Theory →
- 25 Mar 2008
- Working Paper Summaries
Incompatible Assumptions: Barriers to Producing Multidisciplinary Knowledge in Communities of Scholarship
Just as flows of knowledge within and across communities of practice improve the quality of new products, knowledge sharing among knowledge workers within interdisciplinary communities may be critical for new discoveries and for a more comprehensive and accurate understanding of phenomena. In spite of this, biologists tend to talk to biologists, economists tend to talk to economists, and lawyers tend to talk to lawyers. This paper argues that producing and disseminating knowledge within a multidisciplinary community of practice is enhanced when knowledge workers hold compatible assumptions, even when the form and content of knowledge generation across those workers varies. Key concepts include: Generating multidisciplinary knowledge may require communities of scholarship to acknowledge the presence and limitations of their assumptions. Within a community of scholarship, interpretive barriers to sharing knowledge arise when subgroups hold contrary assumptions about the appropriate questions to be asked or the fundamental nature of the phenomenon under investigation. Cross-discipline understanding may stem from the potential for members to recognize the relevance of others' findings to their own scholarship. Closed for comment; 0 Comments.
- 13 Feb 2008
- Working Paper Summaries
Unconventional Insights for Managing Stakeholder Trust
Most organizations understand the need to manage stakeholder trust. The bad news: Most organizations don't really understand how to manage the difficult job effectively. However, for those companies wishing to reap the benefits of improved cooperation with suppliers, increased motivation and productivity among employees, enhanced loyalty among customers, and higher levels of support from investors, managing stakeholder trust is a prudent, if not critical investment. Trust management may require an appreciation for some unconventional insights regarding the appropriate investment of resources. Stakeholders differ in regard to the kinds and degrees of vulnerability they face; what they need to believe before they will trust also differs. Would-be trust managers will be wise to consider these varying needs and to anticipate the tradeoffs that exist in strengthening relationships with specific stakeholders. Key concepts include: Trust is multidimensional, and it is not obvious which dimension you need to focus on when dealing with any particular stakeholder group. Stakeholder groups have different needs and vulnerabilities. Efforts aimed at solving one trust problem can exacerbate others. Stakeholders of all types are interested in associating with organizations with whom they can identify, and with whom they perceive a match in values. Closed for comment; 0 Comments.
- 08 Feb 2008
- Working Paper Summaries
Psychological Influence in Negotiation: An Introduction Long Overdue
This paper attempts to encourage a better dialogue between research on social influence and on negotiation. It provides an overview of the literature on both areas, and identifies opportunities for creating more effective and useful research. First, HBS professors Deepak Malhotra and Max Bazerman identify those elements of psychological influence that do not require the influencer to change the economic or structural aspects of the bargaining situation in order to persuade the target. Second, they review prior research on behavioral decision-making in negotiation to identify those ideas that may be relevant to influence in negotiation. Third, they provide a framework for thinking about how to leverage behavioral decision research to wield influence in negotiation. Fourth, they consider how targets of influence might defend against these tactics. Fifth, because psychological influence is, by definition, aimed at achieving one's own ends through the strategic manipulation of another's judgment, they consider the ethical issues surrounding its application in negotiation. Key concepts include: A broader research field of negotiation is needed, one that more closely matches real-world views of what negotiation entails. This paper conceptualizes and organizes a new domain of academic inquiry—psychological influence in negotiation—contrasting it with literature on social influence. The last 50 years of research on social influence has focused largely on economic and structural elements of influence. However, psychological influence is an interesting and important domain of study in its own right, and is very relevant to the field of negotiation research. Closed for comment; 0 Comments.
