bluuebunny/crossref_metadata_2025 huggingface dataset:
Principles of New Product Management: Exploring the Beliefs of Product Practitioners
Authors: Calantone Roger J. , Di Benedetto C. Anthony , Haggblom Ted
Published: October 2003

Conventional wisdom might lead us to conclude that the various disciplines involved in product development and management are often at cross‐purposes. For example, practitioners from R&D and engineering have been known to suggest that marketing fails to understand the technical trade‐offs involved in product management decisions. Conversely, marketing professionals sometimes complain that their technology‐oriented colleagues pursue product development initiatives without adequate market awareness. And practitioners from both sides of this debate have asserted that research on new product development tends to be of the ivory tower variety, with little or no relevance for industry. Are such complaints valid? Perhaps it is time for a reality check.

By searching academic literature on product development, Roger J. Calantone, C. Anthony Di Benedetto, and Ted Haggblom have compiled a list of 40 fundamental principles of new product development. This list forms the basis for a survey of new product practitioners from marketing and technical disciplines. The study provides a means for assessing whether practitioners agree with the fundamental principles of new product development that are identified in current academic literature. By obtaining responses from both marketing and technical professionals, the survey also sheds light on whether those two groups hold fundamentally different beliefs regarding new product development.

The survey results reveal strong overall agreement among practitioners regarding these fundamental principles of new product management. Managers believe that 80% of the principles are either usually or almost always true. In other words, the survey results support the idea that the academic community is pursuing research issues that are relevant to practitioners, and that they are reaching valid conclusions.

There are only a few cases in which the responses from the technical and marketing practitioners differ. Those disagreements probably result from differences in the basic orientations of the two groups. For example, it is not surprising that marketing managers would be more likely to agree that “product users and the marketplace form the most important source for new product ideas,” while technical managers more strongly support the idea that “radically new technologies constitute an important source of new product ideas.” The respondents noted overall disagreement with only a few of the 40 principles. In many of these cases, the academic literature has reached mixed conclusions. In other words, these “principles” might actually be oversimplifications, and further research is probably needed before we can fully understand the issues involved.
Benchmarking the Firm's Critical Success Factors in New Product Development
Authors: Cooper Robert G. , Kleinschmidt Elko J.
Published: October 2003

Managing new product development (NPD) is, to a great extent, a process of separating the winners from the losers. At the project level, tough go/no‐go decisions must be made throughout each development effort to ensure that resources are being allocated appropriately. At the company level, benchmarking is helpful for identifying the critical success factors that set the most successful firms apart from their competitors. This company‐ or macro‐level analysis also has the potential for uncovering success factors that are not readily apparent through examination of specific projects.

To improve our understanding of the company‐level drivers of NPD success, Robert Cooper and Elko Kleinschmidt describe the results of a multi‐firm benchmarking study. They propose that a company's overall new product performance depends on the following elements: the NPD process and the specific activities within this process; the organization of the NPD program; the firm's NPD strategy; the firm's culture and climate for innovation; and senior management commitment to NPD. Given the multidimensional nature of NPD performance, the study involves 10 performance measures of a company's new product program: success rate, percent of sales, profitability relative to spending, technical success rating, sales impact, profit impact, success in meeting sales objectives, success in meeting profit objectives, profitability relative to competitors, and overall success.

The 10 performance metrics are reduced to two underlying dimensions: program profitability and program impact. These performance factors become theX‐and Y‐ax.es of a performance map, a visual summary of the relative performance of the 135 companies responding to the survey. The performance map further breaks down the respondents into four groups: solid performers, high‐impact technical winners, low‐impact performers, and dogs. Again, the objective of this analysis is to determine what separates the solid performers from the companies in the other groups.

The analysis identifies nine constructs that drive performance. In rank order of their impact on performance, the main performance drivers that separate the solid performers from the dogs are: a high‐quality new product process; a clear, well‐communicated new product strategy for the company; adequate resources for new products; senior management commitment to new products; an entrepreneurial climate for product innovation; senior management accountability; strategic focus and synergy (i.e., new products close to the firm's existing markets and leveraging existing technologies); high‐quality development teams; and cross‐functional teams.
Managing Design in Small High‐Growth Companies
Authors: Dickson Peter , Schneier Wendy , Lawrence Peter , Hytry Renee
Published: October 2003

Cost‐cutting measures may keep investors happy, but such belt‐tightening does little for a company's long‐term growth. In an era of ever‐shrinking product life cycles, effective product design skills are essential to any company's ongoing vitality. To remain competitive, even the largest manufacturers must learn to replicate the entrepreneurial drive and innovativeness that characterize small, high‐growth firms.

