic controversies in industrial economics most previous cross section studies in this field have been concerned with testing hypotheses about structural coefficients in models meant to apply to essentially all markets as we have learned more about the difficulties of constructing such general models and of performing tests on their structural parameters properly structural cross section analysis has fallen out of fashion in contrast to most of the cross section literature the analysis reported here is fundamentally descriptive it does not attempt directly to estimate or to test hypotheses about structural parameters i hope to show by example that one can perform illuminating analysis of cross section data without a host of controversial maintained hypotheses cross section data can yield interesting stylized facts to guide both general theorizing and empirical analysis of specific industries even if they cannot easily support full blown structural estimation one can view the sort of search for stylized facts conducted here as either a replacement for or an input to interindustry structural estimation depending on one s feeling about the long run potential of that research approach this study also departs from much of the cross section literature by being fundamentally concerned with the importance of various effects not just with coefficient signs and t statistics in particular this essay provides estimates of the relative importance of firm market and market share differences in the determination of business unit divisional profitability in u s manufacturing using 1975 data from the line of business program of the u s federal trade commission ftc i find support neither for the existence of firm effects nor for the importance of market share effects moreover while industry effects apparently exist and are important they appear to be negatively correlated with seller concentration in these data section i relates firm market and share effects to current issues and controversies in industrial economics and thus supplies the motivation for our empirical analysis the remainder of the essay treats the data and

does uniqueness in banking matter abstract we investigate whether and how the uniqueness of banking activities affects the performance and systemic risk of u s banks we find that banks performing more unique activities exhibit higher profitability and lower risk controlling for size diversification and other key characteristics we further find that banks sensitivity to systemic risk displays an inversely u shaped relation with activity uniqueness we interpret the impact of uniqueness in analogy to recent theories showing that systemic diversity promotes financial stability our study highlights the role of uniqueness in banking and has important implications for policy makers and banking regulators

services and the business models of product firms an empirical analysis of the software industry some product firms increasingly rely on service revenues as part of their business models one possible explanation is that they turn to services to generate additional profits when their product industries mature and product revenues and profits decline we explore this assumption by examining the role of services in the financial performance of firms in the prepackaged software products industry standard industrial classification code 7372 from 1990 to 2006 we find a convex nonlinear relationship between a product firm s fraction of total sales coming from services and its overall operating margins as expected firms with a very high level of product sales are most profitable and rising services are associated with declining profitability we find however that additional services start to have a positive marginal effect on the firm s overall profits when services reach a majority of a product firm s sales we show that traditional industry maturity arguments cannot fully explain our data it is likely that changes in both strategy and the business environment lead product firms to place more emphasis on services this paper was accepted by christoph loch r d and product development

innovation in services the purpose of this article is to lay the foundations of a theory that can be used to interpret innovation processes in the service sector the hypothesis underpinning this article is based on lancaster s definition of the product in both manufacturing and services as a set of service characteristics the article follows the example of those who have sought to apply lancaster s work to technological phenomena various modes of innovation in the service sectors are highlighted and illustrated