- 31 Jan 2008
- Working Paper Summaries
Peer Effects and Entrepreneurship
How do your coworkers affect your decision to become an entrepreneur? The vast majority of entrepreneurs launch their new ventures following a period of employment in established organizations. To date, factors such as the degree of bureaucracy that individuals have experienced have been shown to shape their likelihood to go into business for themselves. But socialization matters, too. Nanda and Sørensen show that the career experiences of coworkers shape both the information and the resources available to prospective entrepreneurs, as well as the value that individuals attach to entrepreneurial activity as a career choice. Key concepts include: Who your coworkers are, and what they have done in their careers, influence the likelihood that you will become an entrepreneur. Peers matter in 2 ways: by structuring coworkers' access to information and resources that help identify entrepreneurial opportunities, and by influencing coworkers' perceptions about entrepreneurship as a career choice. Company policies and practices related to hiring and retention may have indirect consequences for entrepreneurial activity. These findings have policy implications. For instance, policies that encourage long worker tenures will tend to lower rates of movement between firms, thereby indirectly reducing the supply of prospective entrepreneurs. Closed for comment; 0 Comments.
- 13 Dec 2007
- Working Paper Summaries
Acting Globally but Thinking Locally? The Influence of Local Communities on Organizations
It is a paradox that in a globalizing and "boundaryless" economy, factors associated with local communities—such as interpersonal networks, laws, and tax rates, among others—remain important for understanding organizational behavior. As Marquis and Battilana argue, communities influence organizational behavior not only as local markets and resource environments, but also through a number of institutional pressures. Focusing on communities as institutional environments provides fresh theoretical insights into organizational behavior, in addition to offering a more unified perspective to the diverse set of research that is emerging on local communities. Key concepts include: Despite globalization, local factors remain important, and in many ways local particularities have become more visible and salient as globalization has proceeded. In today's environment, organizations are embedded both locally and globally. Researchers need to account for these different levels in order to understand organizational behavior and also perhaps advance theory. Closed for comment; 0 Comments.
- 15 Nov 2007
- Working Paper Summaries
The Dynamic Interplay of Inequality and Trust: An Experimental Study
Trust makes economic agents more willing to engage in interactions involving the risk of being deceived. Like a lubricant, trust may positively influence efficiency and economic growth, and at the same time affect the distribution of wealth within an economy. However, trust is difficult to measure on both the microeconomic and the macroeconomic level. Survey data frequently discover individual attitudes toward trust, but cannot easily identify to what extent such self-reported attitudes reflect economic behavior, and how trust interacts with the dynamics of efficiency and distribution. This paper complements empirical and survey literature on the relationship between inequality and trust with the help of experimental games, which systematically investigate the dynamic interplay of trust, efficiency, and distribution. Key concepts include: In an experimental economy that started with equal endowments, trust was relatively prevalent at the beginning, maybe due to low social distance as measured by initial wealth comparisons. With increasing inequality, subjects started to condition their behavior on the opponent's wealth. Consequently, trust rates went down, and growth was attenuated. In an experimental economy that started with unequal endowments, trust levels remained stable, allowing for considerable efficiency gains. Results suggest that there might also be value in studying the dynamics of inequality within countries, as well as the interaction of trust and procedural or jurisdictional fairness perceptions. Closed for comment; 0 Comments.
- 12 Oct 2007
- Working Paper Summaries
Mental Accounting and Small Windfalls: Evidence from an Online Grocer
In the course of daily life, people occasionally receive small windfalls. Every so often we are handed a gift certificate for $5 off a meal, find a $10 bill on the street, or win $20 in an impromptu game of poker. According to standard economic theory, these types of small windfalls should have no noticeable effect on spending decisions because such windfalls constitute meaningless changes to lifetime wealth. However, if you have ever been the recipient of a small windfall, you may remember thinking about ways to spend this unexpected cash, buying items you might not have otherwise purchased. This kind of behavior can be interpreted as an example of "mental accounting" as theorized by economists Richard H. Thaler and Hersh M. Shefrin. This paper presents evidence supporting some of the implications of a theory of mental accounting in the domain of online grocery shopping. Key concepts include: In the domain of online groceries, the redemption of a $10-off coupon increases an individual's spending, as predicted by Thaler and Shefrin. The increase in spending stimulated by the redemption of a $10-off coupon is focused on groceries that customers would not purchase in the absence of such a coupon. Closed for comment; 0 Comments.
