Author Archives: support

Heavier Tax Burdens Curtail Philanthropic Contributions

Governments collect taxes to finance the public good, from education and infrastructure to healthcare and social services. Charities, though operating outside the formal machinery of the state, serve parallel functions — addressing social needs, reducing inequalities, and supporting vulnerable populations. Yet an intriguing question arises at the intersection of public and private welfare: do higher government taxes, particularly those targeting personal wealth, reduce individuals’ inclination to give? That’s precisely the issue examined in a recent study by Marius Ring, assistant professor of finance at the Texas McCombs School of Business, in collaboration with Thor Thoresen of Statistics Norway.

The research focuses on Norway, a country with a longstanding wealth tax — a levy not on income but net assets. From 2010 to 2018, Norway taxed households on assets exceeding 1,480,000 NOK (approximately $250,000). During this period, the government altered the tax treatment of real estate, removing discounts on secondary homes while maintaining them on primary residences. This policy shift created a natural experiment, allowing Ring and Thoresen to examine charitable behaviour before and after the change. Their analysis yielded a compelling and perhaps counterintuitive conclusion: wealth taxes appear to discourage, not encourage, philanthropic donations.

One theory in philanthropic economics posits that higher wealth taxation might stimulate giving — a phenomenon known as the acceleration effect. The idea is that when individuals expect more of their assets to be taxed in the future, they may choose to donate sooner while they still control more of their wealth. As Ring explains, “If your wealth is going to be taxed away, you may prefer to give sooner rather than later.” In theory, this approach would allow donors to allocate funds according to their values rather than leaving them to be redirected through state expenditure. However, the Norwegian data did not support this hypothesis.

Instead, the researchers observed a pronounced adverse effect. A mere one per cent increase in the wealth tax rate resulted in a 26% reduction in the average amount donated to charities. Moreover, individuals became 27% less likely to donate at all. According to Ring, this reaction stems from a straightforward economic mechanism: increased wealth taxes reduce after-tax wealth, constraining discretionary spending. Often seen as voluntary or non-essential, philanthropic contributions are among the first expenditures to be curtailed when financial flexibility diminishes. The data underscores how personal giving is intimately tied to perceptions of economic security and disposable assets.

While the research indicates that higher wealth taxes suppress overall giving, it also points to possible policy solutions to mitigate these effects. Chief among them is the strategic use of income tax deductions for charitable donations. When individuals can offset more donations against their income taxes, lowering the effective cost of giving, they respond positively. The study found that a 10% reduction in the after-tax price of giving led to a 4.4% increase in donation levels. These incentives were especially potent regarding religious contributions and became even more effective over time as taxpayers became increasingly aware of and accustomed to the benefits.

This interplay between taxation and giving is part of a broader tension in public finance: how to raise the funds necessary for public welfare without inadvertently weakening civil society. Ring’s earlier research supports that wealth taxes prompt more cautious financial behaviour overall. In a previous study, he demonstrated that such taxes led to increased personal savings — and, by extension, a decrease in external financial commitments such as donations. “One way to save more is to give less,” he summarises. This finding highlights a fundamental behavioural trade-off: altruistic spending often suffers as individuals tighten their financial priorities in the face of taxation.

Nonetheless, Ring is careful not to portray wealth taxes as inherently harmful or misguided. While they may crowd out charitable contributions to some degree, he acknowledges that such policies can still play a vital role in ensuring social equity and funding essential services. He argues that The key question is whether taxes reduce giving and whether public expenditure supported by tax revenues delivers greater overall social welfare than private donations would have achieved. The debate is not about taxation versus charity but about striking the most effective balance between the two. For policymakers, this research serves as a valuable reminder: good intentions must be matched by careful design, especially when the goal is to enhance — not inadvertently diminish — the social good.

More information: Marius Ring et al, Wealth Taxation and Charitable Giving, The Review of Economics and Statistics. DOI: 10.1162/rest_a_01562

Journal information: The Review of Economics and Statistics Provided by University of Texas at Austin

The Impact of Parental Leave Policies on Mothers’ Entrepreneurial Choices

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Recent research published in the Journal of Management Studies offers a nuanced perspective on how parental leave policies—specifically their temporal and financial elements—can shape mothers’ decisions to pursue entrepreneurship. Challenging prevailing assumptions, the study reveals that more generous parental leave, particularly in terms of time rather than financial compensation, may encourage mothers to start their businesses rather than deter them.

The researchers conducted two interrelated studies to explore this phenomenon. The first drew on data from two significant policy reforms in Germany. The 2001 reform, which curtailed the duration of parental leave, was found to reduce the probability of mothers becoming self-employed. In contrast, the 2007 reform, which increased the monetary benefits associated with parental leave but did not extend its duration, did not significantly influence entrepreneurial activity. This finding suggests that time, rather than financial support, is more critical in shaping postnatal entrepreneurial decisions.

The second study employed a vignette-based experimental design in which participants—mothers or expectant mothers—were asked to evaluate their likelihood of pursuing self-employment under different hypothetical policy scenarios. These scenarios varied in the length of leave and the level of financial support. Consistently, mothers expressed greater intent to pursue entrepreneurship when leave duration was extended, irrespective of monetary benefits. This reinforces that time to recover, reflect, and plan after childbirth is a more influential driver of entrepreneurial intention than financial supplementation alone.

However, the research also highlights that financial support is not irrelevant. Further analyses revealed that the monetary component of parental leave can significantly affect certain subgroups—most notably, middle-class mothers juggling substantial domestic responsibilities. For these women, financial security during the early months of motherhood can alleviate stress and potentially free up cognitive and emotional resources that support entrepreneurial ambition.

The study’s lead author, Dr Pomme Theunissen of Maastricht University, summarised the findings succinctly: “After childbirth, giving mothers time to think and reflect will increase their likelihood of becoming self-employed.” This insight reframes the role of parental leave from a potential impediment to career ambition to a possible facilitator of new economic activity led by mothers.

These findings suggest reconsidering how policy design intersects with women’s professional trajectories. By focusing not solely on financial compensation but on the value of time itself, parental leave policies may be crafted to better support the diverse aspirations of mothers, including those who envision entrepreneurship as a viable and fulfilling path forward.

