BizDissNews; Showcasing recent PhD dissertations in Business Research

To survive and prosper firms have to renew their strategies to maintain a dynamic strategic fit with their changing environments. Strategic renewal can be understood as the adaptive choices and actions a firm undertakes to alter its path dependence and maintain a dynamic strategic fit with changing environments over time. In this dissertation we endeavor to develop and test theory on how, and under what environmental, firm, and team conditions, the organization’s key decision makers –its Upper Echelons, pursue particular adaptive responses. We focus on some contingencies that prompt Chief Executive Officers (CEOs), Top Management Teams (TMTs), and Middle Managers (MMs) to adapt through internal and/or external modes of renewal. We propose that heterogeneity in adaptive strategic choices ensues from the contingent search patterns (behavioral, cognitive, and informational) adopted by the organization’s Upper Echelons. In the first study we find asymmetric behavioral search patterns of CEOs in relation to different cross-level correlates. In study two we find that TMT attributes influence cognitive search-focus in dynamic environments to explain heterogeneous adaptive responses. In the third study we find that TMT and MM attributes can either enable or hamper changes in structures, processes, and practices. Study four exposes how the complex interaction between TMT diversity and shared TMT vision drive new knowledge creation from the stock of knowledge acquired through informational search activities by TMTs. The findings from the four studies, each adopting a unique database, provide evidence on how contingent search patterns of Upper Echelons drive different modes of renewal.

Fulltext: http://repub.eur.nl/res/pub/32167/EPS2012259STR9789058923042.pdf

ERIM PhD Series: http://repub.eur.nl/res/col/292/

In this dissertation, we focus on how leadership styles, individual learning behaviors, and social network structures drive or inhibit organizational members to repeatedly generate and develop innovative ideas. Taking the idea management programs of three multinational companies as the research setting, we investigate, in four empirical papers using different sources and methods, how innovative behavior can be supported, influenced, or changed. Within this context, we concentrate on a) the quantity of ideas, b) the quality of ideas, and c) the repeated participation of employees in idea management programs. The findings demonstrate that managers can stimulate employees to submit more ideas through a combination of their leadership style and the organizational mindset they embrace. We also find that people whose prior ideas were rejected in the past are more inclined to initiate new ideas. However, only employees who successfully initiated ideas in the past learn to improve or demonstrate consistency in the quality of their subsequent ideas. We further show that the embeddedness of ties in a network predicts how much time people invest in the development of an idea. Moreover, we find that social network structures dynamically evolve between one idea to the next. In particular, strong ties and a higher network size influence the quality of ideas and vice versa. Together, the insights of the studies illustrate how through leadership, learning, and social networks idea inventors exchange knowledge, build on each other’s expertise, make sense of experiences, and become motivated to constantly generate ideas that move the organization forward.

With the growth of online shopping, a new era of market communication is administered. Internet as a combined communication- and sales-channel has blurred the borders between persuasive communications to activate goals (i.e., abstract messages that are traditionally communicated via advertisements, commercials and billboards) and concrete recommendations to activate choices (i.e., concrete messages that are traditionally communicated by promotions on the shop floor). The blurring borders between abstract persuasive communications and concrete recommendations call for new research to gain insight in the interplay between abstract and concrete product messages. In the first essay we investigate the differential impact of abstract benefit messages and concrete product examples on goal activation and choice behavior. In the second essay we further unravel the cognitive structure in consumers’ minds that underlies the behavior we observed in essay 1. In essay 3 we broaden the applicability of our findings, by investigating the impact of abstract benefit messages versus concrete product messages on consumer behavior outside the focal product category mentioned in the messages. Our findings are based on consumer data gathered in lab-experiments and from a panel survey. All of our essays discuss applications to health related products. In summary, this dissertation shows some interesting theoretical findings about the relative impact of abstract versus concrete product messages. It is also of particular interest to commercial companies and public policy makers, because it provides suggestions on how to steer consumer decision-making processes with product messages to promote healthier consumer choices.

