Knowledge@wharton

Microfinance -- the business of providing financial services in small transaction amounts to poor underserved markets -- has taken off in recent years. With financial sectors in many developing countries maturing and microfinance institutions (MFIs) themselves growing rapidly capital markets have been quick to enter the fray providing ample funding for expansion. But microfinance’s evolution in countries throughout Asia and Eastern Europe has cast a spotlight on changes now buffeting the industry as private investors arrive in force and traditional microfinance values are questioned. See acast.com/privacy for privacy and opt-out information.

When Bear Stearns collapsed in March some insiders argued it was wrong to blame the firm’s risky bets on mortgaged-backed securities. They had another culprit: malevolent traders working together in the upside-down world of short sales -- making money by knocking down Bear’s stock. There has however been little academic research to explain the forces at work. Now Wharton finance professor Itay Goldstein and a colleague have shed some light on the process in a paper titled ”Manipulation and the Allocational Role of Prices.” See acast.com/privacy for privacy and opt-out information.

Images of Chinese guards and local police protecting the Olympic torch on its journey to Beijing were hardly the kind of publicity the IOC or the Chinese government were hoping for. Nor can the 12 ”Worldwide Olympic Sponsors” be thrilled at the latest images of hand-to-hand street fighting. How can sponsors make the August Olympics a brand builder for their products rather than a public relations nightmare for their companies? Wharton professors suggest they figure out a way to reap the benefits of associating with the event while maintaining reputations for corporate social responsibility outside China. See acast.com/privacy for privacy and opt-out information.

The boundaries between work and play are beginning to disappear as consumer technologies -- including social networking tools user generated content and wikis -- are increasingly adopted by corporate America. For technology companies this emerging ”consumerization” trend represents an opportunity but it also brings new management challenges as companies struggle to embrace these technologies in a way that doesn’t limit their usefulness but also doesn’t result in lost time or money. And while there may be productivity gains for corporations that experiment with integrating the latest consumer gadgets security remains the deal breaker say experts at Wharton. See acast.com/privacy for privacy and opt-out information.

With a healthy economy that is benefiting from its economically troubled neighbor to the south Canada has little to complain about these days regarding its relationship with the United States -- although there is always room for improvement on both sides. That was the message from Canadian Ambassador Michael Wilson during a recent visit to Wharton during which he addressed a wide range of topics including border security energy trading rebuilding Afghanistan and political posturing in the U.S. presidential campaign over the North American Free Trade Agreement (NAFTA). See acast.com/privacy for privacy and opt-out information.

Kevin Roberts has been CEO Worldwide of Saatchi & Saatchi since 1997 and in the space of 11 years has cemented the ad agency’s reputation as one of the most successful and creative companies in the industry. Roberts is perhaps most well known for an idea he came up with called ”lovemarks” -- which means creating a brand for which the consumer has ”loyalty beyond reason.” During a visit to campus last week he talked with Knowledge at Wharton about lovemarks and other initiatives. In addition as part of the Wharton Leadership Lecture series he spoke about the skills needed to be a successful marketer what consumers really want his personal management style and the need to have a dream. See acast.com/privacy for privacy and opt-out information.

Securitization is often blamed for aggravating -- if not causing -- the subprime mortgage crisis that keeps roiling U.S. real estate and credit markets. By repackaging pools of mortgages into securities that could be resold to investors the argument goes securitization permitted unscrupulous underwriters to offer housing loans to poor borrowers and transfer the risk to Wall Street. How then will the present credit crisis affect the future of securitization? According to professors from Wharton’s finance and real estate departments securitization will not disappear -- but it is in for radical changes. See acast.com/privacy for privacy and opt-out information.

The financial markets are in turmoil. Inflation is picking up. Home prices are falling. More companies are laying off workers. Oil prices are sky-high. It’s getting harder and harder to borrow money. It seems like a nest of conspirators is preying on America. Even Washington is reinforcing the impression with talk of sweeping reforms to the system of economic oversight. Indeed  economic commentator Ben Stein has promoted the notion of market manipulation from the shadows largely in the form of hedge funds. Yet Wharton faculty reject that idea saying instead that the market is suffering a hangover from the easy-money excesses of recent years. See acast.com/privacy for privacy and opt-out information.

Hedge funds are key players in the world’s financial markets but no one knows exactly what they’re up to. Critics and supporters tend to share an assumption however that hedge funds are run by talented people who merit their hefty management fees. But new research by Wharton statistics professor Dean P. Foster and Brookings Institution senior fellow H. Peyton Young questions that idea arguing that it’s easy for hedge funds to fool their investors into believing the managers are better than they really are. The industry ”risks being inundated by managers who are gaming the system ... which could ultimately lead to a collapse in investor confidence ” they say. See acast.com/privacy for privacy and opt-out information.

The video-sharing site YouTube is currently running a comedy sketch contest sponsored by Toyota’s 2009 Corolla. It’s just one of the latest examples of companies using this advertising hot spot to target customers who spend a lot of their time watching online videos. But finding a home in the medium is not so easy Wharton professors say. In a digital world of instant feedback and ruthless honesty a company can either score major brand points or look as ridiculous as any adult trying to hang with the cool kids. See acast.com/privacy for privacy and opt-out information.

