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Out of Office: New Baylor Management Study Examines Relationship Between Stress and Remote Work

Researchers say people with high emotional stability and autonomy are best suited for remote-work opportunities Many U.S. employees believe working from home – or at least away from the office – can bring freedom and stress-free job satisfaction. A new Baylor University study says, “Not so fast.” The study, published recently in the European Journal of Work and Organizational Psychology, examines the impact of remote work on employee well-being and offers several strategies to help managers provide remote-work opportunities that are valuable to the employee and the company. “Any organization, regardless of the extent to which people work remotely, needs to consider well-being of their employees as they implement more flexible working practices,” the researchers wrote. A total of 403 working adults were surveyed for the two studies that made up the research, said lead author Sara Perry, Ph.D., assistant professor of management in Baylor University’s Hankamer School of Business. The research team measured each employee’s autonomy (the level of a worker’s independence), strain (defined in this study as exhaustion, disengagement and dissatisfaction) and emotional stability. Emotional stability, Perry explained, “captures how even keeled someone is or, on the opposite end, how malleable their emotions are. An example would be if something stressful happens at work, a person who is high on emotional stability would take it in stride, remain positive and figure out how to address it. A person low on emotional stability might get frustrated and discouraged, expending energy with those emotions instead of on the issue at hand.” The research found that: • Autonomy is critical to protecting remote employees’ well-being and helping them avoid strain. • Employees reporting high levels of autonomy and emotional stability appear to be the most able to thrive in remote-work positions. • Employees reporting high levels of job autonomy with lower levels of emotional stability appear to be more susceptible to strain. Perry said the study contradicts past research that says autonomy is a universal need that everyone possesses. Per this research, those who are lower in emotional stability may not need or want as much autonomy in their work. “This lower need for autonomy may explain why less emotionally stable employees don’t do as well when working remotely, even when they have autonomy,” researchers wrote. In addition to their findings, the researchers offered several recommendations for managers who design or oversee remote-work arrangements. The research team advised managers to consider their employees’ behavior when deciding who will work remotely. “I would suggest managers look at employee behaviors, rather than for personality traits, per se,” Perry said. “For example, if someone does not handle stress well in the office, they are not likely to handle it well at home either. If someone gets overwhelmed easily, or reacts in big ways to requests or issues in the office, they are likely less well positioned to work remotely and handle that responsibility and stress.” Based on this study, individuals with high emotional stability and high levels of autonomy are better suited for remote work, but such candidates might not always be available. “If less emotionally stable individuals must work remotely, managers should take care to provide more resources, other than autonomy, including support to help foster strong relationships with coworkers and avoid strain,” they wrote. Managers might also consider providing proper training and equipment for remote work, including proper separation of work and family spaces, clear procedural and performance expectations and regular contact (virtual or face-to-face) with coworkers and managers. ABOUT THE STUDY “Stress in Remote Work: Two Studies Testing The Demand-Control-Person Model,” published in the European Journal of Work and Organizational Psychology, is authored by Sara Perry, Ph.D., assistant professor of management, Hankamer School of Business, Baylor University, Emily Hunter, Ph.D., associate professor of management, Hankamer School of Business, Baylor Univeersity, and Cristina Rubino, professor of management, David Nazarian College of Business and Economics, California State University Northridge. ABOUT BAYLOR UNIVERSITY Baylor University is a private Christian University and a nationally ranked research institution. The University provides a vibrant campus community for more than 17,000 students by blending interdisciplinary research with an international reputation for educational excellence and a faculty commitment to teaching and scholarship. Chartered in 1845 by the Republic of Texas through the efforts of Baptist pioneers, Baylor is the oldest continually operating University in Texas. Located in Waco, Baylor welcomes students from all 50 states and more than 80 countries to study a broad range of degrees among its 12 nationally recognized academic divisions. ABOUT HANKAMER SCHOOL OF BUSINESS Baylor University’s Hankamer School of Business provides a rigorous academic experience, consisting of classroom and hands-on learning, guided by Christian commitment and a global perspective. Recognized nationally for several programs, including Entrepreneurship and Accounting, the school offers 24 undergraduate and 13 graduate areas of study. Visit www.baylor.edu/business and follow on Twitter at www.twitter.com/Baylor_Business.

