Category: Academic Departments
In their recent article “Financial Literacy 101,” offering experts’ top recommendations for novice investors, The Wall Street Journal spotlighted Risk Less and Prosper by Boston University’s Zvi Bodie, the Norman and Adele Barron Professor of Management, and co-author Rachelle Taqqu:
With its focus on goal-based investing, this book offers concrete steps to help beginning investors detail their specific needs and wants for the future, and to invest based on those goals.
Zvi Bodie, a management professor at Boston University, advises investors to take on risk only with money they can afford to lose. For the rest, he recommends specific inflation-indexed government bonds.
“Stocks can be a winning strategy, but they can also bring tragedy, and Bodie carefully sets out the risks and rewards of the alternatives,” says Dallas Salisbury, chief executive of the Employee Benefit Research Institute, a nonprofit think tank.
HBS Working Knowledge Article Spotlights “Public Procurement and the Private Supply of Green Buildings”
Timothy Simcoe and Michael W. Toffel have published a new study on how government policies can stimulate private demand for environmentally friendly buildings. Simcoe is an assistant professor in the Strategy and Innovation Department at Boston University School of Management. Toffel is an associate professor in the Technology and Operations Management group at Harvard Business School.
Their study, “Public Procurement and the Private Supply of Green Buildings” has been published by the National Bureau of Economic Research (NBER Working Paper Number 18385) and was recently spotlighted in the article “LEED-ing by Example,” from HBS Working Knowledge:
In the debate over whether to increase or decrease the stringency of environmental regulations, the possibility that government agencies might use purchasing to stimulate market demand for “green” products and services is often overlooked. Nevertheless, several recent US presidents (of both parties) have issued executive orders requiring federal agencies to use environmentally preferable products and services whenever possible…
But….there has been virtually no industry analysis of whether this strategy actually worked, up until now.
In a new paper, “Public Procurement and the Private Supply of Green Buildings,” authors Timothy Simcoe and Michael W. Toffel show that there is, indeed, a spillover effect to the private sector. The authors studied what happened after municipal governments in California adopted policies that required public (but not private) building renovations and new construction to build “green,” which nearly always meant adhering to the US Green Building Council’s Leadership in Energy and Environmental Design (LEED) standard. After local governments decided to pursue LEED certification for their own buildings, there was an uptick in the number of local architects, general contractors, and other construction industry professionals who sought LEED accreditation. Also, the use of the LEED standard increased among private builders in the same local markets.
Read more at Working Knowledge‘s LEED-ing by Example.
See a recent overview of this research on Forbes.com
Above: Photo of the first LEED-certified parking structure in the US by flickr user Schlüsselbein2007.
Placed 16th overall, 1st among female academics
In December 2012, the American Marketing Association (AMA) launched a new annual initiative to track top contributors to premier marketing journals such as the Journal of Consumer Research, Journal of Marketing, Journal of Marketing Research, and Marketing Science. The goal is to acknowledge the most productive researchers, both by authorship and university affiliation, in the previous five years and to provide a unique perspective to future doctoral students making application decisions about marketing PhD programs.
In the first Author Productivity in the Premier AMA Journals list, Boston University School of Management’s Shuba Srinivasan has ranked number 16 overall and number one for female academics for contributions to the Journal of Marketing and Journal of Marketing Research.
Srinivasan is an associate professor, Dean’s Research Fellow, and PhD Program faculty liaison in marketing. Her research focuses on strategic marketing problems, the link between marketing and financial gains, and metrics for gauging marketing performance.
Professor Srinivasan’s publications include:
- Srinivasan, S., K. Pauwels, and V. Nijs (2008), “Demand-based Pricing Versus Past-price Dependence: A Cost-Benefit Analysis,” Journal of Marketing, 72 (2), 15-27. (Abstract)
- Srinivasan, S. and D. M. Hanssens (2009), “Marketing and Firm Value: Metrics, Methods, Findings and Future Directions,” Journal of Marketing Research, 46 (3), 293-312. (Abstract)
- Srinivasan, S., K. Pauwels, J. Silva-Risso, and D. M. Hanssens (2009), “Product Innovation, Advertising Spending and Stock Market Returns,” Journal of Marketing, 73 (1), 24-43. (Abstract)
- Srinivasan S., M. Vanhuele, and K. Pauwels (2010), “Mind-Set Metrics in Market Response Models: An Integrative Approach,” Journal of Marketing Research, 47 (4), 672-684. (Abstract)
- Osinga, E., P. Leeflang, S. Srinivasan, and J. Wierenga (2011), “Why Do Firms Invest in Consumer Advertising with Limited Sales Response?” Journal of Marketing, 75 (1), 109–124. (Abstract)
Professor Srinivasan is also chair of the AMA’s Marketing Research Special Interest Group and serves on the editorial boards of Marketing Science, Journal of Marketing Research, and International Journal of Research in Marketing. Among her other honors are being named a finalist for the 2012 Robert D. Buzzell Best Paper Award, winning the 2010 Broderick Prize for excellence in research scholarship at Boston University’s School of Management, and receiving the 2001 European Marketing Academy Best Paper Award.
