Monthly Archives: July 2024

Study Reveals Potential Hidden Costs of Return-to-Work Programs for Women

Researchers investigated the experiences of professional women re-entering the workforce after taking time off for family reasons, focusing on employer-sponsored returner programmes designed to facilitate their transition back into professional roles.

The study uncovers a complex scenario where returner programmes while offering crucial support and reducing immediate stigma around career breaks, have the potential to tackle deeper issues of discrimination. Despite their benefits in helping women navigate initial challenges, these programmes often fall short in addressing systemic inequalities that lead to occupational downgrading and hinder career progression, particularly evident in the private sector.

Dr Cecile Guillaume, the lead author and Reader in Work, Employment, and Organisation Studies at Surrey Business School, highlighted the study’s findings. She noted that while returner programmes represent a positive step forward, they have clear limitations. They assist women in overcoming initial hurdles through coaching, mentoring, and access to networks, yet they fail to dismantle the structural barriers that perpetuate disparities in career advancement.

The research underscores the significant role of returner programmes in mitigating the stigma associated with career gaps. However, beyond identifying barriers, the study illuminates the ‘hidden costs’ involved. Many participants reported substantial financial investments such as interview training and professional certifications, which underscore the financial burdens faced even after successful re-entry.

Moreover, the study emphasises the inadequacies of individual and organisational coping mechanisms. While these strategies assist women in navigating daily workplace challenges, they do not address the broader systemic inequities that continue to disadvantage women returning to work.

Dr. Cecile Guillaume stressed the need for broader societal changes to address structural and cultural barriers. She argued that a genuinely inclusive and equitable workplace can be created only through comprehensive reforms for women at all stages of their careers.

More information: Cécile Guillaume et al, The Fate of Being a ‘Distressed Asset’: Insights into Women Returners’ Experiences in the UK, Sociology. DOI: 10.1177/00380385241257480

Journal information: Sociology Provided by University Of Surrey

Study Finds Threefold Increase in Workforce Departures Among Long COVID Patients

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A recent study involving over 9,000 individuals previously employed before the pandemic reveals a stark reality: those grappling with Long COVID face a threefold increased likelihood of exiting the workforce compared to their asymptomatic counterparts. As COVID-19 infections resurge, many recover swiftly, but for a significant subset, enduring complications emerge post-initial infection, persisting for 5-12 weeks or longer.

Published in PLOS One by the University of Birmingham and Keele University, the study underscores that individuals with Long COVID symptoms persisting beyond the UK’s statutory employment protection period (28 weeks) are notably prone to leaving employment. Dr. Darja Reuschke, leading the research at the University of Birmingham’s City-Region Economic Development Institute, remarks on the enduring impact of Long COVID, affecting an estimated 2 million people in England and Scotland by March 2024. This substantial health challenge, she notes, inevitably impacts the workforce, particularly those grappling with symptoms beyond the statutory sick pay threshold.

The study differentiated between two Long COVID groups: individuals experiencing symptoms for 5-28 weeks versus those enduring symptoms for 29 weeks or more, compared with asymptomatic or briefly symptomatic individuals. It examined various employment outcomes, including exit from employment, zero working hours due to sickness absence, reduced working hours, and diminished mental well-being at work.

Findings indicate the highest likelihood of exiting employment was observed among those with Long COVID symptoms persisting beyond 28 weeks. Those with symptoms lasting 5-28 weeks faced increased sickness absence, akin to those with short-lived COVID symptoms. The study found no substantial reduction in working hours for those with Long COVID of 29 weeks or more who remained employed, suggesting resilience or accommodation within workplace settings.

Professor Donald Houston, contributing to the study, underscores that despite the challenges, many individuals with Long COVID strive to remain in the workforce, often adhering to statutory sick pay limitations before considering work modifications or departures.

The study also highlighted profound mental health impacts associated with Long COVID, particularly among those enduring symptoms for 29 weeks or more, underscoring the necessity for tailored workplace adaptations and supportive measures. Professor Paul Sissons from Keele University Business School emphasises the study’s revelation of significant employment challenges posed by Long COVID, calling attention to systemic gaps in sickness benefits and the pivotal role of employers in fostering supportive work environments for individuals managing long-term health conditions.

