Findings

The Office: Managing the Workplace, and Climbing Its Ladder

Kevin Lewis

October 22, 2009

When the Boss Feels Inadequate: Power, Incompetence, and Aggression

Nathanael Fast & Serena Chen
Psychological Science, forthcoming

Abstract:
When and why do power holders seek to harm other people? The present research examined the idea that aggression among the powerful is often the result of a threatened ego. Four studies demonstrated that individuals with power become aggressive when they feel incompetent in the domain of power. Regardless of whether power was measured in the workplace (Studies 1 and 4), manipulated via role recall (Study 2), or assigned in the laboratory (Study 3), it was associated with heightened aggression when paired with a lack of self-perceived competence. As hypothesized, this aggression appeared to be driven by ego threat: Aggressiveness was eliminated among participants whose sense of self-worth was boosted (Studies 3 and 4). Taken together, these findings suggest that (a) power paired with self-perceived incompetence leads to aggression, and (b) this aggressive response is driven by feelings of ego defensiveness. Implications for research on power, competence, and aggression are discussed.

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Insincere Flattery Actually Works: A Dual Attitudes Perspective

Elaine Chan & Jaideep Sengupta
Journal of Marketing Research, forthcoming

Abstract:
This research uses a dual attitudes perspective to offer insights into flattery and its consequences. The authors show that even when flattery by marketing agents is accompanied by an obvious ulterior motive that leads targets to discount the proffered compliments, the initial favorable reaction (the implicit attitude) continues to co-exist with the discounted evaluation (the explicit attitude). Further, the implicit attitude has more influential consequences than the explicit attitude, highlighting the subtle impact that flattery can exert even when it has been consciously corrected for. The authors also clarify the underlying process by showing how and why the discrepancy between the implicit and explicit attitudes induced by flattery may be reduced. Collectively, findings from this investigation provide implications for both flattery research and the dual attitudes literature.

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Power, testosterone, and risk-taking

Richard Ronay & William von Hippel
Journal of Behavioral Decision Making, forthcoming

Abstract:
Power has been found to increase risk-taking (Anderson & Galinsky, [2006]) but this effect appears to be moderated by individual differences in power motivation (Maner, Gailliot, Butz, & Peruche, [2007]). Among individuals high in power motivation, the experience of power leads to more conservative decisions. As testosterone is associated with the pursuit of power and status (Dabbs & Dabbs, [2000]), we reasoned that high-testosterone individuals primed with power might be similarly risk-avoidant. Conversely, we hypothesized that high-testosterone individuals primed with low power, would see risk-taking as a vehicle for pursuing potential gains to their status and resources. We report findings from two experiments that are consistent with these predictions. In Experiment 1, higher testosterone males (as indicated by second-fourth digit ratio) showed greater risk-taking when primed with low power. Experiment 2 replicated this effect and also showed that when primed with high power, higher testosterone males took fewer risks.

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When happiness pays in negotiation: The interpersonal effects of 'exit option' directed emotions

Davide Pietroni, Gerben Van Kleef, Enrico Rubaltelli & Rino Rumiati
Mind & Society, June 2009, Pages 77-92

Abstract:
Previous research on the interpersonal effects of emotions in negotiation suggested that bargainers obtain higher outcomes expressing anger, when it is not directed against the counterpart as a person and it is perceived as appropriate. Instead, other studies indicated that successful negotiators express positive emotions. To reconcile this inconsistency, we propose that the direction of the effects of emotions depends on their perceived target, that is, whether the negotiators' emotions are directed toward their opponent's proposals or toward their own 'exit option'. An ultimatum game scenario experiment showed that negotiators who express positive emotion rather than negative, in addition to benefits in terms of relationship fortification, received better offers when participants perceived the negotiators' emotions directed toward their own 'exit option'. These findings indicate that positive emotions may signal the availability of better 'exit option', suggesting that happiness expressions can be strategically used to maximize both material and relational outcomes.

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Impact of Mad Money Stock Recommendations: Merging Financial and Marketing Perspectives

Ekaterina Karniouchina, William Moore & Kevin Cooney
Journal of Marketing, November 2009, Pages 244-266

Abstract:
This article relies on advertising and persuasive communications theories to uncover persistent variations in investor response to television stock recommendations targeting naive investors. The authors use an event study methodology to determine the size of the next-day abnormal market reaction to recommendations on Mad Money with Jim Cramer. Although viewers are actively looking for recommendations, the results show that any individual recommendation is still subject to many of the same communication challenges as traditional advertisements. A regression analysis finds that traditional advertising variables, such as message length, recency-primacy effects, information clutter, and source credibility, influence the size of the market reaction to a "buy" recommendation. The authors discuss implications for marketers, managers of public companies, and those interested in public policy aspects related to televised stock recommendations.

