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The hidden treasure of digital piracy? It can boost bottom line for manufacturers, retailers

HBO's popular television series "Game of Thrones" returns in April, but millions of fans continue to illegally download the program, giving it the dubious distinction of being the most pirated program. Many may wonder why the TV network hasn't taken a more aggressive approach to combating illegal streaming services and downloaders. Perhaps it is because the benefits to the company outweigh the consequences. Research analysis by faculty in Indiana University's Kelley School of Business and two other schools found that a moderate level of piracy can have a positive impact on the bottom line for both the manufacturer and the retailer -- and not at the expense of consumers. "When information goods are sold to consumers via a retailer, in certain situations, a moderate level of piracy seems to have a surprisingly positive impact on the profits of the manufacturer and the retailer while, at the same time, enhancing consumer welfare," wrote Antino Kim, assistant professor of operations and decision technologies at Kelley, and his co-authors. "Such a win-win-win situation is not only good for the supply chain but is also beneficial for the overall economy." While not condoning piracy, Kim and his colleagues were surprised to find that it can actually reduce, or completely eliminate at times, the adverse effect of double marginalization, an economic concept where both manufacturers and retailers in the same supply chain add to the price of a product, passing these markups along to consumers. The professors found that, because piracy can affect the pricing power of both the manufacturer and the retailer, it injects "shadow" competition into an otherwise monopolistic market. "From the manufacturer's point of view, the retailer getting squeezed is a good thing," Kim said. "It can't mark up the product as before, and the issue of double marginalization diminishes. Vice versa, if the manufacturer gets squeezed, the retailer is better off. "What we found is, by both of them being squeezed together -- both at the upstream and the downstream levels -- they are able to get closer to the optimal retail price that a single, vertically integrated entity would charge." In the example of "Game of Thrones," HBO is the upstream "manufacturer" in the supply chain, and cable and satellite TV operators are the downstream "retailers." Kim and his co-authors -- Atanu Lahiri, associate professor of information systems at the University of Texas-Dallas, and Debabrata Dey, professor of information systems at the University of Washington -- presented their findings in the article, "The 'Invisible Hand' of Piracy: An Economic Analysis of the Information-Goods Supply Chain," published in the latest issue of MIS Quarterly. They suggest that businesses, government and consumers rethink the value of anti-piracy enforcement, which can be quite costly, and consider taking a moderate approach. Australia, for instance, due to prohibitive costs, scrapped its three-strikes scheme to track down illegal downloaders and send them warning notices. Though the Australian Parliament passed a new anti-piracy law last year, its effectiveness remains unclear until after it is reviewed in two years. As with other studies, Kim and his colleagues found that when enforcement is low and piracy is rampant, both manufacturers and retailers suffer. But they caution against becoming overzealous in prosecuting illegal downloaders or in lobbying for more enforcement. "Our results do not imply that the legal channel should, all of a sudden, start actively encouraging piracy," they said. "The implication is simply that, situated in a real-world context, our manufacturer and retailer should recognize that a certain level of piracy or its threat might actually be beneficial and should, therefore, exercise some moderation in their anti-piracy efforts. "This could manifest itself in them tolerating piracy to a certain level, perhaps by turning a blind eye to it," they add. "Such a strategy would indeed be consistent with how others have described HBO's attitude toward piracy of its products."

Is Washington playing Russian roulette with airline safety?

