Recent crb items

The Power of Shame and the Rationality of Trust

Fri, 27 Feb 2009 00:00:00 +0000

Experimental evidence and a host of recent theoretical ideas take aim at the common economic assumption that individuals are selfish. The arguments made suggest that intrinsic “social preferences” of one kind or another are at the heart of unselfish, pro-social behavior that is often observed. I suggest an alternative motive based on “shame” that is imposed by the extrinsic beliefs of others, which is distinct from the more common approaches to social preferences such as altruism, a taste for fairness, reciprocity, or self-identity perception. The motives from shame are consistent with observed behavior in previously studied experiments, but more importantly, they imply new testable predictions. A new set of experiments confirm both that shame is a motivator, and that trusting players are strategically rational in that they anticipate the power of shame. Some implications for policy and strategy are discussed. JEL classifications C72, C91, D82

The Time vs. Money Effect: Shifting Product Attitudes and Decisions through Personal Connection

Wed, 17 Dec 2008 00:00:00 +0000

The results of five field and laboratory experiments reveal a ―time vs. money effect‖ whereby activating time (vs. money) leads to a favorable shift in product attitudes and decisions. Because time increases focus on product experience, activating time (vs. money) augments one‘s personal connection with the product, thereby boosting attitudes and decisions. However, because money increases focus on product possession, the reverse effect can occur in cases where merely owning the product reflects the self (i.e., for prestige possessions, or for highly materialistic consumers). The ―time vs. money effect‖ proves robust across implicit and explicit methods of construct activation. Implications for research on the psychology of time and money are discussed.

Firm Value and Corporate Governance: How the Former Determines the Latter

Tue, 16 Dec 2008 00:00:00 +0000

A model of corporate governance must explain (i) why governance matters; (ii) variation in governance across firms (i.e., be responsive to the Demsetz and Lehn, 1985, critique); and (iii) the positive correlations found empirically between quality of corporate governance and corporate performance. The model presented here satisfies these three criteria. Moreover, the model explains the correlation between firm size and executive compensation and why empirical estimates of managerial incentives seem too low, among other phenomena.

The Role of Boards of Directors in Corporate Governance: A Conceptual Framework & Survey

Tue, 16 Dec 2008 00:00:00 +0000

This paper is a survey of the literature on boards of directors, with an emphasis on research done subsequent to the Hermalin and Weisbach (2003) survey. The two questions most asked about boards are what determines their makeup and what determines their actions? These questions are fundamentally intertwined, which complicates the study of boards due to the joint endogeneity of makeup and actions. A focus of this survey is on how the literature, theoretical as well as empirically, deals—or on occasions fails to deal—with this complication. We suggest that many studies of boards can best be interpreted as joint statements about both the director-selection process and the effect of board composition on board actions and firm performance.

The Happiness of Giving: The Time-Ask Effect

Wed, 21 May 2008 00:00:00 +0000

This research examines how a focus on time versus money can lead to two distinct mindsets that impact consumers’ willingness to donate to charitable causes. The results of three experiments, conducted both in the lab and in the field, reveal that asking individuals to think about “how much time they would like to donate” (versus “how much money they would like to donate”) to a charity increases the amount that they ultimately donate to the charity. Fueling this effect are differential mindsets activated by time versus money. Implications for the research on time, money and emotional well-being are discussed.

When Good Brands Do Bad

Wed, 21 May 2008 00:00:00 +0000

This article reports results from a longitudinal field experiment examining the evolution of consumer-brand relationships. Development patterns differed, whereby relationships with sincere brands deepened over time in line with friendship templates, and relationships with exciting brands evinced a trajectory characteristic of short-lived flings. These patterns held only when the relationship proceededwithout a transgression. Relationships with sincere brands suffered in the wake of transgressions, whereas relationships with exciting brands surprisingly showed signs of reinvigoration after such transgressions. Inferences concerning the brand’s partner quality mediated the results. Findings suggest a dynamic construal of brand personality, greater attention to interrupt events, and consideration of the relationship contracts formed at the hands of different brands.

Do You Look to the Future or Focus on Today? The Impact of Life Experience on Intertemporal Decisions

Wed, 21 May 2008 00:00:00 +0000

In this research, we investigate the impact of significant life experiences on intertemporal decisions among young adults. A series of experiments focus specifically on the impact of experiencing the death of a close other by cancer. We show that such an experience, which bears information about time, is associated with making decisions that favor the long-term future over short-term interests (Studies 1 and 2). Underlying this effect appears to be increased salience and concreteness regarding one’s future life course, shifting focus away from the present toward the long run (Studies 3 and 4). Finally, we explore the shift caused by a cancer death of a public figure and examine its stability over time (Study 5). Implications for research on intertemporal decision making and the impact of life events on perceptions and preferences are discussed.