Dr. Reuschke concludes by advocating for extended statutory sick pay beyond 28 weeks and enhanced flexibility in phased returns to work, crucial steps to mitigate the risk of Long COVID-related workforce departures. She stresses the importance of financial aid to employers to sustain employment and combat escalating workforce inactivity in the UK, aligning with initiatives under the new Labour government’s agenda.

More information: Darja Reuschke et al, Impacts of Long COVID on workers: A longitudinal study of employment exit, work hours and mental health in the UK, PLoS ONE. DOI: 10.1371/journal.pone.0306122

Journal information: PLoS ONE Provided by University of Birmingham

Secure Improved Loan Terms by Partnering Effectively

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In the bustling aisles of Target, where shoppers browse through blouses and blenders, there’s also the enticing option to enjoy a cappuccino at one of over 1,700 Starbucks cafes strategically housed within the store. This symbiotic partnership exemplifies more than mere co-location; it’s a strategic alliance that strengthens brands and drives additional sales through increased foot traffic and cross-promotional opportunities. Such alliances are increasingly common, with approximately 3,600 new partnerships formed annually, highlighting their pivotal role in expanding market reach and integrating advanced technologies while preserving operational autonomy.

Recent research by Urooj Khan, an associate professor of accounting at Texas McCombs, reveals another significant benefit of strategic alliances: enhanced access to financing. Companies engaged in alliances often enjoy improved financing terms and greater access to funds through the established financial networks of their partners. Banks, already familiar with one partner, are more inclined to offer favourable terms, such as lower interest rates, to new borrowers entering into these alliances.

This preferential treatment arises from banks gaining insights beyond traditional financial metrics. They assess factors like the alliance partners’ commitment levels, operational capabilities, and overall risk profiles, which are critical in evaluating creditworthiness and mitigating lending risks.

“Predicting whether a company will uphold its commitments within a strategic alliance is challenging, even with formal agreements in place,” explains Khan. “Yet, these alliances have profound implications for the financial performance, cash flows, and revenue streams of the companies involved.”

Khan’s research, conducted with scholars from Washington University in St. Louis, Peking University, and Hong Kong University, analysed a substantial dataset of U.S. bank loans issued to companies engaged in strategic alliances from 1991 to 2016. Their findings underscore several vital advantages: borrowers within alliances were 6% more likely to secure financing from banks connected to their alliance partners than those without such links. Moreover, loans from alliance-affiliated banks typically carried interest rates of 0.13 percentage points lower, resulting in an average 7% reduction in borrowing costs.

The study further highlighted that alliance-affiliated banks were inclined to offer favourable terms when the alliance was economically significant or closely aligned with the company’s core operations or market segments. Additionally, lower transparency or weaker accounting standards on the part of the borrowing company heightened the importance of insider information from its alliance partner in the lending decision.

These findings have significant implications for both banks and companies considering strategic alliances. Banks can leverage new alliance partnerships to deepen relationships with existing clients and expand their business portfolios. The research underscores the strategic advantage of forming partnerships for companies, especially those anticipating future financial needs. This enhances market access and technological capabilities and strengthens financial positioning through improved lending terms and access to capital, empowering them with a powerful tool in their economic strategy.

“Traditionally, companies have pursued alliances primarily for market expansion, technology acquisition, or cost efficiencies,” notes Khan. “Our research underscores the additional benefit of leveraging each other’s financial networks, underscoring the importance of robust banking relationships in selecting and evaluating potential alliance partners.”

More information: Urooj Khan et al, Strategic Alliances and Lending Relationships, The Accounting Review. DOI: 10.2308/TAR-2021-0359

Journal information: The Accounting Review Provided by The University of Texas at Austin

Financial Benefits of Climate Change Mitigation for Companies

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The escalating frequency of extreme weather events in recent years serves as a stark reminder of the pressing need for immediate action on climate change. Industries with high emissions play a significant role in global carbon output, making their participation crucial in the battle against climate change. Acknowledging their responsibility, many businesses are now actively reducing their carbon footprint and disclosing their environmental strategies and data.