The government shutdown that is finally over had some worrying near the end and for good reason. Air traffic controllers, the very professionals who keep planes in the air and at a safe distance from each other had gone for more than four weeks without getting paid. Exhausted, demoralized and depleting ranks were probably the near-perfect storm for an imminent accident or disaster.   Luckily, and thankfully, these dedicated professionals rose to the occasion and ensured safety was still the priority. Often, working even while the very equipment and technology they rely on was not being serviced. But as the shutdown takes a break for three weeks and everyone is made whole with back-wages and paychecks – does America need to rethink the potential risks and consequences to having the staff who are essential to safety across the entire country go without pay and benefits during a political dispute? The consequences of a major airline crash are huge economically and in terms of lives lost. So, can the nation’s air traffic controllers be exempt form the impacts of a government shutdown? Who would have been liable if an accident did occur? Are aviation, customs and our nation’s airports not considered essential and therefore worthy of being paid during a shutdown? And how close did we come to a disaster? While we wait and watch for a solution in Washington over the coming weeks, there are still a lot of questions to be answered, and that’s where the experts from the University of Rochester can help. David M. Primo is the Ani and Mark Gabrellian Professor and an associate professor of political science and business administration at the University of Rochester. He is an expert in airport safety and security and a professor at the University of Rochester in Rochester, New York, and can comment on airline safety and passenger impacts amid airports such as Laguardia International restricting air travel due to the government shutdown. David is available to speak with media regarding the economic effects of the shutdown – simply click on his icon to arrange an interview.

How Technology is Changing Work as We Know It? Let Industry Experts Answer that Question

Are you interested in what the Future of Work is and how technology will impact your business and industry? Hear how the future of work will impact organizations’ culture, required skills, the way talent will be sourced and how the workspace and makeup of the workforce itself will change. Join IDC Canada and ITAC on January 30th for our annual Tech Trends Breakfast Series event to learn how technology is and will continue changing work as we know it. At this Tech Trends Breakfast event, IDC analysts, partners and industry experts from Tata Consultancy Services, Zoom.AI and ServiceNow will examine how enterprises can adapt to rapidly changing technologies and workforce ecosystems to build a competitive edge. The interactive panel will be moderated by Tony Olvet, Group Vice President of the research analyst team at IDC Canada. While there will be opportunities throughout the panel discussion to ask questions, attendees will have the opportunity to submit questions in advance to help us shape the discussion. Attendees will also have access to presentation materials following the event. The Future of Work Tech Trend Breakfast event will be on January 30th at Twenty Street, Toronto. To see full event details or to register click here. If you have any questions about this event, please contact Cristina Santander at csantander@idc.com.