Ethics Quandary? Women in PR More Apt to Seek Allies Before Giving Execs Advice

Women in public relations are more likely than men to seek allies and form coalitions before they give ethics counsel to senior leaders, while men are more likely to rely on presenting research, according to a Baylor University study. The study also showed that while senior public relations executives in the study overall tend to use “rational approaches,” such as research, case studies and appeals about what is right and lawful, success depends on building relationships with colleagues in other departments so that they have backup when ethical issues arise. “A PR person can be the conscience, but are they listened to? Are they respected? Are they at the table?” one woman said. “You can be doing everything right, but if nobody is listening to you, it really doesn’t matter a whole lot. Except that you can sleep at night.” The study — “The Use of Influence Tactics by Senior Public Relations Executives to Provide Ethics Counsel” — is published in the Journal of Media Ethics. The article highlights the need for younger PR practitioners to seek out senior PR executives as mentors before and during confrontation of ethics issues, said lead author Marlene Neill, Ph.D., assistant professor of journalism, public relations and new media in Baylor’s College of Arts & Sciences and author of the book “Public Relations Ethics: PR Pros Tell Us How to Speak Up and Keep Your Job.” “What inspired us to conduct this research were findings from a study I conducted in 2016 with Millennials working in public relations,” Neill said. “Survey results indicated that Millennials did not feel prepared to provide ethics counsel, were unlikely to speak up and did not even expect to face ethical dilemmas. We decided to conduct this study to instruct them how to do this effectively based on the experiences of senior executives working in our industry.” Researchers conducted through in-depth interviews with an elite selection of 55 public relations executives, many of them with Fortune 500 companies. They included members of the *Public Relations Society of America (PRSA) College of Fellows and The Arthur W. Page Society, with the combined sample averaging 33 years in PR. They represented 19 states and industries including government, healthcare, telecommunications, financial services and energy. Interviewees discussed ways to exert influence, ethics training and whether they are of value as an ethics counselor. “Some see it as being of little use; some recommend the PR practitioner take a modest role in encouraging consideration of ethics among multiple leaders,” Neill said. But others felt strongly that they should be an “organizational conscience” when they think company actions might pose an ethical dilemma with troubling consequences. One reason to do so is that without “boat-rocking” with straightforward tactics   an organization, some may turn outside the company by whistleblowing or leaking information to stakeholders, media or government officials. “Our study found that building relationships was critical for practitioners to ensure that other executives would listen to and respect their counsel,” Neill said. “That doesn’t mean they always won the debate, but relationship building has to do with building respect and trust.” While the interviewees’ most common approach to influencing was rational, followed by coalition-building, “some said they relied on persistence and assertiveness if they felt an issue was so objectionable they could not stay silent,” Neill said. “A few people turn to ingratiation, such as flattery.” When it comes to differences in how genders approach the role of ethics counselor, one reason women may recruit allies is that they tend to be outnumbered by men in the boardroom, Neill said. One woman said that “Going in force can help your case. But sometimes it can backfire . . . you know, if somebody wants to kill the messenger. But if several people come to you with the same messaging, I think you take notice.” Another woman said that she was “reprimanded for being so forthright. So, I didn’t do it that way anymore.” Some women were wary of using emotional appeals. Because of stereotypes about women being emotional in the workplace, “I probably erred in the other direction,” one woman said. Men, meanwhile, were more likely to prefer informational sources of power such as research and case studies, Neill said. But both genders said they ask questions, discuss, listen, share alternatives or solutions and recommend. A few men and women used more confrontational descriptions, such as saying, “We absolutely put our foot down” and “Tell them it’s wrong.” But in the case of women, “some of these more confrontational accounts were used in connection with allies or coalitions,” Neill said. In a few cases, men and women gave examples of resigning accounts or refusing to accept new clients if they decided the client’s business was not worth the ethical cost. Many interviewees said they had received ethics training through PRSA. A few said they had received training through their employer, college courses, personal study and mentors. A few pointed to their religious upbringing. Some of the more common ethics issues centered around communication, such as open disclosure of information, inaccurate information or sending fake letters to an editor. But others were business challenges, such as abusive behavior toward subordinates, misuse of public funds, smear campaigns and conflicts of interest. Neill said that because the study was limited to 55 individuals, a larger study and surveys of senior PR executives in other nations would be valuable. She and a colleague next plan to study to women’s leadership experiences. *PRSA College of Fellows is an exclusive group of approximately 350 senior professionals, each with a minimum of 20 years of experience in PR, Accreditation in Public Relations and recognition for distinguished careers. The Arthur W. Page Society is open by invitation to chief communications officers of Fortune 500 corporations and leading nonprofit organizations, chief executive officers of PR agencies and senior professors from business and communications schools. The study was funded by The Arthur W. Page Center for Integrity in Public Communication and supported by the PRSA Board of Ethics and Professional Standards and PRSA College of Fellows. Co-author is Amy Barnes, associate professor in the School of Mass Communications at the University of Arkansas at Little Rock and co-author of “Public Relations Ethics: PR Pros Tell Us How to Speak Up and Keep Your Job.” ABOUT BAYLOR UNIVERSITY Baylor University is a private Christian University and a nationally ranked research institution. The University provides a vibrant campus community for more than 17,000 students by blending interdisciplinary research with an international reputation for educational excellence and a faculty commitment to teaching and scholarship. Chartered in 1845 by the Republic of Texas through the efforts of Baptist pioneers, Baylor is the oldest continually operating University in Texas. Located in Waco, Baylor welcomes students from all 50 states and more than 80 countries to study a broad range of degrees among its 12 nationally recognized academic divisions. ABOUT BAYLOR COLLEGE OF ARTS & SCIENCES The College of Arts & Sciences is Baylor University’s oldest and largest academic division, with 25 academic departments and seven academic centers and institutes. The more than 5,000 courses taught in the College span topics from art and theatre to religion, philosophy, sociology and the natural sciences. Faculty conduct research around the world, and research on the undergraduate and graduate level is prevalent throughout all disciplines.

