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Research News

Specializing Can Mean Bigger Sales

Customers like to feel they’re buying goods and services from businesses that are leaders in a specific category or two. Being a jack of all trades in too many categories may reduce profits say researchers.

Seeking Common Ground in Conversations Can Stifle Innovation and Reward the Wrong People

The best baseball players don't always get elected All-Stars. Researchers say people try to find a common ground when talking to others, which can mean the wrong people become famous or the most innovative ideas don't get discussed.

How to Be a Good Boss in a Bad Economy

Prof. Bob SuttonWhen cutbacks are necessary, can a good boss do right by the company's finances and by its staff? Some pain is probably unavoidable, but Stanford Professor Bob Sutton says that psychological and organization theory research suggests clear ways to handle such situations with a minimum of harm to the people and company involved.

Photo of Prof. Jeffrey PfefferTime to Detox the Work Environment

Professor Jeffrey Pfeffer wants companies to pay attention to policies and working conditions he argues create a toxic workplace environment that can raise rates of disease and mortality among workers.

 
Self-Identified Multiracial Individuals Realize Real Benefits

Individuals who identified with multiple ethnic or racial groups reported either equal or higher psychological well-being and social engagement than those who identified primarily with a single group, say researchers trying to understand multiracial psychology.

A Central Clearing House Doesn’t Reduce CDS RiskImage of Darrell Duffie

A plan by global financial regulators to fix the mess created by the misuse of credit default swaps is flawed, says Darrell Duffie, professor of finance at the Stanford Graduate School of Business.

 
Peter Henry Small Islands, Big Economic Lessons

Barbados and Jamaica are living proof that government protectionist policies hurt the economy in the long run, say Stanford researchers. Once sporting nearly identical economies, today Barbados outstrips Jamaica’s GDP by more than $5,000 per capita.

Photo of Paul Oyer Are Wall Street Careers Just the Luck of the Draw?

The proportion of graduating MBAs hired into lucrative investment banking positions shrinks or expands depending on how well the stock market is performing, yet this bit of happenstance can have a dramatic effect on lifetime earnings, says Business School professor Paul Oyer.

U.S. Dependence on Oil in 2008: Facts, Figures and Context

Key facts and figures describing global and United States’ energy and oil consumption, the history and evolution of the oil industry, and the relationship between U.S. oil consumption and national security are compiled in this research paper. Authors Andrew Grove, Robert Burgelman, and Debra Schifrin argue that these factors are needed to help shape policy before the next market upheaval.

AakerDoes Consumer Happiness=Time or Money Spent?

Focusing on the time customers invest in products typically leads to better outcomes than focusing on cost. Mentioning time rather than money can trigger very different reactions say Stanford Business School researchers Cassie Mogilner and Jennifer Aaker.

NarayananSpace Junk, What Goes Up Must Come Down

Enforcing existing rules requiring space programs to clean up their own space junk could stem the growing threat to millions of dollars worth of orbiting satellites say Stanford researchers. The rules are already on the books, they are merely being ignored says Prof. Lawrence Wein.

MalhortaMarketing Obama's Stimulus Package: It Depends

Obama’s political strategists might have gotten an even bigger stimulus package if they had relied less on Democratic Party lawmakers to sell it. Or, taking another tack, they could have gotten more Republican support by not blaming that party for the financial crisis and by being more alarmist about the consequences, say researchers Neil Malhotra and Yotam Margalit.

The Vote is Not Tallied on Katrina Blame

In the wake of Hurricane Katrina’s devastation, voters can look beyond political loyalties and carry the blame for the disaster into their next voting booth say researchers Neil Malhotra and Alexander Kuo.

NarayananMost Gamblers Are Just Out for Fun

Is gambling an addiction or a form of entertainment? Mostly the latter, according to a new academic study that found evidence that most people have strict "loss thresholds" they will not cross when gambling.

FlynnIt Really IS The Thought That Counts

When it comes to putting out money for gifts, less may well be more. Researchers say that although most gift givers assume that a more expensive present will be more appreciated, receivers don’t appreciate expensive gifts that much more.

michael spence Spence Paints Optimistic Picture for Developing Countries

"There is, perhaps for the first time in history, a reasonable chance of transforming the quality of life and the creative opportunities for the vast majority of humanity," says Dean Emeritus Michael Spence, describing the report of the Independent Commission on Growth in Developing Countries, which he chaired.

Depression Babies: How Our Economic Experiences
Affect Investment Behavior

Finance professor Stefan Nagel and his co-author have demonstrated that personally experiencing something like the Great Depression has a significant impact on how we invest our money.