The Task Force on Climate-Related Financial Disclosures (TCFD) offers a promising framework for companies to disclose climate-related financial information, thereby helping them navigate climate risks and seize opportunities. Japan has emerged as a leader in adopting TCFD guidelines, and while the specific economic benefits of these disclosures are yet to be fully understood, the potential is significant.

To address this gap, researchers at Kyushu University analysed data from approximately 2,100 Japanese listed companies over five years (2017-2021). Their study, published in Corporate Social Responsibility and Environmental Management on May 20, 2024, focused on how corporate climate actions and disclosures impact the cost of capital, which is crucial for financing operations.

The study found that companies with higher carbon emissions face higher borrowing costs, reflecting increased climate risks such as extreme weather and regulatory changes. However, companies adhering to TCFD guidelines and disclosing climate-related data experienced lower capital costs. Significantly, promises of climate action without transparent disclosures did not influence financial costs, underscoring stakeholders’ preference for substantive action over rhetoric.

A key finding underscored the role of greenhouse gas emissions in exacerbating climate risks, both physical (e.g., extreme weather events) and transition-related (e.g., regulatory shifts). These uncertainties prompt investors and lenders to demand higher returns, thereby increasing costs of equity and debt. The study highlights that transparency in climate-related data is not just important, but necessary, enabling stakeholders to make informed decisions.

The study’s second author, Siyu Shen, emphasised the importance of climate-related data transparency in influencing investor and consumer decisions, particularly in energy-intensive sectors like electricity and oil. While TCFD adherence reduced the cost of equity, it had less impact on the price of debt during Japan’s period of negative interest rates, which ended in March 2024. With interest rates expected to rise, sustainable linked loans aimed at decarbonisation are gaining traction, potentially lowering debt costs for companies committed to climate action.

Though focused on Japan, the study offers global insights into the relationship between climate disclosures and capital costs. Since 2022, Japan’s prime market-listed companies have been required to follow TCFD guidelines, signalling a broader trend towards climate accountability. This research has inspired Professor Shunsuke Managi and Associate Professor Alexander Ryota Keeley to establish aiESG, a start-up using AI to assess global supply chain sustainability. Their plans include expanding global analyses to understand the regional impacts of climate regulations and cultural factors on capital costs and carbon performance.

Collaboration among investors, companies, academics, and policymakers is essential for addressing the climate crisis and achieving carbon neutrality. The study aims to provide evidence supporting companies in adopting effective strategies, changing behaviours, and reducing emissions.

More information: Yizhou Wang et al, How corporate climate change mitigation actions affect the cost of capital, Corporate Social Responsibility and Environmental Management. DOI: 10.1002/csr.2853

Journal information: Corporate Social Responsibility and Environmental Management Provided by Kyushu University

Firms’ Quest for Ad Revenue Fuels Unintentional Funding of Online Misinformation Outlets

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Companies and digital platforms contribute to sustaining misinformation outlets financially through advertising. Despite efforts to combat misinformation, prominent firms and organisations fund such outlets inadvertently. The proliferation of falsehoods is expected to increase as artificial intelligence facilitates the creation of large volumes of misleading content for ad revenue.

A recent study published in Nature by researchers from Carnegie Mellon University and Stanford University delves into the factors driving the dissemination of online falsehoods. It proposes interventions to curb their financial backing. Ananya Sen, assistant professor of information systems and economics at Carnegie Mellon’s Heinz College and co-author of the study, highlights the profound repercussions of online misinformation, such as fostering political discord and exacerbating environmental challenges. She emphasises that their research marks an initial step towards understanding how to mitigate the financing of online misinformation through advertising.

The study scrutinised several aspects. First, researchers analysed the role of advertising companies and digital ad platforms in monetising misinformation. They compiled extensive datasets covering websites publishing misinformation and tracked ad activities from 2019 to 2021. The dataset encompassed nearly 5,000 websites, including approximately 1,250 misinformation sites, and identified over 42,000 unique advertisers. Throughout the period, these advertisers placed advertisements on news websites over nine million times.