- 10 Oct 2007
- Working Paper Summaries
Harnessing Our Inner Angels and Demons: What We Have Learned About Want/Should Conflicts and How That Knowledge Can Help Us Reduce Short-Sighted Decision Making
Many of the most important problems facing the world today are exacerbated by myopic decision-making. Examples include climate change, under-saving for retirement, deficit spending, and obesity. As observed by Freud, contemporary psychologists and researchers, and entertainers, people everywhere struggle to choose between doing what they want to do and what they should do. This paper synthesizes 15 years of empirical explorations of this "want/should" conflict and discusses the most important applications of this work. The results of recent studies have the potential to help individuals and policymakers by arming them with insights about how to increase the chances that they and their constituents, respectively, will favor options that are in their best interest. Key concepts include: Knowledge of the want/should self could help individuals and policymakers learn how to design circumstances that steer people away from making impulsive, short-sighted decisions. Closed for comment; 0 Comments.
- 12 Sep 2007
- Working Paper Summaries
The Ethnic Composition of U.S. Inventors
The contributions of immigrants to U.S. technology formation are staggering. While the foreign-born account for just over 10 percent of the U.S. working population, they represent 25 percent of the U.S. science and engineering workforce and nearly 50 percent of those with doctorates. Even looking within the Ph.D. level, ethnic researchers make an exceptional contribution to science as measured by Nobel Prizes, election to the National Academy of Sciences, patent citation counts, and so on. The magnitude of these ethnic contributions raises many research and policy questions: 4 examples are debates regarding the appropriate quota for H1-B temporary visas, the possible crowding out of native students from the science and engineering fields, the brain-drain or brain-circulation effect on sending countries, and the future prospects for U.S. technology leadership. This paper describes a new approach for quantifying the ethnic composition of U.S. inventors with previously unavailable detail. Key concepts include: Ethnic scientists and engineers are an important and growing contributor to U.S. technology development. The rapidly increasing ethnic contribution in high-tech sectors is due to the strong growth of the Chinese and Indian ethnicities. Shifts in the concentration of ethnic inventors appear to facilitate changes in the geographic composition of U.S. innovation. Closed for comment; 0 Comments.
- 06 Sep 2007
- Working Paper Summaries
Why We Aren’t as Ethical as We Think We Are: A Temporal Explanation
People commonly predict that they will behave more ethically in the future than they actually do. When evaluating past (un)ethical behavior, they also believe they behaved more ethically than they actually did. These misperceptions, both of prediction and of recollection, have important ramifications for the distinction between how ethical we think we are and how ethical we really are, as well as understanding how such misperceptions are perpetuated over time. This paper draws on recent research in psychology and decision-making to gain insight into these forces. It also provides recommendations for reducing them. Key concepts include: All individuals have an innate tendency to engage in self-deception around their own ethical behavior. Organizations worried about ethics violations should pay attention to understanding these psychological processes at the individual level rather than focus solely on the creation of formal training programs and education around ethics codes. Closed for comment; 0 Comments.
- 06 Aug 2007
- Research & Ideas
High Hills, Deep Poverty: Explaining Civil War in Nepal
Nepal, the home of Mount Everest, has been gripped in recent years by civil war. A new paper by Harvard Business School professor Lakshmi Iyer and Quy-Toan Do of the World Bank looked at the roots of Nepal's conflict from a variety of angles. For the future, investing in poverty reduction strategies is a key for peace, Iyer says. Key concepts include: Nepal went through a dozen different governments in 12 years beginning in 1991. Diversity could be a contributing factor to civil wars, and Nepal is tremendously diverse—ethnically, economically, and geographically. Geographic diversity and poverty were the greatest predictors of violence in Nepal. The root cause of Nepal's civil war was economic, not social. Investments in poverty reduction strategies bring direct economic as well as political benefits to countries like Nepal. Closed for comment; 0 Comments.
