Thani Jambulingam

Influence of Franchisee Selection Criteria on Outcomes Desired by the Franchisor

Agency theory suggests that an efficient contract between a franchisor (principal) and a franchisee (agent) could be established by the use of selection criteria that would screen prospective franchisees based on their likely future outcomes desired by their franchisors. Franchisors can use franchisee selection criteria as a key input control to enhance the outcomes of their future franchisees. This article examines the relationship between key franchisee selection criteria such as franchisees’ financial capability, experience and management skills, demographic characteristics, attitude toward business dimensions (perceived innovativeness, desire for personal development, seek work-related challenges, personal commitment to the business, and business risk-taking), and key measures of outcomes desired by franchisors (perceived cooperation, satisfaction with the business decision, and franchisee opportunism). The findings show that certain franchisee attitudes toward business can be used as an effective input control strategy by franchisors because they explain a substantial portion of the variance in franchisees’ outcome desired by franchisors.

Technological innovations: a framework for communicating diffusion effects

The paper investigates the impact of the institutional aspects of the innovation-adoption process on the success of its implementation. More specifically, we concentrate on the adoption of five information technologies using a data set from the aerospace and defense industries. We investigate such factors as advocacy, breadth of support, time of adoption, and intra-organizational communications. Several hypotheses are formulated and empirically tested. We find that advocacy by middle management does not have a positive effect on the success of implementation.

Fairness-Trust-Loyalty Relationship Under Varying Conditions of Supplier-Buyer Interdependence

Relationship marketing plays a significant role in supply chain practice and academic studies. Using the resource advantage theory within the relationship marketing framework, we studied the mediating role of trust as a governance mechanism in the fairness-loyalty relationship under different types of interdependence structure between suppliers (wholesalers) and buyers (retailers). Our findings, based on data from retail pharmacies, demonstrate that only under conditions of symmetric independence, trust, as a governance mechanism, completely mediate the relationship between fairness and loyalty. Under conditions of both perceived independence (i.e., lack of interdependence) and asymmetric buyer dependence, however, trust does not mediate but fairness directly influences loyalty. Thus, fairness and trust influence loyalty, strengthening relationships in different ways under different conditions of interdependence. The implications for research and practice are discussed.

How fairness garners loyalty in the pharmaceutical supply chain: Role of trust in the wholesaler‐pharmacy relationship

Purpose – The purpose of this paper is to understand how fairness garners loyalty by breeding trust in the pharmaceutical wholesaler‐pharmacy relationship. Specifically, the paper seeks to understand if the two dimensions of fairness – procedural and distributive – contribute differently in fostering the two types of trust – credibility and benevolence. The paper further aims to examine how the two dimensions of trust mediate the fairness‐loyalty relationship.Design/methodology/approach – Data from 156 retail pharmacies on their relationship with the pharmaceutical wholesalers are used to test the hypotheses. The mediation models are tested using the Barron and Kenny procedure.Findings – The findings of this paper show the importance of both procedural and distributive aspects of fairness on the part of pharmaceutical wholesalers as perceived by the pharmacies. Each aspect of fairness plays a more prominent role for fostering a particular type of trust, which, in turn, leads to loyalty.Research limitation...

Wealth Effects of the Pharmaceutical Industry-Physician Interaction Compliance Guidelines on Large Pharmaceutical Companies

The purpose of this paper is to investigate the wealth effects of the issuance of guidelines by the Office of Inspector General (OIG) to encourage pharmaceutical manufacturers to use internal controls or self-regulation “to efficiently monitor adherence to applicable statutes, regulations, and program requirements” in their marketing to the physicians. The authors employ a standard event-study methodology to examine the impact on shareholders of 12 large pharmaceutical firms around four events leading up to the final guidance issued by the OIG. The overall results indicate a net wealth loss for the sample firms. Interpretation of results warrants caution since the sample is biased toward large multinational pharmaceutical firms that are listed on the USA stock exchanges. The issuance of high-level government policy initiative triggers a pharmaceutical industry response that in turn mitigated firms’ questionable marketing practices. The government accomplishes this without instituting regulation but by taking the dialogue to a wide-ranging and highly public forum. The empirical results suggest that a public policy initiative that impacts shareholder wealth could alter firm (industry) behavior thereby sparing government from enacting regulation and potentially saving exorbitant regulatory enactment, enforcement, and policing costs. The results also provide credence to the argument that the hybrid systems, ones that combine industry rule making with government oversight, provide the greatest potential for overall benefits to society.

Pharmaceutical industry–physician interaction compliance guidelines: Analysis of contagion wealth effects on large generic firms:

Background This study examines the contagion effect on shareholders’ wealth of large generic firms to the issuance of guidelines by the Office of Inspector General “to efficiently monitor adherence to applicable statutes, regulations and program requirements” of the branded pharmaceutical companies. These guidelines prod pharmaceutical manufacturers to employ internal controls and self-regulation while marketing to the physicians. Methods We use a standard event-study methodology to measure the effect on the value of nine large generic firms around four events including the final guidance issued by Office of Inspector General. Results The results show that there is a contagion effect with an overall loss in net wealth of large generic firms’ shareholders. The US government’s policy guidance necessitated pharmaceutical industry to reexamine and refine for the better, its marketing practices. The government achieved this change in pharmaceutical industry’s behaviour without actually introducing any regulation suggesting the efficacy of self-regulation. Conclusions Our findings suggest that there is a contagion effect of Office of Inspector General guidelines on generic drug industry due to facilitated self-regulation by branded pharmaceutical industry. Thus, the direct implication is that any regulatory event that is meant for one firm or a group of firms in the health sector could adversely impact peer firms in the same industry (pharmaceutical) or related industries such as biotechnology or generic industries. In other words, the study shows that government’s public policy initiatives that effect the value of the targeted firms could change not only the firms’/industry’s behavior but also let government achieve its objectives without contemplating additional regulations. This in turn, may accrue significant cost savings for the government in avoiding the regulation and its related measures. Our results also support an argument that a mechanism that combines industry self-regulation with government monitoring, lends the greatest opportunity for the overall welfare of the society.

The R&D Marketing Interface in Biopharma and MedTech

This article highlights the importance of building a marketing led cross-functional team that integrates the R&D, and commercialization process in an early stage Biopharma and MedTech company. Marketing should play a prominent role in the cross-functional team at the earliest stages of company formation and product development to identify unmet need, design the development plan, shape the product life cycle, position the product in the competitive set, and understand all market drivers and competitive factors that are essential to ensure commercial success. In particular, in this paper, the focus is on the importance of creating an appealing target product profile (TPP) and describe the rational and methodology for creating the TPP. Drug development is a high risk, high cost, high reward undertaking, and the TPP provides a market-guided approach to development of drugs more quickly, inexpensively, and with a higher rate of success.

A Rasch Perspective on Firm Financial Performance in the Pharmaceutical Industry

The metrics that are relevant for ranking firms by their financial performance may vary with conditions across different industries. For the pharmaceutical industry, we explore an approach that lets the Rasch model determine the performance metrics that are most important. Using an initial set of ratios spanning multiple dimensions of firm financial performance, we select the ratios that are compatible with the requirements of the Rasch model for this industry during 2002–2011. We identify the metrics, for which positive results were most difficult to achieve, and the firms that most frequently ranked among the top five performers. Our approach offers a new perspective or research method on the valuation of managers and their firms. Interestingly, our results suggest that the variables most relevant for a Rasch financial performance ranking of firms in this industry are not necessarily the variables that directly measure increases in investor wealth or returns.