Research Seminars

Accounting & Management Control

Speaker: Bjorn Jordensen
LSE

7 November 2014 - Room T004 - From 2:00 pm to 4:00 pm


Unveiling Hidden Markov Models in Marketing, One-day Workshop Labex-Ecodec

Marketing

Speaker: Eva Ascarza and Oded Netzer
Assistant Professor of Marketing and Associate Professor of Business , Columbia University

19 September 2014 - Room T033 - From 8:30 am to 6:00 pm


Unveiling Hidden Markov Models in Marketing

Customers or the business environment often transition over time from one mode of behavior to another. For example, a customer may transition from a more positive relationship with the firm to a less positive one due to exposure to an attractive competitor. However, managers often do not observe the customer’s buying behavior state, neither the transitions from one state to another. Rather, they need to infer such changes from the customer’s observed behaviors (e.g., purchases, transactions, searches). Hidden Markov models (HMMs) are valuable tools for such situations. More generally, HMMs are useful for situations in which the marketer or researcher is interested in identifying a (dynamic) latent state of the world from a series of (possibly noisy) observations. Recently, these models have been widely applied to marketing problems. In marketing, firms are often interested in understanding their customers’ latent buying behavior state and assessing how the firm can use its marketing levers to move customers to a more favorable state to the firm.

In this workshop we will discuss what are hidden Markov models, what are their advantages and perils and how should one go about applying such models to marketing data. We will demonstrate these topics using example of applications of these models in marketing and related fields. The workshop will also include hands on estimation of hidden Markov models using R. No pre-existing knowledge of R will be assumed, though participants are encouraged to install the R statistical software (freely available from http://www.r-project.org/) on the laptops prior to the workshop.

How firms can go wrong by offering the right service contract: Evidence from a field experiment

Marketing

Speaker: Eva Ascarza
Assistant Professor of Marketing , Columbia Business School

18 September 2014 - Room T025 - From 1:00 pm to 2:30 pm


"How firms can go wrong by offering the right service contract: Evidence from a field experiment”


Eva Ascarza (with Raghuram Iyengar, and Martin Schleicher)


Abstract:

Service firms typically offer customers a menu of pricing plans so that they may select the appropriate plan. Past evidence suggests that this may not be always the case; often customers find themselves in tariffs that do not minimize their costs. An increasingly popular strategy is to recommend plans to customers. In this paper, we examine the effectiveness of this strategy using a randomized field experiment in which some customers were offered plan recommendations and some were not. Our results indicate that encouraging customers to switch to cost-minimizing plans can, surprisingly, harm firm profitability primarily due to an increase in customer churn. We propose two drivers for how the campaign increased churn, namely, by lowering customers’ inertia to switch plans and by enhancing customers’ sensitivity to past overage (i.e., usage beyond the free allowance). Our data provide empirical evidence for both drivers. By leveraging the richness of our field experiment, we assess the impact of targeted encouragement campaigns on customer behavior and firm revenues.

"Idea Generation, Creativity, and Prototypicality”

Marketing

Speaker: Oded Netzer
Associate Professor of Business , Columbia University

18 September 2014 - Room T025 - From 1:00 pm to 2:30 pm


"Idea Generation, Creativity, and Prototypicality”


Oded Netzer (with Olivier Toubia)

Abstract:

In this paper we use text mining and semantic network analysis tools to improve our understanding of the idea generation process. Our contribution is both theoretical and practical. From a theoretical perspective, we link the judged creativity of an idea to the semantic relationships among the set of concepts used to form this idea. The concepts related to any idea generation topic can be represented as a semantic network. Each idea contains a subset of these concepts, which form a semantic subnetwork. The structure of this subnetwork reflects a distribution between novel and familiar combination of concepts. We show a “beauty in averageness” or prototypicality effect, such that ideas with semantic subnetworks that have a more prototypical structure are judged as more creative. We show the robustness of this effect in eight studies across multiple domains. While we focus on judged creativity, the effect also holds with measures of overall idea quality coming from consumers or industry experts. From a practical perspective, we show that our research may be used to automatically text mine and identify promising ideas, and develop online idea generation tools that recommend concepts to users on the fly to help them improve their ideas.

Annual Earnings Guidance and the Smoothing of Analysts’ Multi-Period Forecasts

Accounting & Management Control

Speaker: Joshua Ronen
Annual Earnings Guidance and the Smoothing of Analysts’ Multi-Period Forecasts , Stern School of Business, New York University

12 September 2014 - Room T004 - From 2:00 pm to 4:00 pm


This paper examines the effect of management annual earnings guidance on the volatility of analysts’ multi-period earnings forecasts and on the volatility of subsequent reported earnings. We conjecture that, facing the pressure to meet and beat analysts’ forecasts and driven by the perceived capital market benefits of reporting a smooth earnings path, managers issue annual guidance to smooth the time-series path of analyst forecasts, a strategy we term “expectation smoothing.” Our empirical results support our conjecture: the volatility in analysts’ multi-period forecasts is smoothed by annual guidance, which in turn results in smoother actual earnings and higher likelihood of meeting and beating analyst forecasts. We provide evidence that issuing quarterly guidance does not affect the smoothness of analysts’ earnings expectations and that managers with longer horizons are more likely to issue annual guidance, consistent with the unique longer term effects of annual earnings guidance.