To foster a better understanding of the product design skills of small, high‐growth firms, Peter Dickson, Wendy Schneier, Peter Lawrence, and Renee Hytry describe the results of a survey of CEOs from companies that have been included in the Inc. 100 or Inc. 500 lists. On average, 50% of the sales for these companies came from new products launched during the past 3 years. The survey addresses three fundamental questions. First, which aspects of design management do the CEOs of small, high‐growth firms believe they manage well, and which give them difficulty? Second, to what extent are the CEOs involved in design decisions? Finally, how important is good product design to these firms?

The respondents face the most difficulty in making the transition from sequential to concurrent engineering and design. Many cite a need for improved management of such skills as design for manufacturability, involvement of suppliers in the design process, estimation of costs during the design process, and the use of computer‐aided design tools during the design process. In contrast to these engineering‐related aspects of product design, the respondents are more confident in their ability to handle such marketing‐related tasks as generating new design ideas and involving customers in the design process.

The survey results indicate that CEOs of small, high‐growth firms are deeply involved in design decisions. In over half the companies surveyed, CEOs indicated they had primary responsibility for design decisions. Most respondents also reported increasing their investment in design, with approximately 75% increasing their investment in product/service design over the past 3 years and almost 50% increasing their investment in packaging design.

CEOs of Inc. 100 and Inc. 500 firms clearly recognize the importance of design. Approximately 70% of the respondents believe that design issues will be of increasing importance for U.S. firms' competitiveness in the coming years, and the majority feel it is important that their managers be knowledgeable about design. Approximately 75% of the CEOs believe that adopting new, fast‐track approaches to new product design would improve their firms' competitiveness.
Innovation in Process Plant: A Case Study of Ethylene
Authors: Hutcheson Peter , Pearson Alan W. , Ball Derrick F.
Published: October 2003

Successful companies in any industry recognize the importance of involving customers and suppliers in the design and development of products and services. When complex product and process technologies are involved, these relationships create a network of companies and industries, each of which is a potential source for technological innovation. At the same time, however, such interrelationships further complicate the already challenging task of analyzing the evolving nature and sources of innovation.

Using ethylene manufacture as a case study, Peter Hutcheson, Alan Pearson, and Derrick Ball present a three‐stage model of innovation. The model provides a framework for understanding the evolution of technological innovation in ethylene manufacturing, as well as the changing roles of the equipment suppliers, the process plant suppliers, and the operating companies througout this evolution. The applicability of this approach to other sectors of the chemical processing industry is also evaluated.

In much the same way that a product's life cycle can be traced through distinct phases of creation, growth, maturity, and decline, technological innovation progresses through three main phases: uncoordinated, segmental, and systemic. The progression through these three phases is marked by changes in the relative levels of product and process innovation activity. In this three‐stage model, innovative activity progresses from an extreme of high product and low process innovation during the uncoordinated phase, through the segmental period of low product and high process innovation, to the low product and medium process innovation levels of the systemic phase. In other words, as the industry matures, the focus of innovative activity gradually shifts from the product to the process.

As illustrated by the example of ethylene manufacturing, companies operating in an industry that has reached the systemic stage will find little or no scope for innovation in the end product or the core manufacturing technologies. In such a mature market, the product is a commodity item, and the fundamentals of the manufacturing process are well known. At this stage, the quest for productivity improvements focuses on cost reductions from task structuring and specialization, task integration, and automation. As such, equipment manufacturers play an increasingly important role in refining existing technologies and improving equipment reliability and capabilities. Such efforts are facilitated by close cooperation with the operating companies, which can contribute process expertise that the equipment manufacturers might otherwise lack.
A Philosophy for Innovation: The Role of Unconventional Individuals in Innovation Success
Authors: Steiner Carol J.
Published: October 2003

For those of us trying to understand the nature of innovation, the role of the scientist or engineer presents a conundrum. Such individuals are often sources of innovation in both products and processes, yet routine science and engineering is typically carried out in an environment that stresses structure, order, and adherence to prescribed methods–exactly the wrong setting for successful innovation.