More information: Pomme Theunissen et al, What Makes Mothers Decide (Not) to Become Entrepreneurs? Unpacking the Role of Time and Money in Parental Leave Policies, Journal of Management Studies. DOI: 10.1111/joms.13215

Journal information: Journal of Management Studies Provided by Wiley

New Study Uncovers How Popular CEO Compensation Tactics Are Hindering Innovation

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According to new research, a compensation model designed to incentivise corporate success may do the opposite. A recent study reveals that one of the most prevalent forms of CEO remuneration — value-based equity grants — can inadvertently dampen executive motivation and curtail innovation by discouraging long-term investment strategies. The study conducted by Virginia Tech researchers Jin Xu and Pengfei Ye analyses executive compensation structures’ influence on corporate decision-making, drawing on data from thousands of U.S. firms between 2006 and 2022. Their findings, published in the Journal of Financial and Quantitative Analysis, suggest that a system meant to align executive interests with shareholder value might, paradoxically, weaken that alignment.

The crux of the issue lies in how value-based equity grants function. Under this model, CEOs are awarded stock compensation tied to a fixed monetary value rather than a fixed number of shares. If a company’s stock price rises, the executive receives fewer shares; conversely, if the stock price falls, they receive more. While this approach offers a stable and predictable compensation framework, it significantly caps the potential upside for executives. As a result, CEOs have less incentive to pursue bold, high-return strategies that could drive long-term shareholder value. “Boards of directors often aim to balance retention with risk management,” explains Xu, an associate professor at Virginia Tech’s Pamplin College of Business, “but our findings show that value-based equity grants can backfire. These grants may unintentionally discourage executives from making bold, long-term investments.”

To contextualise this, the study contrasts value-based grants with share-based grants, where a fixed number of shares is awarded irrespective of market price. In the latter scenario, executives directly benefit when stock prices climb — the higher the value, the greater the personal reward. Proponents argue that this model encourages executives to aim for ambitious performance targets. By contrast, value-based grants disincentivise exceptional performance by scaling down share allocations when prices are high. “Under value-based compensation,” notes Ye, assistant professor at the Pamplin College of Business, “stronger stock performance actually results in fewer shares for executives. That weakens the reward for driving long-term gains.” The research finds a clear correlation: firms employing value-based grants consistently invest less in research and development, a primary engine of innovation and future growth.

The study also interrogates the assumption that robust corporate governance can mitigate the drawbacks of flawed pay structures. Xu and Ye measured governance strength through established firm-level metrics and compared innovation spending across companies with varying levels of board oversight. The results were striking. Value-based pay schemes undermine CEO innovation incentives even in firms with strong governance frameworks. Companies most likely to adopt value-based compensation often have more sophisticated internal controls. Yet, these controls proved insufficient in countering the disincentive effects inherent in the compensation model. “Good governance can prevent many executive pay abuses,” Xu remarked, “but it does not completely fix the disincentives created by value-based equity grants.”

Over the past two decades, value-based compensation has become increasingly prevalent. In 2006, approximately 60 per cent of firms used value-based equity grants; by 2022, that number had risen to 73 per cent. Meanwhile, the proportion of firms using traditional share-based compensation fell from 40 per cent to just 27 per cent. This shift suggests a broader corporate America trend favouring compensation predictability and executive retention over performance-driven incentives. While such an approach can provide short-term stability and protect companies from excessive risk, it may ultimately hinder strategic leadership and long-term growth. “As more firms adopt value-based pay,” Ye warned, “they need to recognise the long-term trade-offs. A growing reliance on this model could mean lower innovation and slower corporate growth.”

At the heart of the debate lies a fundamental tension: the challenge of balancing retention with leadership dynamism. Value-based pay offers stability by reducing executive earnings volatility, making retaining top talent easier. However, as Xu and Ye demonstrate, the trade-off is a diminished appetite for risk and a hesitancy to pursue transformative initiatives. The researchers argue that these outcomes are not merely theoretical concerns but have measurable impacts on company performance and investment patterns. “Retention and strategic incentives should not be at odds with each other,” Xu contends. “Boards need to design compensation models that keep top talent and push them to drive sustained company growth.” One potential solution is adopting hybrid models incorporating both share-based and value-based compensation elements, thus preserving stability while reinvigorating the incentive to innovate.

For investors and board members alike, the study underscores an urgent need for critical reflection on the strategic implications of executive pay. Compensation structures are more than just financial mechanisms — they are levers that shape corporate behaviour and long-term planning. Investors should scrutinise how much CEOs are paid and how they are paid, as this can reveal much about a firm’s future trajectory. Companies relying on value-based grants may prioritise cautious, incremental strategies over bold leadership, potentially compromising their competitive edge. “As executive pay continues to evolve,” Ye concludes, “investors should take a closer look at the structure behind the numbers. Executive compensation isn’t just about figures — it’s about the strategy that underpins them.” This study provides compelling evidence that thoughtful, well-calibrated remuneration frameworks are essential for fostering innovation and sustainable growth.

More information: Jin Xu et al, Value-Based CEO Equity Grants, Journal of Financial and Quantitative Analysis. DOI: 10.1017/S0022109025000018

Journal information: Journal of Financial and Quantitative Analysis Provided by Virginia Tech

Where Crypto Meets Carbon: A Collision in Market Turbulence

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The emergence of non-fungible tokens (NFTs) and decentralised finance (DeFi) has significantly reshaped the digital asset landscape, introducing new value creation, trading, and decentralised governance paradigms. However, alongside this innovation, the energy-intensive nature of blockchain operations—particularly those based on proof-of-work consensus mechanisms—has drawn considerable scrutiny for their environmental toll. The issue became even more pronounced following China’s sweeping ban on cryptocurrency mining in 2021. This crackdown prompted a mass exodus of mining operations to other jurisdictions, many of which rely heavily on fossil fuels for electricity generation. Consequently, the migration exacerbated the carbon emissions associated with blockchain-based activities, fuelling an intensifying global debate about the ecological sustainability of crypto technologies and drawing attention to the potential of carbon offsetting mechanisms as a mitigating strategy.