Research on professional service firms (PSFs) did not come off the ground until recently. This lack of attention is surprising, given their integral role in contemporary knowledge-based economies. In this dissertation, I focus on two professional industries: law and accounting. Historically, these industries were infused with a dominant professional logic, with its corresponding Professional Partnership configuration as dominant form of enterprise organization. However, changes in economic and social trends, government policies, and client preferences have led to the spread of a commercial ethos in the professions, with the corresponding configuration of the Managed Professional Business. This shift from the professional to the commercial logic is the point of departure for this dissertation. But what are the effects of this changing logic from professionalism to commercialism on PSFs? This dissertation shows, first, that the shift from professionalism to commercialism is not complete for all PSFs, as many professionals in mid-sized firms resist this new logic. Second, although in conflict with the logic of professionalism and the corresponding organizational practices, novel-to-context practices of strategy formation and formal governance do contribute to the performance of PSFs. Yet they do so at a cost, third, as they increase misconduct of lawyers which in Professional Partnerships were effectively remedied by collegial controls. Fourth, PSFs face a choice about the corporate objective function they pursue, as my final study suggests that combining professional and commercial logics in a single configuration is seemingly impossible.

This thesis gives new and important insights in modeling diffusion data in marketing. It addresses modeling multiple series instead of just one series such that one can learn from the differences and similarities across products and countries. Additionally, this thesis addresses the current availability of higher frequency diffusion data. The two issues provide challenges for modeling of diffusion processes. In this thesis we provide solutions to these challenges, and we also suggest another look at some older issues with a particular focus on parameter estimation. In the first chapters we deal with the estimation of diffusion parameters for a single series. We start with an overview of currently used estimation methods and we suggest that a new method is needed. In fact, our new method does not suffer from bias as it properly incorporates the source of noise and the observational frequency. In the next chapters we focus on modeling high-frequency diffusion data, where we specifically address mixed-frequency diffusion data and seasonality. Finally, we propose a new approach to jointly modeling many diffusion series, where we allow for cross effects between products and countries.

With the spurt of technology and innovation the life cycles of parts and products have become shorter and service parts enter their final phases earlier. Final phase of a typical service part starts once the part production is ceased and ends when the last service or warranty contract expires. One popular tactic, in practice, to sustain service operations is placing a final order. The prime challenge of a firm while deciding a final order quantity is to minimize inventory-carrying costs together with the risk of obsolescence at the end of the planning period. In this study, end-of-life inventory decisions for an array of products including both consumer electronics and capital-intensive products are investigated. For consumer electronics we show that considering an alternative service policy, such as swapping the defective product with a new one, besides a regular repair policy improves cost efficiency. Moreover, for capital-intensive products we study systems with phase-out returns and systems with customer differentiation in the end-of-life phase. Our analysis reveals that taming the uncertainty associated with phase-out arrivals engenders a remarkable efficiency improvement. Moreover, including rationing decisions in the end-of-life phase enhances the performance of the system by a significant reduction in cost and risk of obsolescence.

This thesis studies various computational and game-theoretic approaches to economic modeling. Unlike traditional approaches to economic modeling, the approaches studied in this thesis do not rely on the assumption that economic agents behave in a fully rational way. Instead, economic agents are assumed to be boundedly rational. Abandoning the assumption of full rationality has a number of consequences for the way in which economic reality is being modeled. Traditionally, economic models are mostly of a static nature and have a strong focus on deriving equilibria. Also, models are usually analyzed mathematically. In models of boundedly rational behavior, dynamic elements play a much more prominent role and there is less emphasis on equilibrium behavior. Also, to analyze models of boundedly rational behavior, researchers not only use mathematical techniques but they also rely heavily on computer simulations. This thesis presents four studies into the modeling of boundedly rational behavior of economic agents. Two studies are concerned with investigating the emergence of cooperation among boundedly rational agents. One study focuses on cooperation among firms in a Cournot oligopoly market, while the other study examines cooperation in a spatial model of price-competing firms. The other two studies in this thesis are concerned with methodological issues in the use of evolutionary algorithms for economic modeling purposes. One study shows how evolutionary algorithms can be analyzed mathematically rather than using computer simulations. The other study criticizes the use of a so-called binary encoding in evolutionary algorithms.

