Using rigorous methodologies, Goizueta faculty focus on researching important problems that affect the practice of business. The following is a sample of recently created new knowledge. To learn more, please visit goizueta.emory.edu/faculty.
Managing style and product design
Mobile phones look very different now than they did ten years ago. With access to all of the design patents available from the US Patent & Trademark Office (including ones from products in the telecommunications industry), Tian Heong Chan, assistant professor of information systems & operations management, and coauthors Jürgen Mihm (INSEAD) and Manuel E. Sosa (INSEAD) show how one can cluster them according to their visual similarities. The process results in an evolutionary timeline charting the successive styles of mobile phones from “clamshell” to “touchscreen slate” and everything in between. This approach creates a novel data platform from which researchers can start testing hypotheses about how product forms evolve. With the data, the authors show that there is increasing turbulence (or unpredictability in the change in product forms) across all product categories. In other words, it is much harder now than in the past to predict what the next hot style will be based on current trends. This is especially salient in non-tech categories, such as furniture and fashion. The authors conclude that companies with the capability to manage this increasing uncertainty will have a significant competitive advantage in the future. Management Science (2017)
Relational signaling and gift giving
Prior research indicates that gift givers are motivated by competing goals. Often, they will simply select an item of the recipient’s choosing. However, gift givers are also likely to select an item on their own to help show knowledge of the recipient and further define and maintain a personal connection. Morgan Ward, assistant professor of marketing, and coauthor Susan Broniarczyk (U Texas) take the research a step further by analyzing how the closeness of a relationship further impacts the gift-giving decision when a gift registry is readily available. The duo employed five separate studies with human subjects presented with various gift-giving scenarios. The paper notes, “We find that despite their stated primary intention to please recipients, close (vs. distant) givers ultimately are more likely to ignore recipients’ explicit registry preferences in favor of freely chosen gifts.” Ward and Broniarczyk conclude that divergence from the registry was not necessarily about finding a better gift. Instead, it occurred only when givers specifically received attribution for their selection. The closeness of the personal connection resulted in a “perceptual distortion of the gift options in favor of relational-signaling gifts.” Distant givers were much more likely to pick an item from the registry, selecting gifts closely aligned with recipients’ preferences. Journal of Marketing Research (2016)
The link between corporate alliances and returns
Strategic alliances are agreements between two or more firms to pursue a set of agreed upon objectives while remaining independent organizations. Alliances are formed for a number of reasons, including licensing, marketing or distribution, development or research, technology transfer or systems integration, or some combination of the above. Tarun Chordia, R. Howard Dobbs professor of finance, and coauthors Jie Cao (Chinese U of Hong Kong) and Chen Lin (U Hong Kong) find evidence of return predictability across alliance partners. If the alliance partner or partners have high (or low) returns this month, then the firm has high (or low) returns over the next two months. Using a sample of alliances over the period 1985 to 2012, the authors find that a long-short portfolio sorted on lagged one-month returns of strategic alliance partners provides a return of over 85 basis points per month. This long-short portfolio return is robust to a number of specifications, including different adjustments for risk, controlling for different proxies for cross-autocorrelations, and excluding partnerships with customer-supplier relationships, as well as controls for industry returns. They theorize, “If investors are fully aware of the impact of strategic alliances on returns and pay attention to the firm-partner links, then the stock price of a firm should quickly adjust to price changes of its partners’ stocks.” The evidence suggests that investor inattention may be the source of a firm’s underreaction to its partners’ returns. Journal of Financial and Quantitative Analysis (2016)
Understanding the influence of mobile promotions
Michelle Andrews, assistant professor of marketing, and coauthors Jody Goehring (RetailMeNot), Sam Hui (U Houston), Joseph Pancras (U Conn), and Lance Thornswood (JCPenney) cull together divergent streams of research to provide a framework to better understand how mobile promotions influence the in-store shopping behavior of consumers. Online promotions allow merchants to reach shoppers easier and faster, enabling traditional stores to text out online discounts or highlight specific products. Merchants can also use geolocation on mobile phones to text and target shoppers once inside of their store to feature merchandise or advertise a special offer. The authors identify a number of key areas for additional research to “enable long-term, value enhancing relationships between consumers and marketers.” For instance, they note the need for a better understanding of the role of privacy concerns on personal data collection via mobile devices. Andrews and coauthors also find that a deeper investigation of such things as return on investment, loyalty programs, upselling, proximity to purchase, and global promotions are required to get a true sense of the effectiveness of mobile promotions. Journal of Interactive Marketing (2016)
