Operating
People systematically overlook subtractive changes
Gabrielle Adams et al.
Nature, 8 April 2021, Pages 258–261
Abstract:
Improving objects, ideas or situations -- whether a designer seeks to advance technology, a writer seeks to strengthen an argument or a manager seeks to encourage desired behavior -- requires a mental search for possible changes. We investigated whether people are as likely to consider changes that subtract components from an object, idea or situation as they are to consider changes that add new components. People typically consider a limited number of promising ideas in order to manage the cognitive burden of searching through all possible ideas, but this can lead them to accept adequate solutions without considering potentially superior alternatives. Here we show that people systematically default to searching for additive transformations, and consequently overlook subtractive transformations. Across eight experiments, participants were less likely to identify advantageous subtractive changes when the task did not (versus did) cue them to consider subtraction, when they had only one opportunity (versus several) to recognize the shortcomings of an additive search strategy or when they were under a higher (versus lower) cognitive load. Defaulting to searches for additive changes may be one reason that people struggle to mitigate overburdened schedules, institutional red tape and damaging effects on the planet.
Partisan Entrepreneurship
Joseph Engelberg et al.
University of California Working Paper, April 2021
Abstract:
Republicans start more firms than Democrats. Using a sample of 27 million party-identified Americans between 1997 and 2017, we find that 9% of Republicans and 6% of Democrats become entrepreneurs. This partisan entrepreneurship gap is time-varying: Republicans increase their relative entrepreneurship during Republican administrations and decrease it during Democratic administrations, with sharp changes around the elections of President Obama and President Trump. The strongest effects exist among the most politically active partisans: those that donate and vote.
Labor Unions and Product Quality Failures
Omesh Kini et al.
Management Science, forthcoming
Abstract:
In this paper, we study the impact of labor unions on product quality failures. We use a product recall as our measure of quality failure because it is an objective metric that is applicable to a broad cross-section of industries. Our analysis employs a union panel setting and close union elections in a regression discontinuity design framework to overcome identification issues. In the panel regressions, we find that firms that are unionized and those that have higher unionization rates experience a greater frequency of quality failures. The results obtain even at a more granular establishment level in a subsample where we can identify the manufacturing establishment associated with the recalled product. When comparing firms in close elections, we find that firms with close union wins are followed by significantly worse product quality outcomes than those with close union losses. These results are amplified in non-right-to-work states, where unions have a relatively greater influence on the workforce. We find that unionization increases firms’ costs and operating leverage and, consequently, crowds out investments that potentially impact quality. We also find some suggestive evidence that unions may compromise quality by hurting employee morale and by resisting technological upgrades in the firm. Overall, our results suggest that unions have an adverse impact on product recalls and, thus, product quality is an important dimension along which unions impact businesses.
A Founding Penalty: Evidence from an Audit Study on Gender, Entrepreneurship, and Future Employment
Olenka Kacperczyk & Peter Younkin
Organization Science, forthcoming
Abstract:
There is both widespread interest in encouraging entrepreneurship and universal recognition that the vast majority of these founders will fail, which raises an important unanswered question: What happens to ex-founders when they apply for jobs? Whereas existing research has identified many factors that facilitate movement out of an established organization and into entrepreneurship, far less attention has been devoted to understanding what transpires during the return journey — most notably, how employers evaluate entrepreneurial experience at the point of hire. We propose that employers penalize job candidates with a history of founding a new venture because they believe them to be worse fits and less committed employees than comparable candidates without founding experience. We further predict that the discount for having been an entrepreneur will diminish when other stereotypes about the candidate, particularly those based on gender, will contradict the negative beliefs about ex-founders. We test our proposition using a résumé-based audit and an experimental survey. The audit reveals that founding significantly reduces the likelihood that an employer interviews a male candidate, but there is no comparable penalty for female ex-founders. The experimental survey confirms the gendered nature of the founding penalty and provides evidence that it results from employers’ concerns that founders are less committed and worse organizational fits than nonfounders. Critically, the survey also indicates that these concerns are mitigated for women, helping to explain why they suffer no equivalent founding penalty.