Declaring a New Year's Resolution for 2019? Baylor Experts Can Help

WACO, Texas (Dec. 17, 2018) – As 2019 approaches, many Americans are considering ways to improve themselves via New Year’s resolutions. Whether it’s personal, like losing weight or clearing clutter, or it’s professional, such as being a better manager or breaking away from smartphones, the options are wide-ranging. Here is a listing of Baylor University research that might help advise those seeking positive change in the coming year. First and Foremost, Resolve not to Over-resolve Only 10 to 20 percent of people keep their resolutions, says Sara Dolan, Ph.D., associate professor and graduate program director of clinical psychology. She advises setting “bite-sized goals instead of a massive behavior change.” Rather than giving up sugar completely or going all out at the gym, she advises achieving small successes before moving on. Ask Yourself: “Do I really want to work from home?” Many U.S. employees believe working from home – or at least away from the office – can bring freedom and stress-free job satisfaction. A 2018 Baylor University study says, “Not so fast.” The research, led by Sara Perry, Ph.D., assistant professor of management in Baylor University’s Hankamer School of Business, found that: Autonomy is critical to protecting remote employees’ well-being and helping them avoid strain. Employees reporting high levels of autonomy and emotional stability appear to be the most able to thrive in remote-work positions. Employees reporting high levels of job autonomy with lower levels of emotional stability appear to be more susceptible to strain. “Any organization, regardless of the extent to which people work remotely, needs to consider well-being of their employees as they implement more flexible working practices,” the researchers wrote. Read more here. Save Money by being a Better Negotiator In today’s retail climate, where stores struggle to keep up with online competition and customers can compare prices with the ease of their smartphones, the price tag is just a starting point for negotiations, said negotiation expert Emily Hunter, Ph.D., associate professor of management in Baylor’s Hankamer School of Business. “No longer do you need to pay sticker price for everything you buy. The customer is now empowered to have a say in pricing, and even hourly retail workers are often empowered to give price discounts when requested,” Hunter said. Hunter said negotiations – whether in a retail setting or in the workplace – require confidence. “Many people are hesitant to negotiate because they don’t know how or they are worried about the other person’s reaction (Will they think I’m greedy?),” she said. “But practice can increase your confidence in your ability to negotiate. Rejection is less common than you fear, and retail stores especially are often willing to work with you.” She offered the following tips to increase the chances of greater deals at the check-out counter. Resolving to Be More Generous in the New Year Many Americans already have enough “stuff,” and the gift-giving season sometimes adds to that collection of things we really don’t need. Instead of always receiving, how can we resolve to be more generous in the New Year? “Whatever our station, however much money or resources we have, we all have something to share and something to give,” says Andy Hogue, Ph.D., senior lecturer in Baylor’s Honors College who teaches a course on philanthropy and the public good. “I like the idea of thinking in terms of a New Year’s resolution, sort of resolving to be more generous and helping people to think in those ways.” Hogue offers individuals and families four ways to develop a spirit of generosity in the New Year. Home Cooking Saves Money, Encourages Better Diet The more home-prepared foods used, the less risk there is of eating too many calories and fat calories, says Baylor University nutrition expert Janelle Walter, Ph.D., professor of family and consumer sciences and Nutrition Sciences Program coordinator. Home cooking also saves money and allows for more fruits, vegetables and dairy products — which often are missing when pre-prepared products are used — as well as less fat, sugar and salt. Some tips for prepping at home are making a precise list, lining up recipes and lists of ingredients, shopping when you aren’t hungry and preparing five main dishes at a time to see you through a few days. Involve your family in choosing foods, shopping and preparing foods, Walter says. Many simple and quick recipes are on online sites, she said, referencing these from Southern Living. Consider a New Approach to Dieting Meredith David, Ph.D., assistant professor of marketing in Baylor’s Hankamer School of Business, researched successful dieters and how they were different from others. Her research results have received national attention. “Our research shows that instead of creating rules to avoid one’s favorite treats, dieters should focus on eating healthy foods that they enjoy,” David said. “Dieters who restrict themselves from consuming the foods they love most may be setting themselves up for failure. Instead, they may be better off by allowing occasional ‘treats’ and focusing attention on healthy foods that they enjoy and making it a point to include those tasty but healthy foods in their diet.” Read the full article. Be Humble and Helpful In hard times, you know how much a helping hand means — and how humbling those times can be. So it might be good to resolve to look for opportunities to assist in 2019, while remembering not to pat