Tuck faculty members publish their research in the world's best peer-reviewed journals.
Articles authored by Tuck professors may be found via the Tuck faculty directory or on the personal faculty websites. To locate a professor's profile, visit the Faculty Directory.
An Altercentric Perspective on the Origins of Brokerage in Social Networks: How Perceived Empathy Moderates the Self-Monitoring Effect
Adam M. Kleinbaum, Alexander H. Jordan, and Pino G. Audia, Organization Science, March 2015
Social structure matters in organizational life, but our understanding of the origins of social network structure remains limited. In this paper, we observe that the literature on individual differences and social networks focuses almost exclusively on ego’s views of herself and of her network. Our approach complements this egocentric perspective with a more altercentric view, in which others’ perceptions of and reactions to ego’s personality and relational behavior shape the structure of ego’s network. Our altercentric perspective builds on earlier evidence that the construct of self-monitoring is associated with brokerage, but it suggests that the effect of self-monitoring on brokerage is amplified in those perceived as highly empathic and attenuated in those perceived as lower in empathy. A mechanism that underlies this effect is the greater propensity of others to reciprocate the social interactions of high-empathy, high self-monitors than those low in empathy. We find support for these predictions in a study of the dynamic emergence of a social network among a complete cohort of MBA students and conclude that alters are active agents in the formation of ego’s network. Read the paper.
An Interproduct Competition Model Incorporating Branding Hierarchy and Product Similarities Using Store-Level Data
Praveen K. Kopalle, Sudhir Voleti, and Pulak Ghosh, Management Science, February 2015
We develop and implement a Bayesian semiparametric model of demand under interproduct competition that enables us to assess the respective contributions of brand-SKU (stock keeping unit) hierarchy and interproduct similarity to explaining and predicting demand. To incorporate brand-SKU hierarchy effects, we use Bayesian hierarchical clustering inherent in a nested Dirichlet process to simultaneously partition brands, and SKUs conditional on brands, into groups of “similarity clusters.” We examine cluster memberships and postprocess the Markov chain Monte Carlo output to infer cluster properties by accounting for parameter uncertainty. Our proposed approach lends to a spatial competition interpretation in latent attribute space and helps uncover the extent to which competition across SKUs in the latent attribute space is local or global. In a related vein, we discuss the implications of well-defined groups of similar SKUs as subcategory or submarket boundaries in latent attribute space. We empirically test our model using aggregate beer category sales data from a midsize U.S. retail chain. We find that branding hierarchy effects dominate those from product similarity. We find that the model partitions the 15 brands in the data into 4 brand clusters and the 96 SKUs into 25 SKU clusters conditional on brand cluster membership. In estimating a set of models of spatial interproduct competition, we find that SKU competition is more local than global in that only subsets of products compete within groups of comparable products. Finally, we discuss the substantive implications of our results. Read the paper.
Investment Decisions of Nonprofit Firms: Evidence from Hospitals
Katharina Lewellen, Anant Sundaram, and Manuel Adelino, Journal of Finance, January 2015
This paper examines investment choices of nonprofit hospitals. It tests how shocks to cash flows caused by the performance of the hospitals’ financial assets affect hospital expenditures. Capital expenditures increase, on average, by 10–28 cents for every dollar received from financial assets. The sensitivity is similar to that found earlier for shareholder owned corporations. Executive compensation, other salaries, and perks do not respond significantly to cash flow shocks. Hospitals with an apparent tendency to overspend on medical procedures do not exhibit higher investment‐cash flow sensitivities. The sensitivities are higher for hospitals that appear financially constrained. Read the paper.
U.S. Multinationals and Preferential Market Access
Emily Blanchard and Xenia Matschke, The Review of Economics and Statistics, November 2014
We combine firm level panel data on U.S. foreign affiliate activity with detailed measures of U.S. trade policy to study the relationship between offshoring and preferential market access. Consistent with theory, we find that trade preferences and offshoring activity are positively and significantly correlated. Using instrumental variables, we estimate that a 10% increase in U.S. foreign affiliate exports to the U.S. is associated with a 4 percentage point increase in the rate of preferential duty-free access. Restricting attention to the Generalized System of Preferences (GSP) among developing countries, this estimate more than triples relative to the baseline, full sample results. Read the paper.