Amid this discourse, a pivotal study published in China Finance Review International offers new insights into the interrelationships between NFTs, DeFi, and global carbon allowance markets. The research breaks ground by examining these intersections during periods of pronounced market stress, providing a much-needed analytical framework for understanding how environmentally focused financial instruments and digital assets interact. These findings are especially timely as global regulatory bodies and climate conferences—such as the upcoming COP29—grapple with formulating coherent responses to the twin imperatives of digital innovation and environmental stewardship. By analysing the dynamic interplay among emerging asset classes and carbon markets, the study is a vital resource for investors, financial regulators, and technology developers.

The study employs sophisticated econometric tools to assess data from four key financial indices from January 2021 to May 2023. These include the NFT Index (NFTI), which captures the performance of primary NFT tokens; the DeFi Pulse Index (DPI), which measures the value of decentralised financial assets; the KraneShares Global Carbon Strategy ETF (KRBN), representing international carbon credit markets; and the Solactive Carbon Emission Allowances Index (SOLCARBT), which tracks carbon futures within the European Union Emissions Trading System. The analysis encompasses several major economic and geopolitical disruptions, including the COVID-19 Delta and Omicron waves, the Russia-Ukraine war, and the collapse of the FTX cryptocurrency exchange. These events provided a fertile ground for investigating the structural connectedness and tail dependencies between digital and carbon-related financial systems.

One of the most compelling findings of the research is the asymmetric transmission of market shocks between asset classes depending on the prevailing market regime. During bull markets, DeFi instruments (as captured by the DPI) act as dominant transmitters of volatility, indicating their broader influence within the financial ecosystem. On the other hand, NFTs tend to remain relatively isolated except under extreme quantile conditions, at which point they begin to transmit idiosyncratic shocks. Conversely, the dynamic reverses in bearish or crisis-ridden environments: carbon markets such as KRBN and SOLCARBT become the primary sources of systemic disturbance. At the same time, NFTs emerge as the most susceptible receivers of such shocks. These patterns underscore risk propagation’s fluid and context-dependent nature in the contemporary financial landscape.

Another key insight lies in the concept of tail dependence, which refers to the increased correlation between assets during periods of extreme stress. The study reveals that during systemic shocks—such as those induced by pandemics or armed conflict—tail dependence among NFTs, DeFi, and carbon assets intensifies dramatically. This phenomenon suggests that digital and environmental markets are more tightly coupled under duress than previously assumed and that portfolio diversification strategies relying on these assets may prove less effective when they are most needed. This revelation has crucial implications for risk management and strategic asset allocation in an increasingly digitised and climate-conscious investment environment.

The broader relevance of the research extends far beyond academia. As international stakeholders debate how to reconcile the carbon footprint of blockchain technologies with global climate objectives, this study offers a practical foundation for developing market-based responses. For example, Web3 investors may use these findings to hedge against carbon exposure by incorporating carbon credits into their decentralised portfolios. Financial innovators could design green fintech products that remain resilient during crises by accounting for the dynamic shock transmission behaviours elucidated in the study. Most importantly, policymakers and environmental regulators now have a valuable early-warning framework for identifying climate-finance systemic risks that may arise from the intersection of digital and carbon markets.

In practical terms, the implications are manifold. For traders, the research opens avenues for short-term arbitrage strategies, particularly between Ethereum options and carbon futures during periods of blockchain congestion. For regulatory agencies, the findings could inform the development of predictive models that flag systemic risks arising from climate and crypto interactions. Finally, for decentralised autonomous organisations (DAOs), the evidence provides a compelling case for integrating carbon offset mechanisms into their governance protocols, thereby aligning technological growth with sustainability imperatives. As the global community looks toward COP29 and beyond, such research offers both a roadmap and a warning—highlighting the profound and increasingly inseparable links between finance, technology, and the environment.

More information: Bikramaditya Ghosh et al, Is there a nexus between NFT, DeFi and carbon allowances during extreme events? China Finance Review International
. DOI: 10.1108/CFRI-03-2023-0057

Journal information: China Finance Review International Provided by Shanghai Jiao Tong University Journal Center

Combating Honey Adulteration Through AI Innovation

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Researchers at McGill University have developed a cutting-edge method that uses artificial intelligence to authenticate the origins of honey, tackling a longstanding issue of fraud in the global food trade. This novel approach, which relies on advanced chemical analysis and machine learning, ensures that the information printed on honey labels accurately reflects the contents of the jar. For years, food scientists and regulators have grappled with widespread mislabelling in the honey industry, and this breakthrough could offer a practical, scalable solution to a problem that has proven difficult to address with conventional techniques.

Dr Stéphane Bayen, Associate Professor and Chair of McGill’s Department of Food Science and Agricultural Chemistry, emphasised the importance of this work: “Honey is among the most fraud-prone commodities in global trade,” he noted. “A great deal of the fraud arises from misrepresenting either the floral source of the honey or the region in which it was produced.” Monofloral honey derived predominantly from a single flower type, such as acacia or manuka, are particularly susceptible to fraud, as they are highly prized for their distinct flavour profiles and associated health benefits. Their rarity and appeal allow them to command significantly higher market prices, creating a strong incentive for unscrupulous producers to mislabel their products.

What makes the McGill method especially significant is its ability to identify the floral sources of honey, even in highly processed samples where traditional authentication methods fall short. Until now, verifying a honey’s origin typically involved pollen analysis, requiring intact pollen grains. This approach, however, becomes unreliable when honey is filtered, pasteurised, or otherwise refined. Instead, the new technique uses high-resolution mass spectrometry to generate a comprehensive molecular fingerprint of the honey. This fingerprint is then interpreted by machine learning algorithms, which compare it against reference profiles from known floral and geographical sources.

Testing has shown that this AI-based technique is accurate and far faster than existing methods. In trials, the researchers successfully classified a range of honey samples according to their botanical origin, including those that had been processed and would have posed challenges for pollen-based identification. “Whereas traditional authentication could take days, and often fails with filtered honey, our system delivers results within minutes,” said Dr Bayen. This increased efficiency opens the door for more widespread and routine testing, making it easier to catch fraudulent products before they reach the market.