How Well do Social Ratings Actually Measure Corporate Social Responsibility?

Tue, 5 Feb 2008 00:00:00 +0000

Ratings of corporations’ environmental activities and capabilities influence billions of dollars of “socially responsible” investments as well as some consumers, activists, and potential employees. In one of the first studies to assess these ratings, we examine how well the most widely used ratings—those of Kinder, Lydenberg, Domini Research & Analytics (KLD)—provide transparency about past and likely future environmental performance. We find KLD “concern” ratings to be fairly good summaries of past environmental performance. In addition, firms with more KLD concerns have slightly, but statistically significantly, more pollution and regulatory compliance violations in later years. KLD environmental strengths, in contrast, do not accurately predict pollution levels or compliance violations. Moreover, we find evidence that KLD’s ratings are not optimally using publicly available data. We discuss the implications of our findings for advocates and opponents of corporate social...

Imitate or Differentiate? Evaluating the validity of corporate social responsibility ratings

Tue, 5 Feb 2008 00:00:00 +0000

Although there is $2 trillion in portfolios using socially responsible investing (SRI) criteria, it remains unclear how to measure “social responsibility.” We explore competing theoretical perspectives that explain the level of convergent and predictive validity across SRI ratings produced by competing social raters. While some prior literature predicts low convergent validity due to desire for differentiation, other work predicts high convergent validity driven by high true validity or by neo-institutionalist forces that reward imitation. We find that these ratings have low correlations and that firms with high and low social ratings are equally likely to be later embroiled in scandals.

Innovation and Learning by Public Discourse: Citigroup and the Rainforest Action Network

Mon, 25 Jun 2007 00:00:00 +0000

This paper presents the project finance controversy between Citigroup and the Rainforest Action Network (RAN) from a moral learning and innovation perspective. Using Kohlberg’s framework for moral development and learning it shows, that Citigroup improved its moral organizational cognition and implemented innovative processes and standards. This case demonstrates that public criticism can trigger social innovations.

Manager Race and the Race of New Hires

Mon, 16 Oct 2006 00:00:00 +0000

Using personnel data from a large U.S. retail firm, we examine whether the race of the hiring manager affects the racial composition of new hires. We exploit manager changes at hundreds of stores to estimate models with store fixed effects. We find significant effects of manager race and ethnicity. First, all non-black managersi.e., whites, Hispanics, and Asianshire more whites and fewer blacks than do black managers. The differences between non-black and black managers are especially large in the South. Second, in locations with large Hispanic populations, Hispanic managers hire more Hispanics and fewer whites than white managers.

The Private Regulation of Global Corporate Conduct

Mon, 11 Sep 2006 00:00:00 +0000

This paper explores the dimension of transnational governance associated with civil business regulation. Civil regulations employ private, non-state, or market-based regulatory frameworks to govern multinational firms and global supply networks. While the notion that companies have a responsibility to ‘society’ is more than a century old, historically corporate social responsibility (CSR) was associated with initiatives by firms to address social problems at the community level, often through corporate philanthropy. More recently, CSR has become more international in scope; it now increasingly focuses on the impact of global firms and markets on working conditions, environmental quality, community development, and human rights, especially in developing countries. Civil regulations seek to imbed international markets and firms in a framework of global rules and norms by establishing standards for responsible business conduct as well as mechanisms for promoting compliance with...

Business E-Waste Geographical Comparison Study

Fri, 17 Feb 2006 00:00:00 +0000

Business E-Waste Geographical Comparison Study

Institutional Pressures and Environmental Strategies

Thu, 15 Dec 2005 00:00:00 +0000

This paper suggests how institutional theory can explain enduring differences in organizational strategies. We propose that differences in how organizations distribute power across their internal corporate departments lead their facilities to prioritize different institutional pressures and thus adopt different management practices. Specifically, we argue that external constituents who interact with particularly powerful corporate departments are more likely to influence facility managers’ decisions. As a result, managers of facilities that are subjected to comparable institutional pressures adopt distinct sets of management practices that appease different external constituents. Using an original survey and archival data obtained for nearly 500 facilities, we find support for these hypotheses.

Greenwash: Corporate Environmental Disclosure under Threat of Audit