yourself on the back for doing so. A decision to help someone else is influenced by time pressure, number of bystanders, empathy or a person's own distress — but that’s not all, says Baylor researcher Wade Rowatt, Ph.D., professor of psychology and neuroscience. “While several factors influence whether people will volunteer to help, it appears that humble people, on average, are more helpful than individuals who are egotistical or conceited.” Cultivate Patience — and Better Mental Health People who are more patient toward others also tend to be more hopeful, grateful and satisfied with life, says Sara Schnitker, Ph.D., associate professor of psychology and neuroscience. And there is more than one type of patience, including interpersonal patience — dealing with annoying people without losing your cool; handling life hardships — such as illness or unemployment — without frustration or despair; and coping with such daily hassles as traffic jams, computer woes and long lines. In her research, Schnitker invited undergraduates to two weeks of patience training, where they learned to identify feelings and their triggers, regulate their emotions, empathize and meditate. If you want to build your own patience, she recommends following three steps: identify, imagine and sync. First, take a moment to slow down an identify how you are feeling and why you might be feeling that way. Second, try to imagine or reappraise the situation from a different perspective or in a new way that helps you to be calm. Finally, sync with your purpose. Try to connect how what you are doing or enduring helps you pursue larger goals or your life purpose. When Ailing, Talk to A Doctor Instead of Searching the Internet for Answers Rather than heading to the doctor — or even the medicine cabinet — some people turn first to the Internet when they are ailing , according to a Baylor University researcher. Especially for folks who have trouble handling uncertainty, "cyberchondria" — the online counterpart to hypochondria — worsens as they seek answers, says Thomas Fergus, Ph.D., an associate professor of psychology and neuroscience in Baylor's College of Arts & Sciences. “They may become more anxious. And the more they search, the more they consider the possibilities,” he says. Doubts about health also can trigger worries about medical bills, disability and job loss, he said. And that can lead to a Catch-22 of more Googling (sometimes of questionable sources). Rather than giving in to cyberchondria, resolve to call your doctor — and take what you read with a grain of salt. In Conflicts with your Significant Other, Relinquish Power During spats with your spouse or significant other, the most common thing people want is not an apology, but a willingness to relinquish power, says Keith Sanford, Ph.D., professor of psychology and neuroscience in Baylor University's College of Arts & Sciences. That comes in many forms, among them giving a partner more independence, admitting faults, showing respect and being willing to compromise. Following closely behind the desire for shared control was the wish for the partner to show more of an investment in the relationship by such ways as sharing intimate thoughts or feelings, listening and sharing chores and activities, Sanford said. Sleep Better in the New Year Writing a “to-do” list at bedtime may aid in falling asleep, according to a Baylor University study by Michael K. Scullin, Ph.D., director of Baylor’s Sleep Neuroscience and Cognition Laboratory and assistant professor of psychology and neuroscience. Scullin's 2018 research compared sleep patterns of participants who took five minutes to write down upcoming duties versus participants who chronicled completed activities. Scullin suggests that writing a list may allow the brain to “offload” them instead of cycling through them repeatedly. Other hints: Use the bed for sleep rather than studying or entertainment; keep a regular sleep schedule; avoid electronics near bedtime; don’t take long day naps; and stay away from stimulants at least six hours before bedtime. Clear Out Clutter Without Getting Frazzled “Don’t try to organize the entire house in one weekend,” said Elise King, assistant professor in the department of family and consumer sciences. “You are much more likely to complete a task, especially one that you’ve probably been avoiding, if you break it into small goals. Don’t try to clean out an entire room over a weekend; instead, focus on the desk one week, the closet the next, and so forth.” Finally, involve your family, strive to make organization a routine — and reward yourself for your efforts. Break Away from the Smartphone Baylor marketing researchers James Roberts and Meredith David, Ph.D. have conducted numerous studies on the effects of smartphone technology on relationships. Their studies on “phubbing” – phone snubbing – have garnered national and international interest, given the pervasiveness of smartphone technology and its impact on relationships. Their studies have found: Bosses Who “Phone Snub” Their Employees Risk Losing Trust and Engagement “Phubbing” can damage romantic relationships and lead to higher levels of depression People who are phone snubbed by others are, themselves, often turning to their smartphones and social media to find acceptance “Although the stated purpose of technology like smartphones is to help us connect with others, in this particular instance, it does not,” David said. “Ironically, the very technology that was designed to bring humans closer together has isolated us from these very same people.”

