This is a picture of ESMT books and working papers

Publications

ESMT Berlin publishes in international academic journals, which are first-class in their respective fields. Research also provides cutting-edge and profound insights for the business community as well as the classroom through managerial publications and case studies. This rare integration of research and practice makes ESMT Berlin an outstanding location for generating relevant and ground-breaking knowledge.

Forthcoming

Evaluating novelty: The role of panels in the selection of R&D projects

Academy of Management Journal
Paola Criscuolo, Linus Dahlander, Thorsten Grohsjean, Ammon J. Salter
Abstract:
Subject(s): 
Technology, R&D management

Building on a unique, multi-source, and multi-method study of R&D projects in a leading professional service firm, we develop the argument that organizations are more likely to fund projects with intermediate levels of novelty. That is, some project novelty increases the share of requested funds received, but too much novelty is difficult to appreciate and is selected against. While prior research has considered the characteristics of the individuals generating project ideas, we shift the focus to panel selectors and explore how they shape the evaluation of novelty. We theorize that a high panel workload reduces panel preference for novelty in selection, whereas a diversity of panel expertise and a shared location between panel and applicant increase preference for novelty. We explore the implications of these findings for theories of innovation search, organizational selection, and managerial practice.

With permission of the Academy of Management


Forthcoming

Adverse incentives in crowdfunding

Management Science
Abstract:
Subject(s): 
Finance, accounting and corporate governance
Keyword(s): Financial disintermediation, crowdfunding, consumer lending
JEL Code(s): G01, G20, G21, G23

This paper analyzes the substantially growing markets for crowdfunding, in which retail investors lend to borrowers without financial intermediaries. Critics suggest these markets allow sophisticated investors to take advantage of unsophisticated investors. The growth and viability of these markets critically depends on the underlying incentives. We provide evidence of perverse incentives in crowdfunding that are not fully recognized by the market. In particular we look at group leader bids in the presence of origination fees and find that these bids are (wrongly) perceived as a signal of good loan quality, resulting in lower interest rates. Yet these loans actually have higher default rates. These adverse incentives are overcome only with sufficient skin in the game and when there are no origination fees. The results from the analysis in this paper provide more general implications for crowdfunding, its structure and regulation.

© 2015 INFORMS


Forthcoming

Team adaptiveness in dynamic contexts: Contextualizing the roles of interaction patterns and in-process planning

Group and Organization Management
Zhike Lei, Mary Waller, Jan U. Hagen, Seth Kaplan

Forthcoming

Inferior products and profitable deception

Review of Economic Studies
Paul Heidhues, Botond Kőszegi, Takeshi Murooka
Abstract:
Subject(s): 
Economics, politics and business environment
JEL Code(s): D14, D18, D21

We analyze conditions facilitating profitable deception in a simple model of a competitive retail market. Firms selling homogenous products set anticipated prices that consumers understand and additional prices that naive consumers ignore unless revealed to them by a firm, where we assume that there is a binding floor on the anticipated prices. Our main results establish that “bad" products (those with lower social surplus than an alternative) tend to be more reliably profitable than “good" products. Specifically, (1) in a market with a single socially valuable product and sufficiently many firms, a deceptive equilibrium - in which firms hide additional prices - does not exist and firms make zero profits. But perversely, (2) if the product is socially wasteful, then a profitable deceptive equilibrium always exists. Furthermore, (3) in a market with multiple products, since a superior product both diverts sophisticated consumers and renders an inferior product socially wasteful in comparison, it guarantees that firms can profitably sell the inferior product by deceiving consumers. We apply our framework to the mutual-fund and credit-card markets, arguing that it explains a number of empirical findings regarding these industries.


Forthcoming

Joint procurement and demand-side bidding strategies under price volatility

Annals of Operations Research
Xiaofeng Nie, Tamer Boyaci, Saibal Ray, Mehmet Gumus, Dan Zhang
Abstract:
Subject(s): 
Product and operations management
Keyword(s): Supply chain management, procurement, bidding, supply risk, price volatility, price-dependent base-stock policy