See Professor Srinivasan’s additional honors.
Associate Professor and Dean’s Research Fellow gives advice in BU Today about the most common shopper mistakes and how to avoid them
Excerpts from BU Today:
The future of the economy may be uncertain, but money woes appear not to have dampened the spirits of holiday shoppers. Spending over the four-day weekend following Thanksgiving, including Black Friday and Cyber Monday, reached $59 billion, a 13 percent increase over last year, according to the National Retail Federation. The organization predicts that holiday sales will jump 4 percent over last year’s number, to $586 billion.
What does it all mean? Why do people spend more when they may have less? How can shoppers get the biggest bang for their buck? BU Today spoke with Barbara Bickart, a School of Management associate professor of marketing and a Dean’s Research Fellow, about common holiday shopping pitfalls, why we spend irrationally this time of year, whether we should feel guilty about buying for ourselves, and why we should buy the same gift for everyone on our holiday list.
What are some common mistakes shoppers make during the holidays?
The real issue is being tempted by deals that are right in front of you that seem too good to resist and look like they’re going to go away tomorrow. The retailers do a really good job of trying to convey that this is a limited time offer, that it’s a very precious, valuable, scarce deal, and that there are only so many of these available. So people think, I’ve got to act now.
How can we avoid these pitfalls?
One thing is having a list and knowing exactly what you’re going to get. And if you’re going to get things for yourself, know what those are too, because you’re probably going to be more impulsive for yourself than you are for others.
Another thing is not to go shopping when you’re tired or depleted, because as we make many decisions, we start to become more depleted and then we become more inclined to be impulsive. If you go shopping at a time when it’s not so busy or when you can be energetic, that’s going to help you avoid making those impulsive decisions. A shopping marathon is not a good idea. Do a little bit at a time and maybe do it on a Tuesday night when the stores aren’t so crowded.
See all of Associate Professor Bickart’s tips on BU Today.
Photo by Flickr user ThomasOfNorway.
“Getting Inside the ‘R’ in Customer Relationship Management”
Boston University School of Management’s Susan Fournier was featured as a keynote speaker in Stockholm recently, where she delivered her talk, “Getting Inside the ‘R’ in Customer Relationship Management,” for the Swedish Marketing Federation’s 2012 annual conference.
Her keynote covered the top three consumer relationship mistakes: Relating with “consumers” but leaving the “people” out; adopting a one-size-fits-all approach to relationships; and not effectively listening or playing by the rules of the consumer-brand contract. Fournier then offered the following advice for marketers:
- We are not relating with “consumers;” we are relating with people.
- People aren’t here to have brand relationships; they are here to live their lives.
- Optimized systems put brand relationships in perspective as facilitators, not ends in themselves.
Contact Professor Fournier for a copy of the presentation.
“‘Guru’ of Guru Speak Decodes 5 Game-Changing Trends for t2”
In a profile featured in Times of India, David J. McGrath, Jr. Professor in Management N. Venkatraman presented his new framework to analyze the impact of IT on business performance. His model, referred to as The Venkatraman Framework, encompasses the so-called the “five webs” and offers a vision for the future of IT and Globalization 3.0.
Professor Venkatraman also discussed these topics during his talk in February at Guru Speak 2013, an annual advanced knowledge workshop organized by the IIM Calcutta Alumni Association and The Telegraph, who dubbed him “the ‘guru’ of Guru Speak.”
Excerpts from Times of India:
Professor Venkat N. Venkatraman’s interests lie at the point where strategic management and information technology intersect. The Boston University professor, who was recently recognized as the 22nd most cited scholar in management over the past 25 years, has created a new framework to analyse the impact of IT on business performance, referred to as the Venkatraman Framework.