Ethical Leadership Can Have Negative Consequences, Baylor University Researchers Say

Coupled with stress, ethical leadership can lead to employee deviance and turnover Ethical leadership is a good thing, right? Certainly, management experts say. But ethical leadership can have negative consequences, too, according to new research from management faculty in Baylor University’s Hankamer School of Business. A 2018 Baylor study published in the Journal of Business Ethics reveals that ethical leadership compounded by job-hindrance stress and supervisor-induced stress can lead to employee deviance and turnover. The research reflects the thoughts of 609 employees who were surveyed across two studies. “If someone is an ethical leader but induces stress, our research shows that his or her employees will feel less support,” said lead author Matthew Quade, Ph.D., assistant professor of management. “Thus, employees who do not feel supported are more likely to consider leaving their jobs or engage in workplace deviance – things like coming in late to work, daydreaming, not following instructions or failing to be as productive as they could be.” Quade said that ethical leadership is a good thing and often beneficial in terms of employee resources. An example would be a trusted supervisor who listens to her employees and has her employees’ best interests in mind. The trouble comes, he said, when supervisor-induced stress or job-hindrance stress enters the picture. “When those stressors are added, there is a depletion of resources,” Quade explained. “Many of the gains or benefits from ethical leadership are negated.” What does stress-inducing ethical leadership look like? Quade said it could be as simple as supervisors setting expectations too high or, in the interest of “following all the rules,” not allowing for any deviation from a process, even if a shortcut, still within the bounds of behaving ethically, would deliver a desired result. The researchers wrote: “Ethical leadership can be an exacting process of sustaining high ethical standards, ensuring careful practice and enforcement of all rules and meeting leaders’ lofty expectations, all of which can consume time and energy and be perceived by employees as overly demanding or an obstacle to job performance.” As part of the study, those surveyed were asked to what extent they agreed or disagreed with the following statements: My supervisor makes it so that I have to go through a lot of red tape to get my job done. Working with my supervisor makes it hard to understand what is expected of me. I receive conflicting requests from my supervisor. My supervisor creates many hassles to go through to get projects/assignments done. Working with him/her thwarts my personal growth and well-being. In general, I feel that my supervisor hinders my personal accomplishment. I feel that my supervisor constrains my achievement of personal goals and development. Quade said his team in no way wants to discourage ethical leadership. Research consistently shows such leadership is very beneficial, he said. But this new research shows that there are boundaries to those benefits. “This places quite an onus on appropriately managing the stress that comes from the leader and the job, in efforts to most fully realize the potential of ethical leadership,” the researchers wrote. The study listed some tips and takeaways for organizations and leaders. They include: Strike a balance between promoting ethical behavior and providing resources to help employees meet those standards. Encourage employees in word and deed by reducing ambiguity in ethical dilemmas that might otherwise drain resources. Model fair and ethical behavior. Communicate efficient methods to meet standards and reduce unnecessary steps or procedures. Equip and train leaders to balance the demands of leading ethically while not overburdening their employees. ABOUT THE STUDY “Boundary Conditions of Ethical Leadership: Exploring Supervisor-Induced and Job Hindrance Stress as Potential Inhibitors” is published in the Journal of Business Ethics. Study authors are Baylor University Hankamer School of Business faculty members Matthew Quade, Ph.D., assistant professor of management; Sara Perry, Ph.D., assistant professor of management; and Emily Hunter, Ph.D., associate professor of management. ABOUT BAYLOR UNIVERSITY Baylor University is a private Christian University and a nationally ranked research institution. The University provides a vibrant campus community for more than 17,000 students by blending interdisciplinary research with an international reputation for educational excellence and a faculty commitment to teaching and scholarship. Chartered in 1845 by the Republic of Texas through the efforts of Baptist pioneers, Baylor is the oldest continually operating University in Texas. Located in Waco, Baylor welcomes students from all 50 states and more than 80 countries to study a broad range of degrees among its 12 nationally recognized academic divisions. ABOUT HANKAMER SCHOOL OF BUSINESS Baylor University’s Hankamer School of Business provides a rigorous academic experience, consisting of classroom and hands-on learning, guided by Christian commitment and a global perspective. Recognized nationally for several programs, including Entrepreneurship and Accounting, the school offers 24 undergraduate and 13 graduate areas of study. Visit www.baylor.edu/businessand follow on Twitter at twitter.com/Baylor_Business.

The Storm After the Storm: Scam Contractors Who Prey on Those Suffering After a Natural Disaster