The Thought of Acquiring Power Motivates People to Act

In the wake of Barack Obama’s “yes we can” victory, a timely study has emerged from the Stanford Graduate School of Business about what motivates people to take action. The prime mover, say researchers, is acquiring a position of power.

VanHorneFinancial Restoration for the United States

During the past 200 years, there have been 16 credit crises in the United States, all marked by speculative excesses in the years immediately preceding. As the ultimate safeguard to stem a financial panic, the government should have in place the apparatus that will allow it to curtail such excesses in advance of their triggering a financial panic says Finance Professor James C. VanHorne.

BerkIncentives and the Financial Crisis

In any financial crisis, it is possible with 20/20 hindsight to identify the specific causes. Rather than outlawing those activities, Professor Jonathan Berk recommends designing legislation that better aligns the incentives of bankers with the public interest.

MalhortaVoting by Mail May Have Unintended Effects on Elections

Absentee ballots have made voting easier and more accessible to millions of Americans, but the process may have unintended effects on election outcomes, says Professor Neil Malhotra.

Duffie
Achieving Financial Stability

Professor Darrell Duffie argues that redesigning the U.S. financial system after the current financial crisis will focus on creating financial stability. “Most of us thought we had it, but we did not,” he notes.

AakerShould Charities Ask For Time Before Money
Asking would-be donors for their time, not their money, is a better way for charities to increase donations says Prof. Jennifer Aaker. Asking donors first to volunteer their time can positively shift their willingness to give both time and money.

Wages and Productivity Thrive When Developing Countries
Open Their Stock Markets

When a developing country opens its stock market to foreign capital, the resulting economic effect usually helps more than just big business. Manufacturing workers find their salaries rise rapidly while the nation realizes an even more rapid growth in productivity, according to a study of 18 developing nations, says Professor Peter Henry.

Stanford, GSB Professors Debate Bailout Plan

Panel discussion ran the gamut from how the U.S. got into this mess; how this crisis fits in with past credit crises; and whether the financial sector is really sufficiently “different’’ than the rest of the economy to warrant a $700 billion rescue courtesy of the American taxpayer. Video Video

DuffieEffects of the Government Takeover of Freddie Mac and Fannie Mae
Business School Finance Professor Darrell Duffie discusses the effects of having the country’s two largest mortgage finance companies placed into conservatorship and what it means for taxpayers and the economy. Video Video

Mendelson Businesses Can Compete Successfully with
Open-Source Technology

Commercial vendors can compete successfully against open-source products says Professor Haim Mendelson. To do so they must be first to market, judiciously improve product features, keep the product closed so the open source competitors cannot tap into the commercial network, and segment the market.

BurgelmanFirms Survive by Recognizing Fundamental Industry Changes

Enduring companies survive because employees throughout the firm, not just those in the executive suite, learn to keep an eye on how related industries are evolving, say Robert Burgelman and Andrew Grove. Strong firms don't just match the competition, they also recognize fundamental changes in their industries and stay strategically ahead.

JenterFor Underperforming CEOs, Economic Downturns
Can Mean Sudden Death

When either their industry or the overall market is doing badly, CEOs are more likely to be fired, according to a recent study. But it isn’t just boards looking for scapegoats. The ones who are fired tend to be the underperformers regardless of market conditions.

ShivDo Samples Whet—or Dampen—Consumer Appetites?

Does passing out samples in a grocery store cause people to not be hungry and therefore shop less? Baba Shiv, professor of marketing has found evidence that product sampling in fact can do what a good French appetizer is intended to do: whet the appetite for more.

FlynnAsk and You’re Likely to Get Help

New research shows that people who ask for help are likely to get it. The Business School’s Frank Flynn is coauthor of studies showing that subjects seriously underestimate how many people will be willing to help them if asked and that asking directly is the best approach.

LarckerHow Good Are Commercial Corporate Governance Ratings?

A study by Stanford law and business faculty members casts strong doubt upon the value and validity of the ratings of governance advisory firms that compile indexes to evaluate the effectiveness of a publicly held company’s governance practices. “Everyone would agree  that corporate governance is a good thing,” said Business School Professor David Larcker, “but can you measure it without even talking to the companies being rated?”

MontgomeryChallenging Work and Corporate Responsibility
Will Lure MBA Grads

A survey of 759 graduating MBAs at 11 top business schools reveals that the future business leaders rank corporate social responsibility high on their list of values, and they are willing to sacrifice a significant part of their salaries to find an employer whose thinking is in synch with their own.

WheelerCan Polling Location Influence How Voters Vote?

Where you cast your ballot—whether it’s in a church, a school, or an auto garage—can have an effect on the outcome of elections, say three researchers from the Graduate School of Business.