“[The Venkatraman Framework] is about different aspects of how IT shapes and evolves business models. In the 1980s, I focused on how IT impacts internal processes. That was during the period where most companies saw IT as driving business efficiency. Then, in the 1990s, I focused on how IT allows firms to connect externally with suppliers and customers and change business scope. Then, IT became more strategic and CEOs began to take interest in how IT could become a strategic driver.
“As the Internet became more central and important in the early 21st century, I started focusing on the role of the web. Right now, my framework is focused on what I call five webs: mobile web, social web, media web, real-time web and machine web. These are not separate webs but are interconnected. They impact companies all over the world-although their effects may be different. I believe these webs taken together lay the foundation for the emerging digitally connected business infrastructure that could alter the basis of competition in the coming decade.”
Excerpts from The Telegraph (Calcutta):
Will BB10 be happy with fourth place? Will Bring Your Own Device become popular in India? Management strategy expert Venkat N. Venkatraman, professor in management at Boston University’s School of Management, has the answers [offered below]….
Samsung vs Apple
Both are focused on design and user experience. The key difference is software. Apple iOS is not yet big in India (despite the popularity of iTunes and iPods)….Google is well positioned in India and Samsung is positioned with TVs (and appliances). So, the combination of Google plus Samsung is unbeatable in India….
Just as IBM felt secure with their mainframe architecture, RIM (Blackberry) felt secure in the belief that they defined the enterprise mobile worker market with their mobile phones. The advent of two new entrants from outside the traditional industry boundaries –– Apple and Google –– has seriously challenged Blackberry and upset the industry equilibrium…The mobile game is now a two-horse race with Apple and Google. The jockeying for the third place is between Microsoft (Nokia) and BB….
Social media network
…I expect that more businesses in India will embrace social media more formally and aggressively as part of the marketing campaigns. Companies such as Facebook and Twitter should seek to find examples of application of social media in India that have broader applicability….
Read more coverage of The Venkatraman Framework and the professor’s talk at Guru Speak from the Business Standard (India)
New Study on CEO Compensation Is First to Provide Evidence that Firms Benchmark High for Market, not Self-Serving Reasons
A new study by Ana M. Albuquerque, Gus De Franco, and Rodrigo S. Verdi is the first to provide evidence that the “peer pay effect” (the tendency to benchmark to a set of peers with higher CEO pay) among corporate boards represents a reward for CEO talent, not self-serving motives or weak corporate governance.
Albuquerque is an assistant professor of accounting at Boston University School of Management. De Franco and Verdi are on the faculty of the Rotman School of Management at University of Toronto and MIT Sloan School of Management, respectively. Their new study, entitled “Peer Choice in CEO Compensation,” is forthcoming in the Journal of Financial Economics.
This paper offers data showing that when firms benchmark high against their peer group in order to offer higher total compensation to their incoming chief executive officers (called the “peer pay effect”), they 1) do so as a reward for CEO talent and not for self-serving reasons, and 2) tend to yield a better future return on investment (ROI) in terms of CEO performance. Thus, the research offers an argument against claims that firms benchmark high among their peers in order to justify flawed corporate compensation packages with excessive CEO pay.
Albuquerque et al use data from ExecuComp, including mostly firms that comprise the Standard and Poor’s 1500 index, for the fiscal years 2006 to 2008, focusing on Definitive Proxy Statements and their Compensation Discussion and Analysis sections which list peer companies used for benchmarking purposes. They define CEO talent by measuring data about a CEO’s historical abnormal stock and accounting performance, the market value of the firms that the CEO managed in the past, and the number of media mentions a CEO has accrued.
In contrast, they define self-serving behavior or poor oversight on the part of boards based on data about board structure (e.g., how busy are board members and thus how much time can they devote to effective oversight and monitoring?) anti-takeover provisions (e.g., how insular is the firm from the external market, which carries the potential threat of a takeover, and thus works as a strong external force for disciplining management?), and ownership concentration (e.g., how personally invested are individual board members in the firm’s future performance?).
Finally, the authors define future ROI as future accounting and stock performance.
From their data pool, the authors find that:
- the impact of benchmarking against highly paid peers for self-serving reasons on CEO compensation is positive in some, but not all, cases, and at a much lower magnitudes than for talent reasons;
- in terms of economic significance, the impact of the peer pay effect for talent reasons on CEO pay is from two to almost ten times larger than is the impact of the self-serving component of the peer pay effect; and, perhaps most crucially,
- firms that benchmark high to offer higher CEO compensation to more talented CEOs yield a better future ROI performance.
