Research news
Promising Practices, Evolution, Productivity and Impact
Chris Voss, Professor of Operations and Technology Management, has recently completed a three year research programme with Advanced Institute of Management (AIM) funded by the Economic and Social Research Council (ESRC).
The research focused on one of the three AIM themes; the development, adaptation and impact of promising or best practices, contributing to the issue of how can and do management in the UK make a difference to organisational performance. The research within this theme consisted of a number of parallel projects in services, productivity and impact, and the evolution of promising practices. The research which is summarised in a final report was rated as outstanding by the ESRC.
To view the report, click here
Created: Friday 02 May 2008
Creditor rights and corporate risk-taking
This latest piece of research by Viral V. Acharya, Yakov Amihud*, Lubomir Litov proposes that stronger creditor rights in bankruptcy codes reduce corporate risk-taking.
Employing country-level data, the research finds that strong creditor rights are associated with a greater propensity of firms to engage in diversifying mergers, and this propensity changes in response to changes in the country creditor rights. Also, in countries with stronger creditor rights companies' operating risk is lower, and acquirers with low-recovery assets prefer targets with high-recovery assets. These relationships are strongest in countries where management is dismissed in reorganization, suggesting an agency-cost effect.
An interesting possibility that emerges from the research results is that strong creditor rights may have a "dark" side in terms of their effect on corporate investments and attitude towards risk. Employing several methods, the research finds that stronger creditor rights in a country induce firms to take less risk and prefer diversifying acquisitions. If these actions would not have otherwise been taken by the firms, it follows that creditor rights have real effect on corporate decisions whose value effects may be questionable.
To view the research, click here.
Created: Friday 02 May 2008
Attention arousal through price partitioning
Existing evidence suggests that preferences are affected by whether a price is presented as one all-inclusive expense or divided into a set of mandatory charges.
Research by Assistant Professor of Marketing Marco Bertini explains this phenomenon by introducing a new mechanism whereby price partitioning affects a consumer's perception of the secondary benefits derived from a transaction.
The practice of price partitioning has become increasingly common. Instead of charging a simple, all-inclusive price, firms regularly post sets of mandatory charges attached to various attributes of an offer.
The paper looks at what the effects are of price partitioning on consumer behaviour and has introduced a new set of behavioural effects that result from price partitioning.
"We have shown that price format influences the amount of attention consumers invest in various product attributes: an all-inclusive price discourages a thorough assessment of the offer while a partitioned price sensitizes consumers to secondary attributes they might otherwise overlook".
To view the research paper, see attached
Price partitioning research paper
Created: Thursday 01 May 2008
Can firms shape their environments to gain an architectural advantage?
Michael G Jacobides, Associate Professor of Strategic and International Management talks about how firms can shape their environments to gain an architectural advantage.
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In a new podcast, Michael G Jacobides, Associate Professor of Strategic and International Management, and Sumantra Ghoshal Fellow at the Advanced Institute for Management Research, talks about how firms can shape their environments to gain an architectural advantage, and about the new rules for strategy and success through innovation.
Dr. Jacobides begins the podcast by considering how the very competitive landscape changes – and what firms can do to succeed. “Firms don’t only compete in a sector; they compete to shape the structure of the sector. Successful firms understand that a key driver for success is to shape their competitive environment, its about redefining who does what -- and that shapes who takes what.”
Drawing on his recent research, he goes on to discuss examples of how firms such as Google, IBM and Apple have gained (or lost) an architectural advantage. The podcast concludes by explaining how sectors are being redefined by innovative firm that change competition from a tactical confrontation to guerrilla warfare.
Listen to this podcast to hear more of Michael G Jacobides’ insights on architectural advantage and the new rules of competitive advantage.
The full length podcast is available on the podcast page.
Created: Tuesday 22 April 2008
Why the credit crunch took hold
Why the credit crunch took hold and what the authorities should do to avoid a repeat of the crisis and to quell the current economic turmoil.
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In a new podcast, Richard Portes, Professor of Economics, talks about why the credit crunch took hold and what the authorities should do to avoid a repeat of the crisis and to quell the current economic turmoil.
Portes begins the podcast by explaining who is responsible for the spread of problems across borders and markets. “The main players initially were the banks; they took loans, sliced them and diced them in various ways, then sold them on in the ‘originate to distribute’ model which is now in question”.
He goes on to discuss the central banks’ efforts to underpin the markets, monetary policy, the roles of accountants, auditors and the rating agencies, and what should be done.
Listen to this podcast to hear Richard Portes’s insights on the credit crunch.
Created: Tuesday 08 April 2008
Smart Business Leaders Understand Confidence Affects Decision-Making
Smart business leaders understand that confidence affects decision-making and ultimately a company’s earnings. But giving employees positive feedback in the hopes of promoting better decisions sometimes can backfire, suggests new research from the Kellogg School of Management, the psychology department at Northwestern University, and the London Business School.
Across several studies, the research examines how boosting self-esteem - whether contemplating one’s own accomplishments or receiving positive feedback from others - affects the face-saving impulse to justify and recommit to decisions whose outcomes seem dubious at best.
