Category: Faculty in the News
Engaging in social business means you’re damned if you do, and damned if you don’t
Should managers friend employees on Facebook or connect with them on LinkedIn? What are the legal implications of making these connections—or not? Boston University School of Management assistant professor of business law and ethics Kabrina Chang, along with Gerald C. Kane, associate professor of information systems at the Carroll School of Management at Boston College, poses these questions in a piece for MIT Sloan Management Review, in which she and Kane outline several key legal considerations for managers. Social business is a rapidly emerging and expanding phenomenon, creating unique situations unforeseen by our current legal system, the pair writes. Is your company prepared?
Excerpts from MIT Sloan Management Review:
Damned if you don’t.
One potential risk involves “negligent hiring.” An injured third party could sue a company for hiring a dysfunctional employee if that dysfunction was evident on social media platforms and would have been readily apparent through a cursory search. In fact, the easier it is to search, the greater the legal burden to do so. Although there is no case law on this issue yet, it is a real business risk.
Damned if you do.
Even when managers legitimately access information on social media sites, they must be careful about how they act on that information. For example, managers open themselves up for discrimination lawsuits if they discover protected information about their employees. In TerVeer v Library of Congress (2012), an employee filed suit against his employer, claiming a manager harassed and ultimately fired him after surmising the employee was gay when the employee “liked” a pro-gay parenting page online (the case is still pending).
What’s a manager to do?
One solution is to develop an official online policy for employees. Only 33% of businesses have such a policy, but they can provide valuable guidance for employees and managers regarding acceptable online behaviors. These policies must be crafted carefully, however, as the NLRB found that one such policy established by Costco was overly broad and placed unreasonable restrictions on employee behavior. And, as the survey pointed out, employees must be trained in how to follow the policy.
Hire a third-party vendor to assist with legal issues raised by social business. Companies such as Social Intelligence and Reppify search online information and provide reports on job applicants that are scrubbed of any protected information. Others, like Hearsay Social, assist with compliance issues raised by social business in regulated industries, such as finance and healthcare.
Read the full piece here.
To Understand Consumer Data, Think Like an Anthropologist
Harvard Business Review featured a piece from Questrom Professor in Management Susan Fournier and Bob Rietveld, managing director and cofounder of Netherlands-based marketing analytics firm Oxyme, in which the two write that the meaning within consumer data lies with social media, such as pictures and comments on products, not with percentages. Focusing on social-media chatter can have a profound impact on a firm’s consumer knowledge and, consequently, its profitability. Unfortunately, the piece notes, many people in business don’t appreciate the value of that chatter. Rather than treat consumer comments as noise, use social media as a glimpse into the consumer’s life and discover how he or she is really living. In other words, think like an anthropologist.
“Sure, sure,” the numbers-oriented marketing executives may say. Social listening is great for “exploratory” research, but only as a precursor to “real” research that will determine the truth of what’s being said online. What’s needed, they’ll tell you, is broad-based consumer research using representative samples and adequate sample sizes.
Querying a representative sample is great for testing a hypothesis or finding a statistical relationship between known concepts. But often, in marketing, you’re dealing with multiple unknowns. Social listening doesn’t presuppose anything. It has no constraints. Although qualitative information won’t give you a simple equation or statistic that you can show the CEO, it can provide answers to questions you didn’t even know you had.
And comments from a non-representative sample can be highly illuminating. For example, in tech markets, think of the users who regularly post to discussion groups focused on tech products. These knowledgeable netizens provide critical knowledge about product uptake and issues around quality or perception. The same can be said of fan groups and user groups in a variety of fields.
An important player in the electric-shaver category discovered this. Before the launch of a high-end shaver that was to be priced at more than $500 and was encased in brushed aluminum, an Australian retailer posted pictures and specifications of the product online. Almost immediately, consumers began commenting about the product’s “plastic aesthetic” and “cheap look and feel.” The manufacturer took prompt action, posting a new photo series highlighting the quality manufacturing process and construction, neutralizing the negative sentiment spreading online.
