PIMS Data Base Research Articles

HP35P THE NATURAL HISTORY OF GALL STONE VS ALCOHOL INDUCED‐SEVERE PANCREATITIS IN WESTERN SYDNEY

Gall stones (GS) and alcohol (EtOH), are the two commonest causes of pancreatitis, potentially leading to different outcomes. A retrospective review was undertaken of patients admitted with pancreatitis attributed to these two causes, hypothesising that GS pancreatitis carries a worse prognosis. Patients admitted to Westmead Hospital between 2000 to 2005, were audited using PiMS database, entering key words pancreatitis, and greater than 14 days stay. Data obtained from Westmead Hospital’s pathology database, CERNER, and medical records, were recorded regarding demographics, diagnosis, severity of pancreatitis, radiological indices, length of stay (including ICU/HDU), surgical interventions, complications and mortality. A Glasgow score (1) was assigned to each case. Initially of 57 cases reviewed, there was an equal incidence of pancreatitis between genders (28 M;29 F). There was a higher proportion of GS pancreatitis in females (75%), and a higher incidence of EtOH pancreatitis in males (n = 7) compared to females (n = 2). On average, GS pancreatitis scored a higher Glasgow score (2.28). Complications occurred more often in males and the GS pancreatitis population. The data from this pilot project suggested GS pancreatitis leads to a worse outcome compared to EtOH pancreatitis. Case note review has been ongoing and the combined data will be presented. The study provides a foundation for expanding this database to include other factors, such as ethnicity and weight, in comparing the outcome of GS and EtOH pancreatitis. As well a prospective study has been designed that may help predict the outcome of these two types of pancreatitis.

Retail Insights ‐ Autumn 1998

New research using the PIMS database of business performance shows that businesses delivering better value for money than their competitors are up to 200 percent more profitable than those which do not. The evidence very strongly indicates that where improvements in value for money can be made, profitability will increase over time. Previous research data demonstrate that market share is a key driver of profitability. The new study was therefore devised to assess the impact on market share of the two elements of value for money ‐ customer perceived quality and price. It reveals that, overall, quality is nearly 50 percent more important in driving market share upwards.

The R&D cycle: the influence of product and process R&D on short-term ROI

The purposes of this paper are first to explore the relationship between the total R&D budget and two major components, product and process R&D, and second, to examine the relationship between these two types of R&D and the profitability of the business. The paper explores a cyclical pattern in the relationship between product and process R&D on the one hand and the short-term return on investment (ROI) of the business on the other hand. The total level of R&D investment plays a key role in this relationship. The foundation of this paper is based on prior work about the changing role of R&D over the life cycle of a new product or a new technology. It is also based on the notions of the S-curve response function and the limited compatibility between product and process R&D. The empirical part of the paper is derived from the PIMS database where the sampling units are strategic business units (SBUs). It is, therefore, different from studies where the focus of analysis is a single product or technology. Two forms of analysis are presented: correlation analysis of the hypothesized relationship and nonparametric tests of the stability of findings. The analysis assumes a lagged relationship between the investment in R&D and performance in terms of ROI. The primary conclusion is that product and process R&D modestly affect ROI two years later. The relationship appears to be different depending on the level of total R&D spending.

Cultivating global experience curve advantage on technology and marketing capabilities

Multinationals usually face challenges of new business practices, dynamic consumer preferences, location choices for different value chain activities, and effective co‐ordination of global operations. Suggests that multinationals cultivate global experience curve advantage by improving technology and marketing capabilities for coping with rapid changes in the global marketplace. Uses the PIMS database to examine the impact of such capabilities on a firm’s performance. Indicates that companies with higher technology and marketing capabilities tend to expand into international markets earlier and to enjoy better performance. In addition, a synergy effect between technology and marketing capabilities suggests that multinationals improve both simultaneously in raising market share to a desired level. Discusses a framework for developing global experience curve advantage and presents cases illustrating how multinationals utilize their technology and marketing capabilities successfully to create competitive edge for reaching higher overall performance.

Large company capital formation and effects of market share turbulence : micro-data evidence from the PIMS database

The possible effect of demand uncertainty on company investment decisions is investigated at the micro level. A standard investment function is employed and modified to incorporate demand uncertainty. The data comes from the PIMS data base on business units of large firms in concentrated markets. In dynamic panel data estimation, significance was found for a variable representing market share turbulence. In a number of industries, this variable causes a depressing effect on capital investment either on its own or in combination with indicators of vertical integration, which indicate insulation from demand uncertainty. The results constitute some of the best available evidence that demand uncertainty constraints capital investment.