ZeniosHow Much Will We Pay for a Year of Life?

Today $50,000 is the internationally accepted value placed on an additional year of high quality human life. That figure is too low according to new research that also warns using cost effectiveness to decide whether to authorize and pay for specific treatments raises major ethical dilemmas.

TormalaWant (Your Product) to Look Good?
Follow Something that Looks Bad

In marketing, context can be as critical as content. Recent research by Zakary Tormala and others finds that messages are perceived as more powerful when they are preceded by different messages that appear to have less substance or to be authored by someone with lesser credibility.

Sunil KumarNetflix Broke the Rules and Won

The video rental service broke new ground with a patented consumer model that had no deadlines or penalties and charged a set monthly fee. “Netflix got it right,” said Professor Sunil Kumar.

 

WheelerCustomer Behavior-Be Careful to Segment

Verbal, visual, or cognitive cues can have very opposite effects when used on different groups of potential customers, say researchers Christian Wheeler and Jonah Berger.

FlanaganAmerican Symphonies Often Spend More Than They Earn

Most major symphony orchestras in the United States regularly spend more money than they take in, and some dip so far into endowments that they risk their long-term survival, according to a new report commissioned by the Andrew W. Mellon Foundation.

Baba ShivThe Price of a Medication May Affect How Well it Works
A marketing pitch or the price of a drug may do more than simply affect what the consumer thinks about the product. It also can have an actual effect on how effective the user finds the drug, says researcher Baba Shiv.

Kathryn ShawTeamwork Can Boost Manufacturing Productivity
Those who work in the most complex manufacturing environments have the most to gain from the use of problem-solving teams, according to research coauthored by Business School Professor Kathryn Shaw. Teams had the most effect when they worked on very high-quality products with complex manufacturing steps.

stefan Nagel How Dividends Encourage Consumer Spending
Consumers are likely to run out and spend stock dividends while income from capital gains is more likely to be reinvested or saved, says the Business School’s Stefan Nagel and his coauthors. The finding could be considered in setting economic policy.

Wesley Hartmann Why Does Movie Popcorn Cost So Much?
The high price of popcorn at most movie theater concession stands actually benefits moviegoers, say researchers, including the Business School’s Wesley Hartmann. It helps hold down the price of the movie ticket.

Baba ShivMeasuring Wine by Its Pricetag
Wine drinkers asked to compare wines told reseachers the one they believed was more expensive tasted better. Although their brains did react with more pleasure to the higher pricetag, the researchers including Professor Baba Shiv, say the subjects were tasting the same wine under two pricetags.

Kenneth Shotts Elections May Make Candidates Ideologically Rigid
Politicians want to assure the electorate that they share the political leanings of voters. This attention to the electoral process, says Kenneth Shotts, means that politicians are more rigid and less likely to change their positions based on new information, particularly when voters may not share that insight.

Heath photo Too Much Popularity Can Make Items Uncool
Products may go from cool to completely out of favor in a blink. The reason, says Chip Heath, is that consumers associate their own identity with some products and will shy away from something they once liked if they perceive it is associated with the wrong kinds of groups or individuals.

Ernesto DalBoCorruption Hurts Business as Well as a Nation’s Reputation
Corruption, whether in government or in private industry, serves as a serious drag on a nation’s wealth and creates a less favorable climate for business, say researchers including Ernesto Dal Bó. For one thing, corruption swells the number of employees needed, driving up costs and sidetracking workers from jobs that could help grow an economy.

Rajan PhotoAuctions May Simplify Internal Resource Allocation
Creating auctions within a corporation to let managers compete to buy necessary resources can be a boon to industry. But researchers, includingMadhav Rajan, warn that in some cases these internal markets may not benefit the bottom line.

Narayajan photoInformation Can Help You Get the Right Cell Phone Plan
Given enough information, most users can choose the best payment plan for their needs in a cell phone contract. But, caution researchers including Sridhar Narayanan of the Graduate School of Business, there isn’t always an obvious way to get the information.

Peter DeMarzo Investors Fear Missing a Sure Thing More Than They Fear Risk
What investors fear the most is not the risk of a loss per se, but the risk that they may do poorly relative to their peers say researchers Peter DeMarzo and Ilan Kremer of the Business School and Ron Kaniel of Duke University.

KhanBuyer Beware: Shopping Can Lead to More … Well … Shopping
Which items consumers purchase can actually create momentum to make them shop more, say researchers including the Business School’s Uzma Khan. That bag full of items you really didn’t intend to buy may not be completely your fault.