Cybersecurity expert offers holiday shopping tips for protecting identity

Amid the many warnings this holiday season about protecting your identity while shopping online comes advice from Scott Shackelford, associate professor of business law and ethics in the Indiana University Kelley School of Businessand one of the nation's leading cybersecurity experts. "In some ways shopping online is getting safer," said Shackelford, also chair of the Kelley School's Cybersecurity Program in Risk Management and director of the Ostrom Workshop Program on Cybersecurity and Internet Governance. "For example, a few years ago it was relatively uncommon for many sites to use encrypted https technology, but that's become the norm. However, as may be seen by a quick scan of the news, data breaches continue. "The good news is that the cost of those breaches is going up with Federal Trade Commission and European Commission investigations ongoing into firms like Equifax and Facebook, and consumer patience is also wearing thin," he added. "One recent survey, for example, found that 20 percent of consumers would not shop again at a firm that experienced a data breach." Shackelford offers practical advice for holiday shoppers. In essence, there's a lot you can do to become harder targets for cyber criminals, including: Consider freezing your credit. You don't need it open unless you open a new credit card or loan, and even then you can unfreeze it for a short window to allow for the credit check. Install antivirus and antispyware software, use auto-update, and always enable multifactor authentication on all of your accounts. When using public Wi-Fi, use browsers like Tor to make it more difficult for hackers to spy on you. Keep all software up to date -- especially Windows, but also programs like Adobe Reader, Flash and Java, which are often convenient backdoors that can be closed through frequent updates. Use strong passwords of at least 14 characters, keep them secret, and change them often. Consider starting with a favorite sentence, and then just take the first letter of each word. Add numbers, punctuation or symbols for complexity. And be sure to change any default passwords on your new smart devices. Never turn off your firewall; it's an important software program that helps stop viruses and worms. Use flash drives cautiously; they are easily infected. In fact, one of the biggest breaches of U.S. military systems to date was due to a flash drive. Encrypt sensitive information on your computer. Be conscious of what you click on, both in emails and on the web. When in doubt, double check before accessing new files. Look for sites with "https" in the URL. Do not use banks or other sensitive websites that do not have the "s."

Overhaul of FDA's approval process for medical devices overdue, but balanced approached needed

The Food and Drug Administration has announced plans to overhaul its system for approving a certain category of medical devices, which critics have said fails to protect consumers from risky implants and medical instruments.   George Ball, assistant professor of operations and decision technologies and the ArcelorMittal Supply Chain Faculty Fellow, at the Indiana University Kelley School of Business, studies the medical device industry, in particular medical device recalls.   There are two primary approval pathways for medical devices. “510(k)” clearances are reserved for products that demonstrate substantial equivalence to a previously approved device. Clinical trials are normally not required and this method is much faster and cheaper than the other pathway, a “Pre-Market Approval (PMA).”   PMA new product submissions are reserved for those products that are new or substantially modified from previously approved devices. Clinical trials in humans and laboratory study data are normally required to demonstrate safety and efficacy. In comparison to 510(k) clearances, PMA approval pathways are time-consuming and expensive.   “The FDA’s announcement regarding an overhaul of the 510(k) approval process seems to be warranted, as medical device product approvals are currently on two ends of an extreme spectrum,” Ball said. “New PMA products can require years and millions of dollars to successfully obtain approval by the FDA. Conversely, 510(k) clearances are significantly faster and cheaper, as the manufacturer has to simply demonstrate equivalence with similar, already approved products.   “As 510(k) products represent the bulk of new product approvals, they also represent the bulk of medical device recalls, unsurprisingly,” Ball said. “In the last decade, 510(k) products were recalled at a ratio of 17-to-1, compared to PMA products.”   “However, the method of approval currently practiced for 510(k) products has many benefits for manufacturers as well,” he said. “Demonstrating equivalence with prior approved similar devices makes the development time exponentially faster compared to PMA product approval times.   “A middle-ground here seems logical and advisable. For example, the FDA approves products using a two-pronged approach: safety and efficacy. While efficacy may be easily established by demonstrating similarity to prior products, evidence of safety for 510(k) products may require additional verifications and tests. Doing so may help ensure that new 510(k) products, which are often much more technologically advanced than the ones they are compared against for approval purposes, are also safe for patients.”   Ball can be reached at 812-856-0625 or gpball@indiana.edu

Kelley School expert explains changing market conditions leading up to GM announcement