Significance of pricing and product-line strategies
In new research, Ramnath Chellappa, associate professor of information systems & operations management, and coauthor Amit Mehra (U Texas) investigate the business practice of IT “versioning,” whereby a company creates different models of a product in order to charge varying prices for each one. Much research takes into account economies of scale and a company’s marginal costs—the price of making an additional unit of a product. However, Chellappa and Mehra note that companies also need to consider consumer usage costs when they decide to create various versions of the same IT product. But for IT products and services, the “costs” are not monetary. The pair note the “time commitment and physical effort” to use IT products or services. They use the example of mobile devices: “One cannot enjoy these information goods without them consuming resources such as memory and processing power.” They determine that “this consumption-related disutility” is critical to feature bundling and consumer segmentation. The researchers create a model to test the consumer cost impact, using a “digital goods firm with a unique production cost structure and agents—consumers who face resource constraints in consuming these goods.” Given the usage costs, they determine that individuals may not necessarily prefer products with more features to lower-quality items. The pair concludes “marginal cost and consumers’ usage costs have the same impact on versioning strategy.” Management Science (2017)
The impact of behavioral bias on decision-making
For business leaders, the ability to make critical decisions in a dynamic work and industry environment is essential to the success of an organization. However, Diwas KC, associate professor of information systems & operations management, and coauthors Francesca Gino (Harvard U) and Bradley R. Staats (UNC) note that behavioral traits can sometimes impact the ability to weigh new information and make a logical decision, even in the face of negative news. KC, Gino, and Staats analyze 147,000 choices made by cardiologists during a six-year period when they were presented with negative news from the FDA about drug-eluting stents used in angioplasty. The experienced cardiologists were more likely to continue using the questionable stents than their less-experienced peers, even after being informed of the problem. The role of influence also played a factor in the decision-making. They add, “Given that those who feel they are expert are less likely to react to negative news, those around them show the same tendency, thus making worse decisions than those in groups with less perceived expertise.” The seasoned cardiologists were better able to “generate counterexamples to the negative news and thus be susceptible to confirmation bias.” The authors note managers should be aware that more experience and the perception of expertise may bias decision-making. Management Science (2017)
The process behind auditor judgement
Auditors are required to use considerable judgment in their job, assessing information from a number of sources to create financial reports, critique accounting estimates, and assess a company’s internal controls over financial reporting. But an auditor’s decision-making process is not well understood. In their paper, Kathryn Kadous, professor of accounting, and coauthors Emily E. Griffith (U Wisconsin) and Donald Young 13PhD (Goizueta, Indiana U) provide a framework for researchers to better evaluate the judgment of auditors and, in turn, improve audit quality. Prior research in this area presumes that “decision makers typically engage deliberate, analytical processes to solve problems (i.e., pursue goals) that they have specifically chosen, that they limit their decision inputs to items they view as relevant, and that they have access to the details of their own cognitive processing.” The trio notes that “nonconscious goals” and “intuitive processes” are also influential in the decision-making process and in the factors driving these processes. Kadous, Griffith, and Young conclude that their framework indicates researchers approach their investigation by taking into account “conscious and nonconscious goals” and “decision makers with conflicting incentives, as well as differing capabilities.” Auditing: A Journal of Practice & Theory (2016)
The role of the economy on individualism
Past work has shown that as countries become wealthier, people often become more individualistic. In new research, Emily Bianchi, assistant professor of organization & management, takes the investigation a step further and finds that even subtle fluctuations in the economy are associated with changes in individualism. She finds that during good economic times, Americans are more likely to seek out ways to signal their uniqueness and individuality. For instance, during boom times, Americans tend to give their children more uncommon names and are more likely to prize autonomy and independence in child-rearing. They are also more likely to favor music featuring self-oriented lyrics. Conversely, during recessions, Americans tend to focus more on fitting in and tend to give their children more common names, listen to more relationally oriented music, and encourage their children to get along with others. Additionally, Bianchi discovered that recessions engender uncertainty, which, in turn, decreases individualism and encourages interdependence. The study results indicated that the “link between wealth and individualism is driven not only by differences in how people live, work, and learn but also by their sense of the predictability, orderliness, and certainty of the surrounding environment.” Journal of Personality and Social Psychology (2016)
