Knowledge at Wharton

In 2007 mutual funds specializing in non-U.S. stocks returned a fat 16% while funds with diversified holdings in U.S. equities returned just over 6%. In fact the foreign-stock funds have beaten domestic-stock funds over periods of two three five 10 and 15 years. Moreover owning foreign stocks helps a U.S. investor diversify risk by reducing a portfolio’s volatility. Why then does the typical U.S....

Private Equity has passed through a Golden Age but will now spend a year or so in ”purgatory” before entering an even greater period of expansion or ”Platinum Age ” according to David Rubenstein co-founder and managing director of The Carlyle Group the Washington D.C.-based private equity firm with more than $70 billion in assets. In a keynote address at the 14th annual Wharton Private Equity and...

On January 29 online auctioneer eBay unveiled plans to revamp the fees it charges sellers reduce fraud and increase the volume of transactions. It’s the first move by CEO-elect John Donahoe who will take over the reins of eBay on March 31 in the wake of long-time CEO Meg Whitman’s announcement that she plans to step down. Donahoe’s mission is to reinvigorate a company that remains dominant in onli...

It’s been quite a week. Stock markets around the world showed sharp declines on Monday; on Tuesday the Federal Reserve cut its benchmark interest rate by three-quarters of a percentage point. The rate cut helped stem the losses on some indexes but by January 23 the volatility had returned. The obvious fear is one of recession -- a possibility that the White House and Congress are trying to avert b...

The rise in delinquencies on auto loans is one sign that America’s auto industry is in trouble -- along with the rest of the economy. How hard are the auto makers being hit and what should the Big Three do to stem the damage? Meanwhile the global auto industry has seen some interesting developments including the introduction in India of Tata Motors’ Nano and the arrival of five Chinese auto manufa...

Even against the backdrop of an increasing likelihood of recession television advertising spots for February’s Super Bowl XLII were nearly sold out by early January -- several weeks sooner than in the past -- and advertisers are paying record prices. While the power of television has waned as new media compete for consumers’ attention the Super Bowl appears to have retained -- and solidified -- it...

The worldwide collapse of stock prices has many victims -- pension funds insurance companies hedge funds financial services firms. But those are players who if they are smart have the wherewithal to withstand a steep sell-off. What about the small investor the individual who is socking away modest sums for retirement or college costs? Should small investors rush for the sidelines? Or should they v...

Most industries do not begin on a single day but it’s easy to see Facebook CEO Mark Zuckerberg’s presentation on May 24 2007 as the starting gun in an entrepreneurial race that some have dubbed ”the Facebook Economy.” Zuckerberg announced that the social networking site would open to third-party developers transforming itself into a platform on which other businesses can operate. Eight months late...

On January 10 Amazon.com announced a partnership with Sony BMG Music Entertainment to offer music downloads without digital rights management software which typically limits how content can be used. Amazon now has all four major music labels along with thousands of independent ones selling songs without DRM technology. While DRM may be all but dead in the music industry experts at Wharton point ou...

Most energy experts agree that global warming is a serious threat and they also agree that green technology has the power to fundamentally reshape how business gets done. But at this early stage these experts -- including investors -- are finding it hard to separate truth from exaggeration when it comes to the benefits that green technology can offer. That was the consensus of industry speakers at...

When Givenchy dressed Audrey Hepburn for her role in the 1961 film Breakfast at Tiffany’s luxury was still exclusive the particular provenance of the refined social elite. By 1980 all that was changing. When Brooke Shields announced that nothing came between her and her Calvins the message was not that Calvin Klein jeans were for her alone; it was that they were for everyone. In the 20-year span b...

After riding a wave of unprecedented industry growth an established technology manufacturer experiences a sudden market downturn. What should it do? Whereas managers often push for quick bottom-line analysis when facing uncertainty Wharton management professor Sarah Kaplan says that the best move might be to encourage employees to engage in ”framing contests ” in which they champion alternative st...