Innovation, marketing strategy, environment, and performance

The contribution of innovation to corporate survival and growth is an accepted notion in much of management. Typologies of strategic orientations of companies based on innovation have been developed and analyzed. Most of these typologies focus on a single dimension of innovation. This study, using the PIMS database, develops a typology of businesses based on multiple dimensions of innovation and examines their marketing strategies and performance. Results suggest that innovative types have different marketing orientations and performance levels, some of which confirm findings based on other typologies. A major implication in terms of performance is that great care must be taken in adopting an innovation posture. For example, extremely aggressive rates of product introductions are associated with poor marketing (absolute and relative market share) and financial performance but high market share growth. Pioneering a market results in superior all around performance, whereas late entry is associated with poor performance. The findings suggest a need to examine the type of innovation, the type of performance outcome, and the time frame for assessment when evaluating the type of performance outcome, and the time frame for assessment when evaluating the contributions of innovation to corporate survival and growth.

The effectiveness of routine-based decision processes: The case of international pricing

This two-part study used a behavioral framework to explore the usefulness of simple routines for a subset of pricing decisions in multinational corporations, and measured the effect of their use on performance. In the first part of the study, two decision routines and some of their limitatons were identified from the literature and a series of field studies, from which hypotheses were derived. The second part tested the hypotheses using the PIMS database and demonstrated a positive relationship between the use of cost-based routines and firm performance in the United States, which was absent in foreign operations, while an alternative routine in which prices are based on those of competitors was associated with higher performance abroad but not in the United States.

FACTORS AFFECTING TECHNOLOGY STRATEGY.

A model of factors affecting different aspects of technology strategy is tested using the PIMS data base. Results indicate that, of the factors examined, technological characteristics of the business' environment are the overwhelming influence on technology decisions. Market structure, and prior performance are also important, but less so. Strategy had a negligible influence.

Innovation Orientation, Environment and Performance: A Comparison of U.S. and European Markets

Much attention has been paid to the importance of innovation in ensuring the survival and growth of companies. For U.S. companies a key issue is to what extent findings for the U.S. market can be extrapolated to non-U.S. markets to provide a basis for designing innovation strategy. Similar innovation orientation types were identified in both markets using a sample of consumer businesses from the PIMS database. A number of similarities and differences in associated environments and performance levels were also identified. A major finding was that a high degree of product innovativeness leads to generally poor financial and market share performance in both markets but high rates of market share growth. Another major finding was that having pioneered in a market leads to effective performance. Results for the associated environments were more mixed in the sense that there was not a perfect correlation in the environments associated with the types in both markets.

Pioneering new markets: A comparison of market share winners and losers

It is widely believed that to pioneer new markets is the most desirable strategy because of the research evidence which shows that, on average, pioneers tend to out-perform later market entrants. This study set out to question that assumption by examining the range of variation around the average value for a sample of pioneers from the PIMS data base. The results of this analysis indicate that not only is there considerable variation in the performance of pioneers but also that this variation is systematically associated with several dimensions of industry structure and competitive strategy. In particular, it emerges that pioneers which invest heavily from the outset in building large production scale, in securing wide distribution and in promoting their products achieve the strongest competitive position and earn the highest long-term returns.

The Relationship of R&D/Sales to Firm Performance: An Investigation of Marketing Contingencies*

The relationship between a firm's performance and R&D spending is often imperfectly understood, despite the fact that R&D is often a cornerstone of an effective innovation strategy. Susan Holak, Mark Parry, and Michael Song extend the classic innovation-adoption paradigm developed by Rogers and propose a series of hypotheses describing variations in the relationship between the R&D/sales ratio and a firm's performance. Using data from the PIMS database and contrasting growth-stage and mature-stage firms, the authors report that firm and industry characteristics have an important bearing on the R&D-performance relationship. In addition, managers can influence the incremental effects of added R&D spending on the firm's performance by manipulating certain firm-contingent variables. Increased R&D spending can have either a positive or negative influence on gross margin under various circumstances.

Profitability and market share: A reflection on the functional relationship

AbstractThe paper analyzes the functional relationship between profitability and market share for type of businesses in the PIMS data base. Although a linear relationship has been imposed in other studies, our result shows that empirically it seems a poor representation of the data. In addition, three observations seem to be most evident. First, small‐share businesses were not per se less successful than larger business units. In the service market and the market for raw or semi‐finished materials small‐share businesses were just as profitable or even more profitable than larger business units. Second, some businesses were ‘stuck in the middle’, which was most evident in the service market but also in the retail and wholesale markets. Third, very large‐share businesses were often less profitable. A critical market share was identified as between 65 and 70 percent. Beyond that level the ROI decreased.

Characteristics of businesses with high R&D investment

The purpose of this study is to explore the characteristics of firms with high R&D investment in comparison with other industrial businesses. The approach to the study consists of the following aspects: 1. (1) The paper is based on a general framework of variables which characterize businesses with high R&D investment. 2. (2) No assumption is made about a clear direction of cause and effect. 3. (3) The interpretation of high R&D investment is operationalized by selecting businesses with R&D to sales ratios substantially (two times) above average for industrial businesses. In this paper we call them “R&D businesses”. 4. (4) The sampling units for analysis are business units from the PIMS data base which have the advantage of known levels of R&D investment. 5. (5) Two forms of analysis are presented: a binary regression of groups similar to discriminant analysis and a multiple regression analysis.

