and Abbie Smith and workshop participants at the University of Chicago. MANAGERIAL ACTIONS, STOCK RETURNS, AND EARNINGS: THE CASE OF

This paper maintains that the consistent application of subjectivism helps to reconcile contemporary entrepreneurship theory with strategic management research in general, and the resource−based view in particular. The paper synthesizes theoretical insights from Austrian economics and Penrose’s (1959) resources approach, arguing that entrepreneurship is inherently subjective and firm specific. This new synthesis describes how entrepreneurship is manifested in teams, and is driven by both heterogeneity of managerial mental models and shared team experiences.

New information technologies and emerging business forces have triggered a new wave of financial innovation-electronic banking (e-banking). This study utilizes an innovation model to analyze the impact of e-banking on the incumbent banks. The results indicate that the nature of e-banking innovation is disruptive, leading to drastic changes in both technological knowledge and business model. We further identify eight core capabilities that are necessary for the banks to cope with the change, each appearing to address either technical or business aspects of e-banking transformation. The findings have the potential to contribute to the understanding of impacts occurring in the change associated with e-banking and offer rich insights for the incumbent banks to exploit e-banking opportunities.

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Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author. 2

In this study we investigate the role played by managerial actions in explaining stock market returns and accounting earnings of 57 Internet firms engaged in Business-to-Business (B2B) ecommerce. We classify 3,166 managerial actions undertaken by our sample firms between the firm's IPO date and September 30, 2000 into ten action categories: (1) acquisition of major customers, (2) introduction of new products and services, (3) promotional and marketing actions, (4) expansion into international markets, (5) actions taken to address the concerns of stakeholders such as employees and the community at large, (6) announcements of technology, marketing, and distribution alliances, (7) completion of acquisitions, (8) management team building actions, (9) announcement of recognition and awards bestowed upon the firm, and (10) organizational changes. We undertake an event study over a three-day window surrounding the announcement of each action. Our event study results indicate that announcements of alliances (technology, marketing, and distribution), acquisition of new customers, and promotions are associated with positive abnormal returns. Next, using the factor analysis we group the counts of managerial actions taken by each firm over its post-IPO life into three broad managerial initiatives--market penetration, organization building, and legitimacy building. These three initiatives explain a substantial portion of the cross-sectional variation in the firms' post-IPO life stock market returns beyond that explained by accounting earnings. However, accounting earnings do not explain variation in post-IPO stock returns. Thus, investors appear to supplement relatively meager accounting information with data about managerial actions in setting stock prices of B2B Internet firms. ...

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Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author. Exploratory Capacity and the Adaptive Organization

We document the process of strategic renewal of organizations through niche pioneering and new product development in a population of firms. Our main finding is that market pioneering capabilities routinized through product customization efforts lead to continued survival of firms in industries composed of niches. In addition, such capabilities shield firms operating in older technological trajectories from exit and help firms in newer technological trajectories expand. Our study, based on an unusually rich panel of the census of laser firms with self-reported measures of market pioneering capabilities, bridges the gap between inductive and large-scale studies of firms on the balance between strategies of leverage and change in high velocity markets.