Beyond ensuring consumer transparency, the researchers highlight their work’s broader ethical and economic implications. The pressure on producers to compete has increased with the growing demand for local and artisanal food products—such as Quebec’s blueberry honey. This technology could serve as a protective mechanism for honest beekeepers who risk being undercut by fraudulent competitors. At the same time, consumers are increasingly concerned with sustainability and food integrity, and tools like this can provide much-needed reassurance that they are purchasing genuine products. As Bayen remarked, “People deserve to know that their honey is what it claims to be, and honest producers deserve protection.”

The McGill team sees considerable potential for applying this technique beyond honey. Many high-value food products—such as olive oil, wine, saffron, and even coffee—face similar issues of mislabelling and adulteration. Integrating AI with chemical fingerprinting could thus form the foundation of a broader shift in how food authenticity is verified. The researchers are now seeking partnerships with food safety agencies and industry bodies to see their technique adopted as a standard tool in quality assurance and fraud prevention across the food supply chain. Combining rigorous science with technological innovation offers a promising solution to an increasingly pressing global concern.

More information: Stéphane Bayen et al, Rapid Convolutional Algorithm for the Discovery of Blueberry Honey Authenticity Markers via Nontargeted LC-MS Analysis, Analytical Chemistry. DOI: 10.1021/acs.analchem.4c01778

Journal information: Analytical Chemistry Provided by McGill University

Groundbreaking Archaeological Data Uncovers Ancient Connections Between Housing and Social Inequality

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Suppose current interpretations of the archaeological record are accurate. In that case, a series of stone alignments found in Tanzania’s Olduvai Gorge may represent the remains of shelters constructed 1.7 million years ago by Homo habilis, an extinct hominin species considered one of the earliest branches in the human evolutionary lineage. If correctly identified as shelters, these rudimentary structures would considerably push back the timeline for early human habitation.

However, the most precise and unambiguous evidence for housing—structures indisputably built and lived in by humans—dates to just over 20,000 years ago. This period coincides with the last Ice Age, when glaciers blanketed large portions of North America, Europe, and Asia. It also marks a point in human history when communities had only recently formed settled societies. From this time forward, particularly before the onset of industrialisation, the archaeological record becomes increasingly rich. Not only does it reveal the prevalence of housing as a hallmark of settled life, but it also uncovers significant clues regarding the emergence and evolution of social inequality.

A newly published PNAS Special Feature brings together an international team of scholars collaborating to analyse these patterns through a pioneering archaeological initiative. Central to their work is an extensive database comprising over 55,000 housing floor area measurements drawn from archaeological sites worldwide. This vast dataset underpins a series of studies demonstrating compelling correlations between the size of residential structures and levels of economic inequality in various historical contexts.

Scott Ortman, an associate professor of anthropology at the University of Colorado Boulder, worked alongside Amy Bogaard of the University of Oxford and Timothy Kohler of the University of Florida to coordinate this special collection. According to Ortman, archaeologists have long been interested in understanding inequality, often focusing on how and when it emerged. However, the current body of research goes further, seeking to understand the broader dynamics that have shaped economic disparities across time and space. The team has adopted a novel perspective, treating the archaeological record as a sequence of ancient artefacts and a comprehensive repository of human experience. This shift in approach represents an exciting development in archaeological methodology.

The core of this work stems from the Global Dynamics of Inequality (GINI) Project, supported by the National Science Foundation and headquartered at CU Boulder’s Center for Collaborative Synthesis in Archaeology. Ortman, Bogaard, and Kohler, all co-principal investigators, led a global effort to compile housing data from non-industrial societies dating from approximately 12,000 years ago to the advent of industrialisation. By reaching out to archaeologists with regional expertise, the team effectively “crowdsourced” the data collection process, assembling a wide-ranging database that draws on both published excavation records and cutting-edge remote sensing technologies such as LiDAR. Sites represented include the famously preserved cities of Pompeii and Herculaneum, alongside less celebrated but equally informative locations across the Americas, Europe, Africa, and Asia.

Although the dataset does not yet encompass every instance of residential architecture uncovered by archaeology, it represents a highly ambitious and impressively comprehensive sampling of what is currently accessible. Undergraduate and graduate students were crucial in organising and entering the data. With over 55,000 individual housing units catalogued, the database has become a foundational tool for analysing inequality in pre-industrial contexts. Ten papers within the PNAS Special Feature use this information trove to explore how housing size variations reflect broader social and economic trends, particularly the distribution of wealth and power.

In their introductory essay, Ortman, Kohler, and Bogaard underscore the pressing relevance of their research. They frame economic inequality as one of the foremost global challenges of the twenty-first century, closely tied to other critical issues such as climate change and the stability of democratic governance. Prehistoric data, they argue, suggest that societies with pronounced inequalities were often less resilient to environmental shocks. Furthermore, recent evidence from modern democracies indicates that economic disparity undermines political trust and weakens institutional legitimacy. These insights highlight the vital role of archaeology in illuminating not only the distant past but also the foundational mechanisms shaping the present and future of human societies.

Notably, the Special Feature explores how residential data from the same periods and regions—subject to consistent environmental, technological, and cultural conditions—offer valuable comparisons. Some papers examine how wealth inequality evolved with economic growth, focusing on how average house sizes changed over time and what these shifts reveal about access to resources. Others investigate the impact of land use practices, warfare, and duration of site occupation on housing disparities. One key study, led by Ortman and involving an international team, draws a direct connection between variability in house sizes in ancient societies and measures of income inequality used in contemporary settings. Their findings suggest that residential floor area is a conservative but effective proxy for estimating historical wealth disparities.

Bogaard emphasises that wealth inequality did not inevitably follow the advent of agriculture. Instead, high levels of inequality only became entrenched in specific ecological and political contexts—particularly where land could be monopolised. Conversely, some societies managed to maintain relatively egalitarian structures through governance systems designed to curb the accumulation of excess wealth and to promote equitable access to resources. The archaeological record, she asserts, offers powerful lessons for modern societies. It indicates that equitable economic development is best supported by institutions and policies that reduce the reinforcement of inequality through successive generations. In short, understanding the roots of inequality through the lens of ancient housing can help us better address the challenges we face today.

