February 2004

Faculty Ideas Impact Real World Practices

by Dean Robert Joss

I am constantly impressed by the impact our faculty have on the world around us—both by influencing opinion leaders on current business issues and by developing lasting scholarship that advances and deepens our understanding of management practice. I want to share some of these contributions with you and also tell you that, in addition to the research highlights we include in each issue of this magazine, the School now makes these ideas and other material available to you through a free monthly email newsletter, StanfordKnowledgebase. You may subscribe at gsb.stanford.edu/news/knowledgebase.html. 

Since 9/11, national security has been front of mind for the government. Some of the same kinds of mathematical studies that are used to make factory lines work efficiently also can be applied to preparing better logistical responses to bioterror attacks. In 2003, operations professor Lawrence Wein, who has applied his research to medical issues before, had the ears of u.s. Department of Homeland Security officials interested in his analysis of responses to a potential anthrax terrorist attack. Earlier, federal officials had changed their guidelines for mass smallpox immunization after Wein and colleagues demonstrated convincingly that previous policy was inferior.

Like Wein, Stefanos Zenios is an operations scholar and expert in health care delivery systems. His work should, in the future, literally save lives by helping increase the number of donated kidneys available for transplantation. Senior faculty member Alain Enthoven, the father of managed competition in health care, led a 30-person California task force on managed care reform in 1998 and has advised and written extensively on medical management issues.

The business community continues to benefit from other major contributions by GSB faculty. Mentioning them in such a short column barely does them justice. Nonetheless, I want to remind you of the important role the GSB plays in generating new ideas—the legacy of knowledge it creates. In 2001, former dean and economist Michael Spence won a Nobel Prize for his signaling theory, which helps explain how markets work, including those on the Internet. Economist Myron Scholes captured a 1997 Nobel for his work on the Black-Scholes Option Pricing Model, a benchmark formula for stock option valuation. In 1990, Bill Sharpe earned a Nobel for his Capital Asset Pricing Model, which still helps fund managers benchmark fund performance.

Economists Robert Wilson, John McMillan, and Jeremy Bulow did work in auctions and market design that paved the way for deregulation of telecommunications, energy, and other markets. Economist Paul Romer developed "new growth theory," which demonstrated that economic growth is driven by new ideas and advances in technology. Prior to his work, economists assumed economic growth was constrained by diminishing returns and a scarcity of resources.

Management professor Michael Hannan's work gave rise to a new field called organizational ecology, the study of the development of industries over time, which has challenged old assumptions about competition. In human resources, organizational behavior professor Jeffrey Pfeffer has penned 10 books, including the Knowing-Doing Gap. Economist Edward Lazear documented the emerging area of personnel economics in his 1995 book of the same title, which explains worker incentives such as pensions and other forms of compensation. Preeminent economist Kathryn Shaw has done important research on human resources.

Over the years, GSB faculty also have written important textbooks. You may remember James Van Horne's Financial Management and Policy, now in its 12th edition. Accounting giant Charles Horngren published Cost Accounting, now in its 11th edition. That tradition continues: In 2003, economist David Kreps, senior associate dean for academic affairs and a noted game theorist, published Microeconomics for Managers, a text that no doubt will influence thousands of future MBA students. (I could list at least a half-dozen other leading texts authored by our faculty if space permitted.)

While other top institutions also have cultivated research, the GSB has consistently developed the most cross-disciplinary and deepest collection of knowledge. This world-renowned tradition will continue to enlighten the management leaders we develop here. StanfordKnowledgebase gives us another avenue through which to share these important ideas with you.

From the Editor

Dean's Column