John Luke Jr. chairman and CEO of global packaging giant MeadWestvaco was a U.S. Air Force pilot in Southeast Asia during the tail end of the Vietnam era. Since coming home to join and eventually run the company he has been responsible for steering a steady course even as flak comes in from all sides. Speaking at a recent Wharton Leadership Lecture Luke said that during MeadWestvaco’s transformation into a business focused on packaging solutions he had to push for a radical change in focus while continually resisting pressure for quick short-term results. See acast.com/privacy for privacy and opt-out information.

When a report prepared by former Senator George J. Mitchell indicated that Roger Clemens and others used illegal performance-enhancing drugs a marketing agency prepared a voluminous report that relied on statistics to make the case for Clemens’ innocence. But an article written by four Wharton faculty -- Justin Wolfers Shane Jensen Abraham Wyner and Eric Bradlow -- questions the methodology used by the marketing agency noting that the validity of any statistical analysis is only as good as its individual components. And these components they add can be easily misinterpreted. See acast.com/privacy for privacy and opt-out information.

In a new research paper titled ”Dogs on the Street Pumas on Your Feet: How Cues in the Environment Influence Product Evaluation and Choice ” Wharton marketing professor Jonah Berger suggests that what you see in your everyday world can influence what you buy. For example participants in one study who were shown more images of dogs liked sneakers from the Puma brand more than those who had not seen the images -- because dogs are associated with cats and cats with Puma. ”Marketers ... think they have to come up with a catchy slogan or slick advertisement to create a buzz ” Berger says. Instead companies can get a payoff by creating a link between their product and a cue in the environment. See acast.com/privacy for privacy and opt-out information.

Innovation timing a good idea and luck are all ingredients of success in the technology industry according to speakers at the recent Wharton Business Technology Conference titled ”Enterprise Agility: Lead with Speed.” Former Microsoft executive Rob Glaser who went on to found RealNetworks and Glenn A. Britt CEO of Time Warner Cable both said strong technology businesses are built on firm technical footings but shaped by business forces that are not always predictable. ”Any successful entrepreneur who says luck did not play a role is either lying or lacks self-awareness ” stated Glaser. See acast.com/privacy for privacy and opt-out information.

The ongoing credit crisis in U.S. financial markets has claimed a huge and high-profile victim: Bear Stearns. After being slammed by what amounted to a run on the bank during the week of March 10 the Wall Street firm agreed to be acquired -- for $2 a share -- by JP Morgan Chase over the weekend in a deal overseen by Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Federal Reserve lowered interest rates the same day -- and did so again on March 18 by three-quarters of a percentage point. Are other Wall Street firms likely to follow Bear Stearns into oblivion? Will the Federal Reserve’s efforts help to boost confidence in the financial system? Finance professor Jeremy Siegel author of The Future for Investors discussed these questions and more with Knowledge at Wharton. See acast.com/privacy for privacy and opt-out information.

With their low fees all-day trading and tax efficiency exchange-traded funds have captivated investors. There were no ETFs before 1993; today there are nearly 700. While most experts think ETFs were a good innovation -- built like index-style mutual funds but traded like stocks -- some worry that the increasingly specialized ETFs introduced in recent years stray from the faith encouraging too much risk-taking. That concern is heightened by recent Securities and Exchange Commission proposals to let new funds come to market with less oversight and to invite proposals for introducing actively managed ETFs. Knowledge at Wharton looks at the recent action and angst surrounding ETFs. See acast.com/privacy for privacy and opt-out information.

New strategies will be necessary for biotechnology companies to thrive in the new era of personalized medicine but the healthcare system itself will also have to change according to a panel of biotechnology company representatives at the 2008 Wharton Health Care Business Conference. Leaving behind the ”blockbuster drug” mentality must be part of a new mindset for biotech companies going forward suggested one panelist. Others discussed stem cell research regulatory hurdles and competition within the industry. See acast.com/privacy for privacy and opt-out information.

Accounting techniques like budgeting sales projections and financial reporting are supposed to help prevent business failures by giving managers realistic plans to guide their actions and feedback on their progress. At least that’s the theory. But when Gavin Cassar a Wharton accounting professor tested this idea he found something troubling: Some accounting tools not only fail to help businesspeople but may actually lead them astray. He analyzes these conclusions in two separate research papers. See acast.com/privacy for privacy and opt-out information.

A tug of war over the future of media may be brewing between so-called user-generated content -- including amateurs who produce blogs video and audio for public consumption -- and professional journalists movie makers and record labels along with the deep-pocketed companies that back them. The ultimate outcome: a hybrid approach that features entirely new business models say experts at Wharton. See acast.com/privacy for privacy and opt-out information.

Earlier this month Microsoft unveiled Silverlight 2 a platform akin to Adobe’s Flash designed to advance the software giant’s push into the arena of rich Internet applications. One week earlier Adobe Systems launched its ”Adobe Integrated Runtime ” which allows web programmers to move their software out of the browser and onto the computer’s desktop. Both companies hope to establish their software as the foundation for the next generation of software development. Spearheading Microsoft’s efforts is corporate vice president Scott Guthrie who spoke with Knowledge at Wharton about his company’s aspirations for Silverlight and the future of the web. See acast.com/privacy for privacy and opt-out information.