To help explain the diminishing role of science and the burgeoning role of individuals in innovation, Carol J. Steiner presents a philosophy of innovation. Suggesting that unconventional individuals, rather than conventional science or engineering, are central to innovation success, this philosophy of innovation is derived from a philosophy of human nature formulated by Martin Heidegger. Heidegger identified three elements of human nature: (1) it is human nature to be practically involved in a complex world rather than rationally involved with a conceptually simplified world; (2) it is human nature to be authentic (i.e., unconventional, uncommitted to one's paradigm) at least some of the time; and (3) it is human nature to be cooperative. In other words, the methods and organizational structures that characterize “good” science are in direct conflict with human nature. By examining things in isolation from their natural linkages, the scientist misses the holistic view–the big picture–necessary for successful innovation.

Central to this philosophy of innovation is individuality understood as authenticity. The term authenticity refers to both an unconventional (i.e., unscientific) approach to the world and an openness to alternative viewpoints. This openness is the basis for cooperative rather than competitive interaction. The fundamental themes of this philosophy of innovation are the importance of individual experience, the importance of unconventional (free) interpretations, and the importance of respect for individual uniqueness. The magic moments of innovation arise when scientists or engineers assert their individuality, break free from the structured thinking of their traditional methods, and synthesize novel interpretations that move their projects in new directions.

This philosophy of innovation is not presented as a means for determining why innovation succeeds or fails. Instead, it provides a framework for assessing organizational or personal approaches to innovation. In other words, it gives managers a means for understanding and interpreting the human elements of particular innovation projects.
Product Development Strategy and Organizational Learning: A Tale of Two PC Makers
Authors: Methé David T. , Toyama Ryoko , Miyabe Junichiro
Published: October 2003

The personal computer (PC) marketplace in the US presents a dizzying array of component suppliers and products. No single firm dominates the industry with a complete package of hardware and software components. Although one company's operating systems and general‐purpose applications are installed on most PCs in the US, the other system components—processors, memory, storage devices, display adapters, monitors, specialized applications, and so on—come from any number of sources.

David T. Methe, Ryoko Toyama, and Junichiro Miyabe point out that the PC industry in Japan also exhibits this decentralized nature. However, they also note that despite the decentralized network structure of the Japanese PC industry, one company—NEC—was able to achieve a dominant market share. To provide insight into the key issues involved in the management of complex technology, they contrast NEC's strategic approach to product development and organizational learning with the approaches taken by Fujitsu—the firm that placed a distant second in this market.

Despite matching NEC in terms of technological capabilities, financial resources, and managerial talent, Fujitsu never managed to threaten NEC's dominance of the PC market in Japan. Fujitsu continually emphasized technological leadership, even at the expense of protecting its installed base. Poor coordination of resources and product development efforts resulted in incompatibilities among Fujitsu's various products, and the company failed to foster close relationships with suppliers of such key technologies as software and peripherals.

NEC's PCs did not enjoy the advantages of first‐to‐market status or technological leadership. Instead, NEC achieved market dominance by finding the combination of product technologies that met the needs of the greatest number of consumers. Throughout almost 20 years of competition in the PC industry, NEC successfully maintained consistency and backward compatibility across its product lines. NEC also recognized the importance of third‐party software developers, and carefully cultivated relations with these firms as a source of competitive advantage. In other words, NEC struck the right balance between three key factors: technological innovation, motivation of third‐party developers of software and peripherals, and service to its installed base of customers.
When Product Development Performance Makes a Difference: A Statistical Analysis in the Electronics Industry
Authors: Terwiesch Christian , Loch Christoph , Niederkofler* Martin
Published: October 2003

Throughout the pages of JPIM and other publications, researchers and practitioners devote considerable effort to identifying the dimensions of new‐product development (NPD) performance that relate most closely to business success. Although we may hope to unveil a set of universal truths about the relationship between NPD performance and business success, the relevant NPD performance measures appear to depend on the industry in which a firm competes.

In fact, Christian Terwiesch, Christoph Loch, and Martin Niederkofler suggest that the overall relevance of NPD performance to business success depends on the firm's competitive market environment. In a study of 86 business units operating in 12 different electronics industries worldwide, they develop a market contingency framework for understanding the impact of NPD performance on a firm's profitability. Their study uses data from the “Excellence in Electronics” project, a joint research effort by Stanford University, the University of Augsburg, and McKinsey & Co.

They describe market context in terms of three dimensions: market share, market growth, and external stability—that is, the average product life cycle duration in the market. Looking at all 86 business units in the study, they find that industry membership accounts for 23% of the variance in profits, with 18 percent of the variance determined by industry profitability and 5% by the three dimensions of market context. For the firms in the study, development performance has the most significant effect in slow‐growth markets and in markets with long product life cycles. In these stable industries, low development intensity, product line freshness, and technical product performance increase profitability.