More information: Scott Ortman et al, Economic inequality is fueled by population scale, land-limited production, and settlement hierarchies across the archaeological record, Proceedings of the National Academy of Sciences. DOI: 10.1073/pnas.2400691122

Journal information: Proceedings of the National Academy of Sciences Provided by University of Colorado at Boulder

How Leaders Unknowingly Become Dictators at Work

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Micromanagement remains a persistent issue in the professional world—a tendency toward overcontrol that stifles collaboration and undermines trust. At Penn State’s School of Labour and Employment Relations (LER), faculty members Craig L. Pearce and Hee Man Park refer to these overbearing figures as “accidental dictators.” This term hints not at malicious intent but a leadership misstep many fall into without even realising it.

In an article recently published in Organizational Dynamics, Pearce — the Brova Family Endowed Professor of Leadership and Human Resources — and Park, Associate Professor of Human Resource Management and Director of LER’s graduate programme explore this phenomenon’s underlying causes and consequences. Their audience includes business leaders and HR professionals — precisely the groups they aim to inform and influence. Pearce explains their mission succinctly: “We’re trying to create actionable knowledge that people can read and apply that very same day.” His forthcoming book, Shared Leadership 2.0: Taking Stock and Looking Forward, co-authored with fellow faculty members Natalia Lorinkova and Christina L. Wassenaar, will be released by Cambridge University Press on 24 April and further expands on these themes.

The article’s origin lies in a case study from Pearce’s classroom — a course on shared leadership at the Drucker School of Management. One executive, frustrated that her team refused to take the initiative, shared her experience with Pearce, who replied, “Thank you for sharing — I think you might be the problem.” This anecdote planted the seed for the article’s central argument. Pearce has long taught what he calls the “smart person leadership trap”: the idea that intelligent individuals often rise to leadership roles because they are capable and knowledgeable, but this very expertise can breed dependency. Team members come to rely on the leader for every decision, and gradually, the leader unwittingly establishes a hierarchy that discourages autonomy. It’s a relatable scenario for many managers and one that Pearce and Park argue is best addressed through increased self-awareness and intentional delegation.

Park elaborates by referencing findings from delegation research. Leaders, he explains, rarely delegate key decisions. Instead, they tend to assign their subordinates only minor or routine tasks. This reveals a fundamental lack of trust or, at the very least, a hesitation to relinquish control. The more a leader’s expertise becomes recognised, the more their team depends on them, creating a self-reinforcing cycle of centralised power. Even well-meaning leaders, once immersed in organisational pressures and performance goals, may dismiss others’ input. While this intense goal orientation might drive success in the early stages of a leader’s career, it becomes a limiting factor over time. Park argues that advancement requires technical competence and the ability to collaborate, nurture talent, and build resilient interpersonal relationships.

One of the practical strategies Pearce advocates for avoiding this leadership pitfall is what he terms “circumscribed empowerment.” While empowerment is often viewed as a universal good, it can sometimes lead to unintended outcomes if not properly framed. “When people hear they’re empowered,” Pearce says, “they may think that means total freedom — but that’s rarely what leaders have in mind.” Circumscribed empowerment involves delineating the boundaries within which subordinates can make decisions. It’s about providing structure along with autonomy. For instance, empowered individuals should be encouraged to consult their leaders when their choices affect others, particularly across departments. Leaders can grant genuine autonomy by setting expectations and boundaries while ensuring organisational coherence and coordination.

Another foundational principle discussed in the article is cultivating a shared vision and adopting a long-term perspective. According to Pearce, simply stating a vision does not ensure it is shared; it must be co-created. Involving team members in the vision-building process fosters ownership and alignment. Repetition and reinforcement are essential, but genuine engagement gives a shared vision its staying power. Pearce argues that a long-term mindset radically alters leadership behaviour regarding time orientation. It does not mean discarding short-term objectives but approaching them within a broader sustainability and strategic depth framework. Leaders who adopt a long-term view are better equipped to think critically, balance competing priorities, and make decisions that serve immediate needs and the organisation’s health over time.

Park agrees, noting that organisations too often promote individuals into leadership roles based solely on their success in technical tasks. This might be effective in the short term, but it fails to account for the skills that truly sustain leadership: emotional intelligence, communication, and collaborative acumen. By contrast, a long-term view encourages companies to select leaders who inspire, guide, and grow others. In such cultures, delegation is not seen as relinquishing control but as a strategic move that allows leaders to scale their impact. The mistake, Park warns, is in assuming that leadership is about doing everything oneself. The reality is that effective leadership means cultivating capable teams and distributing decision-making power appropriately.

The School of Labour and Employment Relations has taken proactive steps to tackle these issues at the institutional level. In the autumn of 2024, they introduced a residential major in organisational leadership and a leadership minor. A new certificate programme in leadership is also forthcoming. These offerings aim to equip students — whether their primary fields are engineering, science, finance, or otherwise — with the interpersonal and collaborative skills essential for modern leadership. Pearce says, “You pick the technical topic, and we now have the on-ramp to complement that with leadership development.” The ultimate goal is to prepare graduates to excel in their disciplines and lead others effectively and ethically, avoiding the common traps that turn capable managers into accidental dictators.

More information: Craig L. Pearce et al, Are you an accidental dictator?: The smart person leadership trap…and how to avoid it, Organizational Dynamics. DOI: 10.1016/j.orgdyn.2025.101130

Journal information: Organizational Dynamics Provided by Penn State

New Research Finds Resilient Entrepreneurs Navigate Emotional Highs and Lows with Greater Ease

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Entrepreneurship is often described as a turbulent emotional journey punctuated by soaring excitement and periods of profound doubt. Yet, new research published in the Strategic Entrepreneurship Journal suggests that entrepreneurs with high psychological resilience experience far fewer emotional ups and downs than their less resilient peers. Rather than being swept along by the volatile nature of business ownership, these individuals appear better equipped to maintain a sense of emotional steadiness—even during periods of stress or uncertainty.