It is easy to observe instances of contradictions and dilemmas that multinational companies, public bureaucracies, and individuals encounter as they seek resources and markets in a globally-linked world. The default condition for such entities is that they are being constantly stretched apart by global and local processes that are multiple, intertwined, contradictory and irreconcilable. Through qualitative studies of two such organizational environments, this thesis describes its unpredictable nature and highlights the deftness and dexterity required from actors to steer the organizations they manage through this complex thicket and promote the interests they espouse. The first case suggests that when faced with intractable dilemmas emanating from their global activity, multinational actors resort to arbitrary moral commitments. The second case suggests that powerless organizations relying on mutually contradictory political alliances may deliberately opt for hypocrisy; the strategy continues to be preferred in spite of having resulted in a near-death experience in its past. Jointly, these cases support concepts in business ethics and organization theory that incorporate conflict, contradictions, and contingent causality into their explanations as they provide a better reflection of contemporary multinational and organizational activity.

Over the past decades, demographic changes, advances in transportation and communication technology, and the growth of the services sector have had a significant impact on the spatial structure of regions. Monocentric cities are disappearing and developing into polycentric metropolitan areas, while at the same time, social economic processes are taking place at an ever larger geographical scale, beyond that of the city, in which historically separate metropolitan areas are becoming increasingly functionally connected to form polycentric urban regions. Such urban networks are characterised by the lack of an urban hierarchy, a significant degree of spatial integration between different cities and, complementary relationships between centres, in that cities and towns have different economic specialisations. The growing literature on changing urban systems coincides with the increasing popularity of the urban network concept in contemporary spatial planning and policy, in which urban networks are often seen as a panacea for regional economic development problems. Polycentricity and spatial integration have become catchphrases, where polycentric development policies have been introduced to support territorial cohesion as well as higher levels of territorial competitiveness. Despite the enthusiasm for the ideas of a polycentric and networked spatial organisation, the assessment of the network concept leaves much to be desired. To what extent are regions becoming more polycentric and spatially integrated? Are relationships between cities in polycentric, spatially integrated regions complementary rather than competitive? And are polycentric, spatially integrated regions more economically efficient than their monocentric, non-integrated counterparts? In this study, these questions will be addressed.

The studies in this thesis contribute to a growing stream of papers showing that capital structure decisions are not only influenced by corporate determinants, but also by fluctuations in investor tastes and capital available for investment. This is a relatively new way of looking at corporate decisions, but is also given the deserved importance in the literature. This view contrasts with the traditional approach in the literature that largely considered corporate decisions to be distinct from the decision process of investors. Chapters 2 and 3 use convertible debt issuance to analyze the impact of intertemporal variation in investor demand on corporate decisions, and the market reaction to these decisions. Chapter 2 shows that convertible debt issuance, pricing, and design decisions are influenced by demand forces from investors. Chapter 3 finds that a shift in the convertible bond investor base from long-only investors towards convertible arbitrage funds resulted in an increasingly negative stock price reaction, induced by short-selling pressure. Thus, the first two studies in this thesis provide more evidence of corporate opportunism, using data on issuers of convertible debt. The fourth chapter uses data from repeat issuers of equity, and provides evidence in line with the hypothesis that investors take opportunism into account when firms issue new equity. In addition, the paper shows that firms’ choice of capital structure is influenced by their past behavior.