The results indicate that NPD performance plays a much more important role for explaining the profitability of dominant firms than that of the low‐market‐share firms in the study. NPD performance explains 30% of the profitability variance among the high‐market‐share business units in the study, but none of the variance for the low‐market‐share business units. Although the profitability of the smaller firms in the study is driven primarily by the industry environment, these firms can compete on the basis of superior technical performance.
Cross‐National Diffusion Research: What Do We Know and How Certain Are We?
Authors: Kumar V. , Ganesh Jaishankar , Echambadi Raj
Published: October 2003

To compete effectively in the global marketplace, marketing managers require insight into how a product gets adopted in different countries. For example, can international marketers identify specific cultural traits that may help them to forecast how quickly a new product will be adopted in a particular country or in a group of somehow related countries? Similarly, can they identify factors that suggest why the adoption process differs am.ong countries?

Although these diffusion‐related questions address critical issues for international marketing managers, only a few studies have explored cross‐national diffusion. To help fill this gap, V. Kumar, Jaishankar Ganesh, and Raj Echambadi present the results of a study that replicates and extends the findings of three previously published studies of cross‐national diffusion. Their research aims to replicate four findings from the previous studies: the role of country‐specific effects in explaining differences in diffusion parameters, the presence of a lead‐lag effect, the use of cultural variables to explain systematically the diffusion patterns across countries, and the merit of country segmentation schemes based on diffusion parameters. They extend the previous research by integrating cross‐sectional and time lag variables into a single framework, and they demonstrate how managers can apply this integrated framework for forecasting the diffusion of new products.

They replicate the findings from the previous studies by using annual sales data for five product categories (VCRs, microwave ovens, cellular phones, home computers, and CD players) in the following countries: Austria, Belgium, Denmark, Finland, France, Germany, Italy, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the UK. The product categories and time periods covered differ from the ones in the previous studies; some overlap exists among the countries in this study and the ones in the previous studies.

The findings in this study suggest that country‐specific characteristics (for example, cosmopolitanism, mobility, percentage of women in the labor force) are useful for identifying the differences in diffusion patterns across countries and innovations. This study also suggests that the lead‐lag effect helps to explain differences in diffusion across countries. Factors that this study identifies as possibly influencing the clustering of countries with similar diffusion patterns include timing of entry, geographical proximity, and cultural or economic similarity.
The Impact of Cross‐Functional Joint Involvement Across Product Development Stages: An Exploratory Study
Authors: Song X. Michael , Thieme R. Jeffrey , Xie Jinhong
Published: October 2003

Cross‐functional integration offers numerous, well‐documented benefits for new‐product development (NPD), but it also can carry significant costs. Joint involvement of R&D, manufacturing, and marketing personnel can increase the quality, the manufacturability, and the marketability of the final product. However, building consensus among these groups, with their differing perspectives and goals, may require time‐consuming meetings as well as tremendous finesse from the managers who guide the NPD effort. Those managers require an approach to cross‐functional integration that strikes a balance between efficiency and effectiveness.

X. Michael Song, R. Jeffrey Thieme, and Jinhong Xie propose that the right mix of cross‐functional involvement may differ depending on the stage in the NPD process. They also suggest that blindly promoting the involvement of all functional areas in all stages of the NPD process may actually decrease NPD performance. They test these propositions in a study that examines the relationships between new product performance and cross‐functional joint involvement between R&D, manufacturing, and marketing in five major stages of the NPD process: market opportunity analysis, planning, development, pretesting, and launch. Their objective in this study is to identify patterns of effective cross‐functional involvement in different NPD stages. The study uses data collected from 236 managers working in the R&D, manufacturing, and marketing departments of 16 Fortune 500 firms.

Their findings suggest that new‐product success may be more likely when a firm employs function‐specific and stage‐specific patterns of cross‐functional integration than it is when the firm attempts to integrate all functions during all NPD stages. For example, during the market opportunity analysis stage, the findings suggest that joint involvement between R&D and marketing may be productive, but joint involvement between R&D and manufacturing and among all three functions may be counterproductive.

