Columbia Business School Research

Regulatory engagement theory [Higgins, E. T. (2006). Value from hedonic experience and engagement. Psychological Review, 113, 439–460.] proposes that value is a motivational force of attraction to or repulsion from something, and that strength of engagement contributes to value intensity independent of hedonic and other sources of value direction.

Despite the efforts of most luxury brand marketers, the International Chamber of Commerce estimates that this industry is losing as much as $12 billion every year to counterfeiting. This suggests that at least in luxury markets, curbing the insatiable global appetite for counterfeits is essential to winning the war on counterfeiting. Yet a clear and actionable understanding of the motivations underlying consumers' purchase of counterfeit luxury brands remains elusive.

In December 2004, the Financial Accounting Standards Board (FASB) mandated the use of a fair value-based measurement attribute to value employee stock options (ESOs) via Financial Accounting Standard (FAS) 123-R. In anticipation of FAS 123-R, between March 2004 and November 2005, several firms accelerated the vesting of ESOs to avoid recognizing existing unvested ESO grants at fair value in future financial statements.

Cross-selling is becoming an increasingly prevalent practice in call centers, due, in part, to its unique capability to allow firms to dynamically segment their callers and customize their product offerings accordingly. This paper considers a call center with cross-selling capability that serves a pool of customers that are differentiated in terms of their revenue potential and delay sensitivity. It studies the operational decisions of staffing, call routing, and cross-selling under various forms of customer segmentation.

The diffusion of an innovation is governed by, among other things, word of mouth. In social systems, growth processes are considered strongly influenced by people who have large number of ties to other people. In the social network literature, such people are called influentials, opinion leaders, mavens, or sometimes hubs. Furthermore, when the marketing literature addresses such people, the focus is typically not on how they influence the overall market but rather on either assessing their influence on people they are in direct contact with or identifying their characteristics.

We develop a competitive pricing model which combines the complexity of time-varying demand and cost functions and that of scale economies arising from dynamic lot sizing costs. Each firm can replenish inventory in each of the T periods into which the planing horizon is partitioned. Fixed as well as variable procurement costs are incurred for each procurement order, along with inventory carrying costs. Each firm adopts, at the beginning of the planning horizon, a (single) price to be employed throughout the horizon.

In public-good provision, privileged groups enjoy the advantage that some of their members find it optimal to supply a positive amount of the public good. However, the inherent asymmetric nature of these groups may make the enforcement of cooperative behavior through informal sanctioning harder to accomplish. In this article, the authors experimentally investigate public-good provision in normal and privileged groups with and without decentralized punishment.

This research investigates hypotheses about differences between Chinese and American managers in the configuration of trusting relationships within their professional networks. Consistent with hypotheses about Chinese familial collectivism, an egocentric network survey found that affect- and cognition-based trust were more intertwined for Chinese than for American managers. In addition, the effect of economic exchange on affect-based trust was more positive for Chinese than for Americans, whereas the effect of friendship was more positive for Americans than for Chinese.

Purpose — For corporations seeking to boost market share or gain valuable assets, compelling turnaround opportunities seem to abound. In this paper the authors, who are veteran turnaround analysts, aim to share their experiences.

Design/methodology/approach — With so many distressed companies in need of turnaround talent and money, the paper presents lessons learned over the years by veteran specialists, which investors would be well advised to reflect on the before they leap into a thorny acquisition.

The global economic crisis in September 2008 was preceded by the crises of 2007: the subprime mortgage crisis, the corporate credit crunch, and the "quant liquidity crunch." The evolution of these crises appears to have resulted from a set of "deleveraging" that started in the subprime mortgage market but then spilled over into a number of other asset markets and resulted in large premiums in multiple markets. To respond to these events, new proprietary factors have been deployed that are not vulnerable to the actions of others.

Research across disciplines suggests that bad is stronger than good and that individuals punish deception more than they reward honesty. However, methodological issues in previous research limit the latter conclusion. Three experiments resolved these issues and consistently found the opposite pattern: Individuals rewarded honesty more frequently and intensely than they punished deception.