‘The key is to get a lawyer to look at the contract before you sign it,’ Baylor legal expert says WACO, Texas (Oct. 11, 2018) – Following a natural disaster or strong storm like Hurricane Michael, there is usually a second wave of potential destruction – scam artists looking to line their pockets. “After any major weather-related incident, insurance adjusters and contractors swarm the affected area and, unfortunately, some are looking to take advantage of those in distress,” said Stephen Rispoli, L.L.M, J.D., assistant dean of student affairs and pro bono programs at Baylor Law School. As an attorney, he works with victims of insurance scams. Rispoli said most contractors are legitimate businesspeople helping neighbors rebuild. But there are the unscrupulous ones whose practices inflict financial and emotional pain on people already suffering from storm damage. “The primary result of these scams is financial loss,” Rispoli said. “The homeowners may pay much, much more than they should have to fix the damage, sometimes having to pay multiple contractors for the same work. Sadly, in some cases, homeowners could even lose their homes.” In this Q&A, Rispoli shares some tips to help those reeling from storm damage identify and avoid scammers. Q: Who are the most common victims? A: The most common targets are those in distress following a major storm, the elderly and the disabled. Q: How will scam artists approach a potential victim? A: Usually, contractors will approach homeowners they know have been affected. This happens as simply as the contractor driving through neighborhoods looking for damaged homes. Let’s say, for example, they see a damaged roof with a homeowner standing outside looking at it. They’ll quickly pull over and offer to tarp the roof to prevent damage. The homeowner, already distressed by the storm and the damage to the house, agrees. Once the tarp is on, the contractor then starts asking questions about insurance coverage, which insurance company has insured the house, and helpfully offering his or her opinion on how much it will cost to fix the damage. Unscrupulous contractors will try to take advantage of this situation by pressing the homeowner to sign a contract with them. I have even seen cases where the contractor left all the blanks in the form contract unfilled, including the work to be done and the price, saying things like, “Don’t worry about that, we’ll talk to your insurance company and get it all taken care of, just sign it.” Once the unscrupulous contractor has a signed contract, they can fill in the blanks at their leisure. At this point, they are in total control – they know how much the insurance company will pay, and they can try to squeeze the homeowner for more money by charging too much or with add-ons that may or may not be necessary. Q: What are some of the potential losses victims can suffer? A: Financially, victims could lose money by paying more – sometimes much more – than they should for repairs. Or, in extreme cases, they could even lose their homes. That could happen if the homeowner signs a contract with the contractor that contains a mechanic’s or materialman’s lien provision. Under these provisions, contractors can file a lien with the county for work done on the house to ensure payment. If the homeowner does not pay the contractor the amount owed under the contract, the contractor can seek to foreclose on the house to recover the amount owed. Q: What about dealing with the insurance company? A: It’s important that you cooperate with your insurance company and your adjustor. Call your insurance company as soon as you can. Waiting to file a claim may make the process take longer or complicate matters. You should be responsive to their requests, but don’t be afraid to ask questions if you have them. Be sure to take photographs of any damage or evidence of the storm if it’s safe to do so. After your initial conversation with your insurance company, the company will send an adjustor out and will give you a quote. However, after you’ve had two or three contractors come out and give you estimates, if the adjustor’s quote looks too low, don’t be afraid to ask for another adjustor to come out and give you a quote. You should feel comfortable with the process as you move forward. Q: Is it illegal or unethical for contractors to file liens? A: It is not necessarily unscrupulous for contractors to include a mechanic’s or materialman’s lien provision in the contract. Generally, creditors cannot foreclose on a person’s homestead in Texas. The purpose of a mechanic’s or materialman’s lien provision is to protect the contractor should the homeowner wrongfully refuse to pay for work done on a homestead. On large jobs where several thousands of dollars are at stake, the contractor may rightfully want to make sure that they can