PIMS and the FTC line‐of‐business data: A comparison

AbstractThe PIMS data base and the FTC Line‐of‐business data base have both been widely used in industrial organization research and business strategy research. However, both data bases have been criticized because of their sample compositions, their measurement methodologies, and the underlying data structures. This study was designed to explore the issues that have been raised about the two data sets by comparing findings produced by them. Since criticism of the two data sets are dissimilar, it is highly unlikely that comparable results would be obtained if the quality of either or both data sets was deficient. This study shows that the data sets generally produce highly comparable descriptive and relational results. However, a number of disagreements do arise, and these are traced to idiosyncratic causes, rather than to the kinds of systematic shortcomings suggested by critics.

Environment‐strategy coalignment: An empirical test of its performance implications

AbstractThe positive performance impact of a coalignment between the environment and strategy of a business is an important theoretical proposition in strategic management. In spite of its importance and intuitive appeal, the extent of empirical support is equivocal and riddled with problems of conceptualizing and testing for coalignment. This paper evaluates alternate approaches to testing such a proposition and argues in favor of specifying coalignment as ‘profile deviation’, which states that coalignment is the degree to which strategic resource deployments adhere to an ‘ideal profile’ for a given environment. Subsequently, this proposition is tested across two time periods, and eight distinct environments in two different samples drawn from the PIMS data base. Results, which were generally robust across the two periods, strongly support the proposition of a positive performance impact of environment‐strategy coalignment. Implications and research directions are developed.

Examining Generic Competitive Strategy Types in U.S. and European Markets

Identification of generic competitive strategy types has recently attracted considerable attention. Most of this research has, however, focused on competitive strategy of U.S. businesses in their domestic market. The present study extends these findings to markets outside the United States, and more specifically Europe, based on a sample of industrial businesses drawn from the PIMS database. Similar dimensions underlying competitive strategy, and similar generic types are found among business in the U.S. and in Europe. Some differences in the performance and business characteristics of certain strategy types were, however, observed between U.S. and European markets. Rate of market growth also appeared to have more significant relation to performance of businesses in Europe than in the U.S.

Market structure and business performance: An evaluation of buyer/seller power in the pims database

AbstractThis paper explores the patterns of buyer and seller structure among business units in the PIMS database and how buyer/seller structure is related to profit outcomes, both long‐term through the product life cycle and short‐term between periods of boom and recession. Businesses with a favourable structure (few sellers, many buyers buying items of low importance) typically maintain margins through the product life cycle, but if there are many sellers facing few and determined buyers, margins and profitability are likely to deteriorate in recession and to continue to decline through the life cycle.

Order of entry and performance in new markets

A prevalent view among both academics and managers is that pioneers enjoy an enduring advantage over all later market entrants. The study reported in this paper tests this assertion by comparing the behavior and performance of three entrant categories—namely, pioneers, early followers and late entrants. A population ecology model is used to develop a set of hypotheses and these are tested on samples of start-up and adolescent businesses from the PIMS data base. The results show the three entrant categories to have significantly different strategic profiles and performance levels, with pioneers tending, on the average, to outperform later entrants.

The Nature and Measurement of Marketing Productivity in Consumer Durables Industries: A Firm Level Analysis

Improving productivity is a major concern in American industry. Efforts to enhance marketing productivity have been hampered by a lack of a clear conception of what constitutes productivity in the marketing area and an associated absence of standards or benchmarks with which to compare a firm’s performance and costs. In this paper a concept of marketing productivity is presented. The PIMS data base is then used to develop situation specific benchmarks for the consumer durables industries. Reliability and validity tests of the benchmarks are presented and the managerial implications of this approach are discussed.

Cross-Sectional Estimation in Marketing: Direct Versus Reverse Regression

Empirical results in marketing research are often derived from linear additive models estimated on cross-sectional data. An underlying assumption of these model specifications is that each exogenous variable contributes an additive effect to the endogenous variable. Measuring these additive effects is problematic if some components of the endogenous variable are not observable to the researcher. Reliance on observable correlates to capture those aspects of the endogenous variable might require reverse regression to ensure unbiasedness of the estimated effects. In contrast to direct regression used exclusively in marketing research, reverse regression first estimates the effect of the endogenous variable on those correlates and then derives unbiased estimates of the additive effect of other exogenous variables specified in the basic model. This paper discusses the reverse regression approach relying on recently published analytic results. A statistically powerful and analytically simple test is developed which allows the marketing researcher to assess a priori whether direct or reverse regression will provide unbiased parameter estimates. An empirical illustration focuses on the measurement of potential market share rewards for pioneering businesses contained in the PIMS data base. Other areas in marketing where the issue of direct versus reverse regression is pertinent are mentioned.