The results also indicate that joint involvement among all three functions either does not have a significant effect on new product success or may be counterproductive in all stages of the NPD process. For the firms in this study, the three functions seem to take turns playing the central role in cross‐functional activities. During the product planning, development, and testing phases, the role of the focal function, or communication hub, shifts from manufacturing to R&D and then to marketing. (c) 1998 Elsevier Science Inc.
Verbal versus Realistic Pictorial Representations in Conjoint Analysis with Design Attributes
Authors: Vriens Marco , Loosschilder Gerard H. , Rosbergen Edward , Wittink Dick R.
Published: October 2003

The current generation of high‐powered graphics software offers an effective means for presenting product designs. Armed with the right tools for generating photorealistic representations of alternative designs, product development teams can obtain useful consumer input about product design attributes. However, generating computer‐based models carries greater costs than producing verbal representations (written, key‐word descriptions).1 If a verbal representation can effectively communicate the relevant design and styling attributes, can product developers justify the costs associated with generating a computer‐based model?

Marco Vriens, Gerard H. Loosschilder, Edward Rosbergen, and Dick R. Wittink highlight a fundamental question in the choice between verbal and pictorial representations2: Does the type of representation used affect the nature and the quality of the results that product developers obtain? Specifically, does the type of representation used in a study affect the information that the study provides about market segmentation and the relative importance of different design attributes? And does the choice of representation type affect a study's reliability and predictive accuracy?

To address these questions, the authors conducted a study with a European subsidiary of a Japanese manufacturer of car stereo equipment. The study involves the selection of product designs from those made available by the manufacturer. Respondents were asked to evaluate both verbal representations and photorealistic pictorial representations of proposed car stereo designs. Half the respondents evaluated the verbal representations first, while the other half rated the pictorial representations first.

In this study, the pictorial representations produced higher relative importance ratings for two of the three design attributes, as well as somewhat greater heterogeneity (that is, segmentation) among respondents. However, the verbal representations produced greater predictive accuracy, especially for respondents who rated the verbal descriptions after they had evaluated the pictorial representations. These results suggest that the pictorial representations improved the respondents' understanding of the design attributes, while the verbal representations seem to facilitate judgment.
Black Box Engineering: Redefining the Role of Product Specifications
Authors: Karlsson Christer , Nellore Rajesh , Soderquist Klas
Published: October 2003

Original equipment manufacturers (OEMs) in numerous industries recognize the benefits of involving their suppliers in the product design process. Specifications play a central role in guiding that supplier‐OEM relationship. For so‐called “black‐box” parts, the OEM specifies overall requirements for product function and performance, cost targets, and development lead time, and then communicates this information to suppliers, who perform detailed engineering and testing. Black‐box engineering marks a fundamental change in the buyer‐supplier relationship, and companies that use or plan to adopt this practice must understand the factors that contribute to its successful implementation.

Using survey responses from more than 300 suppliers to a European automobile OEM, Christer Karlsson, Rajesh Nellore, and Klas Soderquist identify the problems those suppliers face in the specification process. To provide insight into the context and the causes of those problems, they also describe the results of case studies conducted in the OEM and two suppliers. In this way, they attempt to identify critical factors that can help to improve the specifications process both internally at an OEM and between the OEM and its suppliers.

The respondents identified numerous problems that they face in the specifications process. Based on feedback from product development managers and design staff members in the case study companies, those problems are categorized as follows: technical content and the level of detail in requirements, changes of specifications, cost, interpretation and understanding, and supplier participation in the specification process.

Black‐box engineering redefines the role of specifications. Instead of a fixed document that dictates to the supplier, the specification becomes an open medium for communicating functional and performance requirements and necessary technical adjustments. In other words, black‐box products require a highly interactive design process. Product development managers for suppliers and OEMs must understand that they cannot avoid changes in specifications during black‐box engineering projects. Rather than view such changes as wastes of time and effort, they should approach the black‐box engineering process as a learning opportunity. By working with several parallel sets of functional solutions, which they can validate with the customer before developing detailed dimensional definitions, suppliers can limit the amount of time they lose as a result of changes in specifications.
Technical Professionals in Cross‐functional Teams: Their Quality of Work Life
Authors: Cordero Rene , Farris George F. , DiTomaso Nancy
Published: October 2003

The idea that R&D professionals typically spend a considerable amount of their time working as members of teams makes sense. After all, plenty of research indicates that the use of cross‐functional teams improves the effectiveness of product development efforts. However, the increasing use of cross‐functional teams raises an important question for researchers and R&D practitioners: Does the use of cross‐functional teams improve the quality of work life for technical professionals?