In this dissertation, I focus on physician and patient behavior. I model patient and physician decisions by integrating robust insights from different behavioral sciences (e.g. economics, psychology and sociology) in econometric models calibrated on individual data. This approach allows me to bring novel insights for managers, policy-makers and patients about: (1) how physicians learn from patient feedback about a new drug (in particular, how switching patients are 7 to 10 times more salient, in physicians' memory, than patients who refill their medication), (2) the relationship between patient empowerment and patient non-adherence to physician advice (in particular, the importance of going beyond the logic of self-determination theory, which predicts that empowering patients in the medical encounter is always beneficial, and consider side effects like patient overconfidence which, in the case of therapy adherence, actually make patient empowerment undesirable), and (3) the main drivers of patient drug requests by brand name and the physician’s accommodation of such requests (in particular, comparing the importance of health information obtained via mass-media, word-of-mouth from expert consumers, word-of-mouth from other consumers and patient values).

This research describes the objective measurement of CEO narcissism and its impact on organizational outcomes. Narcissism forms an essential element for effective leadership and is as such an important personal characteristic for CEOs. CEO narcissism can be measured by investigating five determinants of CEO behavior, comprising media exposure, compensation, power, growth and perquisites. The CEO narcissism score is based on these five determinants by a massive data collection of fifteen objective variables for 953 S&P500 CEOs. The composed CEO narcissism score reflects the psycho logically validated factor solution of narcissism. CEOs who have been identified as narcissists by leading psychologists have a top score in this research. The results of the first empirical impact study show an intricate relationship between CEO narcissism and financial accounting performance measures which can be visualized by a concave parabola. This relationship confirms the view that narcissism is an essential element for effective CEO leadership, but is however not without its pitfalls for either too low or too high levels of narcissism. The results of the second empirical impact study indicate a negative relationship between CEO narcissism and countervailing power of the board. High narcissistic CEOs do not tolerate contradiction and surround themselves with followers. The third impact study examines the relationship between CEO narcissism and fraud propensity as alleged in AAERs by the SEC. The results show that high narcissistic CEOs are more inclined to commit managerial fraud to keep up appearances and retain their status. The empirical results theoretically contribute to the psychological perspective of narcissism as a double edged sword and provide an indication to expand the upper echelon theory with the CEOs narcissistic personality. The practical contribution of this research enables stakeholders to monitor CEO narcissism by applying objective measures and trying to retain productive CEO narcissism levels.

The ability to learn about the relation or covariation between events happening in the world is probably the most critical aspect of human cognition. This dissertation examines how the human mind learns numerical and emotional relations and explores consequences for managerial and consumer decision making. First, we study how uncertainty in the environment affects covariation learning and explore the consequences for consumers’ price-quality inferences and product valuation. Second, we examine how different types of accountability (process versus outcome) and analytical intelligence affect learning and judgment. We highlight the implications for employee performance management. Third, building on associative models of memory, we show that bilingual consumers perceive advertising messages in their native language (L1) to be more emotionally intense than advertising messages in their second language (L2). Finally, we explore the consequences of a greater perceived emotionality in L1 for international marketing research. The practical implications of this dissertation are of interest for professionals working in the area of pricing, branding, marketing research, and human resources. From a theoretical point of view, this dissertation relates to the fields of judgment and decision making under uncertainty and cognitive psychology.

In this dissertation, we evaluate the roles senior management teams and individual middle managers play in realizing the performance benefits of entrepreneurial orientations. We investigate the role of senior management teams by focusing on a sample of 9.000 firms in the Netherlands. The first study focuses on antecedents of entrepreneurial orientation, i.e. internal and external knowledge acquisition of senior management teams. We find that both internal and external knowledge acquisition are important and that a premium in terms of the entrepreneurial orientation of the firm may be obtained by simultaneously sourcing for both types of knowledge. Our second study presents a model for top management teams aiming to enhance the performance benefits of the entrepreneurial orientation of the firm. We investigate team attributes such as team heterogeneity and shared vision and find some compelling results with respect to their context specific applicability for leveraging the entrepreneurial orientation of the firm. Our final study, based within the European branch of a single firm operating at the intersection of hardware, software and IT consulting, examines the individual entrepreneurial orientation of middle managers and subsequent performance benefits. We find that strong network ties of relatively higher placed middle managers are instrumental for realizing the inherent value of entrepreneurial orientation. Together, our results emphasize the performance benefits that may be obtained if the entrepreneurial orientation of organizations and individuals is appropriately managed. Attention for knowledge acquisition, team composition, the environmental context as well as network ties and the hierarchical position of individual managers represent essential aspects of effective management of entrepreneurial orientations.

