Knowledge at Wharton

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 their long-term business outlook and what are the unique challenges that hospice companies face given strict government regulation amid increasing demand for their services? Hosted on Acast. See acast.com/privacy for more information.

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 are. So we set out to actually test that ” says Brigitte C. Madrian professor of business and public policy at Wharton. The result is a paper titled ”Why Does the Law of One Price Fail? An Experiment on Index Mutual Funds ” by Madrian Yale professor James J. Choi and Harvard economics professor David Laibson. Hosted on Acast. See acast.com/privacy for more information.

In this discussion, Sarah Kaplan, a Wharton management professor and expert on organizational behavior, delves into the complexities of changing employee incentive systems. She highlights the experiences of Andersen Consulting and Kodak, illustrating the friction that arises when new strategies and cultures clash. Kaplan emphasizes the importance of adapting not just incentives but also the cognitive frameworks within organizations, underscoring that trust is vital for successful transitions in the face of technological shifts and market changes.

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 product its durability in the public’s mind and the advertising budget needed to make it all work. As Wharton professor David Bell notes: It’s very hard to find ”the one big lever that can reach a whole lot of people in a way that is cost-effective.” Knowledge at Wharton asked four Wharton marketing professors how they would go about launching two hypothetical products a summer blockbuster movie and a cell phone. Hosted on Acast. See acast.com/privacy for more information.

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 Disease? Socioeconomic Status and Risk Factors for SARS Transmission ” Wong looks at SARS’ impact on real estate values and analyzes the role of income in determining who contracted the disease. Underlying her research is the recognition that in a global economy infectious diseases such as SARS will likely spread farther and faster as people travel all over the world in search of new business opportunities. Hosted on Acast. See acast.com/privacy for more information.

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 computer systems from a variety of vendors customers wanted help putting everything together. So IBM embarked on a multi-year journey to align its organization with the marketplace. For IBM the experiment was successful. But in a forthcoming paper titled ”Aligning the Organization with the Market ” Day reports on a survey that found only mixed results among 347 medium- to large-size firms that attempted customer-focused reorganizations. Hosted on Acast. See acast.com/privacy for more information.

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 producers of healthcare products ranging from pharmaceuticals and biotechnology to medical devices and information technology. Yet Burns would argue that a focus on the producer side of the healthcare equation is critical -- not just because we are increasingly more reliant on medical technology but also because of the ever escalating costs of advances in these areas. Burns talked to Knowledge at Wharton’s Mukul Pandya and Robbie Shell about the issues raised in his new book. Hosted on Acast. See acast.com/privacy for more information.

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 functions. Many are separate business-financing operations whose transactions do not appear on the parent company’s books. They can be used to create easily traded asset-backed securities that allow their ”sponsor” companies to convert cash flows expected over many years into immediate lump-sum payments according to Wharton finance professor Gary B. Gorton who with colleague Nicholas Souleles has written a paper on the topic titled ”Special Purpose Vehicles and Securitization.” Hosted on Acast. See acast.com/privacy for more information.

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 concepts -- such as relying on core competencies to attain competitive advantage. Now two professors in Wharton’s management department Daniel A. Levinthal and Nicolaj Siggelkow say it is time to once again address the part-whole concept. Without this systemic way of looking at companies the researchers note firms run the risk of engaging in compartmentalized thinking that can work to their disadvantage. The two scholars have addressed issues related to firm positioning and the part-whole relationship of the firm in a number of papers and articles. Hosted on Acast. See acast.com/privacy for more information.

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 value declines. At the same time these experts also suggest ways to improve compensation packages to more closely align them with shareholder interests. Hosted on Acast. See acast.com/privacy for more information.