Knowledge at Wharton

Major League Baseball’s decision to square off with CBC Distribution and Marketing an online baseball fantasy-league operator based in St. Louis Mo. might make good legal sense but it’s bad for business according to Wharton faculty and baseball industry spectators. For several years CBC paid a fee to the Major League Baseball Players Union for the right to use players’ names and stats for its virt...

On May 25 a federal jury convicted former Enron CEO Kenneth Lay and former Enron president Jeffrey Skilling on conspiracy and fraud charges with sentencing to be decided on September 11. As has been repeatedly noted in press coverage of this trial Enron is the incredible story of a once powerful company done in by a group of top executives whose greed and fraud was breathtaking even by post dot-co...

The cover photograph in the latest copy of The Economist says it all. The May 25 edition has a picture of a bear peeping out of the woods with a headline that asks ”Which Way is Wall Street?” The magazine notes in an editorial that after nearly three years of gains international stock markets tumbled by more than 10% during the past couple of weeks. Emerging markets have been volatile as have mark...

American investors have poured money into foreign stocks in recent years lured by the hope of outsized gains. They have been well rewarded in the past 12 months but in May markets plummeted around the world. Mutual funds investing in foreign stocks for example lost more than 8% in the two weeks ending May 25 although their previous stunning performance left them up nearly 31% for the 12 months end...

With more and more advertising vehicles crowding today’s marketing environment -- including traditional print television and radio ads product placements Internet buzz viral campaigns and cell phone messaging -- marketers have new opportunities to reach vast pools of potential customers. But the tangle of options also requires any successful marketing plan to take into account the nature of the pr...

Hospice care occupies a specialized and growing niche in the healthcare economy as a comfort to the dying and their families and a potential cost-saver for Medicare. With baby boomers now hitting their seventh decade hospice is expected to become an even more important part of the healthcare landscape according to Wharton faculty and industry analysts. How profitable are hospice-providers what is...

With their combination of low fees tax efficiency and simple autopilot investing style index funds seem to have captivated American investors. At the same time however many investors still hold trillions of dollars in high-fee funds despite well-publicized evidence that low-fee alternatives offer higher returns over the long run. ”It struck us that most people just don’t know what mutual fund fees...

In the late 1980s as part of an effort to beef up its core IT business Andersen Consulting (now Accenture) began to hire specialist strategy consultants from outside the company. These consultants were more experienced than the usual Andersen employees and they were accustomed to ”much more aggressive individual performance incentives” than was the norm among Andersen’s existing IT staff according...

When Severe Acute Respiratory Syndrome (SARS) broke out in Hong Kong in 2003 some media outlets predicted economic calamity for the city. But by one financial measure -- real estate prices -- Hong Kong hardly suffered according to research by Grace Wong a Wharton real estate professor. In two papers titled ”Has SARS Infected the Property Market? Evidence from Hong Kong” and ”Is SARS a Poor Man’s D...

When Lou Gerstner became chief executive of IBM in the early 1990s Big Blue was on a course to be broken up into smaller companies each responsible for separate IBM business units such as PCs software and the like. But Gerstner concluded the strategy was ”wrong-headed” because it was contrary to the wishes of customers according to Wharton marketing professor George Day. Rather than assemble their...

Lawton Burns is a professor of health care systems and management director of the Wharton Center for Health Management and Economics and author of a new book entitled The Business of Healthcare Innovation. While much has been written about doctors and hospitals government regulations and medical insurance issues Burns’ book looks at an area of healthcare that has not gotten much attention -- the p...

The Pentagon recently invited a group of 43 civilians including Michael Useem director of Wharton’s Center for Leadership and Change Management to witness the management and leadership of its Central Command which is responsible for the wars in Afghanistan and Iraq. Useem and his colleagues -- who included executives private equity investors media commentators and academics -- traveled to the Midd...