Rene Cordero, George F. Farris, and Nancy DiTomaso address this question in study of 1,714 R&D professionals working on projects. They suggest that being a member of a cross‐functional team may be more demanding than working as a member of a functional project group. On the other hand, they expect that working on a cross‐functional project team may be more rewarding than working in a functional project group. Their study tests these hypotheses by examining the relationships between measures of the extent to which respondents work on cross‐functional teams and five measures each of the participants' job demands and positive job outcomes.

The study identifies positive relationships between working on cross‐functional teams and the five positive job outcomes studied: job growth, job security, membership in successful teams, earning money, and job satisfaction. The study finds less consistent and weaker relationships between working on cross‐functional teams and the five job demands studied. Specifically, the study identifies positive relationships between working on cross‐functional teams and the following job demands: effort, job involvement, and considering a lot of difference of opinion. The results of this study do not find a conclusive relationship between cross‐functional team membership and time pressure. And contrary to expectations, the study finds a negative relationship between working on cross‐functional teams and job stress.

Comparing the responses of participants who work on project teams with those who do not, the results of the study indicate that respondents who work on project teams face greater job demands than positive job outcomes. However, working on cross‐functional teams seems to increase positive job outcomes more than job demands. In other words, working on cross‐functional teams appears to increase the quality of work life for the technical professionals in this study.
Using Conjoint Analysis to Help Design Product Platforms
Authors: Moore William L. , Louviere Jordan J. , Verma Rohit
Published: October 2003

This article illustrates how one can combine different conjoint analysis studies, each containing a core of common attributes, to help design product platforms that serve as the foundation for multiple derivative products. The illustration is based on actual, but disguised, data from a small company that makes electronic test equipment.

This article demonstrates that decisions that consider products individually are likely to be suboptimal and can be significantly different than those based on product platforms. Suboptimality can occur either when preferences for product features differ across markets or when a technology is more important to the overall company than it is to an individual product. Additionally, we show the importance of considering both fixed and variable costs when performing this type of analysis as sales, contribution, and profit‐maximizing products are quite different. Finally, sensitivity analyses show that these results are robust with respect to assumptions about price sensitivity, fixed costs, and timing of entry. © 1999 Elsevier Science Inc.
Flexibility and Standardization: Test of a Contingency Model of Product Design–Manufacturing Integration
Authors: Liker Jeffrey K. , Collins Paul D. , Hull Frank M.
Published: October 2003

This article proposes and tests a contingency model of system integration of product design and manufacturing among producers of goods involving tooling development. The model predicts which combinations of organizational and technical practices will be most effective under conditions of high and low design newness. The results, based on data from 74 firms, largely support the model. Differentiating mechanisms, such as a tall hierarchy and job specialization, are negatively associated with design–manufacturing integration, particularly for new designs. Socio‐integrative mechanisms, including such flexible practices as cross‐functional teaming and collocation, are positively related to design–manufacturing integration for new designs only. However, the use of in‐process design controls is positively related to design–manufacturing integration regardless of design newness, which suggests that some modes of standardization may be beneficial even for new designs.
Benchmarking New Product Development Funding
Authors: Pierz Kathleen A.
Published: October 2003

Among the key success factors involved in new product development, identifying, and perhaps more precisely, defending appropriate funding levels can be one of the most difficult. This is especially true if your new products organization is new or if substantial changes have occurred either within your organization or your marketplace. Kathleen Pierz offers a benchmarking methodology developed as one element of a successful redesign and redirection of the new products organization at Ameritech advertising services, the Yellow Pages publishing unit of Ameritech.
A Cynic's View of Zoning Reform
Authors: Nourse Hugh O.
Published: October 2003

A review of the history of zoning and its reform suggests how changes are brought about by economic interests. If previous patterns continue to persist, and there is no evidence to suggest otherwise, zoning reform will continue to create new winners and losers thus creating incentives for further change. The “problem‐solving” view of zoning is a myth.
Industrial Migration: A Case Study of Destination by City‐Surburban Origin within the New York Metropolitan Area*
Authors: Rubin Marilyn , Wagner Ilene , Kamer Pearl
Published: October 2003

Since the early stages of industrial development, the outflow of jobs from central city to suburb has been discernable. This intrametropolitan dispersion process, slowed by depression and war, gained impetus following World War II and accelerated during the ensuing decades. By the 1970s, however, a new dimension had been added to the dispersion process—especially in the mature urban areas of the North‐east and Midwest—that being the outflow of jobs from suburbs themselves to other regions of the U.S. Given this new interregional dimension, a multi‐jurisdictional strategy to stem the job outflow is in order. This paper provides an input into the framework for developing such a strategy through an examination of destination patterns of jobs by intrametropolitan point of origin using New York City and Nassau‐Suffolk as a case study.
Multifamily Distress: A Case for National Action*
Authors: Stegman Michael A.
Published: October 2003

Among other reasons, controlling financial distress in the conventional multifamily sector is important because of the neighborhood destabilizing effects of partially occupied and vacant buildings and the potential lending cutbacks that could be made by financial intermediaries whose loan portfolios may contain substantial numbers of older, failing rental properties.

