Knowledge at Wharton

Microsoft buys aQuantive; Google acquires DoubleClick for $3.1 billion; Yahoo purchases the 80% of Right Media it doesn’t already own and ad firm WPP gets 24/7 Real Media for $649 million. And that’s just in the last six weeks. The common thread: All the takeover targets are online advertising companies. The race to consolidate the online advertising industry is heating up at the same time that advertisers are demanding more return on their marketing dollars. Wharton professors and others analyze how this will play out for tech companies ad companies and consumers.

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Dana Gioia (pronounced Joy-a) claims to be the only person in history who went to business school to be a poet. Having earned a degree from Stanford’s graduate school of business he worked 15 years in corporate life eventually becoming vice president of General Foods. In 1991 Gioia wrote an influential collection of essays titled ”Can Poetry Matter?” in which he explored among other themes the nexus between business and poetry. Since 2002 he has been chairman of the National Endowment of the Arts where he has overseen programs aimed at making Shakespeare and poetry recitation more popular in the U.S. Gioia who is a speaker at the Wharton Leadership Conference in Philadelphia on June 7 talked about these ideas with management professor Michael Useem and Knowledge at Wharton.

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”The U.S. pursues securities law violations with a regulatory intensity unmatched elsewhere in the world ” according to John C. Coffee Jr. director of the Center on Corporate Governance at Columbia University Law School. At a recent Wharton Impact Conference on international corporate governance Coffee said that although securities law enforcement can lower the cost of capital it may deter some foreign firms from cross-listing in U.S. markets. Still he argues strong enforcement is critical for creating good governance and adding value to corporations and investors stand to gain from it.

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According to estimates micro and small businesses contribute almost 50% of South Africa’s total employment and 30% of its gross domestic product. Until recently however the impact of poor health and in particular HIV/AIDS on these enterprises -- ranging in size from single owner-workers to companies with 100 employees -- has been largely overlooked by researchers. A new study by Li-Wei Chao from the University of Pennsylvania’s Population Studies Center Mark V. Pauly Wharton professor of health care systems and others examines how owner health determines the fate of small businesses in South Africa and impacts the larger economy as well.

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We’re all familiar with titles like chief executive officer chief financial officer and chief operating officer. We have even grown used to chief technology officer chief marketing officer and chief diversity officer. But what about chief talent officer chief cultural officer chief innovation officer chief privacy officer chief apology officer and chief geek to name just some of the more contemporary titles in today’s companies? On the surface this looks like title inflation -- an overabundance of C-level jobs that cheapen the prestige that used to go along with promotions. Yet according to several Wharton faculty members there is more to this story than inflated egos. 

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With an estimated $1.2 trillion under management it’s clear that hedge funds must have an effect on the financial markets. The question is: How? In one of the first studies to shed light on that subject researchers at Wharton and three other business schools find that hedge funds’ efforts to improve companies they hold big stakes in have spillover benefits for all shareholders: a quick 5% to 7% jump in stock prices. The gains measured as an ”abnormal return” on top of the broad market’s were nearly 11% when a hedge fund pushed for the targeted company to be sold.

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Some shoppers just can’t help themselves and buy mostly on impulse without regard to price. Others are die-hard bargain hunters who only open their wallets for a discount. Then there are the strategic consumers who are willing to buy full-price sometimes but at other times they will wait for a bargain. According to new research by Gérard P. Cachon professor of operations and information management at Wharton and doctoral student Robert Swinney it’s these customers that retailers need to focus on in order to reap the full benefits of lean retail inventory management and variable pricing.

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During the recent 2007 Wharton Economic Summit Knowledge at Wharton recorded nine podcasts with speakers and panelists at the event whose theme was ”Next Moves in a Global Economy.” The interviews are with Jeffrey R. Lurie owner of the Philadelphia Eagles Football Club; Shellye L. Archambeau CEO of MetricStream; Ramkrishan (Remi) Hinduja chairman of HTMT Global Solutions together with Sashi P. Reddi CEO of Applabs Technologies; Marc Utay managing director of Clarion Capital Partners; Kenneth Shropshire director of the Wharton Sports Business Initiative; Shiv V. Khemka vice chairman  SUN Group; Clark Callander managing director of Savvian; Amy Errett CEO of Olivia and William L. Mack senior principal  Apollo Real Estate Advisors.

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On May 6 conservative Nicolas Sarkozy won the French presidential election defeating socialist Segolene Royal and taking over from Jacques Chirac who had held the positon for 12 years. The election drew a very high 85% turnout which many saw as a sign that French voters recognize the need to get out from under their economic stagnation and social unrest. Sarkozy is depicted as a friend but also a critic of the U.S.; as a supporter to some degree of the European Union; and as a reformer bent on changing France’s burdensome labor laws but also willing to meet with union leaders. Knowledge at Wharton asked Jeff Weintraub a visiting scholar with the University of Pennsylvania’s political science department to give us his views on the possible consequences of Sarkozy’s election.

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The wireless broadband pieces appear to be falling in place: Sprint Nextel says its next-generation high-speed network will be launched in a few markets by the end of 2007. Intel plans to embed so-called ”WiMAX” enabled semiconductors in laptops by the end of 2008 and startups like Craig McCaw’s Clearwire hope to blanket much of the nation with WiMAX service. Other companies are supporting hybrid wireless networks so that devices can hop between technologies. Where is all this heading and what does it mean for the ”Anywhere Consumer”?

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