PfefferFinancial Incentives Can Create Bad Employee Behavior
Financial incentives, including commissions, should be used only to recognize good employee performance. They can backfire if used to try to influence behavior, says Professor Jeffrey Pfeffer.

MullenMimicking Produces Better Negotiated Outcomes
Subtly imitating mannerisms, gestures, etc. of the other partner during a negotiation can lead to greater success for both parties in a negotiation according to recent research co-authored by Elizabeth Mullen.  

JossIt’s Not About You
Leadership is not about you. It’s about the people who work for you Business School Dean Robert L. Joss says in a recent essay.

Haim MendelsonStrategic Spot Trading Benefits Supply Chains
Supply chains can create greater profits for themselves and lower costs to consumers by developing a strategy to purchase needed materials with fixed-priced contracts negotiated in advance plus buying in real time on the open market, report researchers Haim Mendelson and Tunay Tunca.

BeyerYour Auditor's Other Clients Can Effect Your Stock Price
The stock price of a given firm varies based on the quality of audits of other firms in the client portfolio of its auditor, according to research co authored by the Business School's Anne Beyer.

HannanSpecializing Can Mean Bigger Sales
Customers like to feel they’re buying goods and services from businesses that are leaders in a specific category or two. Being a jack of all trades in too many categories may reduce profits say researchers. The research is co-authored by Business School Professor Michael Hannan.

kesslerWho Is Paying for Uninsured Medical Patients?
Underfunding programs like Medicare – not the cost of paying for uninsured medical patients – is driving up private health care costs, argues economist Daniel Kessler. (June 2007)

BurgelmanCompaq and HP: Ultimately, the Urge to Merge Was Right
The controversial merger of Hewlett-Packard and Compaq ultimately was a good idea, but failure to focus on long-term corporate strategy actions meant it wasn’t smooth sailing to the finish line. (June 2007)

JagolinzerDo SEC Rules on Insider Trading Really Protect?
Securities and Exchange Commission Rule 10b5-1, designed to keep permitted insider trades from hurting others in the market, may not be achieving its goal, says Alan Jagolinzer. (June 2007)

Time Pressures Color Consumer Decisions Say Researchers
As any woman who has ever shopped for shoes for a big event can tell you, a looming deadline affects consumer decisions. A month before the big event the shopper is looking for the perfect shoes. The day before, she just wants something that won’t be awful. Marketing researchers who have studied this phenomenon caution that time is one factor that makes framing a marketing campaign something that should not be taken lightly. (June 2007)

Not Coordinating Price and Quantity Can Mean Lost Competitive Advantage
In most manufacturing operations, price is determined by the marketing department while operations decides how much to manufacture. When these two don’t coordinate well the result can mean the company loses competitive advantage say researchers who have created a new mathematical model for finding the optimal price and quantity to fit with real world consumer behavior. (June 2007)

Investor Intuition Is Right: Corporate Leadership and Management Turnover Directly Affect Startup Success
Start-up companies with founding and senior management teams sporting greater diversity in experience and functions are more successful more quickly say researchers. It may be consistent with common wisdom, but the authors argue their study helps companies and investors understand just why this is the case. (May 2007)

Mutual Funds Vote Strategically in Board of Director Elections
By analyzing more than 3 million votes by 3,600 mutual funds, Michael Ostrovsky has come to the conclusion that funds vote to protect themselves from negative reprisals. Some consistently approve slates of directors proposed by corporate management while the majority typically won’t say “no” unless they sense that a critical mass of other funds will do the same. (May 2007)

Blueprint Proposed for Wiping Out Disease-bearing Mosquitoes
Releasing genetically modified male mosquitoes could eliminate the danger of dengue fever and other mosquito-borne diseases within a year in communities of up to a million people, according to new research. The authors, including Professor Lawrence Wein, created a mathematical model to help scientists understand the order of magnitude they would have to deal with to wipe out dangerous native mosquito populations. (May 2007)

Even Costly Mergers Can Be Good
Although a firm’s stock value generally drops after it announces it has acquired a new company, few of its shareholders generally oppose the merger. Michael Ostrovsky argues this is because shareholders in acquiring companies often simultaneously own a near equal number of shares in target firms. (April 2007)

Be Careful What You Ask Your Customers
Understanding the needs and wants of customers in an ever-more competitive economic environment is critical. But Professor Itamar Simonson warns that information gleaned from some widely used types of customer surveys can be misleading and even counterproductive. (April 2007)

The Best Way to Construct Unenforceable Contracts
Strong relationships rather than iron clad legal agreements can be the most practical way for firms to outsource key operational activities, says associate professor Erica Plambeck. The threat of loss of future business is a stronger incentive in many cases than a legal document. (April 2007)