This article develops the case for a heightened national concern for the importance of this inventory to the housing welfare of the nation, particularly lower income and minorities; and then by analyzing the known levels of distress in the FHA insured unsubsidized stock. Failure rates in this portion of the multifamily sector are sufficiently great to suggest that similar problems already plague the conventional market and that such distress should be of major policy interest. The final section propose the development of a multifamily research and demonstration program as a basis for national action.
Financial Reform: A Review of the Past and Prospects for the Future
Authors: Colton Kent W.
Published: October 2003

Over the past decade there have been a wide range of proposals for comprehensive financial reform. In terms of national legislation, these proposals— which are designed to alter the basic asset‐liability mismatch of the housing oriented thrift institutions—have often been stymied. However, legislation is once again under serious consideration in Congress; and more importantly, significant change is already underway at the state and local level, fueled by technology, consumer pressure, financial markets and regulatory action. In fact, lead by such innovations as the money market certificate, negotiable order of withdrawal (NOW) accounts, alternative mortgage instruments and an expanded secondary market, it seems that a strong, silent revolution is underway which will substantially alter the activities and composition of thrift institutions. This paper, then, will outline what has happened over the past decade, the reasons for legislative failure during much of this period, and the factors which fuel the evolution and new pressure for change which is underway. It also discusses the prospects and implications for the future, especially as they relate to financial institutions, housing, and the consumer.**
Housing Finance in the 1980's
Authors: Lindsay Robert
Published: October 2003

Strains evident in the housing finance system on the eve of the 80's suggest significant difficulties in meeting the housing demands of the decade ahead. The annual increase in residential mortgages outstanding had climbed to historic levels, relative to GNP, without raising residential construction spending above its ordinary share of GNP. This very weak housing bang for the mortgage buck is traceable, ultimately, to the soaring volume of sales in the used home market, relative to those in the new home market. With significant inflation rates continuing through the 1980's, mortgage lenders will be under great pressure from demands to refinance the existing housing stock, even if the rate of ownership turnover does not persist at the levels of the late 70's. And, as the dollar demands mount, for new and used housing purchases, lenders may find repayment flows from earlier loans continuing to provide a historically small fraction of the funds they need in supplying these demands.
Minimum Tax, Recapture and Choice of Depreciation Methods*
Authors: Sirmans C. F.
Published: October 2003

This paper examines the problem of the trade‐off between the possible minimum tax consequences of accelerated depreciation, the recapture of excess depreciation, and the choice of depreciation methods for maximizing investor wealth. The model is simulated for various ranges of the inputs to which the depreciation selection decision is sensitive. The results indicate that for high marginal tax rates, reasonably long holding periods, and reasonably high discount rates, the investor should select the accelerated methods after considering the minimum tax and recapture consequences.
A Principal Component Logistic Analysis of the Mobility Decision in Transitional Neighborhoods
Authors: Boehm Thomas P. , Mark Jonathan
Published: October 2003

This study represents an extension of the literature that examines the factors affecting a household's decision to make an intrametropoli‐tan move by emphasizing the importance of neighborhood characteristics in addition to the traditional life‐cycle variables on the decision to move. Because of the dichotomous nature of the dependent variable and the collinearity among the independent variables, we employ both principal component and logit analysis. The primary data base is drawn from a sample of households moving into and out of two areas in St. Louis.