The findings underscore the widespread advertising on misinformation sites across various industries. Digital ad platforms, utilising algorithms to distribute ads, significantly amplify misinformation financing. Misinformation websites primarily monetise through ad revenue, with numerous companies from diverse sectors inadvertently contributing to this funding mechanism.

Secondly, the study gauged consumer preferences through an experiment involving a cross-section of the U.S. population. Participants were exposed to varying factual information, and their responses were evaluated. The research revealed that companies advertising on misinformation platforms face considerable consumer backlash. Consumers tended to distance themselves from firms whose ads appeared on such outlets, diminishing demand for their products. This backlash persisted even when consumers were informed about digital ad platforms’ role in ad placement and the broader implications of ad financing on misinformation.

Furthermore, consumers expressed strong concerns through petitions urging companies to cease advertising on misinformation websites. This consumer activism underscores the potential impact on corporate reputations and consumer loyalty.

Lastly, researchers surveyed corporate decision-makers to ascertain their awareness of online misinformation issues. The study revealed a significant gap between perceived and actual ad placements on misinformation sites among corporate leaders. Many were unaware of their company’s inadvertent financing of misinformation, highlighting a critical informational deficit among decision-makers.

The study’s findings suggest that improving transparency for advertisers about ad placements could mitigate advertising on misinformation websites, particularly among companies unaware of their ad presence on such platforms. Integrated into existing regulatory frameworks, information-based interventions could enhance transparency and accountability in ad placement practices.

Wajeeha Ahmad, a Stanford University PhD student in management science and engineering who led the study, underscores the practical implications of their findings. She recommends that ad companies consider consumer preferences when placing ads online and exercise caution in automating ad placement processes through digital platforms. The study particularly notes the heightened consumer backlash among women and politically left-leaning individuals, suggesting tailored approaches for companies targeting these demographics.

The study calls for concerted efforts from industry stakeholders and policymakers to curb the inadvertent financing of online misinformation. By enhancing transparency, raising awareness among decision-makers, and aligning ad placement practices with consumer expectations, stakeholders can mitigate the detrimental impact of misinformation on public discourse and societal well-being.

More information: Wajeeha Ahmad et al, Companies inadvertently fund online misinformation despite consumer backlash, Nature. DOI: 10.1038/s41586-024-07404-1

Journal information: Nature Provided by Carnegie Mellon University

Enhancing Customer Convenience: Allowing Online Purchases to Be Returned at Retail Stores

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In a study, researchers delved into the strategic importance of a new practice known as return partnerships, wherein online retailers collaborate with brick-and-mortar stores to facilitate the return of online purchases. The study, conducted by researchers from Carnegie Mellon University and the University of Washington, underscores how this strategy can significantly benefit both online retailers and physical stores, with the caveat that careful partner selection is paramount.

The shift towards return partnerships arises from consumer preferences, as many online shoppers prefer returning items to physical stores rather than through mail. This trend prompted online giants like Amazon to forge alliances with store chains such as Kohl’s, enabling customers to drop off their returns conveniently. Importantly, these partnerships typically do not involve direct retail transactions. Instead, store retailers benefit from increased foot traffic and potential additional purchases, while online retailers save on shipping costs associated with individual mail-in returns.

The researchers constructed a model to assess the incentives for both types of retailers in such partnerships. They compared the anticipated profitability before and after implementing a return partnership, identifying scenarios where mutual benefits could be maximised. Key findings include the advantage for online retailers in utilising a cost-effective return channel and the benefit for store retailers in attracting more visitors to their physical locations.

Crucially, the success of these partnerships hinges on aligning incentives that influence consumer behaviour rather than direct financial transactions. Partnerships can vary widely, from collaborations with small-scale store networks offering similar products to large chains with diverse offerings. The study underscores that online retailers with flexible return policies are better positioned to leverage return partnerships effectively. Conversely, those with stringent policies risk increased return rates, potentially impacting profitability.