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The Stingy Hour: How Accounting for Time Affects Volunteering

Jeffrey Pfeffer & Sanford Devoe
Stanford Working Paper, August 2009

Abstract:
We examine how the practice of accounting for one's time - so that work can be billed or charged to specific clients or projects - affects the decision to allocate time to volunteer activities. Using longitudinal data collected from law students transitioning to their first jobs, Study 1 showed that exposure to billing time diminished individuals' willingness to volunteer, even after controlling for attitudes about volunteering held prior to entering the workforce as well as the individual's specific opportunity costs of volunteering time. Studies 2-5 experimentally manipulated billing time and confirmed its causal effect on individuals' willingness to volunteer and actual volunteering behavior. Study 5 showed that the effect of exposure to billing time on volunteering occurred above and beyond any effects on general self-efficacy or self-determination. Individual differences moderated the effects of billing, such that people who did not value money as much were less affected.

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Are CEOs expected utility maximizers?

John List & Charles Mason
Journal of Econometrics, forthcoming

Abstract:
Are individuals expected utility maximizers? This question represents much more than academic curiosity. In a normative sense, at stake are the fundamental underpinnings of the bulk of the last half-century's models of choice under uncertainty. From a positive perspective, the ubiquitous use of benefit-cost analysis across government agencies renders the expected utility maximization paradigm literally the only game in town. In this study, we advance the literature by exploring CEO's preferences over small probability, high loss lotteries. Using undergraduate students as our experimental control group, we find that both our CEO and student subject pools exhibit frequent and large departures from expected utility theory. In addition, as the extreme payoffs become more likely CEOs exhibit greater aversion to risk. Our results suggest that use of the expected utility paradigm in decision making substantially underestimates society's willingness to pay to reduce risk in small probability, high loss events.

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Naming Your Own Price Mechanisms: Revenue Gain or Drain?

Dmitry Shapiro & Arthur Zillante
Journal of Economic Behavior & Organization, forthcoming

Abstract:
We experimentally study the profitability of pricing mechanisms that allow customers to quote their own prices, such as Priceline.com's "Name-Your-Own-Price" (NYOP). Presumably firms find this sales method profit-maximizing despite the concerns that NYOP web-sites can cannibalize profit from standard distribution channels. Using a laboratory experiment we compare outcomes between NYOP and posted-price settings. We find that NYOP mechanisms that do not conceal information about products increase profit and consumer surplus. When NYOP channels conceal information about products there is no significant change in profit unless the threshold above which bids are accepted is set near marginal cost, whereby profit decreases.

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Regulatory Exposure of Deceptive Marketing and Its Impact on Firm Value

Martha Myslinski Tipton, Sundar Bharadwaj & Diana Robertson
Journal of Marketing, November 2009, Pages 227-243

Abstract:
Research linking marketing to financial performance has predominantly focused on how marketing assets and actions add value. The authors argue that it is equally important to understand how marketing decisions can reduce firm value. Prior research has indicated that negative events vary greatly in their indirect costs to the firm. On the basis of established theory and in-depth interviews with practitioners, the authors identify a set of factors that can explain the heterogeneity in the magnitude of indirect costs associated with negative marketing-related events. Specifically, they address how the regulatory exposure of deceptive marketing, which carries no direct cost to the firm, affects shareholder value. Using an event study, the analysis shows that incidents of exposed deceptive marketing are associated with significant, negative abnormal returns amounting to a drop of 1%, which translates into a wealth loss of $86 million for the median-sized firm in the sample. In explaining the variation in magnitude of the impact between events, the authors find that, in general, event characteristics are more significant than firm and brand characteristics. When deception is highly egregious or directed at vulnerable populations, firm value is more negatively affected than when the potential to mislead and harm is not readily verifiable. Furthermore, when the cited product has substantial brand market share, the levels of egregiousness and target audience explain substantially more of the variation in event impact than when brand market share is low. The results are robust to alternative stock-portfolio-based measures of abnormal returns, model specification, heteroskedasticity, and examination of risk. The authors' framework and analysis have implications for Wall Street executives, Main Street managers, academic researchers, and public policy makers.

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Making Sense of Cents: An Examination of Firms That Marginally Miss or Beat Analyst Forecasts

Sanjeev Bhojraj, Paul Hribar, Marc Picconi & John McInnis
Journal of Finance, October 2009, Pages 2361-2388

Abstract:
This paper examines the performance consequences of cutting discretionary expenditures and managing accruals to exceed analyst forecasts. We show that firms that just beat analyst forecasts with low quality earnings exhibit a short-term stock price benefit relative to firms that miss forecasts with high quality earnings. This trend, however, reverses over a 3-year horizon. Additionally, firms reducing discretionary expenditures to beat forecasts have significantly greater equity issuances and insider selling in the following year, consistent with managers understanding the myopic nature of their actions. Our results confirm survey evidence suggesting managers engage in myopic behavior to beat benchmarks.

