Knowledge at Wharton

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 of low-skill American citizens. The large number of illegal immigrants raises key economic questions: Do illegal immigrants depress wages paid to low-skill workers? Do they take jobs away from Americans? How dependent on undocumented workers is the U.S. economy? Should illegal immigrants be compelled by law to return to their native countries? Or should Congress hammer out legislation that would allow illegal immigrants to pay some type of penalty yet remain in the United States and continue working? Hosted on Acast. See acast.com/privacy for more information.

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 revenues of $10.9 billion for the quarter ending March 31. But the big question is whether that performance will be maintained over the next decade. One issue say Wharton faculty and others is whether Microsoft has grown too big to be nimble enough to compete with its long list of rivals on many fronts: Google in Internet search and advertising; Sony in video games with the launch of its Playstation 3 on November 17; Linux inside the corporation; and Apple Computer in digital media to name just a few. By extending its reach into new markets such as mobile communications and digital entertainment is Microsoft in danger of stretching itself too thin? Hosted on Acast. See acast.com/privacy for more information.

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 Middle East to observe troops and operations in Kuwait Bahrain and the Arabian Sea. In this report written literally from the frontlines Useem takes ”a look at the execution of American military policy -- not the policy itself -- a subject of continuing and increasingly intense national debate .... From even this brief foray into their world it is evident that the U.S. armed services have built what many private companies strive for: a culture of readiness and commitment cross-service and cross-national integration and pragmatic flexibility.” Hosted on Acast. See acast.com/privacy for more information.

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 a supplement however may be more likely to eat broccoli and hit the treadmill. In a new research paper Bolton Wharton marketing professor Americus Reed II and Penn medical school professors Kevin G. Volpp and Katrina Armstrong look at how consumer perceptions of supplements and prescription drugs can affect risk perceptions and intentions to diet and exercise. Hosted on Acast. See acast.com/privacy for more information.

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 bankruptcy proceedings and actively negotiating with both the United Auto Workers union and GM. Yet another challenge is growing global competition: Virtually all the Japanese brands are showing an increase in market share in the U.S. And finally questions continue to persist about advances in technology especially as they concern the new hybrid models. John Paul MacDuffie a professor of management at Wharton and co-director of the International Motor Vehicle Program spoke about these issues with Knowledge at Wharton’s Mukul Pandya and Robbie Shell. Hosted on Acast. See acast.com/privacy for more information.

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 Peripheral Vision: Detecting the Weak Signals That Will Make or Break Your Company designed to help firms avoid being blindsided by unexpected events. According to the authors only 20% of companies have succeeded in developing peripheral vision well enough to stay ahead of their competitors. Day talked with Knowledge at Wharton’s Mukul Pandya and Robbie Shell about his book. Hosted on Acast. See acast.com/privacy for more information.

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. Stocks and bonds rallied in response. But after suggesting at a Washington correspondents’ dinner over the weekend that the markets had ”misunderstood” him the sell-off began. What exactly is the Fed likely to do on May 10? And what will that mean for investors? Jeremy Siegel a professor of finance at Wharton and author of the book The Future for Investors spoke with Knowledge at Wharton’s Mukul Pandya and Robbie Shell about interest rates oil prices the commodities markets Bernanke’s learning curve and President Bush’s approval ratings among other topics. Hosted on Acast. See acast.com/privacy for more information.

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 effect on the economy and on energy policy. They also say that as long as the United States continues to rely on oil producers in other parts of the world high prices and price volatility will be the norm. Bolivian President Evo Morales’s decision announced this week to nationalize the country’s natural gas sector only underscores that point. Hosted on Acast. See acast.com/privacy for more information.

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 response is the result of her research into the role of accounting in the design of CEO equity compensation which is also the title of a new paper written by her Luann J. Lynch from Darden and Wharton accounting professor Irem Tuna. Their study coincides with a ruling implemented this year by the Financial Accounting Standards Board (FASB) that requires all firms to expense the value of employee stock options. Hosted on Acast. See acast.com/privacy for more information.

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 the entrepreneurs are celebrities and when the company has grown large enough that broad-based management skills become as crucial as entrepreneurial passion. Hosted on Acast. See acast.com/privacy for more information.