Fulltext: http://repub.eur.nl/res/pub/32166/EPS2012258STR9789058923055.pdf

ERIM PhD Series: http://repub.eur.nl/res/col/292/

This study investigates to what extent extreme confidence of either management or security analysts may impact financial or operating performance. We construct a multidimensional degree of company confidence measure from a wide range of corporate decisions. We empirically test this measure for large US companies from 1980 -2008 and find significantly different company and performance characteristics between confidence extremes. Diffident firms tend to be smaller, more distressed, less conservatively financed and, except for the new millennium, yield a lower return on invested capital with higher variability. When adjusting stock returns for risk, the performance differences prior to moving to extreme confidence become even more pronounced. Extreme confidence could also distort earnings forecasts as analyst may overly rely on an anchor or make insufficient adjustments. Innate bias, anchoring to prior year earnings, risk attitude and responses to recent news are conditional on the level of analysis. Innate optimism prevails on the industry and analyst level. We find no support for anchoring by analysts with a long track record or across industries, which suggests a bottom-up approach. Long-term risk is considered as upside and short-term risk as downside potential. There is also a tendency to underreact to news, the extent of which seems conditional on the direction.

It is well known that our choices and judgments depend on the context. For instance, prior experiences can influence subsequent decisions. People tend to make riskier decisions if they have a chance to win back a previous loss or if they can gamble with previously won money. Another example of context is social environment. People often change their judgments to conform to observed group behavior. Since the reasons driving such context effects are less clear, this dissertation explores the mechanisms behind behavioral patterns with the help of a modern neuroscience technique, functional magnetic resonance imaging. The dissertation concentrates particularly on choice and judgment in risky and in social settings. It consists of three parts. The first part provides a primer on the methodology of neuroeconomics and a synthesis of the body of knowledge on the brain mechanisms of valuation and choice. The second part investigates risk behavior in sequential choice situations. The findings suggest that decision makers tend to take excessive risk after both wins and losses, due to increasing affective arousal and decreasing control. The third part of this dissertation focuses on the influence of social context on judgment. Results indicate that people automatically learn to behave as others do—being different from others is processed in the brain in a similar way to behavioral errors. This indicates the great power of relevant social groups in influencing our behavior. Overall, this dissertation highlights the reasons behind context dependency and demonstrates the power of modern neuroscientific methods for understanding economic behavior.

Customer First is an important issue of the recently introduced banking code in the Netherlands. It mainly concerns customer satisfaction and it is aimed at regaining trust of customers. Interestingly, the code does not address the urgency of improving customers’ financial literacy and their ability to make sound financial decisions, given that they consult a financial advisor. This dissertation specifically considers these two topics. In the first chapters we present empirical results about the sheer size of consumer debts and about the difficulties that consumers have with interest rate computations. With newly acquired data, we also document that the willingness to purchase on credit gets reduced when the total amount involved is mentioned explicitly. As consumers apparently need help, many turn to financial advisors. The second part of this dissertation deals with an extensive survey amongst financial advisors and their customers. This unique database could be compiled with the help of two Netherlands-based financial institutions. We address the perceived expertise of the advisor and the advisee, the satisfaction levels and the relevance of the disclosure of the advisor’s fee. We also contrast the answers of advisors and consumers and we document a substantial difference in opinions about the same topics.