Wall Street and the Housing Bubble
Ing-Haw Cheng, Sahil Raina, and Wei Xiong, American Economic Review, September 2014
We analyze whether mid-level managers in securitized finance were aware of a large-scale housing bubble and a looming crisis in 2004-2006 using their personal home transaction data. We find that the average person in our sample neither timed the market nor were cautious in their home transactions, and did not exhibit awareness of problems in overall housing markets. Certain groups of securitization agents were particularly aggressive in increasing their exposure to housing during this period, suggesting the need to expand the incentives-based view of the crisis to incorporate a role for beliefs. Read the paper.
Insights from Academic Participation in the FAF's Initial PIR: The PIR of FIN 48
Leslie A. Robinson and Jennifer L. Blouin, Accounting Horizons, September 2014
In 2009, the Financial Accounting Foundation (FAF) determined that the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB) standard setting process required a formal review to monitor and address issues that can arise after the implementation of accounting standards. The FAF selected FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, as the initial post-implementation review (PIR) standard. This paper informs the academic community about the PIR process and provides an academic perspective on the initial PIR of FIN 48. In particular, we demonstrate the role of the academic literature using the FIN 48 literature review prepared as part of the PIR process. Read the paper.
How Stringent Are the US EPA’s Proposed Carbon Pollution Standards for New Power Plants?
Erin T. Mansur and Matthew J. Kotchen, Review of Environmental Economics and Policy, July 2014
The passage of national climate policy legislation has proven elusive in the United States. In one of the leading efforts, in 2009, the US House of Representatives passed the American Clean Energy and Security Act. Although the legislation did not become law, it would have established targets for the reduction of domestic carbon dioxide (CO2) emissions and achieved them primarily through a cap-and-trade system. Among the key targets were a 17 percent reduction in emissions from 2005 levels by 2020 and an 80 percent reduction by 2050. In the Senate, the American Power Act was introduced as a draft bill in 2010 and also sought to establish a cap- and-trade system with similar emission targets. However, a vote was never taken despite much political attention during the summer of 2010. Read the paper.
CEO Pay-for-Complexity and the Risk of Managerial Diversion from Multinational Diversification
Dirk Black, Shane S. Dikolli, and Scott D. Dyreng, Contemporary Accounting Research, Spring 2014
This study investigates whether a chief executive officer (CEO) pay premium for managing complex enterprises systematically varies in settings where complexity increases the risk of managerial diversion.1 Prior work documents that a significant determinant of the level of CEO pay is the extent to which an enterprise is diversified across multiple industrial segments.2 Intuitively, more complex enterprises are matched with higher-ability CEOs, and to attract such CEOs, the enterprise must pay them relatively more. It is unclear, however, whether the specific setting of multinational diversification introduces sources of complexity that demand a pay premium over and above the pay premium for complexity implied by industrial diversification. Read the paper.
Does Retailer CSR Enhance Behavioral Loyalty?
Kusum Ailawadi, Scott Neslin, Gail Ayala Taylor, and Jackie Luan, Journal of Research in Marketing, June 2014
We study the effects of consumer perceptions of four types of corporate social responsibility (CSR) activities on their behavioral loyalty toward retailers. The four activities are environmental friendliness, community support, selling locally produced products, and treating employees fairly. Behavioral loyalty is measured by share-of-wallet (SOW). We control for other retailer attributes that drive attitudes and SOW, and examine how the market is segmented in terms of consumer response. We partition the total effect of CSR on SOW into a direct effect and an indirect effect mediated through attitude towards the store. These effects differ by CSR activity and customer segment. The effects on attitude are positive and positive attitude enhances SOW, so the indirect effects on SOW are positive. While we generally find positive total effects, the total effect of one of the CSR activities, environmental friendliness, is significantly negative for one group of consumers. The magnitude of CSR's total impact on SOW is not only statistically significant but also managerially meaningful in an industry where every share point carries a substantial dollar amount. We characterize the customer segments and conclude with implications for how best a retailer can manage its CSR initiatives. Read the paper.