With this spring’s criminal trial of former Enron executives Ken Lay and Jeffrey Skilling the public was again seeing accounts of Raptors Chewco and Osprey -- some of the shadowy ”special purpose vehicles” the energy company used for improper purposes such as concealing its mushrooming debt. But while much of Enron’s SPV use was illegal most SPVs are proper and they can serve a variety of function...

Illegal immigration into the United States has sparked heated debate in Congress roiled the two main political parties and prompted hundreds of thousands of immigrant supporters to take to the streets recently in peaceful demonstrations nationwide. At stake are the lives and livelihoods of as many as 12 million undocumented workers the companies they work for and the job opportunities of millions...

Once again proxy season has revealed some eye-popping numbers in executive compensation packages generating heat from shareholders labor organizations and some analysts who contend that the links between CEO pay and performance are frayed. Other experts however suggest that most executives do earn their pay without indulging in mega-option packages or in salaries that keep increasing even as share...

It’s one of the oldest most fundamental ideas in management theory: that executives should understand how the many distinct functional components of a firm -- production distribution product mix human resources -- interrelate to achieve the proper fit. In recent years however this notion of comprehending the ”part-whole” relationship of the firm fell out of favor as thinkers turned to other concep...

When consumers are diagnosed with a medical condition such as high cholesterol or obesity they immediately begin a new regime of brisk walks and a diet of heart-healthy foods right? Not necessarily says Wharton marketing professor Lisa E. Bolton. If those consumers are taking a prescription or over-the-counter drug for their condition they may actually toss back more chips and donuts. Those taking...

Microsoft announces that it will spend about $2 billion to fend off rivals such as Google and thwart Sony’s video game ambitions and the company loses more than $30 billion in market capitalization in a day. Fair trade or overreaction? Probably a little of both according to experts at Wharton. Microsoft certainly isn’t hurting financially. The company reported net income of $2.98 billion on revenu...

Almost anyone who has been following the auto industry especially in the U.S. will agree that lately it has had a bumpy ride. For one thing the difficulties of GM and Ford have filled the headlines for several months now and there has been lots of speculation about how severe these problems are. In addition the auto parts maker Delphi which was spun off from GM in 1999 is now in the midst of bankr...

In Wharton marketing professor George Day’s world the term ”peripheral vision” means the ability of companies to detect interpret and act on distant signals whether a rumor heard about a new rival a newspaper article about a new medical device or the popularity of a blog started by a dissatisfied customer. Day and co-author Paul Schoemaker have written a book entitled appropriately enough Peripher...

As CBS News put it ”When the Fed Chairman Speaks Everyone Freaks.” What that hyperbolic headline refers to is the sell-off in stocks and rise in bond yields this week after Ben Bernanke the Federal Reserve chairman reportedly told a CNBC reporter that markets had misread his testimony before Congress last week during which he had seemed to hint that the Fed might pause in raising interest rates. S...

Rising prices for crude oil and gasoline have alarmed many consumers and put President Bush and other U.S. politicians in a position where they feel they have to do something -- anything -- in response especially in an election year. But members of Wharton’s finance department and private-sector economists say it’s a good time to look rationally at the reasons for the price hikes and their likely...

The recent resignation of Scott McNealy as CEO of Sun Microsystems the company he founded 22 years ago is another milestone in the succession process of a large technology company. But tech companies often pose unique succession issues in part because of their unusually fast growth and young founders according to Wharton faculty and technology experts. The challenges are especially critical when t...

When a well-known compensation consulting firm predicted in early April that new accounting rules wouldn’t have any impact on the use of options as compensation for corporate executives Wharton accounting professor Mary Ellen Carter was ready to disagree. ”That’s just not true ” she says. ”Options will be cut and directors will be switching to restricted stock for executive compensation.” Carter’s...

The 2006 Venture Finals of Wharton’s Business Plan Competition offered participants judges and the audience an opportunity to peer into the future by surveying potential startups. It was a chance to see what aspiring ambitious entrepreneurs believe will be the next hot discovery. At this year’s competition healthcare companies -- ranging from medical-device makers to a creator of artificial muscle...