We consider a firm buying a commodity from a spot market as raw material and selling a final product by submitting bids. Bidding opportunities (i.e., demand arrivals) are random, and the likelihood of winning bids (i.e., selling the product) depends on the bid price. The price of the commodity raw material is also stochastic. The objective of the firm is to jointly decide on the procurement and bidding strategies to maximize its expected total discounted profit in the face of this demand and supply randomness. We model the commodity prices in the spot market as a Markov chain and the bidding opportunities as a Poisson process. Subsequently, we formulate the decision-making problem of the firm as an infinite-horizon stochastic dynamic program and analytically characterize its structural properties. We prove that the optimal procurement strategy follows a price-dependent base-stock policy and the optimal bidding price is decreasing with respect to the inventory level. We also formulate and analyze three intuitively appealing heuristic strategies, which either do not allow for carrying inventory or adopt simpler bidding policies (e.g., a constant bid price or myopically set bid prices). Using historical daily prices of several commodities, we then calibrate our models and conduct an extensive numerical study to compare the performances of the different strategies. Our study reveals the importance of adopting the optimal integrative procurement and bidding strategy, which is particularly rewarding when the raw material prices are more volatile and/or when there is significant competition on the demand side (the probability of winning is much smaller when submitting the same bid price). We establish that the relative performances of the three heuristic strategies depend critically on the holding cost of raw material inventory and the competitive environment, and identify conditions under which the shortfalls in profits from adopting such strategies are relatively less significant.

© Springer Science+Business Media New York 2015. With permission of Springer


Forthcoming

When do customers get what they expect? Understanding the ambivalent effects of customers' service expectations on satisfaction

Journal of Service Research
Johannes Habel, Sascha Alavi, Christian Schmitz, Janina-Vanessa Schneider, Jan Wieseke
Abstract:
Subject(s): 
Marketing
Keyword(s): Service expectations, customer satisfaction, information processing, ability to evaluate, motivation to evaluate
JEL Code(s): M310

Extant research established that customers’ expectations play an ambivalent role in the satisfaction formation process: while higher expectations are more difficult to meet and thus cause dissatisfaction, they simultaneously increase satisfaction via customers’ perceived performance owing to a placebo effect. However, to date, knowledge is scarce on the question under which conditions either the positive or negative effect of expectations on satisfaction prevails. Building on information processing theory, the authors hypothesize that an essential contingency of the indirect, placebo-based effect is the degree to which customers are able and motivated to process a service experience. Three studies with a total of over 4,000 customers in different service contexts provide strong evidence for this hypothesis. Thus, managers are well advised to provide a realistic or even understated prospect if the service context favors customers’ ability or motivation to evaluate. Conversely, if customers are neither able nor motivated to evaluate the service, increasing customer expectations represents a viable strategy to enhance satisfaction. Relatedly, if customers hold low service expectations, managers should foster customers’ ability and motivation to evaluate the service. In contrast, if service expectations are high, managers may benefit from reducing the likelihood that customers overly focus on the service performance.


New

Where do you begin with your (big) data initiative?

The European Business Review May/June: 19–25

New

Managing customer satisfaction better

The European Business Review May/June: 52–54

New

Team diversity and categorization salience: Capturing diversity-blind, intergroup biased, and multicultural perceptions

Organizational Research Methods 19(3): 433–474
Margarita Mayo, Daan van Knippenberg, Laura Guillén, Shainaz Firfiray (2016)
Abstract:
Subject(s): 
Human resources management/organizational behavior
Keyword(s): Multivariate analysis, computational modeling, team diversity, categorization salience, leadership

It is increasingly recognized that team diversity with respect to various social categories (e.g., gender, race) does not automatically result in the cognitive activation of these categories (i.e., categorization salience), and that factors influencing this relationship are important for the effects of diversity. Thus, it is a methodological problem that no measurement technique is available to measure categorization salience in a way that efficiently applies to multiple dimensions of diversity in multiple combinations. Based on insights from artificial intelligence research, we propose a technique to capture the salience of different social categorizations in teams that does not prime the salience of these categories. We illustrate the importance of such measurement by showing how it may be used to distinguish among diversity-blind responses (low categorization salience), multicultural responses (positive responses to categorization salience), and intergroup biased responses (negative responses to categorization salience) in a study of gender and race diversity and the gender by race faultline in 38 manufacturing teams comprising 239 members.

Volume19Issue3Pages433–474

New

CSR and the frontline context: How social programs improve customer service

GfK Marketing Intelligence Review 8(1): 24–29
Daniel Korschun, CB Bhattacharya, Scott D. Swain (2016)

Pages