Thus, “Peer Choice in CEO Compensation” is an important contribution to the argument that high CEO compensation is crucial to attract top talent as well as to better motivate high-potential CEOs compared to their similarly-high-potential peers who end up with lower compensation due to more moderate benchmarking at their respective firms.
Ultimately, this new research provides evidence that firms who benchmark high do so not simply for self-serving reasons or to justify higher-than-needed CEO compensation, but because they understand the importance of offering a CEO package at the top end of their peer pool, in order to attract, retain, and motivate the best talent.
“The Impact of Regulatory Uncertainty on Renewable Energy Investments,” forthcoming in the Journal of Law, Economics, and Organization
Policy uncertainty—whether concerning the impending “fiscal cliff” or potential carbon taxes—is blamed for reducing investment and restraining economic growth. Does the same logic apply to investment in renewable energy generation?
In a new study, Boston University School of Management’s Kira Fabrizio finds that uncertainty about future regulatory policies does indeed negatively influence firms’ investments in new clean energy assets. Fabrizio is an assistant professor in strategy & innovation, and her paper, “The Impact of Regulatory Uncertainty on Renewable Energy Investments,” is forthcoming in the Journal of Law, Economics, and Organization.
Fabrizio’s study focuses on the enactment of state-level Renewable Portfolio Standard (RPS) policies in the US electric utility industry. The policies are designed to encourage investment in renewable electricity generation by requiring utilities to procure a certain percentage of electricity from renewable generation. She finds that, on average, “RPS enactment in a state did generate an increase in investment in new renewable generating assets, but investment increased significantly less in states with a history of regulatory reversal,” a mark of an uncertain policy environment.
With important implications for policy makers, the study suggests that government renewable-energy policy initiatives, when launched in less stable regulatory environments, 1) lead firms to perceive new investment in clean energy projects and assets as more risky, and 2) ultimately create fewer new investments in renewable generation assets, undermining the purpose of the policy.
Fabrizio’s research highlights the importance of regulators’ commitment to policy stability and predictability. Her study holds implications not just for renewable energy investment but other initiatives such as carbon tax/abatement policies, where long-lived investments depend on policies subject to future modification.
The study also touches on strategies for enhancing the credibility of RPS regulatory efforts and their perceived stability, thus reducing the apparent risk of renewable energy investment. These include:
- Regulatory support for investments dependent on renewable energy policies and requirements, whereby regulated utilities could recover the costs of investments in their rates if the value of these investments falls due to policy reversals.
- Adoption of requirements and procedures making the repeal or renegotiation of RPS policies more arduous.
Whatever strategies regulatory agencies undertake, Fabrizio urges, “Until policy makers are able to enact legislation and credibly commit to maintaining the policy they adopt, firms will be less willing to invest in developing and adopting new technologies.”
Banner image courtesy of flickr user daBinsi
For National Public Radio’s Morning Edition show, Boston University’s Barbara Bickart explains how marketers motivate consumer behavior on Black Friday. Bickart is an associate professor of marketing and Dean’s Research Fellow at the School of Management.
About holiday retail strategies such as “limited time offers,” Bickart tells NPR, “You’ve got to do it right away. It’s going to urge you, push you to behave, to act, to consume…So these things like ‘limited time offer,’ suggesting that something is scarce–you get caught up in the excitement of it, right? And they make you want to take action right away.”
Accounting in the morning, Shakespeare in the afternoon: a normal day for sophomores at the School of Management. On October 31, SMG students watched Shakespeare’s Henry V, as enacted by the FeminaShakes, an all-female acting troupe.
Since the fall 2009 semester, the SMG organizational behavior department and the College of Fine Arts School of Theatre have collaborated on a cross-disciplinary project. Associate Professor Jack McCarthy, who conceived of the endeavor for the OB221 class, says “What I love about the project is that we teach the universality of behaviors, with people from different domains discussing trust, leadership, power, and working together in a team. What are the sources of power, of conflict? How do we resolve differences? We surface ideas around this joint interdisciplinary model and students from both schools come away with a new understanding.”
Pictured: Chloe Fuller (CFA’13) (on ladder), as King Henry V, and BU’s Femina Shakespeare troupe perform Shakespeare’s Henry V. Photo by Kalman Zabarsky via BUToday.