Selecting the right partner is pivotal. For instance, partnerships between online and store retailers offering comparable products may thrive with a moderate number of stores. This balance prevents cannibalising online sales by enticing consumers to return items in-store, potentially leading to additional purchases. Understanding consumer decision-making in purchasing and returning goods is essential, as it informs strategic decisions for retailers aiming to maximise the benefits of return partnerships.

Leela Nageswaran, Assistant Professor of Operations Management at UW’s Foster School of Business, emphasises the need for return partnerships to strategically focus on enhancing customer retention and sales growth. This approach provides critical insights into the types of online retailers best suited for such collaborations. Additionally, Elina Hwang, Associate Professor of Information Systems at UW’s Foster School of Business, underscores the importance of this strategic focus in the success of return partnerships.

The study illuminates the potential of return partnerships to not just benefit individual retailers, but to reshape the entire retail landscape. By aligning online convenience with the physical presence of brick-and-mortar stores, these partnerships have the power to significantly alter how consumers interact with retail. Understanding and capitalising on consumer preferences and retailer incentives can lead to the creation of effective partnerships that enhance customer satisfaction and operational efficiency across both online and offline platforms.

More information: Leela Nageswaran et al, Offline Returns for Online Retailers via Partnership, Management Science. DOI: 10.1287/mnsc.2023.01291

Journal information: Management Science Provided by Carnegie Mellon University

Emerging Trends: Direct Sales Surpass Multi-Brand Shops in Online Commerce

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In the fast-paced digital retail world, effectively engaging potential customers is crucial for success. A recent study by Jan Becker and Christian Barrot, professors and marketing specialists at KLU, sheds light on consumer preferences in online shopping. The research titled “Understanding Customers’ Preferences: D2C vs. Multi-Brand Operations” reveals a growing preference among consumers for direct-to-consumer (D2C) online shops over traditional multi-brand retailers.

The study highlights that consumers are increasingly attracted to D2C platforms due to their personalised shopping experiences, comprehensive product information, and extensive product selections. These preferences often manifest early in the shopping journey, influencing consumer decisions before specific products are considered.

Personalisation is a key strategy for retailers to thrive in the evolving digital retail landscape. Retailers can significantly enhance customer satisfaction and foster loyalty by tailoring the online shopping experience to individual preferences and behaviours. Moreover, focusing on product categories that offer a diverse mix and depth of products can further attract and retain customers on D2C platforms. Concurrently, targeting marketing strategies for exclusive products helps differentiate offerings and appeal to discerning consumers seeking unique experiences.

Professor Jan Becker underscores the significant potential of direct sales strategies in today’s digital marketplace. He emphasises that companies can maintain a competitive edge by aligning with consumer preferences and leveraging their product category strengths. This research provides actionable insights for branded retailers looking to optimise their omnichannel strategies and enhance their D2C operations, ensuring relevance and success in an increasingly competitive online retail environment.

More information: Eda Kalayci et al, Understanding customers’ choice for digital D2C versus multi-brand operations, Journal of Retailing. DOI: 10.1016/j.jretai.2024.02.001

Journal information: Journal of Retailing Provided by Kühne Logistics University

Empowering Online Retail: Enhancing Customer Trust and Sales Through Self-Delivery Services in the Digital Economy

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Researchers from Sichuan University, Tsinghua University, and the University of California Davis have recently published a significant study in the Journal of Marketing, exploring the impact of online retailers’ delivery services (ODS) on customer behaviour and sales performance. Titled “Understanding the Influence of Own Delivery Services on Customer Behaviour and Sales in Online Retail: Enhancing Trust and Delivery Quality in the Digital Economy,” the study is authored by Banggang Wu, Yubo Chen, and Prasad A. Naik.

The study addresses the increasing prioritisation of last-mile home delivery by online retailers worldwide. Many companies have invested significantly in developing delivery networks to fulfil customer orders directly, bypassing third-party logistics providers. For instance, Ocado in the UK initiated its ODS in 2000, followed by JD.com in China in 2010, BigBasket in India in 2011, and Amazon in the US after challenges during the 2013 holiday season. By 2023, Amazon alone delivered approximately 5.9 billion packages in the US through its ODS, highlighting the scale and importance of this trend.