Positioning on a Multiattribute Landscape
Ron Adner, Felipe A. Csaszar, and Peter B. Zemsky, Management Science, 2014
Competitive positioning is a central, yet understudied, topic in strategy. Understanding positioning requires understanding two distinct mappings: how underlying policies are transformed into positions, and how positions are transformed into market performance. A complete treatment of positioning requires incorporating organizational design in the presence of policy interdependence; consumer choice in the presence of trade-offs among multiple product attributes; and competitive interactions among firms. We develop a model that integrates these elements. We show that in a multiattribute setting, trade-offs have critical, nonmonotonic effects on a range of strategy questions including the relationship between positions that are operationally efficient and those that remain viable in the face of competition as well as the concentration of market share in the industry. Of particular interest are implications for firm heterogeneity. We show that increases in business policy interdependence can decrease positioning heterogeneity among firms in an industry, depending on the nature of trade-offs. We also show that the relationship between strategy heterogeneity and positioning heterogeneity is moderated by the extent of policy interdependence. Read the paper.
Merger Negotiations with Stock Market Feedback
B. Espen Eckbo, Sandra Betton, Rex Thompson, and Karin S. Thorburn, The Journal of Finance, August 2014
Do preoffer target stock price runups increase bidder takeover costs? We present model-based tests of this issue assuming runups are caused by signals that inform investors about potential takeover synergies. Rational deal anticipation implies a relation between target runups and markups (offer value minus runup) that is greater than minus one-for-one and inherently nonlinear. If merger negotiations force bidders to raise the offer with the runup—a costly feedback loop where bidders pay twice for anticipated target synergies—markups become strictly increasing in runups. Large-sample tests support rational deal anticipation in runups while rejecting the costly feedback loop.
Multi-Product Exporters and the Margins of Trade
Andrew B. Bernard, The Japanese Economic Review, June 2014
The paper examines multi-product exporters in Belgium, considering their importance and the relationship between the margins of trade and firm productivity. We use proxies for trade costs to quantify the extensive and intensive margin adjustments of trade. Relatively few exporting firms account for the majority of Belgian exports and these large firms have greater productivity and value-added, more employees and more exported products than smaller exporters. Across firms, productivity is positively associated with firm exports. More productive firms export more products to more countries and have higher average product-country export flows. The extensive and intensive margins are equally important in total firm exports.
How Perceptions of Temporal Distance Influence Satiation
Ellie J. Kyung, Jeff Galak, Joseph P. Redden, and Yang Yang, Journal of Experimental Social Psychology, May 2014
Although people recover from satiation with the natural passage of time, we examine whether it is possible to influence the recovery process merely by changing the perceived temporal distance from past consumption. Experiment 1, a field experiment, demonstrates that influencing the perceived temporal distance from dinner-goers’ last meal affects the caloric value of the meal purchased (more recent leads to smaller food purchase). In a lab environment controlling for objective temporal distance and initial satiation, Experiment 2 demonstrates that these changes in perceived temporal distance also affect the actual enjoyment of an experience (listening to a favored song). Beyond these reconstructed temporal judgments, Experiment 3 directly manipulates the perceived length of the intervening period since last consumption using an altered time clock, and replicates these effects on satiation. Our findings illustrate that simple manipulations of subjective time perception can influence consumption, even in the presence of very real physiological inputs, and provide further insight into how satiation is constructed. Read the paper.
Managerial Cognitive Capabilities and the Microfoundations of Dynamic Capabilities
Constance E. Helfat and Margaret A. Peteraf, Strategic Management Journal, April 2014
The microfoundations of dynamic capabilities have assumed greater importance in the search for factors that facilitate strategic change. Here, we focus on microfoundations at the level of the individual manager. We introduce the concept of “managerial cognitive capability,” which highlights the fact that capabilities involve the capacity to perform not only physical but also mental activities. We identify specific types of cognitive capabilities that are likely to underpin dynamic managerial capabilities for sensing, seizing, and reconfiguring, and explain their potential impact on strategic change of organizations. In addition, we discuss how heterogeneity of these cognitive capabilities may produce heterogeneity of dynamic managerial capabilities among top executives, which may contribute to differential performance of organizations under conditions of change. Finally, we propose possible directions for future research. Read the paper.