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Not Invented Here? Innovation in Company Towns Not Invented Here? Innovation in Company Towns

Ajay Agrawal, Iain Cockburn & Carlos Rosell
Journal of Urban Economics, forthcoming

Abstract:
We examine variation in the concentration of inventive activity across 72 of North America's most highly innovative locations. In 12 of these areas, innovation is particularly concentrated in a single, large firm; we refer to such locations as "company towns." We find that inventors employed by large firms in these locations tend to draw disproportionately from their firm's own prior inventions (as measured by citations to their own prior patents) relative to what would be expected given the underlying distribution of innovative activity across all inventing firms in a particular technology field. Furthermore, we find such inventors are more likely to build upon the same prior inventions year after year. However, smaller firms in company towns do not exhibit this myopic behavior; they draw upon prior inventions as broadly as their small-firm counterparts in more diverse locations. In addition, we find that inventions by large firms in company towns have less impact than those produced elsewhere, although the difference is modest, and that the impact is disproportionately appropriated by the inventing firms themselves. Finally, the geographic scope of impact realized by company town inventions is narrower, whether produced by large or small firms.

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Intersections of Power and Privilege: Long-Term Trends in Managerial Representation

Kevin Stainback & Donald Tomaskovic-Devey
American Sociological Review, October 2009, Pages 800-820

Abstract:
This article examines post-Civil Rights Act trends in private sector managerial representation for white men, white women, black men, and black women. We examine how three factors affect changing access to managerial positions: (1) industrial restructuring, (2) the process of bottom-up ascription, and (3) organizational characteristics. Accounting for compositional shifts in the labor supply, we find that white male managerial overrepresentation remains virtually unchanged since 1966, even while other status groups make gains. A significant portion of the observed equal opportunity advance for women and blacks takes place in the expanding service sectors of the economy. We also find that female and minority gains are enhanced in larger and more managerially intensive workplaces. For all groups, managerial representation is increasingly tied to the presence of similar others in nonmanagerial jobs. Further examination reveals a new status hierarchy of managers and subordinates-a hierarchy wherein white men are likely to manage men of all races. White women, in comparison, are realizing a growing racial privilege in managing women of color.

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Corporate Hypocrisy: Overcoming the Threat of Inconsistent Corporate Social Responsibility Perceptions

Tillmann Wagner, Richard Lutz & Barton Weitz
Journal of Marketing, November 2009, Pages 77-91

Abstract:
Reports of firms' behaviors with regard to corporate social responsibility (CSR) are often contrary to their stated standards of social responsibility. This research examines the effects of communication strategies a firm can use to mitigate the impact of these inconsistencies on consumer perceptions of corporate hypocrisy and subsequent beliefs about the firm's social responsibility and attitudes toward the firm. Study 1 indicates that a proactive communication strategy (when the firm's CSR statements precede conflicting observed behavior) leads to higher levels of perceived hypocrisy than a reactive strategy (when the firm's CSR statements follow observed behavior). The inconsistent information in both scenarios increases perceptions of hypocrisy, such that CSR statements can actually be counterproductive. Study 1 also reveals how perceived hypocrisy damages consumers' attitudes toward firms by negatively affecting CSR beliefs and provides evidence for the mediating role of hypocrisy during information processing. Study 2 finds that varying CSR policy statement abstractness acts to reduce the hidden risk of proactive communication strategies and can improve the effectiveness of a reactive strategy. Study 3 reveals that an inoculation communication strategy reduces perceived hypocrisy and minimizes its negative consequences, regardless of whether the CSR strategy is proactive or reactive.

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CEO International Assignment Experience and Corporate Social Performance

Daniel Slater & Heather Dixon-Fowler
Journal of Business Ethics, October 2009

Abstract:
Research suggests that international assignment experience enhances awareness of societal stakeholders, influences personal values, and provides rare and valuable resources. Based on these arguments, we hypothesize that CEO international assignment experience will lead to increased corporate social performance (CSP) and will be moderated by the CEO's functional background. Using a sample of 393 CEOs of S&P 500 companies and three independent data sources, we find that CEO international assignment experience is positively related to CSP and is significantly moderated by the CEO's functional background. Specifically, CEOs with international assignment experience and an output functional background (e.g., marketing and sales) are positively associated with greater CSP.

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Is There Safety in Numbers? The Effects of Forecast Accuracy and Forecast Boldness on Financial Analysts' Credibility with Investors

Kathryn Kadous, Molly Mercer & Jane Thayer
Contemporary Accounting Research, Fall 2009, Pages 933-968

Abstract:
This paper reports the results of an experiment that examines how analyst forecast accuracy (i.e., how close an analyst's forecast is to realized earnings) and forecast boldness (i.e., how far the analyst's forecast is from the consensus forecast) affect the analyst's perceived credibility and investors' willingness to rely on and purchase the analyst's future reports. We hypothesize and find that forecast boldness generally magnifies the effect of forecast accuracy on these variables. That is, analysts who provide accurate, bold forecasts generally experience more positive consequences than those who provide accurate, nonbold forecasts, and analysts who provide inaccurate, bold forecasts experience more negative consequences than those who provide inaccurate, nonbold forecasts. We also find that these effects are not symmetric-the negative consequences of being bold and inaccurate exceed the positive consequences of being bold and accurate. This asymmetry helps explain why analysts are hesitant to deviate from the consensus forecast (i.e., why analysts herd).


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