SHALLOW COMMUNICATORS VERSUS METICULOUS SPECIALISTS? THE DEPARTMENTAL CULTURES OF MARKETING, SALES, AND R&D

Marketing

Speaker: Martin Klarmann
Professor of Marketing , Karlsruhe Institute of Technology (KIT)

11 September 2014 - Room T022 - From 1:30 pm to 3:00 pm


Christian Homburg, Silke Esser, and Martin Klarmann

SHALLOW COMMUNICATORS VERSUS METICULOUS SPECIALISTS?
THE DEPARTMENTAL CULTURES OF MARKETING, SALES, AND R&D

Abstract

Conventional wisdom holds that culture-like practices prevail in firms’ departments and that marketing may differ culturally from other functional areas, such as R&D and sales. This paper describes three studies that seeks to analyze departmental cultures empirically. The first study describes the departmental cultures of marketing, sales, and R&D based on responses from more than 600 German employees. Results confirm that differences in departmental culture exist, even if firm culture, educational background, personality, and industry affiliation are controlled for. The second study compares the German sample to data from China, France, and Russia. Results from this sample of more than 1,000 employees overall, reveal that the cultural profiles of departments are for the most part consistent across countries. Only for four out of ten relevant cultural dimensions differences emerge between countries. The third study looks at the impact of departmental cultures on decision-making. A survey of more than 150 individuals with a wide range of professional and private backgrounds reveals that departmental culture could indeed affect organizational decision-making, especially if departmental affiliation is activated.

Financial Statement Comparability and the Efficiency of Acquisition Decisions

Accounting & Management Control

Speaker: Daniel W. Collins
Financial Statement Comparability and the Efficiency of Acquisition Decisions , University of Iowa

4 July 2014 - Room S210 - From 2:00 am to 4:00 am


This study examines whether acquirers make better acquisition decisions when target firms’ financial statements exhibit greater comparability with industry peer firms. We predict and find that acquirers’ make more profitable acquisition decisions when targets’ financial statements are more comparable—as evidenced by higher merger announcement returns, higher acquisition synergies, and better future operating performance. We also find that post-acquisition goodwill impairments and post-acquisition divestitures are less likely when target firms’ financial statements are more comparable. Finally, we find the effect of targets’ comparability is more pronounced when acquirers’ ex-ante information asymmetry is higher and when acquisitions are accomplished via tender offers to target shareholders. In total, our evidence suggests targets’ financial statement comparability helps acquirers make better acquisition-investment decisions and fosters more efficient capital allocation.

GREEN SUPPLY CHAIN MANAGEMENT: ORGANISATIONAL IMPLICATIONS AND POLICY INSIGHTS FROM THE AUSTRALIAN CARBON TAXING

Operations Management & Information Technology

Speaker: Behnam Fahimnia
Associate Professor of Supply Chain Management , The University of Sidney Business School

23 June 2014 - HEC - Building S - Room S122 - From 11:00 am to 12:30 pm


Carbon emissions are receiving greater scrutiny in many countries due to international forces to reduce anthropogenic global climate changes. Having the world's highest per capita carbon dioxide emissions, Australia has debated the merits of introducing various governmental carbon policies for over two decades. Various Australian studies on the economic implications of carbon pricing focused on whether a determined tax rate on carbon emissions is more effective than free market trading. Initial simulation results revealed that a carbon tax in Australia can cut emissions across the economy effectively, but will cause a mild economic contraction. In 2011, for the first time in Australian history, carbon pricing legislation passed the Australian Federal Parliament and as a result a carbon tax was introduced in July 2012. Since then, empirical policy investigations have tended to focus on the impact of the scheme on the national economy and emission reductions.
From an organisational perspective, the focus has been placed on how best to respond to the new carbon regulatory policy and jointly improve the organisational economic and environmental performance. In particular, determining how the scheme would influence supply chain decisions; for example, when and on what supply chain processes to invest to minimise the economic impacts of the scheme while concurrently improving the emission performance. Using a set of supply chain planning and optimisation case studies, this presentation will discuss our empirical findings on the organisational implications of carbon taxing in Australia and the related policy insights that can be gained from these outcomes.