Successfully disseminating the results of social listening requires skill at seeing stories and developing insights from messy data. It also requires a penchant for simplicity.
Read the full piece here.
Those early-bird sales that drive consumers wild on Black Friday? They just got earlier. A number of large retailers will now open at 6 p.m. Thanksgiving night, offering doorbuster deals like never before. Though the announcement has received some backlash on social media, as well as some retailers announcing that they will remain closed on Thanksgiving in order to give their employees the entire holiday off, there is still strong consumer interest in starting the shopping rush on Thursday.
Professor Voices, a timely collection of newsworthy commentary and analysis from Boston University faculty and experts, asked associate professor of marketing Barbara Bickart, “Is Thursday really the new (Black) Friday or is it just a marketing gimmick?” An authority on consumer decision-making processes, Bickart explains what shopping on Thanksgiving says about retailers and consumers alike, and the potential economic impact.
Professor Voices: What does it say about the retailers that will open for sales Thanksgiving night?
Barbara Bickart: The Black Friday weekend is so important for retailers and the competition for consumers is so fierce that retailers are willing to do whatever is necessary to gain market share and sales. Retailers believe that if competitors are opening earlier and offering more deals, they could lose out. The possibility of being a consumer’s first choice for holiday shopping has a large potential payoff that outweighs the possible risks associated with backlash, particularly when there are six fewer shopping days before Christmas this year. Some stores, like Walmart, are starting Black Friday a week early, both in the store and online. It is clearly competitive forces and the desire to at least meet or beat the competition that is driving these decisions and the Black Friday “creep.”
PV: What does it say about the consumers who will go shopping Thanksgiving night?
BB: There could be different reasons that consumers shop on Thanksgiving night. Probably most important, many consumers look forward to the deals on Black Friday. The earlier start to shopping could be very enticing for these deal-seeking consumers, who are motivated by the thrill of finding a bargain. In addition, many consumers are likely to believe that if they don’t shop on Thanksgiving night, they will miss out on the deals. This idea that deals are “scarce” is a big motivator for shoppers to get to the stores early and make purchases. Finally, there may be a group of consumers who enjoy the ritual of shopping on Black Friday and see the earlier time as a way to expand the ritual. It also may feel less hectic and stressful to shop on Thanksgiving night, compared to the early morning hours of Black Friday.
PV: Are retailers really offering better deals on Thanksgiving night than on Black Friday or is it just a marketing tool to get shoppers in the door?
BB: It is my understanding that the deals on Thanksgiving will actually be better than those on Black Friday. Retailers may feel that consumers need an extra incentive to push away from the table on Thanksgiving evening and head out to the mall. Retailers are also making these deals seem less risky—for example, by guaranteeing that customers shopping on Thanksgiving will receive the product on deal before Christmas, even if it sells out that night. Retailers need to convince consumers that shopping on Thanksgiving is worth the time, effort and disruption to the holiday, so at least until the shopping ritual is established I would expect the Thanksgiving deals to be better than those on Black Friday.
Read the full Q&A here.
Assistant professor speaks on reviewer dishonesty
BU Today spotlighted assistant professor of marketing Georgios Zervas regarding his research that found Yelp to be steeped in fake reviews (at least 16 percent). The piece notes that, following New York attorney general Eric Schneiderman’s recent Operation Clean Turf initiative that uncovered manipulation in the reputation management industry, Zervas’ study elicited a response from Yelp’s vice president for communications and public affairs on the site’s official blog. The study “confirms something we have long known: businesses that don’t have a good reputation online will try to create one by submitting phony reviews,” the response reads. Senior writer Susan Seligson spoke with Zervas about the study he coauthored, Yelp’s impact on businesses, and how consumers can be more critical of online reviews.
BU Today: Did you discover anything particularly surprising in your study?
Zervas: One thing that was slightly surprising, not so much to me but to most people, is the proportion of suspected fake reviews that Yelp removes—approximately one quarter of all reviews submitted to Yelp are not published. That’s about 10 million reviews.