Fresh teams are associated with original and multidisciplinary research
An Zeng et al.
Nature Human Behaviour, forthcoming
Abstract:
Teamwork is one of the most prominent features in modern science. It is now well understood that team size is an important factor that affects the creativity of the team. However, the crucial question of how the character of research studies is related to the freshness of a team remains unclear. Here, we quantify the team freshness according to the absence of prior collaboration among team members. Our results suggest that papers produced by fresher teams are associated with greater originality and a greater multidisciplinary impact. These effects are even stronger in larger teams. Furthermore, we find that freshness defined by new team members in a paper is a more effective indicator of research originality and multidisciplinarity compared with freshness defined by new collaboration relationships among team members. Finally, we show that the career freshness of team members is also positively correlated with the originality and multidisciplinarity of produced papers.
Networks, Creativity, and Time: Staying Creative through Brokerage and Network Rejuvenation
Giuseppe Beppe Soda, Pier Vittorio Mannucci & Ronald Burt
Academy of Management Journal, forthcoming
Abstract:
In this paper we adopt a dynamic perspective on networks and creativity to propose that the oft-theorized creative benefits of open networks and heterogeneous content are less likely to be accrued over time if the network is stable. Specifically, we hypothesize that open networks and content heterogeneity will have a more positive effect on creativity when network stability is low. We base our prediction on the fact that over time network stability begets cognitive rigidity and social rigidity, thus limiting individuals’ ability to make use of the creative advantages provided by open networks and heterogeneous content. On the contrary, new ties bring a positive “shock” that pushes individuals in the network to change the way they organize and process knowledge, as well as the way they interact and collaborate – a shock that enables creators to accrue the creative advantages provided by open network structures and heterogeneous content. We test and find support for our theory in a study on the core artists who worked on the TV series Doctor Who between 1963 and 2014.
Productivity, Place, and Plants
Benjamin Schoefer & Oren Ziv
NEBR Working Paper, May 2021
Abstract:
Why do cities differ so much in productivity? Using a split-sample IV strategy, we document that up to three quarters of the large measured dispersion in productivity across US cities is spurious and reflects the "luck of the draw" of idiosyncratically heterogeneous plants. Due to this granularity bias, economies with randomly reallocated plants exhibit nearly as high a variance as the empirical economy. For new plants, four fifths of the raw dispersion reflects granularity bias, and their productivity is only imperfectly correlated with that of older plants, which dominate measured productivity levels. These US-based patterns broadly extend to European countries.
The Life Cycle of Businesses and Their Internal Organization
Elizabeth Weber Handwerker, Sara Moreira & David Piccone
AEA Papers and Proceedings, May 2021, Pages 587-592
Abstract:
We document new stylized facts on the occupational mix of businesses in the United States and how their internal organization evolves over their life cycles. Our main empirical finding is that younger businesses have fewer hierarchical layers and lower span of control than comparable older businesses do. Our results suggest that businesses become simultaneously more hierarchical and increase their managerial span of control over their life cycles. We show that this pattern is not entirely driven by selection or differences in size and is pervasive across cohorts and sectors.
The local innovation spillovers of listed firms
Adrien Matray
Journal of Financial Economics, forthcoming
Abstract:
This paper provides evidence of local innovation spillovers (i.e., innovation by one firm fostering innovation by neighboring firms). First, I document that exogenous shocks to innovation by listed firms affect innovation by private firms in the same geographical area and that such local innovation spillovers decline rapidly with distance. Second, these local innovation spillovers stem from knowledge diffusing locally through two channels: learning across local firms and inventors moving from their employer to both existing firms and newly started spin-outs. Finally, I study the two-way relations between innovation spillovers and the availability of capital. I find that local innovation spillovers cause venture capital funds from outside the area to invest more in the local area, and that capital availability amplifies local innovation spillovers.