be paid for the job. Whether they are appropriate can only be decided on a case-by-case basis. Q: Are there red flags people should look for when presented with a contract? A: Do not sign a contract you are not comfortable with. There are several red flags to look for: pressure to sign a contract, giving you little time to think about it, refusing to let you take the contract to a lawyer, and asking to collect the money directly from the insurance company or pressuring you to give them the check from the insurance company. Q: How do people know if the repair costs presented to them are too high? A: Be sure to get written estimates from several (at least three) contractors. By getting three estimates, you’ll have a better idea of how much the repair should cost. Any estimates that are way lower or way higher than the others are good indications that something is off. If that happens, get another estimate from a different contractor. Do not be afraid to ask contractors to come give you an estimate. It is a normal part of their job, and good contractors will not mind taking the time to do it. Q: How do you know if a contractor is legitimate? A: Do your homework on the contractors. Ask for references and call them, and check with the Better Business Bureau. Be cautious when dealing with contractors who are not from your area, and extra cautious if they are not from Texas or will not provide local references. Q: Contractors often ask for upfront money, don’t they? A: Once the contract is signed and the work begins, be sure to control the money. The contractor will likely ask you to pay some of the contract up front so that they can begin to purchase materials and hire the crew to work on your repair. Try to pay as little as possible. You do not want to give them the bulk of the money up front, because then the incentive to get the job done quickly is diminished. After the job starts, ask the contractor to give you, in writing, progress reports when they ask for more money. Do not pay more than the progress report. Do not give the contractor the final payment until all the work is done. Q: If someone feels they’ve been taken advantage of, are there legal steps they can take? A: The key here is to get a lawyer to look at the contract before you sign it. Once the contract is signed, it will be difficult for a lawyer to undo the damage. If the contractor is trying to foreclose on the home using a mechanic’s or materialman’s lien, a lawyer may be able to save your home. There are several Texas Constitutional and statutory protections for homeowners. If the contractor did not strictly follow the steps necessary to properly attach a lien, a lawyer may be able to keep the foreclosure from happening. ABOUT BAYLOR UNIVERSITY Baylor University is a private Christian University and a nationally ranked research institution. The University provides a vibrant campus community for more than 17,000 students by blending interdisciplinary research with an international reputation for educational excellence and a faculty commitment to teaching and scholarship. Chartered in 1845 by the Republic of Texas through the efforts of Baptist pioneers, Baylor is the oldest continually operating University in Texas. Located in Waco, Baylor welcomes students from all 50 states and more than 80 countries to study a broad range of degrees among its 12 nationally recognized academic divisions. ABOUT BAYLOR LAW SCHOOL Established in 1857, Baylor Law was one of the first law schools in Texas and one of the first west of the Mississippi River. Today, the school has more than 7,400 living alumni. It is accredited by the American Bar Association and is a member of the Association of American Law Schools. Baylor Law has a record of producing outstanding lawyers, many of whom decide upon a career in public service. Baylor Law boasts two governors, members or former members of the U.S. House of Representatives and the U.S. Senate, two former directors of the FBI, U.S. ambassadors, federal judges, justices of the Texas Supreme Court and members of the Texas Legislature among its notable alumni. In its law specialties rankings, U.S. News & World Report ranked Baylor Law’s trial advocacy program as one of the top 5 in the nation. Baylor Law School also is ranked No. 50 in the magazine’s 2019 edition of “America’s Best Graduate Schools.” The National Jurist ranks Baylor Law as one of the “Best School for Practical Training” and No. 4 in the nation in its most recent “Best Law School Facilities” listing. The Business Insider places Baylor Law among the top 50 law schools in the nation. Baylor Law School received the 2015 American Bar Association Pro Bono Publico Award, making it only the third law school in the nation to be honored with the award since the award’s inception in 1984. Learn more at baylor.edu/law.