General Motors on Nov. 26 announced plans to close five manufacturing sites and consolidate production in North America and eliminate an estimated 14,000 white collar and blue-collar jobs. Rodney Parker, associate professor of operations management at Indiana University’s Kelley School of Business, said the announcement reflects several new realities for GM.   “First, it reflects the ongoing shift of consumers preferences from cars to SUVS and pickups. The announcement to discontinue several cars models and focus more on trucks mirrors Ford’s announcement in April 2018 to drop all car models other than the Mustang and Focus to concentrate on trucks. SUVs and pickups are more profitable and they are what consumers want.    “Consequently, GM has numerous plants which are under-utilized but still incur substantial fixed costs, resulting in losses. The plant closures are necessary for the whole company to remain profitable and competitive with rivals which are making similar moves.   “Second, despite 2017 being a very good year for GM (record operating profit, sold over 10 million vehicles), sales in China can be credited for much of that success. The recent growth in the Chinese vehicle market has benefitted GM greatly and compensates for slower growth in the US domestic market. But the sales in China will necessarily be serviced by plants in China or nearby, rather than plants in the US. Also, the shift in production to more SUVs and pickups in the US plants caters to domestic tastes, not those in China.   “Third, the substantial savings accrued from these closures will be necessary for future investments in autonomous vehicles (AVs) and electric vehicles (EVs) and hybrids. In 2016, GM wisely bought Cruise Automation, an AV startup in San Francisco, and has leapfrogged a number of auto rivals in this critical area. However, further development in AVs will require considerable investment by GM in order to keep pace with Google’s Waymo unit, with the possibility of launching their own ride-sharing service in the future.    “Predictions for the automobile industry frequently suggest a shift from exclusively selling vehicles to also ‘selling miles,’ where the manufacturers are providing transportation services, through a combination of per usage fee or subscription. The economic argument for the usage of AVs in ride-sharing services is compelling and GM wants a part of this. At least part of the current plant closures are being done with an eye to the future and the big down payment GM needs to make in AVs.”   Parker, who also is the Fettig/Whirlpool Faculty Fellow at Kelley, can be reached at 812-855-3329 or rodp@indiana.edu.