What are some of the concerns your study raises?
The main concern is for firms like Yelp and TripAdvisor. Platforms that crowd-source reviews rely on the integrity of these reviews, and fraudulent reviews pose a major threat to their trustworthiness. Furthermore, consumers should be concerned that fake reviews are leading them to suboptimal choices, and businesses should be aware that some negative reviews might come from their competitors.
How much of an impact do sites like Yelp have on a business?
My coauthor Michael Luca did a great study on this and found that having an extra star on Yelp causes the revenue of a business to rise by 5 to 10 percent, so there’s a direct connection between Yelp ratings and a business’ bottom line.
How can consumers view these sites more critically?
I think there are many signals on Yelp that consumers can combine to make up their minds. The way I use Yelp is, I read individual reviews, trying to be aware not just of whether they’re fake, but beyond that, whether they come from consumers who are like myself. There are plenty of biases in reviews besides their being fake or real. The other thing I look at is the number of reviews a business has. I have a lot more faith in a business with 3½ stars and 100 reviews than I do in one with 4 stars and just 3 or 4 reviews. That’s common sense. Also, when available, you can use sites, like Expedia, that allow consumers to review a business only once it’s confirmed that they are paying customers.
Read the full conversation here.
Professor blogs: airline mergers are inevitable
Associate professor of strategy and innovation Samina Karim contributed a piece to Reuters‘ opinion page “The Great Debate,” in which she explains why the current American Airlines/US Airways merger talks will eventually culminate in a deal. The merger has been delayed due to the ongoing antitrust trial led by the Department of Justice (D.O.J.), which is concerned, from a consumer-interest standpoint, that the resulting airline would have too much market power in its locations. However, Karim uses examples of merger deals in both the music and wireless-operator industries to illustrate her point that, despite said concerns, the consolidation of these two airlines is only a matter of time.
Excerpts from Reuters:
Back in 2012, the music industry consolidated from four big players to three as EMI was split up. Its music business went to Vivendi’s Universal Music Group and its publishing business to Sony/ATV. In this deal, similar concerns of market power led the European Commission to stipulate that Universal had to sell a third of EMI’s assets. And that deal went through.
Meantime, ending in a different fate in 2011, AT&T finally admitted defeat in its attempted bid for T-Mobile. It would have consolidated the cohort of this nation’s cellular operators from four to three. In this latter case, the firms were up against both the D.O.J. and the Federal Communications Commission.
So why are airline mergers inevitable? It’s because, in many ways, the passenger airline industry is more like the music industry than the wireless-operator industry.
In both airlines and music there is a long history of prolific entry of new rivals (such as regional carriers and private labels), and successful ones either grow or get gobbled up by the larger players. Think about it. Most of us have heard the names of smaller music labels but many may not be as aware of the dynamic market of regional, non-legacy carriers. Next time you fly check out the “operated by” field on your ticket and start tracking how many different “operators” you’ve experienced in your travels.
In general, large players are faced with competition by the focused, agile, competitive, smaller players and some of these large players don’t fare well (e.g. American Airlines, EMI, T-Mobile). The usual reaction from Strategy 101 is to try to achieve economies of scale and increase market power. So, voila, with airlines we see consolidation and mergers (e.g. Delta’s merger with Northwest and United’s merger with Continental, and there are plenty of smaller ones).
Read the full blog post here.
Golden-Biddle introduces idea of healthcare “micro-moves”
The Harvard Business Review featured a blog post from senior associate dean and professor of organizational behavior Karen Golden-Biddle, in which she writes that small changes to healthcare organizations can have a large impact. She calls these small changes “micro-moves” and believes that, contrary to the idea that the solution is “bringing in consultants, undertaking large-scale and highly visible action, and jolting the organization into change,” micro-moves are the key to driving real transformation. Through her research, she finds that less visible actions and interactions avoid derailing the organization by tapping collective energy and building enthusiasm.
