Thesis advisor: Philp E. Strahan / This dissertation is comprised of three essays which examine the interactions among credit market innovation, corporate finance, and information intermediaries. In the first essay, I study the role of credit default swaps (CDS) in reducing credit supply frictions for corporate borrowers. I find that firms whose CDS is included in a major CDS index--the CDX North American Investment Grade index--have significantly lower cost of debt, and in response rely more heavily on debt for external financing. To address the potential endogeneity of index addition, I use a regression discontinuity design by exploiting the index inclusion rule, which allows me to compare firms that are just above and below the index inclusion cutoff. I show that index inclusion improves the liquidity of underlying single-name CDSs, which enables constituent firms' debtholders to better hedge their credit risk exposure. My findings suggest that CDS market benefits investment-grade borrowers by alleviating the supply-side frictions in credit markets. In the second essay, we investigate the role of proxy advisory firms in shareholder voting. Proxy advisory firms have become important players in corporate governance, but the extent of their influence over shareholder votes is debated. We estimate the effect of Institutional Shareholder Services (ISS) recommendations on voting outcomes by exploiting exogenous variation in ISS recommendations generated by a cutoff rule in its voting guidelines. Using a regression discontinuity design, we find that in 2010-2011, a negative ISS recommendation on a say-on-pay proposal leads to a 25 percentage point reduction in say-on-pay voting support, suggesting strong influence over shareholder votes. We also use our setting to examine the informational role of ISS recommendations. In the third essay, I examine how Moody's ratings have responded to the introduction of Credit Default Swap (CDS) market--an important innovation in credit markets in the past decade. I find that ratings quality of CDS firms, measured as default predictive power, improved significantly after the onset of CDS trading, consistent with a disciplining role of the CDS market. I show that ratings become more accurate in terms of less failure to warn (i.e. rating a defaulter too high) which is not accompanied by a rise of false alarms. In addition, rating downgrades are significantly more likely to be preceded by negative outlook or a watch for downgrade. The results are robust to controlling for the endogeneity of CDS trading. Overall, the evidence suggests that, in response to the CDS market developments, Moody's ratings become better at differentiating bad issuers from good ones as opposed to a "cookie-cutter'' approach to more conservative ratings. / Thesis (PhD) — Boston College, 2016. / Submitted to: Boston College. Carroll School of Management. / Discipline: Finance.

Metrology is a concept that is not known by many, it is the science of measurement. For such an unknown concept it has significant importance to both the manufacturing companies and the customers as they both need to be sure that the final products are correct and of high quality. Therefore many companies have a quality system within their company to measure and calibrate their instruments. To ensure that the measuring instruments used are correct they need to be calibrated towards national and international standards. If you cannot do that at the company the service needs to be purchased externally. SKF, Svenska Kullagerfabriken AB, has a metrology service that they use for their own manufacturing that they have sold externally before and want to start selling again. The purpose of this study was to investigate what the main value drivers are in the metrology market and based on those values create a service offer. To investigate the purpose a case study of SKF’s metrology service was made and interviews were performed on nine manufacturing companies within the western region of Sweden, with focus on Gothenburg. The theoretical framework is based on the market positioning strategy by Lovelock & Wirtz (2011). The market positioning strategy includes a market section, an internal section and a competitor section. These parts can be seen all through the thesis as it guided the authors through the process. The empirical findings show the interview answers, the value drivers and the competitor response profile.   In the empirical chapter it was discovered that accreditation and accuracy are the two value drivers that the customers find most important in metrology. Those value drivers does both Mätcentrum and most of the competitors have. The empirical also show that the suppliers have a strong position in the market and can offer similar or more value than Mätcentrum. The conclusion is that it would be difficult for Mätcentrum to start selling their service externally again. This is due to the competition, mainly from existing competitors and suppliers in combination with the lack of differentiating elements in their offer. However there is still an opportunity for profitability if the communication of the values is adjusted after each customer’s need and received successfully.