Led by Dr. Lauren A. Zettel, Assistant Professor of Entrepreneurship at Central Michigan University’s College of Business Administration, the study explores how resilience influences entrepreneurs’ day-to-day emotional experiences. While previous research has established a link between resilience and overall emotional positivity, Dr. Zettel’s work examines how resilience affects the fluctuation of emotions over time. This subtle but significant distinction offers more profound insight into how resilient entrepreneurs might be better prepared to feel good and remain emotionally consistent.

The research team collected data from 163 technology entrepreneurs to investigate this dynamic. Participants first completed an online assessment measuring their psychological resilience and describing a significant challenge they had recently faced in their business. Over 10 days, these entrepreneurs reported daily on their emotional states, work effort, and any new challenges they encountered. This longitudinal design allowed researchers to trace how emotions varied from one day to the next in terms of both individual resilience levels and ongoing entrepreneurial demands.

The results were telling. Entrepreneurs with higher resilience scores demonstrated less emotional fluctuation throughout the study period. In contrast to the conventional image of the entrepreneur as a figure constantly oscillating between excitement and despair, the data suggest that resilient individuals experience a more balanced emotional landscape. This sense of equilibrium was linked to more stable work efforts, suggesting that emotional consistency may help fuel sustained motivation and productivity.

Equally noteworthy was the finding that emotional instability influenced the amount of energy entrepreneurs invested in their work. Participants who experienced wider swings—especially in negative emotions—were likelier to report changes in how long or intensely they worked. According to Dr. Zettel, these emotional swings can be taxing: “Entrepreneurs who maintain a more even emotional keel are better able to conserve their psychological resources. They’re less likely to become depleted and more capable of navigating the daily business demands.”

These findings have important implications for entrepreneurs, educators, and mental health professionals. Instead of focusing exclusively on minimising negative emotions or encouraging unrelenting positivity, the research points to the benefits of cultivating emotional stability. Building resilience may be one of the most effective ways entrepreneurs can protect their well-being, regulate their energy, and maintain consistent performance in the face of inevitable challenges. For those weathering the emotional storms of entrepreneurship, this study offers a compelling message: resilience helps you recover and stay grounded.

More information: Lauren A. Zettel, Rethinking the rollercoaster: Resilience and affect in entrepreneurship, Strategic Entrepreneurship Journal. DOI: 10.1002/sej.1533

Journal information: Strategic Entrepreneurship Journal Provided by Strategic Management Society

Sales Quotas Aren’t One-Size-Fits-All

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Sales quotas have long been a staple in boosting performance, serving as a tried-and-tested mechanism to incentivise sales teams. However, their effectiveness is far from guaranteed. According to a 2022 survey by Salesforce, only 28% of sales professionals were reaching their targets, highlighting a gap between the intended motivational impact of quotas and actual performance outcomes. This disconnect raises essential questions about how sales incentives are structured and whether they truly reflect the diverse motivations of those they aim to engage.

Recent research from the McCombs School of Business at the University of Texas sheds new light on this issue by examining how different types of salespeople respond to quota cycles of varying lengths. Doug Chung, associate professor of marketing, has found that individual attitudes toward time—specifically, how people value present versus future rewards—play a crucial role in determining the effectiveness of sales quotas. Future-oriented people tend to excel when working towards longer-term goals, as they are motivated by the promise of a significant reward at the end of an extended period. Conversely, more present-focused salespeople tend to disengage when faced with distant goals and instead thrive on more immediate, short-term incentives.

Chung illustrates this with a simple but telling example: if someone does not value future rewards, they will unlikely exert effort in January for a bonus that may only materialise in December. Such individuals, he argues, require “pacers”—frequent, tangible incentives to sustain their motivation throughout the quota period. To test this theory, Chung collaborated with Byungyeon Kim of the University of Minnesota and Byoung Park of the University at Albany, SUNY, in studying a Swedish electronics retailer with 100 store locations. This company had been using a monthly sales quota system but observed a troubling pattern: if sales were sluggish during the early days of the month—perhaps due to pleasant weather drawing customers outdoors—employees often gave up on meeting their targets altogether.

In response, the company transitioned midyear from monthly quotas to daily ones, aiming to reinvigorate its sales force and counteract early-cycle apathy. Chung and his colleagues analysed performance data before and after this change, with telling results. Sales among low-performing staff improved significantly under the daily quota structure. These shorter cycles offered more frequent opportunities for success, preventing the early-month disengagement plaguing the monthly system. “These short quota cycles benefit the less motivated salespeople,” says Chung. “It motivated them not to give up.” Interestingly, top performers experienced a slight decline in performance under the new system, possibly due to the interruption of longer-term momentum. However, overall sales variability decreased, making business forecasting more reliable.

These findings support the argument that sales quota design should be more tailored, considering the differing motivational drivers among employees. Shorter quota cycles appear especially useful in energising lower-performing or less future-motivated salespeople, whereas longer cycles may better suit high performers who can maintain long-term focus. Chung stresses that while time preference is a significant factor, it is not the only consideration. The nature of the product or industry also matters. Extended quota periods may be necessary in some sectors, such as those with long sales cycles or complex procurement processes. However, long cycles also introduce risks—such as illness or absence—that can disrupt progress over time.

Looking ahead, Chung is exploring an innovative approach to sales compensation: allowing employees to choose the quota cycle that best suits their working style. Some start-ups have already adopted this model, offering flexibility to their sales teams. Yet widespread adoption remains limited, mainly due to concerns around fairness and cultural cohesion within organisations. “Once sales comp is different, even if the salesperson selected it, they might question its fairness,” Chung explains. Ultimately, the research suggests that moving beyond a uniform model and recognising the diverse motivational profiles of employees may lead to more effective, adaptable sales strategies—and better performance outcomes across the board.

More information: Doug Chung et al, Time Dependence and Time Preference: Implications for Compensation Structure, Marketing Science. DOI: 10.1287/mksc.2022.0037

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

Strategic Approaches to Logistics in Platform-Based Supply Chains: An Integrated Perspective

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In a recent publication in Engineering, scholars Lin Chen, Ting Dong, Xiang Li, and Xiaofeng Xu undertook a systematic review of logistics service strategies within platform supply chains (PSCs). As the platform economy experiences rapid expansion, PSCs have become a fundamental component of global economic infrastructure. Within this context, the role of logistics engineering management has grown more pivotal, ensuring the efficient functioning of supply chain operations mediated through digital platforms.