Excerpts from the Harvard Business Review:
One such collection of micro-moves is “discovery.” These actions encourage people to notice their taken-for-granted assumptions regarding how things are done, reconsider them, and create alternatives. For example, a team of managers and clinical leaders at a medium-size health system, Thedacare, in Appleton Wisconsin, gained invaluable insights about their own care delivery process simply by walking the “care path” with patients.
Early in her tenure, Kathryn Correia, an executive in this health system at the time, brought together managers and clinical leaders to figure out how they might change inpatient care delivery to improve quality and safety. As they talked they soon realized that they had very little understanding of how patients moved through the system. Although all participants knew how patients navigated within their own areas of treatment and their units, they had little idea of how patients travelled between admission and discharge, or what patients experienced on the journey. So, the group decided to walk the actual care path themselves, first as if they were patients, and then alongside the patients through real-time care delivery.
In a second session, the group explored how they could best learn about patients’ subjective experience as they navigated the system. They generated open-ended questions to ask patients when they accompanied them that would illuminate their experiences – questions such as, “Would you share with me what being a patient here is like?” “What was it like just now when (describe situation concretely) happened?” “Could you describe some other experiences you have had here as a patient?” And they decided to leave behind their medical frocks and suit jackets in order to slip out of their “expert” roles. These gestures – leaving their “uniforms” behind, walking the care path, engaging patients with open-ended questions – are examples of micro-moves for discovery.
Read the full blog post here.
Professor shares thoughts on Affordable Care Act in BU Today opinion piece
In “POV,” BU Today‘s new opinion page that provides timely commentaries from students, faculty, and staff on a variety of issues, Professor of Health Care Management Stephen Davidson writes that many opponents of the Affordable Care Act (ACA), which was officially implemented earlier this month, are uniformed. Davidson finds that the opposition hasn’t taken the time to learn the facts, or simply doesn’t care to learn them. He continues, explaining why he believes reform is “critically important to the future of the American health care system.”
Excerpts from BU Today:
One reason, of course, is that millions of Americans have not had insurance, and therefore, have lacked access to beneficial medical services. In addition, US health care spending, which already is the highest in the world by far, is still growing, thus making it harder both for employers to continue to provide good coverage to employees and their families and for individuals to buy insurance even when their employers offer it. Finally, quality of care is too unreliable. Quality measures vary widely from state to state. Even doctors, when they or their families are patients, have trouble getting the care they know they need.
These are serious problems, and the continuing failure to deal with them makes them worse. In 2010, the president and his congressional allies were able to pass the ACA, which, while not perfect, addresses all of these problems in ways that are reasonable. If fully implemented, the health care system will improve, and we will all benefit.
What are some key provisions? Practically all Americans must obtain health insurance (the “individual mandate”). Those who have trouble paying for it may be eligible for subsidies to help. Moreover, insurers must provide coverage for all who seek it, even those with prior medical conditions, and except for age, may not charge individuals more because of personal characteristics, even factors that increase the risk of needing care. Thousands of young adults up to the age of 26 are still covered on their parents’ insurance policies while they continue as students or look for a job with coverage. According to estimates, in 2012, almost 13 million people received rebates totaling more than $1 billion because private insurers spent more than the maximum permitted by the law (85 percent for large-group insurers; 80 percent for those in the individual and small-group markets) on overhead, executive compensation, and profit instead of on medical services and efforts to improve quality of care. Health insurance exchanges should make it relatively easy for individuals to compare competing insurance policies and to choose the one that is best for them. And many provisions encourage reform of the way care is delivered and paid for to increase quality and save money.
Read the full piece here.
Media references SMG assistant professor’s paper “Fake it Till You Make it”
The Wall Street Journal has repeatedly spotlighted the research of Georgios Zervas, Boston University School of Management assistant professor of marketing, on the consequences of fake online reviews. Both the Journal’s Corporate Intelligence blog and its “Morning Risk Report,” which provides insights and news on governance, risk, and compliance, featured recent posts on the writing and solicitation of fake online reviews.