Heterogeneity is ubiquitous in firm-level and sectoral data. Equilibrium models, however, typically assume a representative firm, as in Andrew B. Abel and Olivier J. Blanchard (1983). The representative firm paradigm leaves no role for the distribution of capital. We model capital reallocation in a general equilibrium model with two sectors. Capital adjustment costs capture illiquidity in our model, similar to Hirofumi Uzawa's (1969) capital installation technology.

Many new products (e.g., PDA phones) share features with multiple categories, but are also significantly different from each of these categories. When consumers encounter such a product, they may create a new subcategory (e.g., smart phones) to accommodate it. In such situations, consumers must decide where to position the new subcategory. We develop the Category Activation Model (CAM) to predict where within a category structure consumers are likely to position a subcategory that they have created to accommodate a new product that could potentially belong to multiple product categories.

We propose that people protect the belief in a controlled, nonrandom world by imbuing their social, physical, and metaphysical environments with order and structure when their sense of personal control is threatened. We demonstrate that when personal control is threatened, people can preserve a sense of order by (a) perceiving patterns in noise or adhering to superstitions and conspiracies, (b) defending the legitimacy of the sociopolitical institutions that offer control, or (c) believing in an interventionist God.

We develop a competitive pricing model which combines the complexity of time-varying demand and cost functions and that of scale economies arising from dynamic lot sizing costs. Each firm can replenish inventory in each of the T periods into which the planning horizon is partitioned. Fixed as well as variable procurement costs are incurred for each procurement order, along with inventory carrying costs. Each firm adopts, at the beginning of the planning horizon, a (single) price to be employed throughout the horizon.

The present work examines how experiencing high versus low power creates qualitatively distinct psychological motives that produce unique consumption patterns. Based on accumulating evidence that states of power increase focus on one's own internal desires, we propose that high power will lead to a greater preference for products that are viewed as offering utility (e.g., performance, quality) to the individual.

Media firms compete in two connected markets. They face rivalry for the sale of content to consumers, and at the same time, they compete for advertisers seeking access to the attention of these consumers. We explore the implications of such two-sided competition on the actions and source of profits of media firms. One main conclusion we reach is that media firms may charge higher content prices in a duopoly than in a monopoly.

Results from four studies show that the reliance on affect as a heuristic of judgment and decision making is more pronounced under a promotion focus than under a prevention focus. Two different manifestations of this phenomenon were observed. Studies 1–3 show that different types of affective inputs are weighted more heavily under promotion than under prevention in person-impression formation, product evaluations, and social recommendations.

This paper studies the joint impact of corruption on the entry mode and volume of inward foreign direct investment (FDI) using a unique firm-level data set. We find that corruption not only reduces inward FDI, but also shifts the ownership structure towards joint ventures. The latter finding supports the view that corruption increases the value of using a local partner to cut through the bureaucratic maze. However, R&D intensive firms are found to favor sole ownership.

Reflecting on the past is often a critical ingredient for successful learning. The current research investigated how counterfactual thinking, reflecting on how prior experiences might have been different, motivates effective learning from these previous experiences. Specifically, we explored how the structure of counterfactual reflection — their additive ("If only I had") versus subtractive ("If only I had not") nature — influences performance in dyadic-level strategic interactions.

The universality of design perception and response is tested using data collected from 10 countries: Argentina, Australia, China, Germany, Great Britain, India, The Netherlands, Russia, Singapore, and the United States. A Bayesian, finite-mixture, structural equation model is developed that identifies latent logo clusters while accounting for heterogeneity in evaluations. The concomitant variable approach allows cluster probabilities to be country specific.

Despite abundant anecdotal evidence that creativity is associated with living in foreign countries, there is currently little empirical evidence for this relationship. Five studies employing a multimethod approach systematically explored the link between living abroad and creativity. Using both individual and dyadic creativity tasks, Studies 1 and 2 provided initial demonstrations that time spent living abroad (but not time spent traveling abroad) showed a positive relationship with creativity.

The authors propose that culture affects people through their perceptions of what is consensually believed. Whereas past research has examined whether cultural differences in social judgment are mediated by differences in individuals’ personal values and beliefs, this article investigates whether they are mediated by differences in individuals’ perceptions of the views of people around them.

