This is a picture of ESMT books and working papers


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.

Journal Article

IT-Sicherheitsrecht – Schutz kritischer Infrastrukturen und staatlicher IT-Systeme [IT security law – Protection of critical infrastructure and government ICT systems]

Computer und Recht 33 (10): 648–656
Subject(s): Economics, politics and business environment, Information technology and systems, Technology, R&D management
Keyword(s): IT security, cybersecurity, security law, network and information security, EU law, critical infrastructure protection, government ICT systems
Volume 33
Issue 10
Pages 648–656
ISSN 2194-4172 (Online)

Journal Article

Joint procurement and demand-side bidding strategies under price volatility

Annals of Operations Research 257 (1–2): 121–165
Xiaofeng Nie, Tamer Boyaci, Mehmet Gumus, Saibal Ray, Dan Zhang (2017)
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

Volume 257
Issue 1–2
Pages 121–165

Journal Article

The declining interest in an academic career

PLoS ONE 12 (9)
Michael Roach, Henry Sauermann (2017)
Subject(s): Human resources management/organizational behavior, Strategy and general management, Technology, R&D management
Keyword(s): Preferences, graduate education, science careers, STEM labor markets, science policy
JEL Code(s): O32, J22, J44

There is increasing evidence that science & engineering PhD students lose interest in an academic career over the course of graduate training. It is not clear, however, whether this decline reflects students being discouraged from pursuing an academic career by the challenges of obtaining a faculty job or whether it reflects more fundamental changes in students’ career goals for reasons other than the academic labor market. We examine this question using a longitudinal survey that follows a cohort of PhD students from 39 U.S. research universities over the course of graduate training to document changes in career preferences and to explore potential drivers of such changes. We report two main results. First, although the vast majority of students start the PhD interested in an academic research career, over time 55% of all students remain interested while 25% lose interest entirely. In addition, 15% of all students were never interested in an academic career during their PhD program, while 5% become more interested. Thus, the declining interest in an academic career is not a general phenomenon across all PhD students, but rather reflects a divergence between those students who remain highly interested in an academic career and other students who are no longer interested in one. Second, we show that the decline we observe is not driven by expectations of academic job availability, nor by related factors such as postdoctoral requirements or the availability of research funding. Instead, the decline appears partly due to the misalignment between students’ changing preferences for specific job attributes on the one hand, and the nature of the academic research career itself on the other. Changes in students’ perceptions of their own research ability also play a role, while publications do not. We discuss implications for scientific labor markets, PhD career development programs, and science policy.

Volume 12
Issue 9
ISSN 1932-6203 (Online)

Journal Article

Exerting pressure or leveraging power? The extended chain of corporate social responsibility enforcement in business-to-business supply chains

Journal of Public Policy and Marketing 36 (2): 331–347
Urs Müller, Johannes Habel, Marcel Stierl (2017)
Subject(s): Economics, politics and business environment, Ethics and social responsibility, Marketing, Strategy and general management
Keyword(s): Corporate social responsibility (CSR); CSR regulation; customer–supplier relationship; power; stakeholder pressure
Volume 36
Issue 2
Pages 331–347
ISSN 0743–9156 (Print)

Journal Article

From products to solutions: Mastering sales force incentives

European Business Review 2017 (September–October): 33–35
Subject(s): Human resources management/organizational behavior, Marketing, Strategy and general management
Keyword(s): Solutions, servitization, incentivization, variable compensation
JEL Code(s): M310
Volume 2017
Issue September–October
Pages 33–35

Journal Article

Sustainability managers could lead the fourth industrial revolution

Stanford Social Innovation Review
Joanna Radeke (2017)
Subject(s): Ethics and social responsibility
Keyword(s): Big data, corporate social responsibility, employment, environmental sustainability, ethics, partnerships, socially responsible business, supply chains, sustainability
JEL Code(s): M000

Journal Article

Infuriating impasses: Angry expressions increase exiting behavior in negotiations

Social Psychological and Personality Science 8 (6): 706–714
Jeremy A. Yip, Martin Schweinsberg (2017)
Subject(s): Human resources management/organizational behavior
Keyword(s): Negotiations, emotion, conflict, selfishness, timing, communication, social norms, impasses, anger
Volume 8
Issue 6
Pages 706–714

Journal Article

Contracts as a barrier to entry in markets with non-pivotal buyers

American Economic Review 107 (7): 2041–2071
Özlem Bedre-Defolie, Gary Biglaiser (2017)
Subject(s): Economics, politics and business environment
Keyword(s): Long-term contracts, breakup fees, foreclosure
JEL Code(s): D11, D21, D43, D86, L13, L51

Considering markets with nonpivotal buyers, we analyze the anticompetitive effects of breakup fees used by an incumbent facing a more efficient entrant in the future. Buyers differ in their intrinsic switching costs. Breakup fees are profitably used to foreclose entry, regardless of the entrant's efficiency advantage or level of switching costs. Banning breakup fees is beneficial to consumers. The ban enhances the total welfare unless the entrant's efficiency is close to the incumbent's. Inefficient foreclosure arises not because of rent shifting from the entrant, but because the incumbent uses a long-term contract to manipulate consumers' expected surplus from not signing it.

Copyright ©2017 by the American Economic Association.