Performance Management in UK Higher Education Institutions: The Need for a Hybrid Approach

Accounting & Management Control

Speaker: Monica Franco-Santos
Performance Management in UK Higher Education Institutions: The Need for a Hybrid Approach , Cranfield University

20 June 2014 - Room X118 - From 2:00 am to 4:00 am


This research investigates current practice and trends in the institutional performance management of UK Higher Education Institutions (HEIs).
We adopt a holistic view of institutional performance management – we understand it as a package or a system of the formal and informal mechanisms an institution uses to facilitate the delivery of its mission. Individual performance development reviews or appraisals are just one small component of an institutional performance management system.
Background
• Traditionally, HEIs have seen themselves as stewards of knowledge and education, focusing on long-term scholarly goals comprising the development of knowledge and the greater good for society at large.
• This view of HEIs is changing, as they are currently becoming more short-term and results/outputs driven due to the increased pressures to perform (e.g., international competition, reduced financial resources, research assessment frameworks, rankings).
• HEIs are intensifying their use of performance management mechanisms at all levels to facilitate the delivery of their goals.
• Nevertheless, we know little about the type of performance management mechanisms used in UK HEIs and the influence these mechanisms have on the wellbeing of staff and the performance of HEIs as a whole. This research was designed to address these gaps in our knowledge.
Research methods
• We used case studies to look at the performance management mechanisms in six universities. Three Russell Group and three post-1992 universities were involved and the research focused on both academic and administrative staff. This included interviewing 110 key informants from across institutions, from vice chancellors to front line staff in central services and in four schools/faculties (Education, Math, Business & Management, and Art).
• We also surveyed staff working in 162 UK HEIs through an online survey obtaining over 1000 usable responses. The results from the survey were combined with other publicly available data, from the National Student Satisfaction survey, the last Research Assessment Exercise, the Higher Education Statistics Agency (HESA), and the Universities and College Union’s (UCU) academic staff wellbeing survey.
Findings
• The performance management mechanisms UK HEIs use can be classified into two categories: stewardship-based and agency-based.
• Stewardship approaches focus on long-term outcomes through people’s knowledge and values, autonomy and shared-leadership within a high trust environment.
• Agency approaches focus on short-term results or outputs through greater monitoring and control.
• Most UK HEIs adopt a combination of stewardship and agency performance management mechanisms but most institutions are moving towards an increased adoption and greater use of agency mechanisms.
• Institutions with a mission that is focused on long-term and highly complex goals, which are difficult or very costly to measure (e.g., research excellence, contribution to society) are likely to benefit from relying on stewardship performance management mechanisms to convey their mission.
• Institutions with a mission that is focused on short-term and low complex goals, which are often easy or economical to measure (e.g., cost-reduction, surplus maximization) are likely to benefit from relying on agency performance management mechanisms to convey their mission.
• Institutions with a diverse mission including goals with various degrees of complexity and time orientation will benefit from relying on a hybrid performance management approach.
• Most people in professional, administrative and support roles find agency performance management mechanisms helpful as they provide greater clarity and focus.
• Most people in academic roles find agency performance management mechanisms such as individual performance reviews as unhelpful and dysfunctional.
• Institutions’ use of stewardship mechanisms is associated with higher levels of staff wellbeing as well as higher student satisfaction.
• Institutions’ use of agency mechanisms is associated with lower levels of staff wellbeing as well as lower levels of institutional research excellence.
• High staff wellbeing is associated with higher HEI’s research excellence, students’ satisfaction, students’ employability, and financial results.
Recommendations
The report suggests that there is not a ‘once size fits all’ performance management approach for all institution and for all staff. Institutions need to adopt and use those performance management mechanisms that are ‘fit for purpose’. The current missions of HEIs are highly diverse comprising long-term outcomes as well as short-term results/outputs. The roles in their own context required for delivering the different HEIs missions require the co-existence of both stewardship and agency mechanisms. Thus the challenge for UK HEIs is to craft a hybrid performance management approach that will allow them to deliver across the breadth of their mission.

SUPERSTAR SUBSIDIARIES AND INNOVATION IN MULTINATIONAL COMPANIES

Operations Management & Information Technology

Speaker: Ivo Zander
Professor and Head of the Entrepreneurship Department , Uppsala University

12 June 2014 - Ecole des Mines de Paris - 60 Bd Saint-Michel 75006 Paris - From 5:00 pm to 7:00 pm


A multinational corporation MNC can be modeled as a network of differentiated units internationally dispersed.
However, there are variations in the technological and strategic contributions of the subsidiaries. Among them, some take on strategic roles for the MNC globally and play a crucial role in designing new technology of significant importance for the development of the entire group. A very small number have consistent and highly significant technological contributions to the multinational group. We label them “superstar subsidiaries”.
Based on the evolution of two foreign subsidiaries of two Swedish multinational companies - the German subsidiary of ball bearing manufacturer SKF and the U.S. subsidiary of agricultural equipment producer Alfa Laval- the presentation will highlight what differentiates superstar subsidiaries from others in the multinational company, and in particular the origins and underlying drivers of these differences. A longitudinal investigation into the technological, business, and organizational development of both firms suggests that a number of factors need to coincide for a foreign subsidiary to develop superstar status. These factors include large and munificent local markets, high relative profitability, autonomy within the overall multinational group, as well as dynamic interrelationships between these factors.