- 12 Jul 2007
- Working Paper Summaries
Toward a Theory of Behavioral Operations
Research in psychology over the past several decades teaches us that behavioral biases and cognitive limits are not just "noise"; they systematically affect (and often distort) people's judgment and decision making. Despite such advances, however, most scholarly research in operations management still assumes that agents—be they decision makers, problem solvers, implementers, workers, or customers—either are fully rational or can be induced to behave rationally, usually with economic incentives. This paper builds on earlier studies to explore the theoretical and practical implications of incorporating behavioral and cognitive factors into operations management models. It then points to fruitful areas for future research. Key concepts include: A behavioral approach to operations management can lead to a better understanding of underlying drivers of operating systems performance and also to a better understanding of puzzling "pathologies" such as excess inventory, late product development projects, and overcommitment to research and development projects. A behavioral perspective can lead to better identification of appropriate management interventions. Closed for comment; 0 Comments.
- 10 Jul 2007
- Working Paper Summaries
The Persuasive Appeal of Stigma
Are minority groups more persuasive when their conversations with majority groups are conducted face-to-face? Interracial interactions are among the most perilous social occasions in contemporary America, full of opportunities for things to go awry. People in stigmatized groups, for instance, may worry that members of majority groups hold prejudiced attitudes that can lead to discriminatory or offensive behavior. Members of majority groups, for their part, may fear coming across as biased or racist. While psychology has traditionally explored the damaging effects of such interactions on social exchange, new findings contribute to the growing recognition that stigma may be a two-sided construct, marked with a host of costs but occasional benefits. This study demonstrates the persuasive power of stigmatized individuals and shows how self-presentational concerns may change attitudes. Key concepts include: During face-to-face interactions, stigmatized minorities may sometimes have an edge in persuading majority group members. The stigma of being labeled racist may in some situations be potent enough to promote an ironic power reversal. While whites may assume the more solicitous role typically associated with stigmatized minorities, it is important to add that the discomfort that accompanies such efforts may simply pose yet another problem for members of stigmatized groups to manage. This research underscores the need to examine social interactions around stigma in real-world contexts, from organizations to interpersonal relationships. Closed for comment; 0 Comments.
- 28 Jun 2007
- Working Paper Summaries
Film Rentals and Procrastination: A Study of Intertemporal Reversals in Preferences and Intrapersonal Conflict
Throughout our lives, we face many choices between activities we know we should do and those we want to do. Examples of such choices include whether or not to visit the gym, to smoke, to order a greasy pizza or a healthy salad for lunch, and to watch an action-packed blockbuster or a history documentary on Saturday night. Using data on consumption decisions over time from an Australian online DVD rental company, this paper investigates how and why individuals make systematically different decisions when their choices will take effect in the present versus the future. Key concepts include: The more "should watch" characteristics and the fewer "want to watch" characteristics a DVD has, the longer an individual will postpone watching that DVD. Companies that loan goods to consumers and are interested in predicting return times may be better able to forecast borrowing times based on the extent to which the items are "should" or "want" goods. Consumers may be better able to take steps that curb impulsive behavior. Closed for comment; 0 Comments.
- 28 May 2007
- Research & Ideas
How Property Ownership Changes Your World View
When Argentine squatters were granted property title it changed the way they viewed the world. HBS professor Rafael Di Tella discusses his research into how property ownership affects our beliefs and also our attitudes toward capitalism. Closed for comment; 0 Comments.
- 22 May 2007
- Working Paper Summaries
The Speed of New Ideas: Trust, Institutions and the Diffusion of New Products
Does trust confer competitive advantage in terms of time, money, and productivity? Previous research indicates that it does. This study shifts perspective slightly and asks whether trust can also act as a barrier to entry. In other words, are trusted suppliers protected from competition if buyers are reluctant to try new products and services offered by other suppliers? Oberholzer-Gee and Calanog explored the link between levels of trust and the decision to adopt a new product using a field experiment on the diffusion of an innovative floor drain for the plumbing market. Key concepts include: Entrepreneurs from less-trusted groups—in this study, African-Americans—found it more difficult to overcome trust barriers. Trust can act as a barrier to entry for new firms and products because trust makes existing relationships more productive. Trust in current suppliers is a particularly strong deterrent to entry if the product is associated with a less-trusted group. Information from an intermediary organization, in this case a national industry association, can neutralize the negative impact of trust. Trust in institutions is therefore a valuable substitute for interpersonal trust. Closed for comment; 0 Comments.