The study categorises logistics service strategies in PSCs into three principal models: self-built logistics (SBL), third-party logistics (3PL), and logistics service sharing (LSS). The SBL model, as exemplified by companies like JingDong (JD), provides platforms with heightened control over their logistics processes. This approach supports fast, reliable delivery services but necessitates considerable capital investment and infrastructure development. In contrast, the 3PL model, utilised extensively by platforms such as Pinduoduo, enables firms to delegate logistics operations to specialised external providers. This arrangement allows companies to reduce operational expenditures and concentrate on their core competencies.

Meanwhile, LSS has emerged as a novel and collaborative alternative that builds upon the foundation of SBL and 3PL. It encourages the sharing of logistics resources among multiple firms, with shared platforms like Deliv serving as prominent examples. This model aims to enhance logistics efficiency and flexibility through cooperative infrastructure usage.

Drawing upon a diverse sample of scholarly articles from major academic databases, the researchers identified several key themes that dominate the current discourse on logistics strategy in PSCs. For SBL and 3PL models, scholars have focused on optimising logistics strategies to maximise value for PSC participants. These inquiries frequently explore how logistics-related elements influence broader platform operations, including decisions about channel structure, platform entry timing, and sales models. Trade-offs between service costs and quality often shape the choice between adopting an SBL or 3PL approach. Other influencing factors include branding, competitive dynamics, market potential, and distribution channel configuration.

The study finds that logistics service sharing (LSS) is gaining attention as a strategic complement to traditional logistics models. Current research hotspots within LSS include channel strategies, partner selection mechanisms, and competitive dynamics in logistics service provision. Among the critical variables affecting LSS adoption, service cost remains the most influential, while consumer preferences, competitive intensity, and market prospects also play significant roles. The cooperative nature of LSS introduces unique analytical complexities, as it involves multiple stakeholders simultaneously engaging in collaboration and competition.

The study further outlines several promising avenues for future research. One crucial direction involves examining the interplay of SBL and 3PL strategies within multiparty and multiplatform ecosystems. While much of the existing literature centres on single-platform contexts, the reality of PSCs is marked by inter-platform competition and cooperation, which necessitates more nuanced models. Another suggested area of exploration is the role of consumer preference for environmentally sustainable logistics, particularly in light of China’s strategic focus on green technology innovation. A third area involves incorporating elements of risk and uncertainty into logistics strategy frameworks—an increasingly urgent consideration given the unpredictability of global supply chains.

Technological innovation introduces challenges and opportunities for the evolution of logistics service strategies. The increasing availability of real-time data improves supply chain visibility and facilitates more responsive decision-making regarding logistics model selection. At the same time, advancements in intelligent automation—such as robotics—are reshaping the efficiency and scalability of logistics operations. Furthermore, the tightening of environmental regulations and the introduction of green policy frameworks are expected to influence PSC participants to adopt more ecologically responsible logistics practices, potentially transforming the landscape of logistics decision-making.

This research offers a comprehensive and integrative perspective on logistics service strategies within platform supply chains. It bridges theoretical exploration with practical application, furnishing valuable insights for scholars and practitioners. The study highlights the strategic, technological, and environmental considerations involved in logistics decisions and contributes to a more informed and agile approach to managing logistics in digitally mediated supply networks. Platform-based firms, in particular, stand to benefit from these findings as they navigate complex trade-offs between cost, service quality, market competitiveness, and sustainability in the evolving logistics ecosystem.

More information: Lin Chen et al, Logistics Engineering Management in the Platform Supply Chain: An Overview from Logistics Service Strategy Selection Perspective, Engineering. DOI: 10.1016/j.eng.2024.12.032

Journal information: Engineering Provided by Higher Education Press

Layered Job Skill Hierarchies Highlight the Value of Foundational Education

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Mastery begins with a firm grounding in foundational competencies in many professional fields. Whether it is a computer programmer requiring a robust grasp of basic mathematics, a nurse building clinical acumen before progressing to the role of a nurse practitioner, or a negotiator whose persuasive capacity rests on clear communication and active listening, initial skill development is essential. These early proficiencies form the bedrock upon which more complex, specialised abilities are constructed. Without this grounding, advancement within a profession becomes difficult and, in many cases, unfeasible.

A recent study in Nature Human Behaviour offers a novel empirical framework for understanding this phenomenon. Drawing from millions of job transitions and extensive data from U.S. workplace surveys, the researchers mapped the interdependencies among job-related skills. Their findings revealed a distinct “nested” structure within many professions, where more advanced competencies are built upon the mastery of broader, more general skill sets. This structure is not merely academic; it has tangible consequences for economic inequality, workforce stratification, and career mobility within today’s increasingly specialised labour market.

Lead author Moh Hosseinioun, a postdoctoral fellow at Northwestern University, highlights this layered dynamic: “We found that many skills aren’t just complementary — they’re interdependent in a directional way, acting as prerequisites for others, snowballing layer over layer to get to more specialised knowledge.” In this schema, professional advancement resembles a scaffolding in which one must secure basic rungs before accessing more specialised tiers. Such an architecture fosters cumulative learning, where each successive level is contingent upon mastery of the previous.

The research’s origins lie in a broader inquiry into how occupational categories like “white-collar” and “blue-collar” emerge. According to SFI External Professor Hyejin Youn of Seoul National University, a corresponding author on the study, the distinction often lies in the specialisation mode. Knowledge-intensive careers typically demand extensive educational investment and prolonged training, whereas more physically oriented roles can be learned through on-the-job experience. This dichotomy suggests a fundamental divergence in how various sectors approach skill acquisition and professional growth.

Youn further draws a compelling analogy from ecology to describe how this nested structure unfolds. Like ecological succession — in which microbes prepare the soil for plants, which sustain herbivores and eventually predators — human cognitive development proceeds in stages. “Advanced problem-solving — like solving partial differential equations — first depends on mastering arithmetic, understanding mathematical notation, and grasping logical principles,” she notes. Foundational educational skills are akin to the early organisms that create the conditions for more complex forms of life, or in this case, higher-order reasoning.