Bibliometric mapping of science is concerned with quantitative methods for visually representing scientific literature based on bibliographic data. Since the first pioneering efforts in the 1970s, a large number of methods and techniques for bibliometric mapping have been proposed and tested. Although this has not resulted in a single generally accepted methodological standard, it did result in a limited set of commonly used methods and techniques. In this thesis, a new methodology for bibliometric mapping is presented. It is argued that some well-known methods and techniques for bibliometric mapping have serious shortcomings. For instance, the mathematical justification of a number of commonly used normalization methods is criticized, and popular multidimensional-scaling-based approaches for constructing bibliometric maps are shown to suffer from artifacts, especially when working with larger data sets. The methodology introduced in this thesis aims to provide improved methods and techniques for bibliometric mapping. The thesis contains an extensive mathematical analysis of normalization methods, indicating that the so-called association strength measure has the most satisfactory mathematical properties. The thesis also introduces the VOS technique for constructing bibliometric maps, where VOS stands for visualization of similarities. Compared with well-known multidimensional-scaling-based approaches, the VOS technique is shown to produce more satisfactory maps. In addition to the VOS mapping technique, the thesis also presents the VOS clustering technique. Together, these two techniques provide a unified framework for mapping and clustering. Finally, the VOSviewer software for constructing, displaying, and exploring bibliometric maps is introduced.

This study tests and extends current knowledge on the causes of social entrepreneurship: a type of entrepreneurship that concerns the process of discovering, evaluating, and pursuing opportunities aimed at the creation of social value. In contrast to what is common in this research domain, this study applies a research design based on unique, large-scale and internationally comparable survey data. Various research themes are addressed such as the occurrence and drivers of social entrepreneurship at the macro-level, factors that influence the survival of social ventures at the firm level, and the differences and commonalities between social and commercial entrepreneurs at the individual level. At the macro-level it is concluded that social entrepreneurship clearly is a global phenomenon with a prevailing role for the level of income in a country as one of the drivers of its occurrence. At the micro-level results indicate a deviating entrepreneurial profile for social entrepreneurs that tends to be, in some respects, less favorable compared to commercial entrepreneurs in terms of effort put into the organisation, self-confidence, ambition, funding and progression to more mature stages of the entrepreneurial process. The results of this thesis are of particular interest for public policy-makers, private foundations, and support organizations who want to promote social entrepreneurship and improve the sector infrastructure. This study advocates taking account for this deviating entrepreneurial profile.

Given the abundance of ethical scandals in businesses, sports, governments and religious organizations, it should come as no surprise that social scientists have increasingly put ethical leadership on the forefront of their research agenda. However, the literature on ethical leadership has primarily taken a normative approach, suggesting what leaders should do. This approach does not help in explaining why leaders sometimes deviate from such moral standards. In fact, little empirical work has been conducted on the question of when or why leaders actually engage in (un)ethical behavior (a behavioral ethics approach). The research presented in this dissertation aims to take a first step in filling this gap in the literature by identifying and examining antecedents of several ethical leader behaviors. I aim to answer important empirical questions such as: When do leaders go beyond their self-interest? When do leaders treat their followers in a fair manner? And, do leaders consistently take action against unethical followers, or do they sometimes condone unethical follower behavior? In answering such questions, I will show that aspects of leaders themselves (motives and dispositions), aspects of their followers (motives and actions) and aspects of the environment in which leaders operate interact in determining whether leaders engage in ethical leader behaviors or not.

Academic financial economists have been keenly interested in the value of active portfolio management since the seminal paper of Jensen (1968). This book examines the information advantages that active mutual fund managers attain in financial markets through an analysis of disclosed fund holdings. Performance evaluation at the security level allows us to paint a more comprehensive picture of fund managers’ security-selection talents. The three chapters in this book constitute an empirical investigation of the information content of mutual fund portfolio disclosure. Chapter 2 examines the value of active funds’ portfolio disclosure from an outside investor’s perspective. Hypothetical copycat funds that duplicate the disclosed asset holdings of actively managed funds can generate performance that is comparable their primitive targets. More interestingly, their relative success increases after the U.S. SEC mandates more frequent portfolio disclosure. Chapter 3 studies the information content of the active portion of fund investments by creating a stock-level measure that seeks to aggregate various pieces of information scattered among active funds, as revealed through their over- and underweighting decisions. Active funds’ portfolio deviations from benchmarks can strongly and positively predict future stock returns. The findings establish a robust link between active fund investments and asset prices. Chapter 4 further explores the role that active mutual funds play in bringing about price efficiency. Active funds are able benefit from fundamental analysis and their information advantages are mainly attributed to their expertise in forecasting and processing fundamental information.