- 18 May 2007
- Working Paper Summaries
An Empirical Approach to Understanding Privacy Valuation
What do consumers value and why? Researchers on privacy remain stumped by a "privacy paradox." Consumers declare that they value privacy highly, yet do not take steps to guard it during transactions. At the same time, consumers feel unable to enact their preferences on privacy. Clearly, scholars need a more nuanced understanding of how consumers treat information privacy in complex situations. To test the hypothesis that there is a homo economicus behind privacy concerns, not just primal fear, Wathieu and Friedman conducted an experiment based on a real-world situation about the transmission of personal information in the context of car insurance. Their experiment was based on a previous case study about marketing processes that use membership databases of trusted associations (such as alumni associations) to channel targeted deals to members through a blend of direct mail and telemarketing. Key concepts include: Contrary to some research, the chief privacy concern appears based on data use, not data itself. There is consumer demand for social control that focuses on data use. Sophisticated consumers care about economic context and indirect economic effects. Closed for comment; 0 Comments.
- 31 Jan 2007
- Working Paper Summaries
Behavioral Decision Research, Legislation, and Society: Three Cases
Insights about how people make decisions have enormous importance for society and public policy, yet often behavioral decision findings are overlooked or dismissed in favor of arguments based on sometimes-simplistic economic theory. This is particularly true in Washington, D.C., where Bazerman provided expert testimony in government cases on auditor bias, pharmaceutical company collusion, and big tobacco, respectively. His experiences highlight the barriers to the use of the most appropriate social science under the existing legal and legislative frameworks. In this article that is based on analysis and opinion, he tells what happened and reflects on the need for social sciences, in addition to economics, to be brought to the legal and policy-making domains. Key concepts include: Economic logic lies behind preventable disasters that range from accounting scandals to the many avoidable deaths resulting from the U.S. organ donation system. Creating wise policies in society means updating our understanding of unconscious or unintentional processes in decision making and recognizing how social science today is based on rigorous science. Economic logic plays an important role in the policy-making process, but it should not be used at the expense of other social science knowledge. A smoking gun is not necessary to show that an institution is set up to encourage wrongdoing. For behavior-decision reasons, organizations are likely to prefer a status quo. Too often, when it comes to public policy, the status quo either prevails or inappropriately influences future activity. Closed for comment; 0 Comments.
- 08 Jan 2007
- What Do You Think?
Neuro Economics: Science or Science Fiction?
The growing use of MRI (magnetic resonance imaging) devices for studying decision making means that in 2007 we may hear a number of striking conclusions based on studies involving a small number of brain scans, says Jim Heskett. What are the more general implications of this trend? Will it have strong explanatory as well as manipulative potential for us as consumers, managers, and citizens? Closed for comment; 0 Comments.
No Harm, No Foul: The Outcome Bias in Ethical Judgments
Too often, workers are evaluated based on results rather than on the quality of the decision. Given that most consequential business decisions involve some uncertainty, the upshot is that organizations wind up rewarding luck rather than wisdom. From a rational decision-making perspective, people's decisions should be evaluated based on the information the decision maker had available to him or her at the time, and not based on the ultimate results. This paper tests predictions about this effect, known as the outcome bias, in two studies in which participants were asked to consider various ethically questionable behaviors. Participants were also given information about the outcome of such behaviors and were asked to rate the ethicality of the described actions with or without the outcome information. The findings extend prior research in psychology and ethics. Key concepts include: The tendency demonstrated in these two studies might lead people to blame others too harshly for making sensible decisions that have unlucky outcomes. The outcome bias could also partly explain the slow reactions that people tend to have when they observe others' unethical behavior. It is worth trying to understand a decision maker's state of mind. Judging decisions based on their outcomes will wind up condemning too many unlucky people and acquitting too many scoundrels. Closed for comment; 0 Comments.