Integration of Online and Offline Channels in Retail: The Impact of Sharing Reliable Inventory Availability Information
Santiago Gallino and Antonio Moreno, Management Science, April 2014
Using a proprietary data set, we analyze the impact of the implementation of a “buy-online, pick-up-in-store” (BOPS) project. The implementation of this project is associated with a reduction in online sales and an increase in store sales and traffic. These results can be explained by two simultaneous phenomena: (1) additional store sales from customers who use the BOPS functionality and buy additional products in the stores (cross-selling effect) and (2) the shift of some customers from the online to the brick-and-mortar channel and the conversion of noncustomers into store customers (channel-shift effect). We explain these channel-shift patterns as an increase in “research online, purchase offline” behavior enabled by BOPS implementation, and we validate this explanation with evidence from the change of cart abandonment and conversion rates of the brick-and-mortar and online channels. We interpret these results in light of recent operations management literature that analyzes the impact of sharing inventory availability information. Our analysis illustrates the limitations of drawing conclusions about complex interventions using single-channel data. Read the paper.
Services, Industry Evolution, and the Competitive Strategies of Product Firms
Steven Kahl, Michael Cusumano, and Fernando Suarez, Strategic Management Journal, March 2014
Services of different types have become increasingly important for product firms. While these firms mainly focus on products, managers and researchers lack a comprehensive framework to understand when to make significant investments in particular kinds of services. We identify three categories of product-related services from a product firm—smoothing and adapting services, which complement products, and substitution services, which enable customers to pay for the use of a product without buying the product itself. We develop propositions about the relative level of these different kinds of services vis-a-vis industry evolution, as well as suggest how these services affect industry structure. We draw upon various literatures, though we conclude that the relationship between products and services is more complex and richer than any one literature suggests. Read the paper.
A Case for Brands as Assets: Acquired and internally developed
Kevin Lane Keller and Roger Neville Sinclair, Journal of Brand Management, February 2014
An unacceptable dichotomy hides important information from investors and masks the full contribution brands make to enterprise wealth. Under conditions of merger and acquisition brands are mandated as assets, but when they are internally created they are forbidden to be described as such. The sources of this contradiction are the global accounting standard setting bodies: the International Accounting Standards Board (IASB), the Financial Accounting Standards Board (FASB), and the accounting standards developed to deal with how intangibles are dealt with under different conditions (IASB: IFRS 3 Business combinations and IAS 38 Intangible Assets. FASB: SFAS 141 Business Combinations and FSAS 142 Goodwill and Other Intangible Assets). In this article we explain the nature of this contradiction and show that the authorities are aware of it. Since 2001 there have been several attempts to update the standards that created it. However, these have never been seen as a priority and have been aborted before completion. We show that the conflict is caused by a technical anomaly and demonstrate that, by the accountants’ own evaluative criteria, the conflict should be resolved. We admit that if this happens there is, at present time, no single acceptable method of valuating brands but we suggest that the foundation is firmly laid for such an approach to be developed. Finally, we make the suggestion that if this financial distortion is resolved it might require the standard setters to acknowledge that asset accretion ranks in importance with impairment. Our argument is mostly based on an unintended conflict: the change accountants made some time ago from an historical cost perspective to a forward looking current cost and, in this case, fair value measurement approach, is at the heart of the contradiction. The business combination standards feature the new approach; the intangible assets standards feature the old approach. Until this conflict is rectified the investment community will continue to miss out on a major source of enterprise value. This extends to boards of directors and their marketing departments being deprived of a key financial metric; one that measures the mediating source of much of the company’s revenue and one of the most valuable assets, or sets of assets, any company owns. We intend to show that this situation is easily rectified and that an increase in important financial information instantly justifies the resources needed to bring about this change. Read the paper.
A new analytic model by professor Ron Adner offers a more nuanced and powerful tool to examine strategic positioning.
A new analytic model by professor Ron Adner offers a more nuanced and powerful tool to examine strategic positioning.