Monthly Archives: February 2025

Improving Poverty Mapping: A New Machine-Learning Method for More Efficient Aid Distribution

Researchers from Cornell University have pioneered a new machine-learning method for mapping poverty. This method could significantly enhance the ability of policymakers and non-governmental organisations to pinpoint and aid the most impoverished populations in developing countries. This novel approach merges national surveys, large-scale data, and machine learning to create a refined tool for resource allocation aimed at eradicating extreme poverty.

Extreme poverty is categorised as living on less than $2.15 per person daily. To effectively combat this, governments and agencies involved in development and humanitarian efforts must understand the scope of poverty—specifically, how many people fall below this economic threshold and their geographic locations. However, obtaining this data is a significant challenge in the regions that most require assistance, according to the researchers at Cornell.

Typically, poverty is measured using household surveys that track income or consumption. These surveys are considered the gold standard for establishing poverty thresholds. Still, they are often either unavailable or not current due to their high costs and the logistical challenges in administering them regularly. Conversely, there has been success in using satellite imagery and other Earth observation data to assess infrastructure, environmental conditions, and human activity. This data has been used to create asset-based poverty indexes, which, while applicable, do not align directly with the monetary metrics that are most valuable to decision-makers.

The innovative method developed by the Cornell team bridges this gap by converting extensive Earth observation data into more actionable metrics for policymakers. This approach was tested in a pilot project across four countries in southern and eastern Africa. It proved to be as precise as traditional asset index methods in mapping poverty. Still, it provided more relevant data, such as the proportion of the population living below the global poverty line. This structural poverty model performed better than previous monetary poverty estimation methods and offers a forward-looking perspective, making it particularly advantageous for planning and program development.

Chris Barrett, a professor of applied economics and management at Cornell and the study’s senior author, emphasised that while rapid advancements in data science have been made, their adoption has been limited because they have not yielded practical estimates for policy implementation. This research makes computational strides more applicable by correlating them with monetary poverty benchmarks.

The “Microlevel Structural Poverty Estimates for Southern and Eastern Africa” study has been published in the Proceedings of the National Academy of Sciences. It was part of a series of inaugural articles by new academy members, including Barrett, and focused on Ethiopia, Malawi, Tanzania, and Uganda. These countries were selected not only because of their significant poverty rates and the active presence of development agencies but also because they provided robust data on consumption and assets, enabling the researchers to model and understand their interconnections.

The research team utilised machine learning models trained on 13 national household surveys conducted between 2008 and 2020, linked with Earth observation data on various assets such as housing quality, land ownership, livestock, vehicles, and access to technology, including mobile phones. According to Elizabeth Tennant, the study’s first author and a research associate in economics, this integration of older survey data and recent satellite observations allows for generating localised “nowcasts” that reflect current conditions rather than past circumstances.

Barrett highlighted the dual benefit of their approach: achieving the precision offered by recent data science advances while maintaining the relevance of these findings for policy and programming. This method provides forward-looking insights, enabling policymakers and agencies to understand who will likely be poor in the present rather than relying on outdated data. This makes the Cornell team’s structural poverty models a powerful predictive tool in the ongoing fight against extreme poverty.

More information: Elizabeth Tennant et al, Microlevel structural poverty estimates for southern and eastern Africa, Proceedings of the National Academy of Sciences. DOI: 10.1073/pnas.2410350122

Journal information: Proceedings of the National Academy of Sciences Provided by Cornell University

Financial Stress and Burnout May Reduce Job Satisfaction

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Work-related stress frequently leaves individuals feeling exhausted and overwhelmed, and this condition can be compounded by anxiety from other life domains. This dynamic was highlighted in a recent study by the University of Georgia, which explored the effects of external stressors like financial anxiety on job satisfaction. The research revealed that stresses in personal life, such as financial worries, impact mental health and professional environments by contributing to burnout.

Burnout is a complex phenomenon traditionally linked to the workplace but can be intensified by factors outside work, such as financial stress. The study surveyed over 200 full-time U.S. employees, examining the relationship between their current financial stress and their burnout and job satisfaction levels. The findings indicated that financial worries could significantly influence an employee’s sense of engagement and satisfaction at work, suggesting a spill-over effect where difficulties in one area can exacerbate challenges in another.

Camden Cusumano, the study’s lead author and a doctoral candidate at UGA’s College of Family and Consumer Sciences, drew parallels between physical and financial health. He noted that just as a physical injury in one part of the body could cause pain elsewhere, financial stress could manifest in reduced workplace performance. This analogy underscores the interconnected nature of personal and professional well-being, where distress in any life domain can ripple across others.

The symptoms of burnout include depersonalization, emotional exhaustion, and a reduced sense of personal accomplishment. These symptoms often create a disengaging work experience where employees may feel detached and unproductive. This study aimed to look beyond the usual suspects of workload and autonomy, examining how external pressures, like financial stress, contribute to these feelings of burnout and lower job satisfaction.

In their research methodology, the team conducted an online survey with 217 full-time employees who shared their experiences related to burnout and job satisfaction. They also assessed participants’ current financial stress and outlook on future financial security. Those with high stress levels regarding their current economic situations reported more incredible burnout, which lowered their job satisfaction.

The researchers suggest several strategies to mitigate these effects. For individuals, staying informed about the sources of financial stress and actively managing these can help alleviate burnout. For employers, there is an opportunity to support employees through programs that address financial well-being, such as offering financial counselling. Such initiatives help manage current financial stress and foster a positive outlook on future economic stability, improving job satisfaction and employee engagement.

More information: Camden Cusumano et al, Mind the gap: Investigating how financial well-being shapes job satisfaction through burnout, Journal of Workplace Behavioral Health. DOI: 10.1080/15555240.2024.2441208

Journal information: Journal of Workplace Behavioral Health Provided by University of Georgia

Increasing Salaries Propel Advances in Automation Tech

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Is increasing wage pressure a catalyst for automation? Economic theory posits that it is. As wages rise, innovation in automation technology gains momentum, driven by companies’ pursuit of cost-saving alternatives to expensive labour. But does this theory hold in practice? Do companies forge ahead with automation innovations in response to external pressures like higher wages? Groundbreaking empirical evidence from a new study by economists at the University of Zurich (UZH) affirms this notion.

The authors employed a novel method integrating two distinct datasets to facilitate their research. The primary dataset was a freshly established classification of automation patents derived from European patent data. This innovative dataset allowed the researchers to track automation-related patents at the company level, thereby assessing firms’ innovation activities. The focus was mainly on patents related to machine tools, textile machinery, and paper machines.

These patent records were subsequently merged with a macroeconomic dataset spanned 41 countries, mainly focusing on innovative companies susceptible to global market dynamics. This amalgamation enabled the UZH team to evaluate wage levels and examine the extent to which wage fluctuations spur automation innovation. “This innovative approach enabled us to isolate the causal effect of labour costs on technological advancements, thereby offering a more accurate insight into how companies react to changes in wages,” explains David Hémous, the study’s lead author and associate professor of economics of innovation and entrepreneurship at UZH.

The study also delved into the effects of higher minimum wages on innovation. It found that increased minimum wages encourage companies to develop more automation technologies. “Our findings robustly support the idea that higher wages for low-skilled workers motivate companies to channel investments into automation innovations to cut down on production costs,” states David Hémous. The research revealed that a 1% wage increase results in a 2% to 5% surge in innovation within the relevant sectors. Conversely, rising wages for high-skilled labour tend to dampen automation innovation, as the deployment and operation of automation machinery often necessitate highly skilled personnel. Elevated wage costs make automation pricier, diminishing its advantages and deterring innovation.

The impact of labour market policies was also a focal point of the study. The Hartz reforms in Germany, which were implemented between 2003 and 2005 and are believed to have boosted labour supply while suppressing wages, particularly for low-skilled workers, provided a case study. The UZH researchers found that these reforms reduced automation innovation among companies dealing with the German market. “Events like the rise in minimum wages and Germany’s Hartz reforms underscore how labour market policies directly influence corporate incentives to invest in automation—or not—and how these policies shape long-term economic trajectories such as economic growth,” notes Hémous.

However, the study also observed that not all innovation reacts to wage shocks. Innovations in non-automation sectors, such as those aimed at enhancing energy efficiency, appeared unaffected by wage changes. This observation has prompted calls for further research into the impact of rising wages for highly skilled workers on the development of recent automation technologies, including artificial intelligence.

More information: David Hémous et al, Induced Automation Innovation: Evidence from Firm-level Patent Data, Journal of Political Economy. DOI: 10.1086/734778

Journal information: Journal of Political Economy Provided by University of Zurich

Study at WVU Finds Consumers Prefer Karma Over Boycotts to Penalise Brands for Unethical Conduct

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According to a marketing expert from West Virginia University, individuals who believe in karma are more likely to forgive corporations that engage in immoral behaviour compared to those who do not hold such beliefs. Kylie Vo, a teaching assistant professor at the WVU John Chambers College of Business and Economics, has explored how consumers anticipating the universe will address corporate misdeeds are less likely to harbour grudges against such companies. They are also less inclined to engage in consumer activism like boycotts. This trend is becoming increasingly relevant as consumers become more informed and socially conscious. Digital media and social networks are significantly amplifying moral outrage against brand transgressions, such as the Facebook-Cambridge Analytica scandal and the #DeleteUber movement, which have profoundly impacted user trust and brand loyalty.

Vo’s research indicates that those who believe in karma are less concerned about moral transgressions by brands than non-moral issues. The karmic belief system, encapsulated by the phrase ‘you reap what you sow’, suggests that every action leads to a corresponding consequence. This belief is prevalent among over 65% of Americans and is foundational for more than 75% of South and Southeast Asian people. Such beliefs subtly influence daily decisions and behaviours, from justifying luxury purchases to promoting reduced consumption to avoid adverse outcomes.

In her studies, Vo has demonstrated that believers in karma are more forgiving and exhibit fewer negative attitudes towards brands that commit moral wrongs. They are less likely to boycott these brands. These insights were detailed in a paper published in The Journal of the Association for Consumer Research. However, Vo noted that consumers are less forgiving regarding non-moral transgressions, such as defective products or misleading claims. These directly jeopardise the consumer experience and raise safety concerns, exemplified by incidents like the significant sales decline Mattel faced when lead was discovered in its toys.

For those who believe in karma, forgiving brands for moral transgressions is also seen as a way to accumulate good karma through forgiveness. Vo’s research shows that the stronger an individual’s belief in karmic forces, the more likely they are to forgive a brand guilty of moral wrongdoing. This understanding of how faith in karma affects consumer responses to brand transgressions allows marketers to strategise around messaging that resonates with those beliefs, emphasising themes like good deeds or cosmic justice.

Vo advises that brands identified with wrongdoing must quickly determine whether the issue was moral or non-moral. For non-moral problems, the brand’s response can be universal, focusing on corrective actions. However, the response should be more nuanced for moral transgressions, reflecting the intricacies of karmic retribution and consumer expectations for ethical conduct. This approach helps brands tailor their crisis management strategies effectively, potentially mitigating damage and restoring consumer trust more efficiently.

More information: Kylie Vo et al, Fate, Forgiveness, and Brands: How Karmic Beliefs Impact Consumer Responses toward Transgressing Brands, Journal of the Association for Consumer Research. DOI: 10.1086/733043

Journal information: Journal of the Association for Consumer Research Provided by West Virginia University

Recent Research Uncovers Concealed Dangers of Social Capital in Microfinance Amidst Economic Turmoil

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A recently published article in the Strategic Management Journal reveals a significant yet often overlooked risk associated with microfinance. While social capital contributes to financial stability under normal conditions, it may lead to higher default rates during economic crises. This research, led by Arzi Adbi, Matthew Lee, and Jasjit Singh, studied the repayment behaviour of nearly two million low-income borrowers following the 2016 demonetisation policy in India. This event inadvertently highlighted the double-edged nature of peer accountability in financial settings.

For over five decades, microfinance has been lauded as a transformative strategy for enhancing financial inclusion, mainly through group lending frameworks. These models capitalise on social bonds and peer pressure to promote loan repayment among low-income borrowers. However, the study indicates that the same factors that facilitate repayment in stable times might accelerate the incidence of default during external shocks.

The research focused on the 2016 demonetisation initiative in India, which invalidated 86% of the nation’s currency overnight. This drastic policy led to a severe liquidity crisis, primarily affecting those dependent on cash transactions. As a result, default rates among microfinance borrowers soared from a mere 2% before the demonetisation to over 40% afterwards. Interestingly, these defaults were not uniformly distributed but were notably concentrated in specific lending centres.

In-depth analysis using data from a leading microfinance institution in India, supplemented by interviews with borrowers and community service officers, helped the researchers understand that the decision to default was influenced by economic hardship and social relationships within the borrowing groups. In several communities, peer influence led to collective defaults, as borrowers, overwhelmed by financial duress, chose to default together rather than individually. This social dynamic exacerbated financial instability rather than mitigating it.

The research underscores a critical vulnerability inherent in community-based business models: the social mechanisms that ensure operational efficiency in stable times can transform into liabilities during crises. To counteract these risks, the authors recommend several strategic interventions: enhanced risk management with crisis-focused scenario planning, context-specific approaches due to varying social and economic dynamics, and fostering more decisive community leadership to stabilise borrower behaviour during economic downturns.

As financial institutions, policymakers, and corporate leaders strive to expand financial access in emerging markets, the insights from this study provide a crucial understanding of the complex interplay between social capital and economic behaviour. Achieving sustainable financial inclusion demands innovative approaches and a profound comprehension of the social dynamics at play. These findings serve as a valuable guide for crafting policies that recognise the strengths and potential pitfalls of leveraging social capital in financial systems.

More information: Arzi Adbi et al, Community influence on microfinance loan defaults under crisis conditions: Evidence from Indian demonetization, Strategic Management Journal. DOI: 10.1002/smj.3558

Journal information: Strategic Management Journal Provided by Strategic Management Society

What Impact Will China’s Updated Standards Strategy Have on Corporate Employment Practices?

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The Chinese government is instituting reforms to many technical standards that have a widespread influence on the products and services consumers use across the globe. Previously, China’s approach to developing its standards system was heavily reliant on the unilateral authority of its government. This traditional method has been predominant, with little input from market-driven mechanisms. However, the new reforms signify a shift towards incorporating principles of market economies into the standards development process. An illuminating study published in the journal Contemporary Economic Policy delves into the ramifications of these reforms on corporate labour employment, offering a comprehensive analysis of their impacts.

The research scrutinises how these reformed standards are designed to interact with various aspects of corporate management and operational efficiency. The study’s findings suggest that the reform of standardisation protocols significantly enhances corporate labour employment. This enhancement comes through several channels: it reduces transaction costs, which often burden companies; it improves operational efficiency, making daily processes more streamlined; and it ameliorates the financing environment, which can usually be a stifling factor for corporate growth. The reforms are paving the way for a more fluid integration of standard practices within businesses, fostering environments conducive to growth and development.

The impact of these reforms is not uniformly distributed across all sectors and types of firms. The study highlights that firms with specific characteristics will likely accrue the most significant benefits. Notably, non-state-owned enterprises, which traditionally have more flexibility and possibly face more competitive pressures, stand to gain significantly. Additionally, highly competitive industries are more likely to see dynamic changes as the reforms encourage firms to innovate and adapt to maintain or enhance their market position. Moreover, regions with lower levels of marketisation, which have perhaps not benefitted as much from previous economic policies, and firms with significant gender disparities, indicating untapped potential in human resources, are also areas where substantial impacts can be expected.

Another critical aspect of the reforms is their influence on firms’ labour investment and management practices. By encouraging and sometimes necessitating improved labour investment efficiency, these reforms help firms optimise their labour structures. This optimisation can involve better allocation of tasks, more fitting job-role matching, and enhanced productivity strategies. Moreover, the reforms push firms to increase labour compensation. This is a matter of raising wages and improving the overall remuneration package, including benefits, bonuses, and other non-monetary incentives. Additionally, there is a strong emphasis on enhancing labour training programs, which are essential for employees’ personal growth and the company’s overall advancement.

The study’s authors are firm believers in the positive outcomes of these reforms. They argue that the insights provided by their research are vital for both governmental bodies and corporate entities. For governments, these insights can guide advancing a more robust and efficient standard system that aligns more closely with market dynamics and economic realities. For firms, the findings underscore the importance of improving standardised practices to comply with new regulations and harness the benefits of these changes for better competitiveness and growth.

In summary, the reforms to China’s standard system represent a significant shift towards integrating market economy principles into the regulatory framework that dictates the operation of companies within the country. The effects of these changes, as evidenced by the research, are profound, offering numerous opportunities for corporate entities to enhance their operational capacities, labour management practices, and competitive standing in the global marketplace. The study, therefore, provides essential perspectives that can help shape future policies and business strategies, ensuring that the standard system evolves to support sustainable and inclusive economic growth.

More information: Lianchao Yu et al, The standard system and corporate labor employment: Empirical evidence from China’s comprehensive standardization reform, Contemporary Economic Policy. DOI: 10.1111/coep.12688

Journal information: Contemporary Economic Policy Provided by Wiley

Timing Is Crucial for Effective Push Promotions

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As you exit the office, your phone alerts you with a notification: a nearby shop is offering a discount on a smartwatch, complete with a 20% off coupon displayed on your app. Intrigued, you decide to take advantage of this timely offer.

This scenario is a classic example of a push promotion: a retailer proactively sends a notification through an app to catch your attention. This strategy has been a staple for online giants like Amazon. However, Jason Duan, an associate professor of marketing at Texas McCombs, believes that physical retailers, ranging from small family-run shops to large chains like Target, can also effectively utilise this method to enhance competitiveness.

Jason Duan and Vijay Mahajan, another marketing professor at McCombs, delve into this topic through their latest research. They explore the intricacies of how, when, and what kind of push notifications are most effective in driving customer visits to physical stores. Their study particularly emphasises the potential of location-based notifications, which are sent when a consumer is near a store, as opposed to behaviour-based notifications that rely on a user’s previous shopping habits. While companies like Amazon depend on behaviour-based strategies, physical stores might benefit more from leveraging location-based notifications.

According to Duan, this approach could provide a significant edge as retailers possess vast data reserves that could help optimise location- and behaviour-based notification deployment.

To assess the effectiveness of these two promotional strategies and their potential synergy, Duan and Mahajan collaborated with Zhuping Liu from Baruch College. They developed a model simulating shopper behaviour, incorporating data from a company that sends coupon notifications through a mobile app. This dataset included detailed logs of when notifications were issued, when and where consumers engaged with the app and its coupons, and their subsequent store visits, all with the consent of the participants. The study tracked 5,000 shoppers in a mid-sized American city over 120 days in 2015.

Their findings revealed distinct advantages for each type of notification. The timing was critical for behaviour-based notifications; if sent before a shopping trip, they significantly increased the likelihood of app engagement and store visits by up to 23% compared to those without notifications. On the other hand, location-based notifications proved most effective when the user was already near or within the store, enhancing the probability of opening the app by 27% and clicking on coupons by 22%.

Moreover, integrating both notification types resulted in even more compelling outcomes. For instance, if a user engaged with the app outside a mall, they were 35% more likely to use it again inside the mall.

Duan suggests a strategic approach where a retailer could send a behaviour-based notification when a customer is planning a shopping trip and a location-based notification at a pivotal moment during the store visit. For example, a notification about a shoe sale might be sent as the customer prepares to leave home, followed by a coupon offering additional discounts once they arrive at the mall.

However, Duan cautions against excessive repetition of notifications, which can become irritating for shoppers. Instead, he advocates personalising notifications as much as possible to enhance their impact. With advancements in AI, wearable technology like smartwatches, and real-time location tracking, businesses can tailor each notification to match customer profiles and preferences.

For stores lacking the capability to collect and analyse such data, partnering with external companies specialising in gathering and dispatching push notifications can be an effective solution. This enables smaller retailers to stay competitive with larger online counterparts, like Amazon, in the rapidly evolving retail landscape.

More information: Jason Duan et al, Push and pull: Modeling mobile app promotions and consumer responses, Quantitative Marketing and Economics. DOI: 10.1007/s11129-024-09289-w

Journal information: Quantitative Marketing and Economics Provided by University of Texas at Austin

Strengthening Shareholder Oversight: Insights from Corporate Governance Changes in Japan

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Shareholders play a vital role in corporate governance by casting votes on crucial decisions within the companies they invest in. To enhance transparency and accountability, regulatory entities worldwide, including government bodies and stock exchanges, are progressively enacting guidelines to ensure institutional investors are accountable for their voting actions and fulfil their fiduciary responsibilities effectively.

A significant study published in the ‘Corporate Governance: An International Review’ on 22 January 2025 highlights that even non-binding regulations can spur institutional investors to adopt a more proactive stance, thereby enhancing corporate governance standards. The research, led by Professor Toru Yoshikawa from Waseda University and Associate Professor Daisuke Uchida from Keio University, focused on the responses of institutional investors to the 2017 amendments made to Japan’s Stewardship Code, which now mandates the disclosure of their voting records.

Professor Yoshikawa pointed out that the amendment aimed at disclosing voting records has motivated institutional investors to take a more engaged role in the corporate governance of the companies they invest in. “We were particularly interested in observing how institutional investors, key players in corporate governance, reacted to this amendment, especially analysing the variances between domestic investors, who traditionally played a more passive role, and foreign investors, who are typically more active,” he explained.

The researchers scrutinised the voting on 7,887 proposals involving 5,051 directors across 495 TOPIX 500 companies and the top 500 firms listed on the Tokyo Stock Exchange. Typically, director candidates are endorsed by the company’s board, and traditionally, domestic Japanese institutional investors often supported these candidates to maintain amicable relations with the companies. However, post-amendment, there was a marked increase in shareholder dissent during director elections.

This change was particularly pronounced in companies with substantial domestic institutional ownership. In contrast, firms with a higher proportion of foreign institutional investors exhibited little or no change in their voting patterns. Furthermore, the opposition to board-endorsed directors was most intense when the directors were perceived as underperforming or unqualified. “Previous research indicates that foreign investors often have different goals than domestic investors and place more emphasis on the corporate governance of the firms they invest in. However, our findings reveal that domestic investors responded more strongly to the regulatory change concerning the disclosure of voting records than their foreign counterparts, increasingly casting dissenting votes against director candidates at general shareholders’ meetings,” Professor Yoshikawa noted.

The study elaborates that domestic institutional investors, such as local banks, trust banks, and insurance companies, are more likely to adhere to local regulations owing to their dependence on local regulatory authorities for legitimacy. In contrast, foreign institutional investors generally conform to international standards and are less influenced by domestic laws. “Our theory and findings illustrate that domestic institutional investors tend to diverge from their foreign counterparts in response to regulatory cues due to their varying levels of reliance on the legitimacy granted by regulatory bodies, although they are all classified under the umbrella of institutional investors. This indicates that shareholder preferences are diverse and subject to change over time,” Professor Yoshikawa added.

The enhanced accountability in shareholder voting, precipitated by Japan’s disclosure rule, underscores that regulatory reforms can substantially improve corporate governance. These findings offer a model for other Asian countries transitioning to Western-style corporate governance systems, suggesting that strategic regulatory measures can foster similar improvements.

More information: Toru Yoshikawa et al, The Differential Effect of Regulatory Signals on Shareholder Dissent: The Case of Shareholder Voting in Director Elections, Corporate Governance: An International Review. DOI: 10.1111/corg.12640

Journal information: Corporate Governance: An International Review Provided by Waseda University

Artificial Intelligence in Retail: Enhancing Creativity and Boosting Job Satisfaction

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Artificial intelligence (AI) transforms the workplace by enhancing routine task efficiency and fostering a culture of innovation, especially within the retail sector, where staying ahead requires constant innovation. More than just automating processes, AI aids employee creativity by providing insights that allow staff to focus on more creative tasks. Despite these advancements, there remains a gap in research concerning the impact of AI service quality on retail employees, marking a critical area for further investigation.

A collaborative study conducted by scholars from Florida Atlantic University and Hanyang University in Seoul, South Korea, delved into how retail employees’ perceptions of AI service quality affect their innovation, job alignment, and overall job satisfaction. The research focused on system-centric attributes like reliability and transparency and interaction-centric qualities like responsiveness and empathy. Additionally, the study examined how AI adaptability—its ability to tailor its functions to user requirements—might play a moderating role in enhancing perceived service quality.

Published in the Journal of Retailing and Consumer Services, the findings indicate that retail employees are more inclined to innovate when they perceive tangible benefits from AI interactions. Notably, when AI systems exhibit reliability and empathy, this encourages employees to innovate. The research underscores the significant role of AI in fostering service innovation, mainly how it aids management in making strategic decisions and scaling operations across the retail sector.

The study revealed that while reliability is crucial for supporting service innovation, transparency does not hold a significant sway over innovation. This is a surprising revelation, as responsiveness, traditionally viewed as critical for boosting customer engagement and addressing real-time issues, showed no significant impact on service innovation. On the other hand, empathy was found to have a robust positive influence on innovative service behaviours, suggesting that AI systems that can effectively recognize and respond to users’ emotional and psychological needs contribute to a more dynamic work environment.

Dr Sangbeak Ye, a co-author of the study and an associate professor in the Department of Educational Leadership and Research Methodology at FAU, highlighted the role of empathy in AI. He noted that empathetic AI builds trust and deepens connections, motivating employees to engage in innovative behaviours by making them feel supported. In the retail context, empathetic AI improves job fit by aligning employees’ attributes with their roles, enhancing job satisfaction, decreasing turnover, and boosting employee participation. This alignment allows employees to customize tasks to match their skills and aspirations, making them feel more connected to their roles.

Interestingly, the study also found that AI adaptability tends to dilute the impact of system-related attributes like transparency and reliability on service innovation, pointing to intricate interactions between system and interaction-related factors.

Dr. Ye further emphasized the importance of managers fostering innovative work environments by improving AI service quality. He advocated for a focus on reliability to ensure AI’s dependable support in daily operations and enhancing empathy within AI systems to provide more personalized and emotionally engaging experiences. These efforts, he suggested, inspire employees to explore new ideas. Moreover, in environments driven by dynamic AI applications, attributes such as empathy become crucial in enhancing employee engagement and creativity. By strategically integrating AI to support job customization and innovation, organizations can increase job satisfaction and connect employees more deeply with their work, enhancing overall service quality.

For their analysis, the researchers gathered data from 290 retail employees across various sectors, including online retail and e-commerce, grocery and food retail, apparel and fashion retail, health and beauty retail, electronics and appliances retail, and finance retail. The participants included 62.8% management-level employees and 37.2% frontline workers, providing a broad perspective on the AI’s impact across different levels of retail operations.

More information: Sangbeak Ye et al, How AI enhances employee service innovation in retail: Social exchange theory perspectives and the impact of AI adaptability, Journal of Retailing and Consumer Services. DOI: 10.1016/j.jretconser.2024.104207

Journal information: Journal of Retailing and Consumer Services Provided by Florida Atlantic University

Escaping the Mediocrity Trap in the Workplace

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Confidence, persistence, and ingenuity are traditionally viewed as quintessential traits for success in the workplace. Conventional wisdom upholds these qualities as the bedrock of professional achievement. However, new research from Rutgers suggests that less commendable characteristics, such as a tendency to enforce the status quo, also hold value within team settings. According to a study published in the Journal of Occupational Health Psychology by Cong Liu, an expert in organizational behaviour at the Rutgers Graduate School of Applied and Professional Psychology, environments with high levels of envy might lead to the ostracization of the most competent team members. This, in turn, could prompt these high performers to engage in actions that sabotage productivity.

Cong Liu’s research indicates a complex workplace dynamic where positive and negative behaviours contribute to the overall functionality. Over time, evidence has accumulated suggesting that the dichotomy between constructive and destructive workplace behaviours is not as clear-cut as previously thought. Liu’s study sheds light on a phenomenon where high-performing individuals, who typically drive team success, become the targets of exclusion by their peers. This exclusion not only demotivates but also may lead these high performers to underperform, effectively transforming them from assets to liabilities intentionally.

This intricate relationship was explored through a survey involving 630 employees across 131 teams in various industries in China, including healthcare, finance, real estate, and manufacturing. Most of these teams were composed of three or more members, with a predominance of female participants with an average tenure of about six years. While the study was localized to China, the insights are considered universally relevant, particularly in collaborative, team-based work cultures like those prevalent in the American corporate landscape.

The research process involved two surveys conducted a month apart. In the initial study, employees assessed their levels of proactivity, envy, coworker ostracism, negative emotions, and job satisfaction. The follow-up survey asked them to measure their own ‘production deviance’ or the extent of their intentional underperformance. The analysis revealed a significant correlation between high levels of envy and the ostracization of proactive team members, which increased production deviance among those ostracized.

The implications of these findings are profound, especially considering that previous studies have shown that poor management of team dynamics can lead to substantial drops in productivity. Even minor disruptions can have amplified effects in a modern work environment that heavily relies on teamwork and collaboration. Thus, addressing issues such as team-based ostracism and the resultant decline in production is crucial, albeit challenging. Cong Liu emphasizes the importance of recognizing the underlying human emotions that contribute to such dynamics, including jealousy, envy, and pride, as well as the impact of ‘upward comparison’—the feelings of inadequacy that can arise when employees compare themselves to more successful colleagues.

In a competitive corporate culture where performance metrics are publicly acknowledged and competition is fostered, these feelings can intensify, making it even more essential for managers to intervene effectively. For example, in sales environments where team members might collectively benefit from one member exceeding sales targets, management might still perceive those who underperform as less effective. This perception can lead to a culture where being a ‘middle performer’ might seem like the safest bet, discouraging employees from striving for excellence. To mitigate these negative dynamics, Liu suggests that employers and managers recognize and evaluate each employee on their merits rather than in comparison to top performers. Encouraging proactive behaviours while ensuring that performance evaluations are based on the required outputs and not just about the highest achievers is crucial. Managers can foster a more inclusive and supportive workplace environment by treating each team member as an individual and valuing their unique contributions. This approach is not only about effective management but is also a strategic advantage that can drive long-term success in today’s collaborative and innovative business climate.

More information: Cong Liu et al, Proactive employees perceive coworker ostracism: The moderating effect of team envy and the behavioral outcome of production deviance, Journal of Occupational Health Psychology. DOI: 10.1037/ocp0000389

Journal information: Journal of Occupational Health Psychology Provided by Rutgers University

How AI Prejudice Influences Aspects from Recruitment to Medical Care

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Generative AI tools such as ChatGPT, DeepSeek, Google’s Gemini, and Microsoft’s Copilot are revolutionising industries quickly. Yet, as these expansive language models become more affordable and prevalent in pivotal decision-making roles, their inherent biases might skew results and diminish public confidence. Naveen Kumar, an associate professor at the University of Oklahoma’s Price College of Business, has co-authored research highlighting the critical need to address bias by developing and implementing ethical, comprehensible AI. This involves strategies and guidelines that promote equity and transparency while reducing stereotypes and discrimination in large language model (LLM) applications.

Kumar highlighted a significant trend in the AI market: “As major entities like DeepSeek and Alibaba unveil platforms that are either free or significantly cheaper, a worldwide AI pricing competition emerges,” he explained. “With cost becoming a predominant concern, questions arise about whether ethical considerations and bias regulations will maintain their importance. Alternatively, with international firms involved, might there be a swift move towards stringent regulations? We are hopeful for the latter, but it remains to be seen.”

The study Kumar contributed to pointed out that nearly one-third of survey respondents felt they had missed out on financial or employment opportunities due to biased AI algorithms. Kumar notes that while AI systems have been designed to eliminate explicit biases, subtle, implicit biases persist. As LLMs grow more intelligent, identifying these hidden biases becomes increasingly complex, underscoring the imperative for ethical governance.

Kumar stressed the importance of aligning these models with human ethical standards, especially in finance, marketing, human resources, and healthcare sectors, to prevent biased decisions and outcomes. “Healthcare models biased against certain demographics could worsen patient treatment disparities; recruitment algorithms might unfairly prefer certain genders or races; advertising models could continue to perpetuate harmful stereotypes,” he noted. These concerns underscore the vital need for models that uphold fairness and avoid perpetuating inequality.

While frameworks for explainable AI and ethical guidelines are being established, Kumar and his team urge scholars to forge ahead with proactive technical and organisational measures to monitor and mitigate bias in LLMs. They advocate for a balanced approach to ensure that AI applications remain effective, equitable, and transparent. “The pace at which this industry evolves generates significant tension among stakeholders, each with diverging aims. It is crucial to reconcile the concerns of developers, business leaders, ethicists, and regulators to adequately confront bias in these LLM models,” he concluded. “Striking an optimal balance across various business sectors and regional regulations is essential for achieving success.”

More information: Naveen Kumar et al, Addressing bias in generative AI: Challenges and research opportunities in information management, Information & Management. DOI: 10.1016/j.im.2025.104103

Journal information: Information & Management Provided by University of Oklahoma

Revolutionary Report Advocates Transition from Economic Expansion to Wellbeing Within Ecological Boundaries

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A detailed new review by leading experts in sustainability science, recently published in The Lancet Planetary Health, challenges the traditional view that economic growth is indispensable for societal advancement. Spearheaded by the Institute of Environmental Science and Technology of the Universitat Autònoma de Barcelona (ICTA-UAB) and titled “Post-growth: the science of wellbeing within planetary boundaries,” the review delves into the burgeoning field of post-growth research. It presents a strong case for shifting focus from perpetual economic expansion to prioritising human well-being and ecological sustainability. The research team included contributors from a range of prestigious institutions across the globe, including the University of Barcelona, the University of Leeds, the University of Oxford, York University, Boston College, the University of Lausanne, and the Central European University.

This groundbreaking review synthesises the most recent insights across various disciplines, such as ecological economics, wellbeing economics, and degrowth. The authors contend that pursuing continuous economic growth in affluent nations is not only ecologically unsustainable but may also lack social benefits and financial viability. They highlight the close link between GDP growth and environmental degradation, diminishing returns of income on well-being, and the perils associated with economic downturns as critical factors driving the post-growth agenda.

The review revisits significant findings, such as the Limits to Growth. It reexamines the conclusions of the 1972 report “Limits to Growth,” noting that current trends align with the “Double Resources” scenario predicted in the report, where societal collapse is precipitated by pollution rather than scarcity of resources. This scenario is particularly relevant regarding ongoing climate change and biodiversity loss concerns.

Another critical finding discussed is the concept of decoupling. Although it’s common to see a relative decoupling of GDP from resource use, the review finds no evidence of a sustained, absolute, and sufficient decoupling. Projections suggest that achieving such decoupling is unlikely, even with optimistic assumptions about technological advancements. Furthermore, the review identifies social limits to growth, indicating that further economic growth fails to enhance human wellbeing beyond a certain income level, and the adverse effects of growth—such as pollution and social unrest—may outweigh its advantages. As GDP increases, there are diminishing returns for social outcomes like health, education, and poverty alleviation.

The review promotes the development of ecological macroeconomic models that explore policies for thriving without growth. It discusses various policies to reduce growth dependency and enhance well-being, including universal essential services, reduced working hours, job guarantees, and the imposition of carbon and wealth taxes. It also emphasises that high levels of well-being are achievable with lower resource consumption, advocating for focusing on public services, income equality, and democratic quality to meet human needs sustainably.

Finally, the review addresses the unequal exchanges between the Global North and the Global South, where wealthier nations exploit resources and labour from poorer countries. Adopting post-growth strategies in high-income countries could benefit low-income nations by mitigating this exploitation. However, it also warns that post-growth could adversely impact low-income countries reliant on exports to wealthier nations unless these countries adopt policies that promote monetary sovereignty, industrial policy, and effective disengagement from high-income economies. Despite acknowledging the existing knowledge gaps, particularly concerning the politics of transition and the relationships between the Global North and South, the review calls for further research into the geopolitical implications of post-growth scenarios and the factors that can decouple social outcomes from GDP. This comprehensive review marks a significant paradigm shift in our understanding of progress. It outlines a roadmap for crafting societies prioritising human and planetary health above economic growth, offering valuable insights for policymakers, researchers, and the general public.

More information: Giorgos Kallis et al, Post-growth: the science of wellbeing within planetary boundaries, The Lancet Planetary Health. DOI: 10.1016/S2542-5196(24)00310-3

Journal information: The Lancet Planetary Health Provided by Universitat Autonoma de Barcelona