Why Some Mannequins Are Turning Blue, Taking a Dive and Putting on Weight

Baylor University fashion expert and author explains new twists in 'silent selling' -- and why frustrated customers may be relieved Women have long griped about pencil-thin mannequins in clothing displays, saying they bear little resemblance to real women’s bodies and make shopping frustrating and depressing. But the criticism is beginning to make inroads, and some members of the apparel industry are introducing changes to stop idealizing thin bodies and make mannequins more inclusive — among them creating mannequins with curvier shapes, modeling the figures after disabled people and, in a very different approach, fashioning forms that are totally unrealistic, says Baylor University researcher Lorynn Divita, Ph.D., co-author of the textbook "Fashion Forecasting” and associate professor of apparel merchandising in Baylor’s Robbins College of Health and Human Sciences. And more change may be in the works, prompted by research. A 2017 study published in the Journal of Eating Disorders found that 100 percent of the female mannequins studied in two large English cities represented an underweight body size — one that would be “medically unhealthy.” (Note: While female mannequins look scrawny, many of their male counterparts are brawny. Only 8 percent of male mannequins represented an underweight body size — although many appeared “unrealistically muscular,” researchers said.) Divita, who conducts research on the apparel industry, tracks trends and makes fashion predictions, offers some observations in this Q&A: Q: If mannequins are supposed to be a “silent seller” and a strong method for attracting customers, why are they so skinny that it is discouraging to women who are average or bigger? Why can’t their makers pack a few extra plastic pounds on them? A: For one thing, mannequins are expensive. The material for one that’s larger is going to cost more, the same way it is for plus-size garments, because you use more material. Typical department store mannequins can cost on average $500 to $900, and it can cost $150 just to repair a joint on a broken mannequin. In New York, where the retail industry is widely unionized, in some stores the sales associates are not allowed to touch the store mannequins. That responsibility is solely for visual merchandisers as a means of protecting the store’s investment. Another reason smaller mannequins have been appealing to retailers is that smaller dimensions make it easier to put on and remove clothing. Q: Wouldn’t it be worth the investment to make them bigger to showcase more realistic or inclusive figures and attract those customers? A: I recently visited the corporate offices of plus-size design company ELOQUII in New York, and their creative director, Jodi Arnold (B.S.H.E. ’88), shared with me that 65 percent of U.S. women are over size 14. Yet they represent only 17 percent of apparel spending. It’s hard to determine cause and effect: are they not spending on apparel because a wide variety of options aren’t available? Or is it that a wide variety of options are not available because this market does not spend on apparel? ELOQUII is betting on the former. In addition to their online store, they’ve recently begun opening brick-and-mortar storefronts which, unlike their website, feature merchandise on mannequins. Hopefully as the plus-sized apparel market continues to grow, the increased demand for plus-sized mannequins will result in wider representation of mannequin body types overall. Q: If most mannequins don’t reflect the majority of women’s physiques, where does the inspiration come for their sizes and shapes? A: Many mannequins can be sculpted using the measurements of live models or even have their proportions based on a celebrity who has a widely admired figure. Just like there is no standard apparel sizing system for women, there is no standard sizing system for display mannequins. Q: Besides beginning to be a bit more realistic in size, how are mannequins evolving? A: We are used to traditionally seeing mannequins in static poses like standing or sitting. With the rise in popularity of activewear, stores are devoting more floor space to this merchandise category, and it only makes sense to put those mannequins in dynamic positions like doing yoga poses or running. Another great example of dynamic poses can be found in swimwear: there are some great displays of mannequins diving. The impact of dynamic poses such as these are heightened when mannequins are displayed in groups of five or seven. Dynamic poses are currently being taken to the next level by actually suspending mannequins from the ceiling, so who knows how far this trend can go? One way to address representation is to go in the opposite direction and make a mannequin that is totally unrealistic. The last time I was shopping, I saw an entire section merchandised with glossy light-blue mannequins. This is actually a very clever way of appealing to everyone by targeting no one. Another interesting thing is that new technology allows visual merchandisers to creatively alter a mannequin’s appearance without changing it permanently by printing vinyl stickers to affix to mannequins’ faces. Merchandisers can print out bold lips or dramatic eyelashes, affix them to the mannequin in the display and easily take them off when they are done, which gives visual merchandisers yet another way to attract our attention. ABOUT LORYNN DIVITA, Ph.D. Divita is the author of the textbook “Fashion Forecasting” (Fourth edition, Fairchild Books). Her publications have appeared in the Journal of the Textile Institute and Journal of Fashion Marketing and Management, both published in England; Clothing and Textiles Research Journal and Journal of Textile and Apparel Technology and Management. She is the United States editor for the Bloomsbury Fashion Business Case Studies project and is on the editorial board of the Journal of Fashion, Style and Popular Culture. Divita received her B.A. in French and B.S. in fashion merchandising from California State University Chico, her Master’s degree in apparel manufacturing management from University of Missouri, and her Ph.D. in textile products marketing from University of North Carolina at Greensboro.

Pressure to lower drug prices may lead to recalls, particularly of generics

The pressure being placed on drug companies to reduce prices as a result of President Donald Trump’s recent proposals, likely will intensify with the Democrats’ taking control of the House of Representatives in the mid-term elections. Research by George Ball, assistant professor of operations and decision technologies at the Indiana University Kelley School of Business, highlights why consumers should be concerned beyond the high prices of their prescriptions. Ball is the lead author of a recent paper in the Journal of Operations Management which found that extreme price competition in the generic pharmaceutical market -- designed to make medications more affordable -- may be putting more patients at serious health risk. This was evidenced by a higher number of product recalls caused by manufacturing-related problems. "Extreme price competition in the generic pharmaceutical market has some unexpected risks that regulators and lawmakers may not have foreseen when pushing for cheaper drugs," Ball said. “There's a downside to cheaper drugs: You can't guarantee that they're going to be of the exact same quality," Ball said. "This research demonstrates that regulators and insurers may want to temper their intense public pressure placed upon pharmaceutical companies to bring prices down. Such pressure may come at a cost: poorly manufactured drugs." Ball can point to examples of recent generic drug recalls that occurred because of manufacturing problems. He is available at 812-856-0625 and gpball@indiana.edu. Copies of the paper are available.