Though the subprime mess and rising oil prices slammed the U.S. economy during much of 2007 other emerging markets -- especially China and India -- seem to be on a roll. China’s growth rate of more than 11% is likely to continue and India too should be able to sustain a high rate of GDP growth even if it slows from last year’s 9%. Latin America meanwhile is cautiously optimistic but could see a mo...

At the beginning of 2008 crude prices are at record highs creating immense wealth for oil-exporting nations in the Middle East. Yet the Arab economies also face what economists call ”a demographic bulge of a fast-growing labor force” -- and the challenge of creating enough jobs for the population. This is happening at a time when the arrival of China and India is raising the competitive stakes for...

In Germany labor unions traditionally have had seats on corporate boards. At Japanese firms dozens of loyal managers cap off careers with a stint in the boardroom. Founding families hold sway on Indian corporate boards. And in China Communist Party officials are corporate board fixtures. But as companies continue to globalize should they consider adopting one uniform model of corporate governance?...

This month more than half of Americans probably made health-related New Year’s resolutions but few are likely to stick to them. Employees at CFI Westgate Resorts in Orlando Fla. might consider themselves lucky: They have an incentive to get healthy. If they join in the company-wide weight-loss contest and reach their goals they could win cash prizes or a luxury vacation. Westgate isn’t the only em...

The ability to ”connect the dots” -- work the connections between local conditions and global forces and between the non-profit private and government sectors -- is necessary whether you work in the private sector or for a conservation group according to Carter S. Roberts president and CEO of the U.S. World Wildlife Fund (WWF). During a recent Wharton Leadership Lecture Roberts spoke about corpora...

The January 3 Iowa caucuses and the January 8 New Hampshire primary showcased the 2008 presidential campaign’s ongoing political dogfight as candidates battled for their parties’ nominations. Under the surface however the scrum represents a tipping point in the use of the Internet as a campaign tool say experts at Wharton. In many respects the 2008 race resembles any sophisticated Internet marketi...

Contrary to management theories developed in the Industrial Age employee satisfaction is an important ingredient for financial success according to a new research paper by Wharton finance professor Alex Edmans. His findings also challenge the importance of short-term financial results and may have implications for investors interested in targeting socially responsible companies. The paper is title...

Western companies looking to do business in Asia especially in China don’t always confront a homogenous market and the ways that consumers make decisions about what to buy aren’t always predictable according to a group of marketing experts who spoke at the 2007 Wharton Asia Business Forum. Like developed-world consumers many urban Chinese people are technologically savvy and comfortable seeking pr...

For the third time in the past few months the Federal Reserve’s Open Market Committee has chosen to cut short-term interest rates by a quarter percent or 25 basis points. The Fed cut its main short-term rate target to 4.25% and the ”discount rate” charged on direct Fed loans to commercial banks to 4.75%. In its statement justifying the decision the Fed noted ”Incoming information suggests that eco...

Fansumers viral videos and social computing -- these are just some of the many buzzwords pinging around the marketing world today. While making sense of them isn’t easy the concept behind them is clear: Online technologies allow customers to communicate in new ways with one another and companies must decide whether to ignore co-opt or dive into these new waters of interactivity. ”Consumers want to...

Fire your bad customers. That piece of advice has become widely accepted in recent years as companies have sought to manage their relationships with customers in more sophisticated ways. The rationale is clear-cut: Low-value customers end up costing more money than they provide. So why not jettison them and focus your customer-relationship efforts on more profitable individuals? Or as an alternati...

The Abu Dhabi government is buying a 4.9% stake in Citigroup for $7.5 billion. UBS is selling a 10.8% share to the government of Singapore and an unnamed Middle Eastern investor for $11.5 billion. Two Middle Eastern government funds now own a third of the London Stock Exchange. Governments through investment pools known as sovereign wealth funds have put tens of billions of dollars into Western fi...

A generation ago the only financial goal for a superstar African-American athlete at the peak of his career -- beyond a large contract -- was to nab a lucrative endorsement deal with a big sneaker company like Nike or a national brand such as McDonald’s. The idea was to earn several million extra dollars before his skills began to wane. Those short-term goals remain but today many in the National...