We investigate whether current mid-level and future entry-level managers subjectively value stock options and restricted stock consistent with economic theory. We also investigate whether managers' subjective valuations are sensitive to changes in key characteristics of these equity instruments. We believe our investigation is important for three reasons. First, in recent years firms have granted the vast majority of options to employees who are not senior-level executives.

This paper examines image motivation—the desire to be liked and well-regarded by others—as a driver in prosocial behavior (doing good), and asks whether extrinsic monetary incentives (doing well) have a detrimental effect on prosocial behavior due to crowding out of image motivation.

We study the dynamic pricing problem of a monopolist firm in presence of strategic customers that differ in their valuations and risk preferences. We show that this problem can be formulated as a static mechanism design problem, which is more amenable to analysis. We highlight several structural properties of the optimal solution, and solve the problem for several special cases.

Product and waste take-back is becoming more regulated by countries to protect the environment. Such regulation puts an economic burden on firms, while creating fairness concerns and potentially even missing its primary target: environmental benefits. This research discusses the economic and environmental impacts of extended producer responsibility type of legislation and identifies efficiency conditions.

We propose a new three-pronged plan to address the recent harmful flood of foreclosures. Our plan would address the major barriers that inhibit the ability of third-party servicers to modify mortgages the way portfolio lenders are now doing with greater success. The plan provides greater compensation for servicers to perform their duties, removes legal constraints that inhibit modification, and addresses critical second liens that often get in the way of effective mortgage modifications.

This paper studies the effect of product market competition on the compensation packages that firms offer to their executives and in particular its impact on the sensitivity of pay to performance. To measure the effect of competition we use two different identification strategies on a panel of US executives. We exploit two deregulation episodes in the banking and financial sectors as quasi-natural experiments. We provide difference-in-differences estimates of the effect of competition on estimated performance-pay sensitivities and on the sensitivity of stock option grants.

Social commerce is an emerging trend in which online shops create referral hyperlinks to other shops in the same online marketplace. We study the evolution of a social commerce network in a large online marketplace. Our dataset starts before the birth of the network (at which points shops were not linked to each other) and includes the birth of the network. The network under study exhibits a typical power-law degree distribution. We empirically compare a set of edge formation mechanisms (including preferential attachment and triadic closure) that may explain the emergence of this property.

In this essay, I provide an overview of the scope and breadth of the field experiments in class size conducted prior to World War II, the motivations behind them, and how their experimental designs were crafted to deal with perceived sources of bias. I conclude with a discussion of how one might interpret the findings of these early experimental results alongside more recent research, and how research on class size has shifted towards using instrumental variables rather than field experiments to address the class size issue empirically.

The literature on the benefits and costs of financial globalization for developing countries has exploded in recent years, but along many disparate channels with a variety of apparently conflicting results. There is still little robust evidence of the growth benefits of broad capital account liberalization, but a number of recent papers in the finance literature report that equity market liberalizations do significantly boost growth.

Financial innovations often respond to regulation by sidestepping regulatory restrictions that would otherwise limit activities in which people wish to engage. Securitization of loans (e.g., credit card receivables, or subprime residential mortgages) is often portrayed, correctly, as having arisen in part as a means of "arbitraging" regulatory capital requirements by booking assets off the balance sheets of regulated banks.

For decades, goal setting has been promoted as a halcyon pill for improving employee motivation and performance in organizations. Advocates of goal setting argue that for goals to be successful, they should be specific and challenging, and countless studies find that specific, challenging goals motivate performance far better than "do your best" exhortations. The authors of this article, however, argue that it is often these same characteristics of goals that cause them to "go wild."

Managing shipping vessel profitability is a central problem in marine transportation. We consider two commonly used types of vessels—liners (ships whose routes are fixed in advance) and trampers (ships for which future route components are selected based on available shipping jobs)—and formulate a vessel profit maximization problem as a stochastic dynamic program. For liner vessels, the profit maximization reduces to the problem of minimizing refueling costs over a given route subject to random fuel prices and limited vessel fuel capacity.