Category: Faculty in the News
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.
CEO magazine says yes, SMG’s Vinit Nijhawan says no
Excerpts from BU Today:
A generation after Massachusetts was dubbed “Taxachusetts” for its putative hostility to business, the charge has been resurrected in the magazine via its latest state rankings, determined by a survey responded to by 736 CEOs. The commonwealth was rated 47th among states for the warmth of its business climate, slightly better than New York, Illinois, and dead-last California. Texas won the best-of designation.
“If I were designing Hell for a company, I couldn’t do as good a job as Massachusetts has,” one anonymous CEO told the magazine. Another groused that the company was moving operations out of Massachusetts and three other states and firing employees there, as “the regulatory and tax environment has become untenable.” The magazine itself slammed Governor Deval Patrick’s plans to raise income taxes and eliminate corporate deductions (coupled with a cut in the sales tax), proposals that legislators may scale back.
We ran the matter by Vinit Nijhawan, managing director of BU’s Office of Technology Development and a School of Management lecturer. He has started or served on the boards of about a dozen technology companies since coming to Massachusetts from Canada a quarter century ago. “The biggest one grew to 400 people worldwide,” he says, “and it had about $60 million in sales.”
BU Today: California and Massachusetts are hubs for technology companies. If they‘re so awful for business, why would CEOs cluster in those states?
Nijhawan: It’s really clear why: because a lot more emphasis is placed in those states on human capital and lifestyle. If you’re starting a technology company, you have enormous access to technology and people in those places, more than anywhere else. That suggests that the CEOs they interviewed were from bigger companies, especially companies in low-margin commodity markets, like retail. There, the difference between having a 6 percent state sales tax versus a 3 percent tax probably makes a difference to your bottom line, because your margins are thin.
But retail’s very complex, because your outlets could be all over the country. Your income gets taxed differently if you’re here, so who gets affected? Basically, in-state shareholders and management. In the past 30 years, CEO salaries have increased dramatically. So I could see CEOs getting a big personal hit if they were here, versus, say, New Hampshire, which has no sales or income tax. But people aren’t going to move out of Massachusetts to Texas because of sales or income tax.
Read the full article on BU Today.
Bodie, PBS notes, is “perhaps country’s foremost expert on pension finance”
The NewsHour blog “The Rundown” features insight on little-known safer investing strategies by the School of Management’s Zvi Bodie, “perhaps the country’s foremost expert on pension finance.” Bodie is Boston University’s Norman and Adele Barron Professor of Management in finance and author, most recently, of the books Risk Less and Prosper and Essentials of Investing, 9th Edition.
In his latest NewsHour post, titled “The One Safe Investment and Why You Never Hear About It,” Bodie writes,
…I recommend that for people concerned about preserving the purchasing power of their savings, an investment program should start with the purchase of US Treasury Series I Savings Bonds, of which you can purchase up to $10,000 per year per person….I Bonds provide the ultimate in long-run liquid financial security to residents of the U.S. An investor in these bonds cannot lose any money or any purchasing power for up to 30 years, despite either inflation or deflation. They provide a return at least equal to the rate of inflation and, often, have paid a “premium” of interest above and beyond inflation.
At the moment, because of historically low interest rates, that premium is zero, but it is reset every six months. If, in September (or the following March or a year from September, etc.), new I Bonds do offer a premium, you can sell the current ones and use the money to buy the new ones.
Read the full post, see all the comments it has inspired, and watch a related video on “The Rundown” blog.
From “Relating Badly to Brands,” appearing in the April 2013 Journal of Consumer Psychology
Brand managers may dream of customers relating to their brands as committed partners, best friends, soul mates, or allies, but what if a brand portfolio offers rocky marriages, one-night-stands, power plays, stalkers, and secret affairs?
How, for example, should the New York Philharmonic react to recent news that a large percentage of first-time ticket buyers felt “stalked” by their customer service calls? What about frequent flyers’ mixed—and often negative—emotions about their airline of “choice”?
We recognize negative relationships with other people and appreciate how complex and powerful they can be. So why not in our bonds with brands?
A recent study by Boston University School of Management professor Susan Fournier and doctoral candidate Claudio Alvarez “Relating Badly to Brands” (Journal of Consumer Psychology, April 2013) calls for a new science of negative brand relationships, a field overlooked by much current research. Fournier is a professor of marketing and has been named one of academia’s most influential researchers for her work on brand theory.
Alerting brand managers to the importance of the negative
Fournier and Alvarez note that although negative brand relationships are more common and frequently more powerful, positive brand relationships are supported by much richer academic frameworks. ”Negative brand relationships are in fact more common than positive relationships,” they write, “with an average split across categories of 55%/45% for negative and positive relationships, respectively….Without a formal accounting of negative relationships, our brand management frameworks are misleading and incomplete.”
Applying new data to a marketing theory by Park et al. called the “Attachment-Aversion continuum,” Fournier and Alvarez conduct two studies using subjects across four countries to identify the range of relationships people have with a variety of brands. They first identify four dimensions along which brand relationships vary: positive/negative, significant/superficial, equal/unequal power, and deliberate/not under my control. They then have consumers assign brands to categories resembling their own primary personal relationship dynamics.The results highlight 27 significant types of consumer-brand relationships, including “flings,” “broken engagements,” “stalker-prey,” “addict/dealer,” “fleeting acquaintance,” and more.
Are we really distant from all the “bad” brands in our lives?
One important finding from these studies is the challenging of the assumption that brand negativity stems from perceived distance between consumer and product. Building on their comparison between brands and interpersonal dynamics, the authors argue, “negative relationships do not all involve distanced self-connections and low interdependence between partners.” For instance, the authors point to past studies exploring the following brand relationships, encompassing both the passionate (or close) and the negative:
- The ”monstrous relationships” fans have with the Twilight media brand, which justifies partner violence and emotional abuse as an ultimate act of protection and love
- Products that generate compulsive consumption, addictions, and dependencies, from alcohol to cigarettes to social media
- Credit card and consumer lending agencies, including ones where “consumers are lured into lending relationships with a courteous attitude and quick, easy credit offered under conditions that are not fully disclosed”
As negative brand relationships are common and cause damage to both consumers and companies, Fournier and Alvarez urge, “managing negatives may actually be more important for brand equity development than cultivating positive connections with brands.”
Read more about “Relating Badly to Brands” in the Journal of Consumer Psychology.