Central to the study are questions regarding how adopting ODS influences consumer behaviour and impacts sales performance for online retailers. The research utilised extensive data, including 250,055 customer transactions over a decade across 416 cities and 49 product categories from JD.com, alongside 6.7 million customer reviews, to provide empirical insights into these dynamics.

Key findings reveal that ODS enhances delivery quality and builds consumer trust by ensuring online retailers take full responsibility for delivery issues and product damages. This contrasts with scenarios involving third-party delivery services, where attributing fault for issues like damaged goods can be unclear, potentially eroding trust. Consequently, ODS reduces consumer transaction risks, encouraging increased purchases and enhancing overall sales performance.

At an individual customer level, the study shows that ODS leads to a 7.8% increase in monthly spending, a 4.2% rise in purchase frequency, and a 5.1% increase in the number of items purchased. At a city level, ODS contributes to an average aggregate sales growth of 11.9%, with more pronounced impacts observed in cities with lower consumer trust levels. These effects are particularly significant for less frequent buyers, high-risk product categories, and products sold directly by the online retailer.

The study’s implications for Chief Marketing Officers (CMOs) underscore ODS as a strategic investment for acquiring and retaining active customers, as evidenced by JD.com’s substantial growth in active customer accounts following the implementation of ODS. Furthermore, the research suggests that ODS is particularly advantageous in markets with lower consumer trust levels, which is ideal for expanding customer bases in emerging markets like China and India.

Moreover, the study highlights ODS’s heightened effectiveness in handling high-risk product categories such as perishable goods, where maintaining delivery quality and consumer trust is crucial. Initiatives from retailers like Ocado in the UK, Walmart’s use of ODS for fresh and perishable food items, and Amazon’s deployment of fresh grocery delivery illustrate this.

Lastly, the research indicates that ODS tends to generate more sales for products sold directly by the online retailer than third-party products. This insight suggests opportunities for online platforms to expand ODS-like services to third-party sellers, akin to Amazon’s Fulfillment by Amazon (FBA) model, which provides storage, packaging, and shipping services. Such initiatives empower sellers by leveraging the online retailer’s robust delivery network, enhancing customer satisfaction and sales performance across a broader spectrum of products.

To conclude, the study underscores the strategic value of ODS in enhancing delivery reliability, building consumer trust, and driving sales growth in the competitive landscape of online retail. By offering insights into the optimal conditions and product categories where ODS can deliver the most significant impact, the research provides actionable guidance for online retailers looking to leverage self-owned delivery networks as a cornerstone of their operational strategy in the digital economy.

More information: Banggang Wu et al, How Own Delivery Services Influence Customer Behavior and Sales in Online Retail? Building Trust and Improving Delivery Quality in Digital Economy, Journal of Marketing. DOI: 10.1177/00222429241239892

Journal information: Journal of Marketing Provided by American Marketing Association

Strategic Approaches for Local Firms: Balancing Market and Nonmarket Strategies Amid Foreign Direct Investment

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Recent research investigates the strategic responses of local firms to inward foreign direct investment (FDI) in emerging markets. While prior studies highlight FDI’s potential to enhance local firms’ productivity and innovation through knowledge spillovers, this new study delves into how local firms should strategically navigate the competitive pressures posed by foreign firms. Published in the Global Strategy Journal, the study underscores the importance of local firms adopting a balanced approach by integrating both market and nonmarket strategies to maximise benefits, as more than just political connections are needed.

Inward FDI refers to when a company acquires or establishes operations in a foreign country, bringing opportunities and challenges to local firms. On the one hand, local firms can benefit from knowledge transfers and technological advancements brought by foreign firms. On the other hand, they face intensified competition in their domestic markets. To address these dual challenges, local firms are advised to deploy market strategies to enhance marketplace competitiveness alongside nonmarket strategies that influence the regulatory and public opinion environments.

Meitong Dong from The University of Hong Kong, Pengcheng Ma from Renmin University of China, and Lin Cui from the Australian National University explored the dynamics between foreign firms, local firms, and the local government. Drawing on resource dependence theory, the researchers argue that the impact of inward FDI on local firms’ reliance on government resources follows a U-shaped curve. Initially, low to moderate levels of inward FDI can reduce local firms’ dependence on political connections by providing alternative resources. However, as FDI levels increase, the competitive threats outweigh the benefits, prompting local firms to strengthen their political ties to level the playing field.

The study focused on China, an exemplar of an emerging economy and a major destination for FDI, using a dataset spanning 2009 to 2017 encompassing 1,463 Chinese listed firms. The researchers analysed variables such as FDI inflows, local firms’ political connections, governmental R&D funding, institutional development, and market diversification to gauge how resource similarities between foreign firms and the government influence local firms’ strategic responses.

The findings revealed a nuanced relationship where the similarity of resources provided by foreign firms and the government significantly influenced local firms’ adoption of nonmarket strategies, particularly political connections. When resources from FDI and the government were similar, local firms were more inclined to leverage political ties to counterbalance competitive pressures. This highlights the strategic importance of effectively aligning market and nonmarket strategies amidst growing FDI.

The authors emphasised that local firms in emerging markets cannot rely solely on governmental support to mitigate the competitive impacts of FDI. Instead, they advocate for a dual-pronged approach where firms integrate market competitiveness with strategic nonmarket actions. Understanding the complementarity between resources from FDI and governmental support is crucial for local firms seeking to optimise their strategic responses.

The study underscores the strategic imperative for local firms to adopt a holistic approach when confronted with increasing inward FDI. By blending market-driven competitiveness with astute nonmarket strategies, local firms can better navigate the competitive landscape and harness the potential benefits of foreign investment while safeguarding their market positions. This research contributes valuable insights into how firms in emerging markets can effectively manage the complexities of globalisation and foreign competition.

More information: Meitong Dong et al, Inward FDI and local firms’ political connections in emerging markets: Evidence from China, Global Strategy Journal. DOI: 10.1007/s00394-023-03123-x

Journal information: Global Strategy Journal Provided by Strategic Management Society

USF Study: Star Ratings Outweigh Numerical Scores in Online Reviews

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In online reviews, the perception of a product’s quality can vary significantly depending on how its rating is presented. While scoring 3.5 out of 5 is equivalent to receiving three and a half stars, visually, these representations do not align.

In a recent study published in the Journal of Marketing Research, researchers from the School of Marketing and Innovation at the Muma College of Business, University of South Florida (USF), explored how different formats of rating presentation influence consumer perceptions. The study by Assistant Professor Carter Morgan revealed that shapes such as stars, circles, and bars hold more significant sway over consumers than numerical figures when evaluating product ratings online.

“Simply changing a rating’s format from numbers to stars increases the perception of the rating as higher,” noted Morgan. This shift in perception can significantly impact consumer behaviour in the digital marketplace, influencing their decisions to click on advertisements or make purchases.

The research highlighted a cognitive bias known as left-digit anchoring, wherein consumers focus more on the leftmost digit of a numerical rating. For instance, a rating of 3.5 might be mentally processed as closer to 3 rather than 3.5, thereby undervaluing the product in the consumer’s perception. This bias underscores the importance of format in shaping consumer attitudes towards product quality.

The findings of the study offer promising implications for online retailers, marketers, and web designers. By embracing visual formats like stars instead of numerical ratings, businesses can potentially boost consumer confidence in product quality, increase purchase intent, and enhance engagement with advertisements. This shift in approach could open up new avenues for success in the digital marketplace.

Furthermore, the study underscores the crucial role of consumer advocates and public policymakers in promoting transparency in online reviews. By advocating for the standardization of rating formats across platforms, they can help mitigate unintentional biases in consumer decision-making processes. This push for standardization aligns with broader efforts to empower consumers with clearer, more consistent information for making informed purchasing decisions.

The USF study sheds light on how subtle changes in the presentation of product ratings, from numbers to shapes like stars, can wield significant influence over consumer perceptions and behaviors in the digital age. As businesses navigate the competitive landscape of online commerce, understanding and leveraging these insights can be pivotal in driving consumer trust and engagement. The potential impact of this research on consumer behaviour is significant and should be considered.

More information: Annika Abell et al, The Power of a Star Rating: Differential Effects of Customer Rating Formats on Magnitude Perceptions and Consumer Reactions, Journal of Marketing Research. DOI: 10.1177/00222437241240694

Journal information: Journal of Marketing Research Provided by University of South Florida

Exploring the entrepreneurial mind: fresh insights into cognitive adaptability

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In a recent exploration led by researchers from the University of Liège, the intersection of entrepreneurship and neuroscience was investigated, focusing on the cognitive flexibility exhibited by habitual entrepreneurs compared to less experienced entrepreneurs and managers.

Cognitive flexibility, the capacity to adapt and transition between different concepts or strategies, is pivotal in entrepreneurial triumph. The neural underpinnings of this trait offer valuable insights into enhancing entrepreneurial training and education. Recent research findings underscore connections between entrepreneurial behaviour and brain structure, marking a significant stride in the burgeoning field of neuro-entrepreneurship.

“Our study employed a dual-phase methodology,” elucidates Frédéric Ooms, the study’s Assistant Professor and lead author. “Initially, we gathered self-reported assessments of cognitive flexibility from 727 participants, encompassing both entrepreneurs and managers. Subsequently, we conducted structural magnetic resonance imaging (MRI) on a subset of these individuals to investigate variations in grey matter volume within the brain. This interdisciplinary approach enabled us to correlate self-reported cognitive flexibility with actual brain structure.”

The foremost outcome of our analyses underscores pronounced cognitive flexibility and discernible brain disparities between entrepreneurs and managers. Habitual entrepreneurs exhibit heightened grey matter volume in the left insula compared to their managerial counterparts. This brain region is closely associated with bolstered cognitive adaptability and expansive thinking—indispensable qualities in entrepreneurial pursuits. The study further associates grey matter density in the left insula with mental flexibility, particularly in fostering divergent thinking. “This discovery suggests that the brains of habitual entrepreneurs are uniquely predisposed to cultivate the cognitive flexibility required for identifying and seizing novel opportunities,” expounds Steven Laureys, a ULiège and Laval University neurologist.

These findings bear significant practical implications for educators and organisations alike. Acknowledging the criticality of cognitive flexibility, educational initiatives can be tailored to nurture this attribute among aspiring entrepreneurs. Similarly, organisations can gain by promoting cognitive flexibility among their managerial ranks, potentially fostering more innovative and adaptable business strategies.

“This study holds profound relevance for researchers in entrepreneurship and neuroscience, educators developing entrepreneurial training programmes, and business leaders aiming to foster innovation within their organisations,” summarises Bernard Surlemont, Professor of Entrepreneurship. By comprehending the neurobiological foundation of cognitive flexibility, stakeholders can better underpin entrepreneurial success and adaptability.

Identifying distinctive neural attributes in habitual entrepreneurs not only advances our understanding of entrepreneurial cognition but also sets forth new avenues for examining the development and evolution of these brain structures in response to entrepreneurial activities. Longitudinal studies are underway to ascertain whether these disparities arise from innate predispositions or the brain’s adaptable response to entrepreneurial endeavours.

This pioneering research underscores the importance of integrating neuroscience into conventional entrepreneurship studies to understand better the distinctive neurological traits that distinguish successful entrepreneurs. “As we continue to delve into the cerebral aspects of entrepreneurship, this study represents a seminal advancement in the realm of neuro-entrepreneurship,” concludes Frédéric Ooms.

More information: Frédéric Ooms et al, Entrepreneurial neuroanatomy: Exploring gray matter volume in habitual entrepreneurs, Journal of Business Venturing Insights. DOI: 10.1016/j.jbvi.2024.e00480

Journal information: Journal of Business Venturing Insights Provided by University of Liège