The results indicate that many of the traditional life‐cycle variables are significant, although some behave differently than in the usual case because of the transitional nature of the neighborhoods we examine. The results also suggest that a household's perceptions regarding the quality of the neighborhood are also important determinants of mobility. Finally, when the maximum likelihood logit analysis results are compared with the principal component logit results, we find that the principal component logit technique performs better in almost all instances.
Homeownership Effects of Alternative Mortgage Instruments*
Authors: Follain James , Struyk Raymond
Published: October 2003

Most of the interest in alternatives to the standard mortgage instrument has centered on the ability of the alternatives to improve on the performance of the mortgage instrument over the business cycle. The focus in this paper is on the long‐term effects on homeownership rates and associated additional residential construction. The instruments are found to offer potentially large increases in homeownership rates by reducing monthly mortgage payments. Widespread adoption of those instruments causing larger payment reductions would allow around one million more households to become owner‐occupants. The demand for new single‐family homes would increase over the long run by 3 to 4 percent a year. Homeownership could be further increased by a time‐limited subsidy directed at moderate income families.
A Vacancy Transfer Model of the Structure of the Local Housing Market
Authors: Sands Gary
Published: October 2003

Household mobility data derived from vacancy chain or turnover studies may be used to develop a Markov model of the local housing market. Such a model based on empirical data from the Detroit metropolitan area indicates a strong tendency for households to substantially increase their housing expenditures when they move. This finding is consistent with the filtering model of local housing market dynamics. However, these data do not support the hypothesis that more expensive new housing will produce the greatest number of indirect housing opportunities. New units at every cost level generated about the same total of turnover vacancies. The model also indicates that all types of new construction ultimately have their greatest impact on lower cost housing in established communities.
A National Policy and Budgetary Framework for Housing and Community Development*
Authors: Solomon Arthur P.
Published: October 2003

Recent legislation has determined that federal budget allocations and tax expenditures for housing should be tied to specific housing goals or “missions.” The major issues of national housing policy can be organized within six problem areas—three relating to production and three to consumption. Current federal housing programs can be classified into four broad budget categories (involving mortgage credit and thrift institutions, housing assistance, community development, and tax expenditures) and a fifth off‐budget category of credit market activities. By examining a matrix that relates these five areas of federal involvement to the six broad problem areas, this article attempts to provide an analytical foundation for a national policy and budgetary framework for housing, housing finance, and community development.
The Neighborhood Effects of Filtering
Authors: Stegman Michael A.
Published: October 2003

This article attempts to examine the filtering issue within a broad market framework, emphasizing some of the potentially serious neighborhood implications of the turnover process. It concludes that the negative social welfare effects associated with the market adjustments that take place in older inner city neighborhoods as a result of the expansion of the suburban inventory could be sufficiently great to offset the positive gains resulting from the chains of moves initiated by the new building activities on the urban fringe. This is because the vacancy creation and withdrawal process associated with filtering is not under policy control.
Impact of New Housing Construction on Racial Patterns
Authors: Erber Ernest
Published: October 2003

This paper inquires into the racial distribution impact of a projected significant increase in housing starts, under conditions of a federal fair housing law only now beginning to be effective and of an increase in the number of black families in the upper range of minority incomes. It examines the evidence within the broad context of changing urban forms and functions. The impact of new housing construction is analyzed under the headings of minority access to (1) new units and (2) filtered units in mover chains initiated by housing starts. Data are cited to support the conclusion that blacks' access to new units, while sharply increased over previous performance, will not have important effects on racial distribution, especially not increasing blacks as a proportion of suburban populations. Blacks' access to filtered housing, it is concluded, continues to be largely blocked by the dual racial market in real estate, except where such housing functions to extend the ghetto.
The Effect of Municipal Services and Local Taxes on Housing Values
Authors: Kohlhepp Daniel B. , Ingene Charles A.
Published: October 2003

This paper presents an economic model which casts the “Tiebout Hypothesis” in a Von Thumen type model of spatial equilibrium and considers the effect of differential provision of municipal services on household utility levels and housing prices in a politically fragmented urban area. Also in the context of this model three alternative methods of financing municipal services are examined. The article suggests that different levels of municipal services may cause spatial disequilibrium in an urban area, and as households move within the urban area to maximize their utility, they bid up (or down) the price of housing to the extent that their consumer's surplus is capitalized in housing values. Thus, the resultant urban rent gradient may be “kinked” or discontinuous. This paper also presents empirical findings examining the relationship between housing values and several municipal services.
Simulation of Housing Market Dynamics
Authors: Kain John F. , Apgar William C.
Published: October 2003

Developed over the past decade by the Urban Studies Croup of the National Bureau of Economic Research, the NBER Urban Simulation Model is primarily a model of the urban housing market. It represents other urban phenomena such as industrial location, transportation systems, and changes in the demographic structure of the population, but the behavior of the housing “market” is its central focus. This paper provides a brief description of the NBER Urban Simulation Model and presents illustrative results from a series of baseline simulations for the period 1960 to 1970 for the Chicago and Pittsburgh SMSAs.