National culture has a significant influence on how innovations are adopted and diffuse throughout society. Existing innovation literature often employ Hofstede’s cultural difference dimensions to predict technology diffusion, which is critical to international marketers who are interested in tapping into this region. However, whilst Hofstede initially clustered the Arab nations into one region, past works have failed to compare and predict the diffusion of innovations amongst the Middle East and North African (MENA) nations. To address this research gap and to challenge Hofstede’s assumption of the MENA region as one cultural homogenous group, this study proposes to 1) measure the cultural differences of the seven nations, including Kuwait, Kingdom of Saudi Arabia, United Arab Emirates, Egypt, Iraq, Libya, and Lebanon within the MENA region and 2) explore the relationship between national culture and the diffusion of innovations amongst the seven countries. Using Hofstede’s latest national culture instrument, the Value Survey Model 2013 (VSM13), 775 survey data is collected from university students based in the seven nations to obtain new national cultural profiles on six dimensions, which are power distance, uncertainty avoidance, individualism, indulgent versus restraint, long-term orientation and masculinity femininity index. Empirical evidence shows that all seven nations differ significantly on each of Hofstede’s national culture dimensions, particularly on the power distance, uncertainty avoidance, indulgent versus restraint, and long term orientation dimension. The Bass Model is employed to estimate each of the seven nation’s diffusion patterns based on their mobile subscription data, and then correlated with their national culture ranks along with other variables such as socioeconomic indicators and telecommunication sector specific variables. The findings indicate that out of the six national culture indices, only the power distance index, indulgent versus restraint, long term orientation, and uncertainty avoidance dimensions show significant correlations with the innovation and imitations levels on the national level, suggesting that these particular cultural scales can effect and limit the innovation levels and the speed of the diffusion process of innovations. Results also indicate that literacy rate and urbanization are significantly correlated with the speed of the diffusion process and imitation levels on the national level. This research sheds new light on cross national diffusion literature by empirically revealing the innovative and imitative profiles of seven Arab States that were previously underrepresented and untested. The present study also provides fresh insights into the diffusion and national culture relationship by analysing the MENA region, which presents a theoretical contribution to cross cultural diffusion studies by advancing our understanding of the process by which Hofstede’s dimensions are associated with innovative and imitative levels. International marketing managers are thus advised to adopt a waterfall strategy when approaching the MENA region, in which innovative countries, such as Kuwait, are first targeted for introducing innovative products and services, through mass media and advertising. Whilst imitative countries, such as Egypt, are targeted for last entry, with a marketing communication plan that utilizes brand ambassadors and influencers, so as to reduce the risk and uncertainty of the innovation in question.

Although researchers during the last 5 years have been doing a lot of study onemerging market innovations, and of which Frugal Innovation had its special place. They haveparticularly concentrated on this innovation type on how it re-emerged in the emergingcountries especially India and China and gave it new theoretical definition and a framework.Although this frugal innovation usage is constrained only to the firms located in those emergingmarkets and this innovation has not seen much application in the western smaller firms. In thisresearch our main idea is to develop a theoretical model on frugal innovation for the westernsmaller firms, where currently not much emphasis is given by the previous researchers in thiscontext. To achieve this we have been involved in an action research with a company lookingto enter an emerging market by using frugal innovation strategy for their product development.The output of this research is a theoretical framework model which is sequential and includesall the stages that a firm has to follow as part of a frugal innovation strategy having not muchknowledge of the emerging markets or its customers and who had to rely on external partnersin developing countries to successfully develop frugal innovations. We have also identifiedchallenges firms face in this context and listed out alternatives at each level of the strategy,finally concluded by listing out the future scope of research on frugal innovation in thisparticular area.

In times of scarce resources, frugal innovation can be a driving engine for growth and market success, as it is a practical concept established in developing countries. Nonetheless, the available literature also emphasizes a potential importance for Western countries. Accordingly, our thesis and research add to the lack of literature that connects frugal innovation to developed countries and its specific underlying conditions. The review of available literature and further discussions led to the following research questions: 1. What is the current application status of frugal innovation in Germany? 2. What characteristics should frugal innovations have to serve the BoP in the context of the German market? A preliminary theoretical framework was created from the relevant literature streams stressing the fragmented nature of frugal innovation. As the concept and research addressing this issue are in a nascent stage, one unifying definition was not found. For the course of this thesis, the definition of frugal innovation was therefore chosen to be "thrifty, modest and affordable innovations, valuable for BoP customers”. One major derivation from the literature review is that frugal innovation can be of major importance in developed countries, not only for customers for getting access to certain products, but also for companies addressing untapped markets. The empirical investigation and explorative data collection was undertaken within the market context of Germany based on eight companies from different industry backgrounds. Therefore, interviews were held with representatives of companies that offer frugal products (thereafter also including services) according to the definition from above. Within the scope of the grounded theory analyzation techniques, the interviews supported our aim to gain rich and meaningful data to extend the substantive theory about the concept of frugal innovation. Our study results (based on our eight interviews) prove the existence of frugal products in the German market, while the term and the concept have previously been unknown. Even though frugal innovations were still to be confirmed, they were not labeled as such to connect them to the concept. The study also indicates the existence of a bottom of a pyramid in Germany, despite its original connection to emerging market population. Our findings resulted in a revised framework that connects relevant fragments to a logical comprehension of the concept of frugal innovation. Finally, characteristics for frugal products and requirements could be validated and improved to be economically successful in developed market contexts. The major contribution of our thesis is its general investigation of a rather unknown concept and its presence in other markets than originally laid down. The thorough literature review, the creation and revision of the framework and our study results will serve as a fruitful ground for further exploration of this innovation type.