Business schools are still trying to make sense of the Great Recession and its aftermath. As the world faces a still struggling economy, many business professors are conducting research designed to help organizations (not to mention governments) choose the right kinds of leaders and make knowledgeable decisions about money and investments. Here is a rundown of some of the research relevant to these pressing issues coming out of the nation’s top business schools.
Nice Guys Finish Last
Knowing what traits make a leader most effective can be a challenge. Ever wonder, for instance, whether leaders are better off being generous or dominant? Research that will be published in the Journal of Personality and Social Psychology suggests that nice people are often seen as weak. When faced with fierce competition from another group, people want their leaders to be dominant, but when confronted with a less competitive situation, they want generosity from their leaders, writes Nir Halevy, acting assistant professor of organizational behavior at the Stanford Graduate School of Business, in an e-mail.
To come to this conclusion, the research team, which included Eileen Chou and Robert Livingston of Northwestern’s Kellogg School of Management and Taya Cohen of Carnegie Mellon’s Tepper School of Business, conducted three experiments that asked participants to decide whether to keep $20 worth of game chips for themselves or give them to their group. The experiments were constructed in such a way that contributions either benefited the participant’s team or simultaneously benefited the participant’s team while harming another team. People perceived contributors who helped the team as admirable and somewhat weak, whereas those who harmed others were seen as dominant but less admirable.
Knowing when to be generous and when to be dominant is part of being a good leader, according to the findings, writes Halevy. “These changes in group members’ preferences for different types of leaders bring to mind famous historic examples” such as Winston Churchill, writes Halevy, “[leaders] who experienced different levels of support at different times as a function of their group’s situation.”
Scary Stock Market
Lately everyone has been terrified of the stock market, and with good reason: It’s been acting like a roller-coaster ride full of thrills and spills. For years, pundits have speculated that fear drives the stock market. Recently researchers Eduardo B. Andrade, associate professor of marketing at the University of California, Berkeley Haas School of Business, and Chan Jean Lee, a PhD candidate in the Haas marketing group, conducted an experiment in which some participants viewed horror movies while others watched historical documentaries. Then both groups participated in a stock market simulation that had them selling a $10 stock. Prices would decrease if anyone sold his or her stock, and they would increase if everyone hung onto his or her stock. The researchers found that those who had watched the horror flicks were more likely to get rid of their stock early. There was a twist to determine if one’s peers would influence one’s behavior. When researchers told participants the stock’s value was computer-generated, as opposed to being determined by the buying and selling decisions of the group, the viewing of horror movies played no role in the decision-making.
The research, which is in the November issue of the Journal of Marketing Research, shows that even mild changes in a person’s emotional state can have a high impact on decision-making, writes Andrade in an e-mail. In addition, those who see the market as being random will respond to fear differently than those who see it as being influenced by others’ decisions.
“People often see feelings and thoughts as separate entities and even opposing forces,” explains Andrade. “This is a mistake. Thoughts help shape/define emotions and the impact of emotions on behavior is often contingent on people’s [prior experiences].”
In the age of cutbacks, government has paid lots of attention to teachers and layoffs and tenure. Jonah Rockoff, an associate professor of business at Columbia Business School, and Cecilia Speroni, a former PhD student at Columbia University’s Teachers College, in their research tackled a related debate about using objective data on student achievement to evaluate teacher performance. The study looked at whether performance evaluations conducted by superiors were a clear indicator of student achievement.
To do this, the researchers analyzed the behavior, demographics, and standardized test scores in math and English of students in grades three to eight in the New York City public school system and compared them to the evaluations their teachers received either prior to working or in their first year on the job. In this study, the researchers found that teachers who received positive feedback from superiors had students who were higher achievers.
Education is not the only field that can benefit from this study, which was published in the October 2011 issue of Labour Economics, writes Rockoff. “There will always be some employees who are well-liked by supervisors but do poorly when one looks at hard numbers, and others whose supervisors give them low marks but knock the ball out of the park when the data are crunched,” he writes. “This underscores why we need balance. None of these measures is perfect, so it’s harder to find the best employees if you only look at one piece of information.”
Those who think the Great Recession killed high-end designer labels are mistaken, according to a recent study by Xavier Drèze, associate professor of marketing at the UCLA Anderson School of Management, and Joseph C. Nunes and Young Jee Han of the University of Southern California Marshall School of Business. By looking at data collected both before and during the recession by designer handbag labels Louis Vuitton and Gucci, the researchers found that products introduced during the slowdown featured the brand more prominently. The expectation that the brand would be toned down during hard times was unfounded, and the companies did not reduce prices either.
Pundits who are saying that luxury is out of fashion are wrong, according to this research, which was published in the April 2011 issue of the Journal of Consumer Psychology. “While Vuitton and Gucci pared down their product lines (removing more products than they added), the new products tend to be louder and pricier than products they deleted,” writes Drèze in an e-mail. “It looks like they are catering to those customers who use luxury goods as a signal to others that they are doing well. If they were to stop buying, it would imply that they are not doing as well as they want others to believe; thus, they keep buying, and they keep buying loud.”