One Tweak That Can (Instantly) Add Significantly To The Value Of Your Business

If you’re trying to figure out what your business might be worth, it’s helpful to consider what acquirers are paying for companies like yours these days. A little internet research will probably reveal that a business trades for a multiple of your pre-tax profit, which is Sellers Discretionary Earnings (SDE) for a small business and Earnings Before Interest Taxes, Depreciation and Amortization (EBITDA) for a slightly larger business. Ian Fitzpatrick is a Chartered Professional Accountant and a Chartered Business Valuator. He is an expert in advising business owners and entrepreneurs on all aspects of corporate sales, mergers, acquisitions, litigation, succession and ownership issues. In a recent piece, Ian highlights how business owners can take simple steps to add significant value to their enterprises. To learn more, simply click on the short article attached at the bottom. To contact Ian directly, simply click on his icon to arrange an appointment regarding this topic. Source:

Forecasting sales using financial stock market data

Firms use many kinds of data for forecasting future sales—one of the key activities in the management of a business—and combine various methods in order to utilize different types of information. A recent study by Nikolay Osadchiy, assistant professor of information systems and operations management; Vishal Gaur (Cornell); and Sridhar Seshadri (UT Austin) focuses on financial stock market data in developing a new methodology for firm-level sales forecasting, testing it against standard benchmarks such as forecasts from equity analysts and time-series methods. Applying their method to the forecast of total annual sales for US public retail firms, the researchers find their market-based approach achieves an average 15 percent reduction in forecasting error compared with more typical forecasting methods. Their model, they write, can also be applied to hedging operational risk with financial instruments. Source:

Going about business . . . and helping change

Politically oriented organizations, such as those advocating equal rights for lesbians and gays, have long been credited with effecting changes in public policy that reduce discrimination. But what about the role of “ordinary” commercial organizations, such as dry cleaners or insurance agencies or clothing stores, that are affiliated with a “challenger” group that has limited recognition in a political system? A recent article by Giacomo Negro, associate professor of organization and management; Glenn Carroll (Stanford); and Fabrizio Perretti (Bocconi) examines such organizations, which are often overlooked in the study of policy outcomes. The researchers find that “politically mundane” commercial enterprises linked to lesbians and gays can contribute distinctly to local enactment of nondiscriminatory policies. The researchers attribute this to the bridges created between these businesses and the larger community, and to the normalcy and legitimacy signaled by their familiar organizational forms. They find that the more diverse in nature these commercial organizations are, the greater their potential to bring about nondiscriminatory policies. But this potential is diminished, they note, in communities where political organizations, particularly those engaging in contentious action, have a larger presence. The authors conclude that commercial organizations are an important complement to political action and can helpfully challenge discrimination while enhancing community connections and awareness. Source:

The impact of behavioral bias on decision-making

For business leaders, the ability to make critical decisions in a dynamic work and industry environment is essential to the success of an organization. However, Diwas KC, associate professor of information systems & operations management, and coauthors Francesca Gino (Harvard U) and Bradley R. Staats (UNC) note that behavioral traits can sometimes impact the ability to weigh new information and make a logical decision, even in the face of negative news. KC, Gino, and Staats analyze 147,000 choices made by cardiologists during a six-year period when they were presented with negative news from the FDA about drug-eluting stents used in angioplasty. The experienced cardiologists were more likely to continue using the questionable stents than their less-experienced peers, even after being informed of the problem. The role of influence also played a factor in the decision-making. They add, “Given that those who feel they are expert are less likely to react to negative news, those around them show the same tendency, thus making worse decisions than those in groups with less perceived expertise.” The seasoned cardiologists were better able to “generate counterexamples to the negative news and thus be susceptible to confirmation bias.” The authors note managers should be aware that more experience and the perception of expertise may bias decision-making. Source:

Significance of pricing and product-line strategies

In new research, Ramnath Chellappa, associate professor of information systems & operations management, and coauthor Amit Mehra (U Texas) investigate the business practice of IT “versioning,” whereby a company creates different models of a product in order to charge varying prices for each one. Much research takes into account economies of scale and a company’s marginal costs—the price of making an additional unit of a product. However, Chellappa and Mehra note that companies also need to consider consumer usage costs when they decide to create various versions of the same IT product. But for IT products and services, the “costs” are not monetary. The pair note the “time commitment and physical effort” to use IT products or services. They use the example of mobile devices: “One cannot enjoy these information goods without them consuming resources such as memory and processing power.” They determine that “this consumption-related disutility” is critical to feature bundling and consumer segmentation. The researchers create a model to test the consumer cost impact, using a “digital goods firm with a unique production cost structure and agents—consumers who face resource constraints in consuming these goods.” Given the usage costs, they determine that individuals may not necessarily prefer products with more features to lower-quality items. The pair concludes “marginal cost and consumers’ usage costs have the same impact on versioning strategy.” Source:

Managers’ performance measures and their work behavior

Management accounting literature devotes considerable attention to the “controllability principle.” This principle stipulates that managers should only be held responsible for the results they directly control through their actions. The literature argues that the use of less controllable performance measures reduces managerial motivation and causes stress. However, Karl Schuhmacher, assistant professor of accounting; Michael Burkert (U Fribourg); Franz Fischer (independent researcher); and Florian Hoos (HC Paris) argue that there can also be positive effects associated with a lack of controllability. The researchers conducted a survey with 432 business managers, asking questions related to the measures used for their performance evaluations. They concluded that less controllable measures do create stress but also induce proactive work behaviors. In fact, the lack of controllability stimulates managers to cope with stress by interpreting their roles more flexibly and cooperating with peers to seek solutions for organizational problems they cannot control individually. The authors suggest further research to determine how organizations modulate between the positive and negative effects of disregarding the controllability principle. Source: