Author Archives: support

Surprising research finds tipping fails to boost service quality

A new study has examined the real reasons people tip and questioned whether the practice genuinely improves service quality. Researchers identified two main motives behind tipping: sincere appreciation for good service and the desire to conform to social norms. Those who tip out of gratitude often leave larger tips, while conformists follow the prevailing custom. Over time, this dynamic has led to rising average tipping rates, as seen in countries like the United States, where tips once averaged around 10% but now hover closer to 20%.

The study, published in Management Science, was conducted by Dr Ran Snitkovsky of Tel Aviv University and Prof. Laurens Debo of Dartmouth College. Their theoretical model explores how both personal feelings and social behaviour influence tipping. Dr Snitkovsky explained that traditional economics cannot fully explain tipping, since a purely self-interested person has no reason to tip after receiving a service. Past theories suggested that people tip to ensure better service next time, yet this fails to explain why customers still tip workers they will never meet again, such as taxi drivers or hotel staff in other cities. The researchers argue that psychological and social factors play a much stronger role than financial logic.

Using tools from game theory and behavioural economics, the researchers divided tippers into two categories: “appreciators,” who tip out of gratitude or empathy, and “conformists,” who do so to meet social expectations. Their model showed that in societies with stronger social pressure, tipping rates tend to rise because conformists emulate the behaviour of generous appreciators. This process naturally drives up the average tip over time. The findings also suggest a link between higher tipping rates and rising income inequality, as wealthier customers can set higher norms that others feel pressured to follow.

The study further explored whether tipping truly motivates servers to provide better service. The researchers found that while tips can slightly encourage effort, the effect is weak when most customers are conformists who tip the same amount regardless of service quality. In the United States, where tipping is widespread, this means many servers have little incentive to go beyond the norm, as they can expect roughly the same tips regardless of their performance. In a society made up entirely of appreciators, tips would be a stronger motivator, but this scenario is unrealistic. Moreover, in such a world, businesses might interpret higher tips as a willingness to pay more overall and raise prices, which would likely reduce tipping again.

The researchers also looked at the controversial “tip credit” system in the U.S., which allows employers to pay servers below the minimum wage, assuming tips will make up the difference. For example, if the minimum wage is $8 per hour, employers in some states can pay as little as $3, expecting tips to cover the rest. Dr Snitkovsky noted that while this system can lower menu prices and make businesses more efficient, it often reduces servers’ actual earnings. Essentially, it allows employers to use customer tips to subsidise wages, shifting part of the labour cost from the business to the customer.

Despite recognising some advantages to tipping, Dr Snitkovsky admits he personally dislikes the practice. He argues that tipping creates social discomfort and can reinforce discrimination, as studies have shown that female servers and those from minority backgrounds are often mistreated. Tipping can also foster inequality between customers, rewarding those who can afford to give more. However, he acknowledges that tipping has some redeeming qualities, such as allowing people who value good service to contribute more and indirectly subsidising others. Still, he believes that in the modern era, businesses have better ways to measure performance—through reviews, ratings, and direct feedback—making the traditional tipping system an outdated and inefficient form of incentive.

More information: Ran Snitkovsky et al, A Modeling Framework for Tipping in the Presence of a Social Norm, Management Science. DOI: 10.1287/mnsc.2021.03422

Journal information: Management Science Provided by Tel-Aviv University

Managing Humanity: Can Artificial Intelligence Do It Humanely?

Leave a Reply

A new study published in the Annals of Tourism Research suggests that Artificial Intelligence (AI)–driven management systems can become more human-centred—if organisations reintroduce human judgement, openness, and flexibility into the way algorithms are built and applied. Rather than replacing human managers, the research argues that AI should work alongside them, supporting better decisions while keeping empathy and fairness at the heart of management. The findings highlight that technology itself is not the problem; rather, the challenge lies in how organisations choose to design and use it.

The research team conducted interviews with thirty hospitality professionals and developers, alongside an analysis of sixty-one algorithmic management systems used in hotels, restaurants, and call centres. Their results show that AI does not remove managers from the picture; instead, it redistributes their authority. Algorithms now play a key role in assigning tasks, measuring performance, and scheduling shifts. Yet the human managers who interpret, adapt, or question these algorithmic outputs determine whether workplaces become more empowering or more controlling. In other words, AI sets the framework, but people still define how it feels to work within it.

Dr Brana Jianu, a Research Fellow at the University of Surrey and co-author of the study, explained that algorithmic management need not strip the workplace of its humanity. “When managers use algorithms as tools for collaboration rather than control, they can protect employee dignity while still improving efficiency,” she said. Dr Jianu stressed that people must remain involved at every stage—understanding how the systems work, using their own discretion, and questioning automated decisions when they seem unfair or inaccurate. Keeping people “in the loop” helps balance technological precision with moral responsibility.

The study also introduces the concept of Modalities of (In)Visibility, describing how algorithms influence what is seen, measured, and valued at work. When algorithmic systems make their reasoning clear and invite human interpretation, employees tend to feel respected and trusted. But when their inner workings are hidden—reducing workers to data points—the result is often a sense of surveillance and powerlessness. This concept captures how design choices in AI can directly affect the emotional and ethical climate of a workplace.

Professor Iis Tussyadiah, Dean of Surrey Business School and co-author of the study, emphasised the importance of designing for transparency and participation. “We need dashboards that display teamwork as well as individual productivity, allow staff to challenge automated decisions, and hold regular sessions explaining how data is used for scheduling or evaluation,” she said. These practical steps can help shift AI management from a model of control towards one of collaboration, where technology supports communication and fairness rather than undermining them.

The researchers conclude that making AI more human is less about the technology itself and more about organisational values. When managers remain engaged, transparent, and open to discussion, algorithmic systems can make work more efficient without dehumanising it. As the hospitality industry becomes an early testing ground for AI in management, the lessons it offers—about trust, accountability, and empathy—could influence the future of workplaces far beyond hotels and restaurants. By putting people before processes, organisations can ensure that intelligent systems serve human wellbeing, not the other way around.

More information: Brana Jianu et al, Humanising algorithmic management systems, Annals of Tourism Research. DOI: 10.1016/j.annals.2025.104021

Journal information: Annals of Tourism Research Provided by University of Surrey

When brands are bruised, loyal consumers rise to defend them

Leave a Reply

On New Year’s Eve in 2019, a Domino’s Pizza delivery worker sold pizzas for $30 each in Times Square — double their usual price. When New York City’s mayor criticised the chain for price gouging, many customers leapt to its defence. They argued that the price was fair given the difficulty of navigating the dense crowds. “If the $30 was too expensive, then nobody would have bought it,” one customer tweeted, highlighting the value of consumer choice and perspective.

Wayne Hoyer, professor of marketing at the University of Texas McCombs School of Business, says such reactions reveal a powerful resource for companies under fire: online “brand defenders.” These are customers who publicly stand up for brands on social media, countering negative comments or accusations. “In today’s world, everything is a two-way interaction,” Hoyer explains. “Consumers make videos, post comments, and stand up for brands. They can be very valuable in offsetting negative communication.”

To understand what drives this behaviour, Hoyer and a team of researchers from the University of Bern in Switzerland analysed 3 months of Facebook comments from 8 U.S. brands. They found that, on average, 1 in 20 comments was a defence against criticism, ranging from 1% for AT&T to 10% for Tesla. The findings suggested that consumer defences are not isolated acts but part of a broader pattern of engagement and identity expression.

Through follow-up interviews and a survey of 570 people who had defended brands online, the researchers identified three distinct types of defenders. The first group, “brand promoters,” are emotionally attached to their favourite companies. They defend brands out of love and loyalty, seeing attacks on the brand as personal affronts. Companies can engage these supporters by recognising and thanking them, strengthening their sense of belonging and appreciation.

The second group, “justice promoters,” is not emotionally tied to the brand but acts out of a sense of fairness. They intervene when they feel a company is being unfairly criticised, motivated by moral principles rather than affection. Because they lack emotional attachment, they are harder to influence directly. However, brands can appeal to their sense of justice by communicating transparently and addressing criticism fairly.

Finally, “self-promoters” defend brands to enhance their social image. They enjoy attention online and may seek likes, followers, or even rewards from the brand. For this group, defending a company is as much about self-promotion as it is about support. The researchers suggest that companies can encourage all three types of defenders with subtle gestures — private thank-you messages, small rewards, or social recognition — while avoiding overt praise that might make defenders appear like paid representatives, thereby harming their authenticity.

More information: Clemens Ammann et al, Beyond Strong Bonds: A Typology of and Motivational Insights into Online Brand Defenders, Journal of Interactive Marketing. DOI: 10.1177/10949968251320615

Journal information: Journal of Interactive Marketing Provided by University of Texas at Austin

Displaying the cost per wear on clothing tags may help tackle fast fashion, study finds

Leave a Reply

A recent study has found that showing the cost per wear (CPW) on clothing labels could nudge shoppers away from fast fashion and towards better-quality, longer-lasting garments. CPW, which divides an item’s price by how many times it is likely to be worn, gives consumers a clearer picture of the long-term value of their purchases. The idea is that when people see how often they would need to wear a piece to make it cost-effective, they may be more inclined to invest in durable, timeless clothing rather than cheap, short-lived trends. This concept seeks to challenge the culture of disposable fashion by framing sustainability in terms of financial wisdom.

The research, published in Psychology & Marketing by the University of Bath and Cambridge Judge Business School, tested this theory through six online experiments. Participants were shown various items of clothing, with and without CPW labels, to see how this influenced their preferences. The results consistently showed that when shoppers saw CPW information, they were more likely to favour higher-quality garments, even when the initial price was higher. The impact was powerful when shoppers could directly compare the CPW of multiple items, or when they were considering everyday clothing rather than something for a special occasion.

Dr Lisa Eckmann, from the University of Bath’s School of Management and Bath Retail Lab, explained that CPW helps consumers rethink what “cheap” really means. “Cost per wear reframes sustainability as smart spending,” she said. “A low-cost fast fashion item can appear more expensive in the long run because it wears out quickly, while quality pieces become smarter financial investments.” In essence, CPW turns sustainable choices into rational, value-driven decisions rather than moral ones, bridging the gap between environmental awareness and consumer practicality.

The researchers argue that clothing, like many consumable goods, can be evaluated by unit cost. Because garments deteriorate over time, it makes sense to consider their cost over their lifespan rather than at the point of purchase. CPW calculations could be based on standard material durability tests already common in the textile industry. By grounding the measure in objective data, brands can help consumers make informed decisions rather than relying on vague claims about quality or sustainability.

Interestingly, the study also found that CPW information could be more persuasive than generic durability or sustainability claims—provided credible comparisons and third-party verification accompanied it. For instance, if brands shared the average CPW within a product category and offered independent certification to confirm their figures, consumers were more likely to trust and act on the information. This approach could make sustainability marketing both more transparent and more effective, transforming the way brands communicate value to customers. Despite its potential, CPW labelling remains unused mainly on the high street, though it is familiar in sustainability circles.

While CPW can make higher-priced clothing seem more affordable over time, the researchers acknowledge that not everyone can pay more upfront for better quality. Economic constraints still drive many consumers towards cheaper, short-lived items. However, the study’s authors hope that their findings will encourage retailers and policymakers to test CPW labels in real shops, potentially leading to broader behavioural change. They also stress that CPW addresses only one aspect of sustainability—durability—and does not account for ethical or ecological factors such as fair labour practices or the use of sustainable materials. Nevertheless, they believe it could be a simple yet powerful tool to make consumers think twice before buying fast fashion, helping to reduce textile waste and its environmental impact.

More information: Lisa Eckmann et al, Shifting Toward Quality: How Communicating “Cost per Wear” Influences Consumer Preference for Clothing, Psychology and Marketing. DOI: 10.1002/mar.70061

Journal information: Psychology and Marketing Provided by University of Bath

From Data to Design: How Pusan National University Researchers Use AI to Predict Fashion Trends

Leave a Reply

Fashion trend forecasting helps brands anticipate what styles will be popular in upcoming seasons. Traditionally, this process has depended on experts’ intuition, creativity, and experience. More recently, big data analytics has provided more profound insights into consumer behaviour. Still, these methods often require advanced technical skills, putting them beyond the reach of fashion students and small designers.

Advances in artificial intelligence (AI) are now helping to level the playing field. Large language models (LLMs) such as ChatGPT can analyse vast amounts of cultural and societal data, making data-driven insights more accessible to the public. However, since LLMs are prone to inaccuracies and “hallucinations,” researchers must carefully test their effectiveness in practical applications, such as fashion forecasting.

In a recent study published in the Clothing and Textiles Research Journal on 26 September 2025, Assistant Professor Yoon Kyung Lee and Master’s student Chaehi Ryu from Pusan National University explored how ChatGPT could be used to predict fashion trends. “Rather than simply asking what will be popular in the future, we designed a systematic method to prompt AI for specific and consistent answers,” explained Dr Lee. Their work compared ChatGPT’s predictions with reports from a professional trend forecasting agency.

To refine the process, the researchers created a new Top-Down Prompting (TDP) method inspired by the Lotus Blossom brainstorming technique. This method begins with a general prompt—such as “predict fashion trends”—and expands into detailed subtopics like silhouette, materials, key items, decorative elements, colour, and mood. Using this framework, they generated ChatGPT-3.5 and ChatGPT-4 predictions for men’s autumn/winter 2024 fashion and compared them with forecasts from the Official Fashion Trend Information Company (OFTIC), reviewed by fashion experts.

The findings showed that ChatGPT tended to reproduce familiar or mainstream fashion ideas rather than highly innovative designs. It matched only 9 of 39 trends in OFTIC’s report. Nonetheless, both models detected emerging cultural themes, such as gender fluidity and statement outerwear, indicating AI’s potential to sense broader social movements and inspire creativity.

Although ChatGPT is not yet reliable enough to replace expert analysis, it offers a valuable supplementary tool for education and small-scale designers. By combining AI insights with human expertise, the TDP method makes fashion forecasting more systematic, inclusive, and accessible—opening new opportunities for creative exploration and data-informed design.

More information: Yoon Kyung Lee et al, How the Field of Fashion can use ChatGPT to Predict Fashion Trends, Clothing and Textiles Research Journal. DOI: 10.1177/0887302X251371969

Journal information: Clothing and Textiles Research Journal Provided by Pusan National University

One negative safety review may be all it takes to drive guests away from an Airbnb, study finds

Leave a Reply

When choosing an Airbnb, reviews play a far greater role than many travellers might assume. A new study conducted in collaboration with the Binghamton University School of Management has revealed that even a small number of reviews highlighting safety concerns—particularly about a property’s surrounding neighbourhood—can significantly affect bookings, nightly rates, and guest loyalty. The research found that these reviews, though they make up only a fraction of total feedback, carry a disproportionate weight in shaping customer perceptions. A single mention of safety issues can cause guests to look elsewhere, lower the price a host can charge, and make visitors less inclined to return, no matter how many other glowing reviews a listing might have.

The study, co-authored by Assistant Professor Yidan Sun, delves into the tension between transparency and profit on digital platforms. Companies such as Airbnb face an inherent dilemma: while complete transparency about safety issues may deter potential customers in the short term, suppressing such information could undermine user trust and harm long-term growth. The findings suggest that encouraging open discussion of both positive and negative safety experiences is ultimately beneficial for the platform, its users, and its hosts. “Travellers should treat safety-related reviews as meaningful signals when choosing where to stay,” Sun explained. “Guests who personally encounter neighbourhood-safety issues are more likely to leave the platform or choose a different area in future.” For hosts, safety problems within the property itself—such as broken locks or poor lighting—had a more severe impact on occupancy than concerns about the surrounding area, particularly for newer listings still building a reputation.

To arrive at these conclusions, the researchers analysed a massive dataset of 4.8 million Airbnb guest reviews from five major U.S. cities—New York City, Atlanta, Chicago, Los Angeles, and New Orleans—spanning the years 2015 to 2019. The team sorted safety-related comments into two broad categories: listing safety reviews, which mentioned issues directly tied to the property (such as faulty locks, poor maintenance, or unsafe interiors); and vicinity safety reviews, which referred to the external environment (such as crime, noise, or general feelings of insecurity). Interestingly, only about 0.5% of all reviews mentioned safety concerns, yet nearly half of those were focused on the neighbourhood rather than the listing itself. When a property received a safety-related comment, its occupancy rate dropped between 1.5% and 2.4%, and its average nightly rate decreased by roughly 1.5%. These seemingly small percentages represent a significant loss of revenue when applied across the thousands of listings active on the platform.

The researchers also discovered that personal experience with safety issues has a much stronger influence on behaviour than merely reading about them. Travellers who directly encountered neighbourhood-related safety problems were 60% less likely to book again through Airbnb. This suggests that bad experiences, rather than bad publicity alone, drive customers away from the platform. The study further reinforced the reliability of safety-related reviews by comparing them with official crime data from the five cities studied. It found that the geographic distribution of vicinity safety reviews closely mirrored patterns in reported crime, particularly in lower-income areas. This alignment suggests that guests’ perceptions of safety often reflect real-world risks rather than subjective unease or bias, giving their reviews an added layer of credibility.

Ultimately, the research underscores a persistent and delicate trade-off between consumer welfare and corporate revenue. Platforms like Airbnb must navigate competing interests: guests value transparency and trustworthiness, while companies may feel pressured to minimise the visibility of negative feedback that could harm bookings. As Sun and her co-authors note, suppressing vicinity-safety reviews might boost short-term profits, but it comes at the expense of consumer trust and overall satisfaction. In contrast, embracing transparency—even when it reveals uncomfortable truths—helps build a more reliable marketplace where guests can make informed choices and hosts are incentivised to maintain both property and neighbourhood standards. The findings make a compelling case for a more open review ecosystem —one that acknowledges that long-term success in the sharing economy depends not only on positive ratings but also on honesty and accountability.

More information: Yidan Sun et al, Safety Reviews on Airbnb: An Information Tale, Marketing Science. DOI: 10.1287/mksc.2023.0552

Journal information: Marketing Science Provided by Binghamton University

Do social likes convert into actual clicks?

Leave a Reply

A recent Journal of Marketing study has uncovered new insights into how “likes” influence user behaviour in social media advertising. Conducted by Song Lin of the Hong Kong University of Science and Technology and Shan Huang of The University of Hong Kong, the research examines how visible social cues—such as the number of likes—shape engagement on platforms like Instagram and Facebook.

The study, titled “Do More ‘Likes’ Lead to More Clicks? Evidence from a Field Experiment on Social Advertising,” finds that likes trigger two main types of social influence: normative and informational. Normative influence arises when users mimic others to fit in, while informational influence depends on how credible and relevant an ad appears. Lin explains that the first like is particularly powerful, prompting people to both like and click, whereas additional likes mainly encourage more likes without driving many extra clicks.

According to the findings, the first visible like acts as a strong social cue that draws attention and motivates engagement. However, as more likes accumulate, their informational value fades. Huang notes that this leads to a plateau in click-through rates, meaning users continue liking the post but are not necessarily more inclined to click through to the advertiser’s site.

For marketers, these results carry clear implications. Brands aiming to boost awareness can benefit from showing likes, as visible approval enhances credibility and encourages users to engage superficially with the ad. In contrast, performance-driven campaigns—those seeking clicks or conversions—should be more selective in how they present likes. Too many visible likes may dilute informational influence, making users less curious or motivated to act.

Huang suggests that marketers display only the first like or a limited number to preserve authenticity and perceived value. This strategy helps maintain users’ curiosity and prevents engagement fatigue. It also offers a more balanced approach between social validation and genuine interest in the ad’s content.

Finally, the study highlights how social media platforms themselves can affect ad outcomes through design choices. Lin recommends that platforms reconsider whether to display like counts, as these cues can shape how users interact with ads and how effective those ads become. As platforms like Instagram experiment with hiding likes, the research suggests that a thoughtful balance between visibility and subtlety may foster both authentic engagement and improved advertising performance.

More information: Shan Huang et al, Do More Likes Lead to More Clicks? Evidence from a Field Experiment on Social Advertising, Journal of Marketing. DOI: 10.1177/00222429241307608

Journal information: Journal of Marketing Provided by American Marketing Association

Revamping food taxes could make us healthier – without a rise in everyday prices

Leave a Reply

A new study from Chalmers University of Technology in Sweden suggests that changing the way food is taxed could save lives and help the planet — without raising the cost of an average grocery basket. The researchers propose removing VAT on healthy foods such as fruit, vegetables, legumes, and whole grains, while introducing levies on foods that harm the climate, including red and processed meat and sugary drinks. Their findings indicate that such a policy could reduce greenhouse gas emissions and prevent around 700 premature deaths in Sweden each year.

In many wealthy countries, unhealthy diets are now a significant cause of disease and early death, responsible for more fatalities than alcohol and almost as many as smoking. At the same time, food production contributes significantly to global warming. In Sweden, emissions linked to food consumption are roughly double those from all the country’s passenger cars. Current policies mostly rely on dietary guidelines, but experts from the European Commission’s Science Advice for Policy by European Academies (SAPEA) have recommended economic measures, such as taxes and subsidies, to encourage healthier eating.

The researchers behind this study, from Chalmers University, Karolinska Institutet, and the Swedish University of Agricultural Sciences, examined how such a reform could work in practice. Their model suggests that lowering prices on healthy foods while taxing high-emission and unhealthy ones would shift consumer habits toward better diets and lower carbon footprints — without increasing overall grocery spending. According to lead researcher Jörgen Larsson, this balance makes the idea more politically realistic and fair to both low- and high-income households.

The analysis focused on four major food groups: fruit and vegetables, whole grains, meat products, and sugar-sweetened drinks. It showed that removing VAT could cut prices for fruit, vegetables, legumes, and whole grains by roughly 11 per cent, encouraging higher consumption — about 10 per cent more for wholegrain bread and 4 per cent more for fruit and vegetables. Meanwhile, new levies on sugary drinks would raise prices by around 17 per cent, reducing consumption by a quarter. The most significant change would come from red meat, where a 25 per cent price increase could cut consumption by nearly a fifth.

This shift in consumption would have tangible health and environmental benefits. The study estimates that eating more plants and less meat could reduce Sweden’s food-related emissions by about 700,000 tonnes of carbon dioxide per year — equivalent to removing nearly one in ten cars from the road. It would also prevent hundreds of deaths from diet-related illnesses, such as heart disease and diabetes, particularly among people under 70. The researchers describe this figure as conservative, noting that improved diet quality would also reduce long-term suffering from chronic conditions.

Importantly, the proposal is designed to be cost-neutral overall. While some foods would become more expensive and others cheaper, the total cost of an average shopping basket would remain about the same. This balance would make the reform more acceptable to the public and fair across income levels. Over time, the government could also benefit from reduced healthcare costs and fewer sick days as public health improves. According to the authors, the Swedish case could serve as a model for other high-income nations looking to promote healthier diets and tackle climate change through smart economic policy.

More information: Jörgen Larsson et al, Cost-neutral food tax reforms for healthier and more sustainable diets, Ecological Economics. DOI: 10.1016/j.ecolecon.2025.108822

Journal information: Ecological Economics Provided by Chalmers University of Technology

Labour Income Share in Transition: A Micro-Level Examination of China’s Economic Transformation

Leave a Reply

Since the mid-1990s, China’s labour share — the proportion of national income paid to workers as wages — has steadily declined. This long-term fall, however, saw a turning point in 2008, when the share began to recover. Scholars have proposed many explanations for these shifts, often focusing either on broad macroeconomic factors or on firm-level microeconomic mechanisms. In light of this divide, a recent study published in China Economic Quarterly International has attempted to bridge the gap between these two perspectives. It does so by examining how firm-level changes and market dynamics together shape the aggregate labour income share in China’s manufacturing sector.

The study draws on two extensive data sources: the Annual Survey of Industrial Firms (1998–2007) and the National Tax Survey Database (2008–2016). Using these datasets, the researchers explore how individual firms’ labour shares and market positions contribute to overall trends in labour income distribution. They find that shifts in the aggregate labour share are not simply the result of uniform changes across firms. Instead, they arise primarily from how value added is reallocated among firms with differing labour shares, productivity levels, and ownership structures.

The first significant finding reveals that after 2008, aggregate labour share and average firm-level labour share moved in different directions. While labour shares declined across most firms, the main reason for the aggregate drop was that economic activity shifted toward firms with lower labour shares. As the corresponding author, Kang Zhou, explains, this indicates that structural changes within the economy — such as the growth of capital-intensive or high-profit firms that rely less on labour — play a key role in driving the national trend.

The second insight concerns the earlier period between 1998 and 2007, when the decline in aggregate labour share was not caused by dominant firms cutting their labour shares or low-labour-share firms expanding. Instead, it was due to a redistribution process in which many firms simultaneously reduced their own labour shares while expanding their market shares. This same pattern persisted after 2008, even though the overall labour share began to recover, suggesting that the underlying micro-level mechanisms linking firm behaviour and market structure remained consistent over time.

A third finding emphasises the pivotal role of state-owned enterprises (SOEs). Between 1998 and 2007, both SOEs and private firms displayed distinct trends in their labour shares. Still, quantitative analysis shows that SOEs alone accounted for over 80 per cent of the total change in the manufacturing sector’s aggregate labour share. This highlights how the state sector continues to influence income distribution and economic balance, even amid China’s broader transition toward a market-oriented economy.

The study concludes with reflections on policy implications and future research. The authors warn that a falling labour share can deepen inequality, weaken household consumption, and threaten long-term economic growth. They call for further research into other sectors, especially services, which now dominate China’s economy and employ nearly half of its workforce. As first author Junsen Zhang notes, examining labour share dynamics in the tertiary sector or across all industries would provide a more complete understanding of income distribution in modern China. Overall, the study enriches our understanding of how firm-level dynamics and structural transformations interact to shape national economic outcomes.

More information: Junsen Zhang et al, Changes in labor share of China: A micro-level anatomy, China Economic Quarterly International. DOI: 10.1016/j.ceqi.2025.05.002

Journal information: China Economic Quarterly International Provided by KeAi Communications Co., Ltd.

Research from ESMT Berlin suggests data partnerships with big tech benefit niche enterprises

Leave a Reply

A new study has found that specialist firms can increase their profits by sharing data with large technology competitors. Rather than weakening their position, this kind of collaboration can actually turn rivals into partners, easing competition and creating shared value. The research shows that data, when used strategically, can help smaller firms protect their market space while allowing bigger players to benefit from improved efficiency and product quality.

The study, “The Strategic Value of Data Sharing in Interdependent Markets,” was written by David Ronayne, Assistant Professor of Economics at ESMT Berlin, along with Hemant Bhargava from UC Davis, Antoine Dubus from ETH Zurich, and Shiva Shekhar from Tilburg University. Published in the journal Management Science, it models how data collected in one market can enhance products in another. The authors describe this effect as a “cross-market externality,” meaning that data in one area can indirectly improve performance elsewhere.

According to the researchers, when a specialist firm shares its valuable data with a large, generalist competitor, both sides can benefit. The generalist, now reliant on the specialist’s data, becomes less likely to compete aggressively in the specialist’s primary market. This creates a relationship the authors call “co-opetition,” where companies remain competitors but also cooperate to mutual advantage. The generalist gains from better product development, while the specialist enjoys reduced competition and more breathing space.

“Our findings reveal a surprising logic,” says Ronayne. “By making a generalist dependent on the specialist’s data, both firms profit. The specialist secures a more stable position in its market, while the generalist saves money and time on innovation.” The study challenges the usual belief that firms should guard their data at all costs, suggesting instead that strategic sharing can create win–win outcomes when managed carefully.

The authors identify several lessons for business leaders. Sharing data can make competition with larger firms less intense and improve profitability for smaller companies. Generalists, too, can increase their profits when they cooperate across markets. And for firms considering entering a new market, data-sharing agreements can serve as powerful bargaining tools. In this way, the study offers a fresh perspective on how firms of different sizes can coexist in data-driven industries.

This research is particularly relevant today, as major technology firms like Google and OpenAI expand into new areas to gain access to valuable data sources. For smaller players under pressure from such giants, the study provides a new playbook: collaboration may sometimes be a more innovative, more sustainable strategy than confrontation. However, Ronayne warns that firms must think about long-term effects, such as mergers, acquisitions, and the potential for weaker competition to harm consumers. The message is clear: data sharing can be profitable—but it must be done with foresight and responsibility.

More information: David Ronayne et al, The Strategic Value of Data Sharing in Interdependent Markets, Management Science. DOI: 10.1287/mnsc.2024.04938

Journal information: Management Science Provided by ESMT Berlin

New research reveals that households chasing higher savings rates can intensify economic downturns

Leave a Reply

In prosperous periods, savers tend to pay little heed to the modest variations in interest rates offered by banks. Yet when the economy begins to falter, this behaviour changes dramatically. The study finds that households become far more alert and deliberate, actively combing through the market in search of better returns. At the individual level, this seems like a rational and prudent move—tightening budgets and maximising returns when times are tough. However, the research reveals a paradox at the macroeconomic level: by locking in higher savings rates during recessions, households as a group may unintentionally sap spending power from the broader economy, worsening the downturn.

Published in the American Economic Journal: Macroeconomics, the study combines extensive UK banking data with an economic model designed to capture this behavioural pattern. The findings suggest that during periods of economic contraction—when unemployment is rising and base interest rates are low—households make more efficient financial choices than in boom times. In particular, they are significantly more successful at identifying and switching to accounts with the highest available rates. While this heightened attentiveness benefits individuals, it also amplifies fluctuations in aggregate demand. The researchers estimate that this increased focus on savings during downturns makes swings in consumer spending roughly 14% more extreme than they would be if attention to interest rates remained constant across the business cycle. In essence, the collective impulse to “make every pound count” translates into reduced consumption precisely when the economy can least afford it.

Dr Alistair Macaulay, the study’s author and a Surrey Future Fellow in Economics at the University of Surrey, explained the broader implications of this behaviour. “For many families, seeking out better savings rates during tough times is a perfectly understandable reaction. Yet when millions of households adopt the same strategy, it can inadvertently deepen the slump,” he said. “My research highlights how even small, seemingly rational financial decisions can combine to magnify the ups and downs of the economy.”

Dr Macaulay emphasised that improved access to transparent, comparable financial information could help mitigate these effects. His modelling indicates that halving the so-called ‘information cost’—the effort required for consumers to identify and compare savings products—could reduce the volatility of consumer spending by approximately 11%. Such a reduction could make the economy more stable and resilient in the face of future shocks, dampening the self-reinforcing cycle of reduced spending and deepening recession.

The findings carry important lessons for policymakers and financial regulators. While encouraging financial literacy and responsible saving remains a cornerstone of sound economic policy, the research underscores that the aggregate consequences of individual actions can sometimes run counter to collective welfare. Making financial information more accessible could help households make better-informed choices without inadvertently intensifying economic stress. The study thus adds a nuanced perspective to our understanding of consumer behaviour in recessions—showing that prudence, though individually beneficial, can collectively pull economies into deeper slumps.

In sum, the University of Surrey’s research sheds new light on the complex interplay between micro-level decision-making and macroeconomic outcomes. It highlights how even well-intentioned financial choices, such as searching for higher savings rates, can ripple through the economy in unexpected ways. By improving information transparency and reducing barriers to comparison, policymakers could soften these unintended consequences—ensuring that the instinct to save wisely does not come at the expense of broader economic stability.

More information: Alistair Macaulay, Cyclical Attention to Saving, American Economic Journal Macroeconomics. DOI: 10.1257/mac.20220311

Journal information: American Economic Journal Macroeconomics Provided by University of Surrey

Have Global Industry Rankings Been Miscalculated?

Leave a Reply

For many years, global rankings have judged nations by how competitive their industries appear to be. Yet new research from the University of Surrey suggests that the method used to make those comparisons may not be telling the whole story. The study argues that the United Nations’ standard index for measuring manufacturing power can sometimes be misleading. Its simple weighting system may hide countries’ real strengths and weaknesses, giving some an undeserved advantage while downplaying others’ achievements.

Published in the Journal of the Operational Research Society, the Surrey-led study introduces a new model that aims to paint a more accurate picture of industrial performance. Instead of relying on fixed, subjective weightings, the researchers used advanced data analysis to create fairer benchmarks. This approach compares nations in a way that better reflects real-world outcomes, identifying those that have genuinely improved their manufacturing capabilities rather than those that appear successful only because of outdated or unbalanced measures.

The team tested their model using data from 153 countries across 2016 and 2021, examining manufacturing output, technological sophistication, and export performance. Their analysis uncovered patterns that traditional methods overlook. Some economies that had appeared strong in past rankings were found to benefit from skewed scoring systems, while others—particularly emerging industrial powers—proved far more competitive than earlier data suggested.

Professor Ali Emrouznejad, Director of the Centre for Business Analytics in Practice at the University of Surrey, led the project. “Our model challenges the way industrial competitiveness has been ranked for years,” he said. “The current global index can reward countries for the wrong reasons. We’ve developed a method that reflects reality—accounting for technology, trade, and productivity in a balanced way. This helps governments understand their true position and make better-informed policy choices.”

Their model could become a valuable tool for policymakers and development agencies. By offering a fairer and more transparent view of industrial progress, it helps identify areas where investment and innovation can deliver real results. Rather than simply celebrating rankings, governments can use these insights to make targeted improvements that raise productivity and build long-term competitiveness.

As Professor Emrouznejad explained, the implications reach well beyond academia. “By making competitiveness assessments fairer and more transparent, our study could reshape the way global institutions, including the UN and OECD, compare and support industrial growth.” If adopted widely, this new framework could redefine how success is measured in the world economy—moving away from numbers that flatter and toward metrics that reveal actual progress.

More information: Ali Emrouznejad et al, Redefining competitive industrial performance indicator: a multiplicative data envelopment analysis approach, Journal of the Operational Research Society. DOI: 10.1080/01605682.2025.2554746

Journal information: Journal of the Operational Research Society Provided by University of Surrey