One post, “Fake Reviews Raise Reputation Stakes,” was prompted by New York attorney general Eric Schneiderman’s targeting fraudulent online reviewers this week under his new initiative “Operation Clean Turf,” a yearlong undercover investigation into the reputation management industry, the manipulation of consumer-review websites, and the practice of astroturfing.
Zervas notes that the consequences for writing and soliciting fake reviews are very low and that, for anyone with a computer, crafting a fake review is simple. He is quoted saying:
“The New York attorney general is trying to increase the cost of being uncovered as a fraudster. I think it’s a small first step in the right direction.”
Zervas, who completed his PhD in 2011 in computer science at Boston University, also explains that the problem of fake reviews extends beyond New York’s borders. His paper “Fake it Till You Make it” was co-authored with Harvard Business School assistant professor Michael Luca.
Focusing on the issue of fake restaurant reports, BBC News, in the article “Yelp admits a quarter of submitted reviews could be fake,” writes,
Michael Luca of Harvard Business School and Georgios Zervas of Boston University studied the incidence of fraudulent reviews of Boston restaurants posted to Yelp, including those that had been filtered out.
After analysing more than 310,000 reviews of 3,625 restaurants, they found that negative fake reviews occurred in response to increased competition, while positive fake reviews were used to strengthen a weak reputation or to counteract unflattering reviews.
Obama taps David Weil to lead Wage and Hour Division
Excerpts from BU Today:
David Weil, a BU expert in labor market policy and industrial and labor relations policy, has been chosen by President Obama to lead the US Department of Labor’s Wage and Hour Division. The nomination, which requires confirmation by the US Senate, was one of 29 made in a September 10 announcement by the president, who says he is “grateful that the talented and dedicated individuals have agreed to take on these important roles and devote their talents to serving the American people.”
Weil, a School of Management professor of markets, public policy, and law and an Everett W. Lord Distinguished Faculty Scholar, has advised government agencies, including the Wage and Hour Division and the Occupational Safety and Health Administration, as well as workplace agencies in other countries. His research has been supported by the National Science Foundation, the Department of Labor, the National Institutes of Health, the National Institute for Occupational Safety and Health, and the Alfred P. Sloan Foundation.
Kenneth Freeman, SMG’s Allen Questrom Professor and Dean, says Weil is a valued member of the SMG community, whose “commitment to groundbreaking research and outstanding teaching is exemplary.”
If confirmed, Weil would oversee a division that ensures American workers are adequately compensated for the work they have done by being paid the minimum wage and required overtime compensation. It also protects responsible employers from competition with companies that do not comply with federal wage and hour requirements by enforcing the Fair Labor Standards Act, which also regulates child labor. The agency also oversees the Family and Medical Leave Act, wage garnishment provisions of the Consumer Credit Protection Act, and employment standards and worker protections as provided in several immigration-related statutes.
A recent post on the Academy of Management Review’s (AMR) Ethicist Blog explores new questions gaining traction in management education: Are today’s students “ethically broken” when they enter business schools? And, “through the use of ‘normal’ business school language, modeling, and metrics,” in the classroom, does management faculty “perpetuate ‘broken’ student perspectives and behaviors”?
AMR turned to Boston University School of Management Assistant Professor Kabrina Kebrel Chang to answer these questions, writing, “Chang and her holistic re-framing of how Boston University School of Management is approaching business ethics were featured in a recent Wall Street Journal article. She is a lawyer who teaches business law and ethics at BU, and her research includes how social media is fundamentally influencing employment decisions.”
Asked about how she approaches ethics, particularly in the undergraduate classroom, Chang explains,
I am at a b-school in the Northeast and students are uber-motivated. Being in a business school, sadly I take it as a given that we will need to break many of the money=happiness equation. Breaking the equation has to happen in more than one class, and they have to see real examples.…My focus is on the critical thinking skills—getting [students] to broaden their horizons when it comes to decision-making will have a real impact on their ability to make decisions that will take into account the betterment of people and not just the betterment of their business….My take on ethics and the take I employ now…is not to teach [students] right and wrong but to teach them that there’s more to think about with a decision.