The authors find that some types of positive feedback can actually escalate perceived threats to the ego and increase the need to prove that a questionable decision was the right one.
The challenge is to instill confidence in people so they can change, rather than justify, the course of a failing strategy, concluded lead author Sivanathan. “Our work offers organizations a framework for systematically leveraging self-affirmation processes so that people will be less likely to recommit to decisions not producing optimal results.”
Gillian Ku, Assistant Professor of Organisational Behaviour collaborated and co-authored this article along with; Niro Sivanathan (Kellogg; joining LBS this Autumn), Daniel Molden (Northwestern University), and Adam Galinsky (Kellogg). The research will be published in an article titled “The Promise and Peril of Self-affirmation in De-escalation of Commitment,” currently in press at Organizational Behavior and Human Decision Processes (published by Elsevier).
Created: Monday 31 March 2008
The Sixth Annual British Regulatory System Report Co-Authored by Tim Ambler
The sixth annual British Regulatory System report co-authored by Tim Ambler of London and Francis Chittenden of Manchester Business Schools, examines how the UK regulatory system works in practice and whether it follows the Government’s own guidelines. The report is published by the British Chambers of Commerce and begins with a brief review of previous recommendations and documents the progress made and where they stand now. It then focuses on the EU Impact Assessment process before turning to the UK.
Over the last decade regulation has become a major UK industry. Tens of thousands are employed not in commerce to grow GDP but to interfere in that process. Each regulation has a purpose and many contribute to national well being but “better regulation” in practice has come to mean “more regulation”. The Impact Assessment system designed to control the volume may have improved quality at the margins but the original purpose of Regulatory Impact Assessments, namely challenging the need for the regulation and the serious consideration of alternatives, has not been met. The National Audit Office has reached similar conclusions.
The report goes on to discuss how the weaknesses of the UK and the EU Impact Assessment systems are compounded by the lack of synchronisation between them.
The comparison of the EU and UK systems leads to a simple conclusion: the EU very rarely employs Impact Assessments for legislation, and even more rarely quantifies them thoroughly but, when it does so, the system works very well. Conversely, the UK goes through the motions with all relevant regulations but so superficially that the system does not work.
The research concludes that neither the UK nor the EU Impact Assessment systems are working effectively to challenge, inform and shape new regulations.
To view the report, click here
Created: Monday 31 March 2008
Challenges for charitable investors
The challenges facing philanthropic and charitable investors today.
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The latest in a series of London Business School podcasts featuring members of faculty is now online.
In a new podcast, Elroy Dimson, BGI Professor of Investment Management, talks about philanthropic and charitable investors, and the unique challenges they face in the current economic climate.
Professor Dimson begins the podcast by discussing how market conditions have changed. “Markets have subsided but they haven’t gone down at the rate we experienced at the beginning of this decade”. He then talks about how one should be positioning a fund for 2008/9.
He goes on to discuss specific challenges for charitable investors and factors that they need to take into consideration that other investors may ignore. The podcast concludes by explaining the benefits of the Foundation and Endowment Asset Management programme held in June each year, at London Business School.
Listen to this podcast to hear more of Elroy Dimson’s insights on charitable investing
The full length podcast is available on the podcast page.
Created: Thursday 27 March 2008
Is there hope for the planet?
How to get businesses on board with environmentally innovation
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The latest in a series of London Business School podcasts featuring members of faculty is now online.
Yiorgos Mylonadis, Adjunct Assistant Professor of Strategic and International Management, talks about how to encourage companies to find ways to beat global warming.
Mylonadis discusses how most companies are motivated by the fear of being penalised if they do not reduce their green house emissions, which often means that they will only do the bare minimum that is required by law.
Rather, he suggests that if there are ‘prizes’ to be gained for being environmentally friendly then companies will be more likely to develop environmental innovations.
The need to balance the demands of shareholders, who want to grow the bottom line, along with a company’s desire to adopt environmental practices is raised as is the work of Richard Branson to encourage innovation in this area.
Listen to this podcast to hear more about what businesses can do to ensure there is hope for our planet.
The full length podcast is available on the podcast page.
Created: Tuesday 18 March 2008
Global Investment Returns Yearbook
GIRY 2008 finds momentum trading can deliver big profits to investors
Momentum trading involves buying past winners and selling past losers. It sounds too easy to be worth doing. In a well-functioning stock market, it should be impossible to make consistent profits from such a simple system. But new research reveals large potential gains from momentum trading.
The research appears in the 2008 edition of the ABN AMRO Global Investment Returns Yearbook. The Yearbook is the most comprehensive and authoritative work of its kind. It analyses total returns since 1900 for stocks, bonds, cash, foreign exchange and inflation in 17 major markets, covering North America, Asia, Europe and Africa.
Professors Elroy Dimson, Paul Marsh and Mike Staunton, of London Business School—study all 17 stock markets to update the international evidence on momentum. And in a completely new investigation, they go back to 1900 to see whether momentum worked in a previously unresearched era.
For more information see press release and view the synopsis below
Created: Thursday 14 February 2008
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