Although the hierarchical nature of skill development may seem self-evident, the implications are far from trivial. The researchers found that the most deeply nested skills are associated with longer educational timelines, higher wage premiums, and more excellent resistance to automation. As skill chain complexity increases, so does the exclusivity of roles positioned at their apex. This deepening stratification risks intensifying job market polarisation, particularly for individuals who lack access to strong educational foundations early in life.

This structural reality presents significant challenges for policymakers. The growing entrenchment of nested skill hierarchies may hinder social mobility, limiting access to higher-wage professions for those without early exposure to foundational education. As Youn cautions, “The more we become specialised and nested, the more inequality and disparity across the labour market will occur.” The findings suggest that while well-intentioned, short-term ‘reskilling’ initiatives may be ineffective unless paired with sustained investment in basic educational infrastructure.

Educational institutions are also implicated in this shifting landscape. A growing trend among universities to prioritise market-ready skills over general foundational learning may backfire in the long term. By neglecting the essential building blocks of reasoning, analysis, and communication, graduates may find themselves ill-equipped to develop the specialised skills that today’s labour markets increasingly demand. The erosion of foundational learning could thus inadvertently diminish future adaptability and career resilience.

Finally, the advent of artificial intelligence introduces new complexities. As AI systems, huge language models, become adept at handling fundamental tasks, a pressing question arises: does outsourcing these skills facilitate or inhibit human learning? “Large language models are unprecedented in how they target fundamental skills,” notes Hosseinioun. While such technologies might accelerate access to specialised knowledge by bypassing certain learning stages, they could also undermine our capacity to develop the competencies on which advanced reasoning depends. In an era of accelerating technological change, the challenge lies in acquiring knowledge and understanding how its acquisition is structured — and what that means for individuals and societies alike.

More information: Moh Hosseinioun et al, Skill dependencies uncover nested human capital, Nature Human Behaviour. DOI: 10.1038/s41562-024-02093-2

Journal information: Nature Human Behaviour Provided by Santa Fe Institute

Taking Credit for Colleagues’ Ideas Damages Vital Knowledge Resources, New Study Finds

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If you’ve ever put forward a thoughtful idea in a meeting, only to hear it echoed by someone else moments later—with them receiving all the praise—you’re not alone. This frustrating experience isn’t simply bad manners; it’s a widespread organisational problem with significant consequences. According to Professor David Zweig of the University of Toronto, knowledge theft is more common than expected. It seriously threatens the culture of collaboration that underpins innovative and high-performing workplaces.

Professor Zweig, who teaches organisational behaviour and human resources at the University of Toronto Scarborough and the Rotman School of Management, began paying close attention to this phenomenon after witnessing it. During a routine meeting, he noticed one colleague offer an idea that was ignored—only for that idea to be repeated later by someone else, who received a positive response. Crucially, the original contributor went unacknowledged. It happened more than once, and that pattern sparked Zweig’s interest. “I noticed that this happened repeatedly,” he says. “So I started paying attention to how people did or did not credit the work of others.”

An extensive research program followed involving more than 1,500 workers across various industries in Canada, the United States, and the United Kingdom. The goal was to investigate knowledge theft as a distinct form of workplace deviance, examine how often it occurs, how it might be reliably measured, and what broader effects it has on organisational functioning. Zweig and his colleagues found that knowledge theft—deliberately claiming unjustified ownership over another person’s ideas, contributions, or solutions—was far more prevalent than anticipated.

In fact, in one of their studies, 91 per cent of participants reported having experienced knowledge theft in some capacity: as a victim, a witness, or a perpetrator. This suggests the problem is systemic rather than isolated. Unlike accidental oversight, knowledge theft involves an intentional act—rephrasing a colleague’s suggestion in a meeting, omitting contributors from presentations, or taking sole credit for collaborative work. And the damage caused by such behaviour extends well beyond individual feelings of resentment or betrayal.

For those who find themselves victims of this misconduct, the fallout can be profoundly demoralising. Zweig’s research indicates that affected individuals often become guarded and reluctant to share their knowledge in the future. Some reported actively concealing information or withholding support from co-workers, particularly those they no longer trusted. Others described an urge to retaliate through subtle interpersonal sabotage, such as making critical comments or avoiding cooperation. Most concerningly, these responses were not confined to the original workplace—victims carried them into new environments, suggesting a lasting emotional and behavioural impact.

This creates what Zweig calls “a toxic environment,” where openness and collaboration are replaced by distrust and self-protection. When ideas are consistently stolen or unrecognised, employees perceive knowledge-sharing as risky rather than rewarding. As a result, the free flow of information slows, innovation is stifled, and the organisation’s overall productivity suffers. Knowledge—the lifeblood of competitive advantage in most modern firms—becomes siloed, hoarded, and underutilised.

The role of leadership is pivotal in either fuelling or curbing this behaviour. When managers ignore incidents of knowledge theft or reward those who engage in it, they legitimise and encourage such conduct. Over time, this erodes psychological safety in teams and undermines the credibility of performance evaluation systems. Zweig urges leaders to “call it out” whenever they see knowledge theft occur. “They need to be very cognisant that this happens. It can’t be normalised,” he insists.

To mitigate the problem, Zweig and his colleagues recommend a shift towards team-based recognition and rewards. By acknowledging collective achievements rather than spotlighting individual contributions, organisations can reduce the incentive to claim sole credit and foster a stronger culture of mutual respect. This approach not only encourages collaboration but also better aligns with the realities of how most work gets done—through shared effort, brainstorming, and support.

The implications of this research extend far beyond the academic realm. Zweig is writing a book on the subject, to be published by Rotman-UTP Publishing, which will explore the nuances of knowledge theft and its organisational consequences in greater detail. As the modern workplace continues to evolve, his work offers a timely reminder that while knowledge may be intangible, its value is immense—and that protecting the channels through which it flows is crucial to the success of any enterprise.

More information: David Zweig et al, It’s mine but you took it: knowledge theft as a barrier to organizational knowledge management efforts, Journal of Knowledge Management. DOI: 10.1108/jkm-07-2023-0653

Journal information: Journal of Knowledge Management Provided by University of Toronto, Rotman School of Management