U.S. economy to remain strong through most of 2019, with output averaging 3 percent

Higher than expected economic growth in 2018 should continue into next year, with U.S. output averaging 3 percent and continued strong gains in domestic job growth. Indiana will continue to outperform the nation, with output growing at a rate of 3.2 percent, according to a forecast presented today by Indiana University's Kelley School of Business. A year ago, members of Kelley's Indiana Business Outlook Tour panel predicted that U.S. gross domestic product would grow by 2.6 percent this year and about 3 percent if tax reform were enacted. Indiana was forecast to see growth of 2.8 percent. Friday's release of GDP data for the third quarter supports their view that 2018 should end up with output growth above those levels. "The tax cut has produced an acceleration in the U.S. economy during 2018 to well above the new normal status quo of 2 percent growth," said Bill Witte, associate professor emeritus of economics at IU. "We expect output growth in 2019 to average 3 percent, but with deceleration as the year proceeds. By this time next year, quarterly growth will be heading toward equilibrium growth at a little below 2.5 percent." The story in Indiana and the greater Indianapolis area is very similar. "The state economy appears poised to see its strongest growth in the first quarter of 2019, after which growth rates are expected to slow but remain strong through the end of the year," said Ryan Brewer, associate professor of finance at Indiana University-Purdue University Columbus and author of the panel's Indiana forecast. "It is most likely Indiana will continue to experience growth across the board -- in jobs, numbers of establishments, income levels, wages as well as gross state product." The Kelley School released its forecast this morning at the Indianapolis Artsgarden and will present it again at 11 a.m. today in Bloomington. The Business Outlook Tour panel also will present national, state and local economic forecasts in eight other cities across the state through Nov. 28. The national labor market has exceeded expectations for two years now. A year ago, the panel felt the U.S. economy would create jobs at a monthly rate of about 175,000 and that the unemployment rate would fall to 4 percent. Instead, monthly job creation through September has averaged nearly 200,000, and the jobless rate has fallen to 3.7 percent. These job creation trends are expected to continue into 2019, with average monthly job gains of 200,000, and the participation rate -- which measures the percentage of the U.S. population that was employed or looking for a job -- remaining flat. "The labor market will be increasingly tight," Witte said. "The unemployment rate could decline a little, but firms unable to find workers will remain an important theme." Risks to the forecast include the effects of political uncertainty, further trade disputes and economic concerns being felt in other parts of the world, including China and Europe. The panel also expressed reservations about the impact of further Federal Reserve interest rate hikes. They expect the federal funds rate to rise above 3 percent by the end of 2019. Kyle Anderson, clinical assistant professor of business economics and author of the forecast for an 11-county area that includes Indianapolis, Carmel and Anderson, said the region is at full employment, and continued job growth will ensure it stays there. Economic growth in the area will average about 2.5 percent. "Communities around Central Indiana are finding it necessary and important to invest in projects that improve quality of life and provide amenities for residents," Anderson said, referring to examples of this in downtown areas of Indianapolis and Speedway and in Carmel. "The message to community leaders is clear: Investing in infrastructure to improve quality of life is necessary to maintain a healthy local economy. "Tax incentives are not sufficient to draw in businesses and residents. Bike trails, community centers and connected neighborhoods were once seen as luxuries, but now are important economic development tools," he added. "This trend will continue, especially if the economic expansion continues nationally." Other highlights from today's forecast: ·      Consumer spending will continue to grow, although at a rate less than in 2018. ·      Business investment will be good, but held back by trade concerns. ·      Housing will resume growth with a small boost from the aftermath of hurricanes Florence and Michael. Elsewhere, including in Central Indiana, 30-year mortgage rates, nearly a full point higher than a year ago, could dampen enthusiasm for new housing and constrain prices. ·      Government spending will be strong early in the year, but growth could slow significantly toward year end.  ·      The trade balance will show increasing deficits. A detailed report on the outlook for 2018 will be published in the winter issue of the Indiana Business Review, available online in December. For more assistance, contact George Vlahakis, associate director of communications and media relations at the IU Kelley School of Business, 812-855-0846 (o) or 812-345-1500 (m), vlahakis@iu.edu.