Search and selection in the money market fund industry

Article Abstract:

A generic dynamic growth system for money market fund families is developed to measure organization search and test if it minimizes failure risk. This growth system incorporates specific cost and demand characteristics that affect firm expansion. The condition of the growth system in each time period for a specific firm, as estimated by the Kalman filter, indicates the state of the search process of the firm. Findings demonstrate no supporting evidence that the continually revised coefficients have an impact on the risk of failure. Nevertheless, the cumulative amount of search positively influences exit, in consonant with the structural inertia theory of Hannah and Freeman (1984). Other significant predictors of money market fund failure are founding conditions and money market fund performance.

Open-End Investment Funds, Management investment, open-end, Money Market Invest Funds, Mutual fund industry, Organizational behavior, Corporate growth, Online searching, Money market funds, Searching behavior

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Can first-mover and early-mover advantages be sustained in an industry with low barriers to entry/imitation?

Article Abstract:

A study was conducted to ascertain if first-mover and early-mover advantages can be maintained in an industry with low barriers to entry and easily copied new product innovations. This study differs from prior research because it focuses on a single industry, in this case the money market mutual fund business, and hones in a specific source of competitive advantage, the timing of market entry. Findings revealed that first-movers and early-movers benefit from a highly sustainable pricing advantage and a moderately sustainable market share advantage. These results seem to contradict the generalizations made by the supporters of the hypercompetitive paradigm, which posits that competition is increasing in all industries where advantages are no longer sustainable.

Competition (Economics), Barriers to entry (Industrial organization), Barriers to entry

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Identifying a Distinctive Competence: Forecasting Ability in the Money Fund Industry

Article Abstract:

The ability of money market mutual funds to forecast changes in short-term interest rates is examined. The effect of such abilities on the economic surplus generated by a specific fund and its growth is tested.

Methods, Management

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