The rise of consumerism and the increasing availability of information through the Internet have increased patients’ demand for care that is more in line with their preferences. Because of this trend the expectation that hospitals act according to each individual patient’s preferences is becoming even more prominent. Hospitals could respond by implementing flexible health care policies that offer patients more choice. In this dissertation we explore two types of flexible health care policies from the consumer perspective: priority access pricing and customized care. We do this by (1) investigating how consumers evaluate price-based priority access allocation policies (i.e., allocation policies in which patients are offered the option to pay extra for faster health care access), and by (2) demonstrating how the collective costs and benefits of customized health care policies (i.e., policies that offer individuals the possibility to “create” their own health care program) can be used to evaluate customized care. Throughout, special attention is given to the role of collective health outcomes. Besides our scientific conclusions, our findings are also relevant for hospitals and policy makers that consider implementing new allocation policies. They can be used to provide assistance in future health care decision making.

Pharmaceutical marketing effectiveness comprises the measurement of marketing efforts of pharmaceutical firms towards doctors and patients. These firms spend billions of dollars yearly to promote their prescription drugs. This dissertation provides empirical analyses and methods to contribute to several substantial problems on pharmaceutical marketing effectiveness. Using unique data in every essay, it studies the role of the firm, sales rep and doctor in pharmaceutical marketing. The first essay evaluates the size of the sales force and the allocation of sales calls among doctors. In particular, it provides a method to gauge a yet-to-be-enacted firm-initiated policy shift. The second essay studies the effectiveness of the information content provided in sales calls. The main questions evolve around the discussion of positively biased drug information and the responsiveness of doctors to that. In the third essay, the interplay between drug sales, marketing and scientific reviews is studied in detail. The essays reveal important implications for academics and managers. For academics: (i) a new alternative to gauge policy shifts is offered; (ii) a model is offered to analyze the effectiveness of sales message content; and (iii) scientific reviews should be considered to correctly measure pharmaceutical marketing effectiveness. The implications for managers are: (i) the market leader is able to buck the trend in increasing sales forces; (ii) sales reps discuss positively biased information too often, which is counterproductive in the long run; and (iii) scientific reviews on products should be actively considered as a part of the marketing mix.

A growing number of firms rely on strategic R&D alliances to develop new products. In these alliances, firms use various kinds of governance mechanisms for incentive alignment. Project-level governance, i.e., the daily control of alliance activities by firms’ alliance representatives such as steering committee members, alliance managers, and project managers; and, performance-based monetary incentives, i.e., the potential milestone payments tied to the performance of partners, are two governance mechanisms, increasingly used in practice, yet overlooked in the strategic alliances literature. In this dissertation, I examine the antecedents and performance outcomes of these two governance mechanisms in the biopharmaceutical industry setting. The results of this dissertation suggest that project-level governance and monetary incentives offset each others’ effects on alliance innovation performance in the context of startup-incumbent alliances. In other words, offering greater monetary incentives to startups has minimal positive effect on development success, if incumbents opt for intense project-level governance by their controllers at the same time. On the other hand, the results suggest that greater monetary incentives result in higher abnormal stock returns to startup firms following alliance announcements. The results also reveal the positive reciprocal relationship between project-level governance and monetary incentives. The greater the project-level governance, the higher the size of potential milestone-payments, and vice versa. Hence, the incumbents that exercise intense governance on startups in alliances offer also higher potential milestone payments to compensate for the performance risks of startups. The results also show that project-level governance positively influences the contractual detail, which in turn increases the likelihood of development success. Finally, the results reveal several other exogenous and endogenous antecedents of both governance mechanisms.