Volume 107
Issue 7
Pages 2041–2071

Journal Article

What do a million observations have to say about loan defaults? Opening the black box of relationships

Journal of Financial Intermediation 31 (July): 1–15
Manju Puri, Jörg Rocholl, Sascha Steffen (2017)
Subject(s): Finance, accounting and corporate governance
Keyword(s): Bank lending, relationship specific information, discretion, loan defaults, monitoring, screening
JEL Code(s): G20, G21

Using a unique dataset of more than 1 million loans made by 296 German banks, we evaluate the impact of many aspects of customer–bank relationships on loan default rates. Our research suggests a practical solution to reducing loan defaults for new customers: Have the customer open a simple transactions account – savings or checking account. Observe for some time and then decide whether to make a loan. Loans made under this model have lower default, as banks can use historical data about their borrowers to establish a baseline against which new client-related information can be evaluated. Banks assemble this historical information through relationships of different forms. We define relationships in many different ways to capture non-credit relationships, transaction accounts, as well as the depth and intensity of relationships, and find each of these can provide information that helps reduce default – even establishing a simple savings or checking account and observing the activity prior to loan granting can help reduce loan defaults. Our results show that banks with relationship-specific information act differently compared with banks that do not have this information both in screening and subsequent monitoring borrowers which helps reduce loan defaults.

With permission of Elsevier

Volume 31
Issue July
Pages 1–15

Journal Article

Fehlermanagement – warum Schuldzuweisungen nicht helfen [Error management – why finger-pointing does not help]

UnternehmerBrief Bauwirtschaft 40 (5): 3–8
Jan U. Hagen (2017)
Subject(s): Human resources management/organizational behavior
Volume 40
Issue 5
Pages 3–8

Journal Article

Naivete-based discrimination

The Quarterly Journal of Economics 132 (2): 1019–1054
Paul Heidhues, Botond Kőszegi (2017)
Subject(s): Economics, politics and business environment
Keyword(s): Sophistication, naivete, first-degree, price, discrimination, third-degree price discrimination, big data, privacy
JEL Code(s): D21, D49, D69, L19

We initiate the study of naivete-based discrimination, the practice of conditioning offers on external information about consumers’ naivete. Knowing that a consumer is naive increases a monopolistic or competitive firm's willingness to generate inefficiency to exploit the consumer's mistakes, so naivete-based discrimination is not Pareto-improving, can be Pareto-damaging, and often lowers total welfare when classical preference-based discrimination does not. Moreover, the effect on total welfare depends on a hitherto unemphasized market feature: the extent to which the exploitation of naive consumers distorts trade with different types of consumers. If the distortion is homogenous across naive and sophisticated consumers, then under an arguably weak and empirically testable condition, naivete-based discrimination lowers total welfare. In contrast, if the distortion arises only for trades with sophisticated consumers, then perfect naivete-based discrimination maximizes social welfare, although imperfect discrimination often lowers welfare. And if the distortion arises only for trades with naive consumers, then naivete-based discrimination has no effect on welfare. We identify applications for each of these cases. In our primary example, a credit market with present-biased borrowers, firms lend more than socially optimal to increase the amount of interest naive borrowers unexpectedly pay, creating a homogenous distortion. The condition for naivete-based discrimination to lower welfare is then weaker than prudence.

This is an open access article.

Volume 132
Issue 2
Pages 1019–1054

Journal Article

Risky recombinations: Institutional gatekeeping in the innovation process

Organization Science 28 (1): 133–151
John-Paul Ferguson, Gianluca Carnabuci (2017)
Subject(s): Human resources management/organizational behavior, Technology, R&D management
Keyword(s): Innovation, knowledge recombination, recombinant breadth, differential selection, patent, patent approval, patent impact, institutional gatekeeping
JEL Code(s): O310, O330

Theories of innovation and technical change posit that inventions that combine knowledge across technology domains have greater impact than inventions drawn from a single domain. The evidence for this claim comes mostly from research on patented inventions and ignores failed patent applications. We draw on insights from research into institutional gatekeeping to theorize that, to be granted, patent applications that span technological domains must have higher quality than otherwise comparable, narrower applications. Using data on failed and successful patent applications, we estimate an integrated, two-stage model that accounts for this differential selection. We find that more domain-spanning patent applications are less likely to be approved, and that controlling for this differential selection reduces the estimated effect of knowledge recombination on innovative impact by about one-third. By conceptualizing the patent-approval process as a form of institutional gatekeeping, this paper highlights the institutional underpinnings of and constraints on the innovation process.

© 2017, INFORMS

Volume 28
Issue 1
Pages 133–151

Journal Article

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

Academy of Management Journal 60 (2): 433–460
2016 TIE / VHB 2016 Jürgen Hauschildt Award best research publication in innovation management, 2016 EBS Best-Paper-Award “Innovation Management” 2016
Paola Criscuolo, Linus Dahlander, Thorsten Grohsjean, Ammon J. Salter (2017)
Subject(s): Technology, R&D management
Keyword(s): innovation search, novelty, professional services firms, R&D project selection, selection panels

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

Volume 60
Issue 2
Pages 433–460

Journal Article

Replication data collection highlights value in diversity of replication attempts

Scientific Data 4 (170028)
Kurt Andrew DeSoto, Martin Schweinsberg (2017)
Subject(s): Human resources management/organizational behavior
Keyword(s): Crowdsourcing science, replication, reproducibility

Researchers agree that replicability and reproducibility are key aspects of science. A collection of Data Descriptors published in Scientific Data presents data obtained in the process of attempting to replicate previously published research. These new replication data describe published and unpublished projects. The different papers in this collection highlight the many ways that scientific replications can be conducted, and they reveal the benefits and challenges of crucial replication research. The organizers of this collection encourage scientists to reuse the data contained in the collection for their own work, and also believe that these replication examples can serve as educational resources for students, early-career researchers, and experienced scientists alike who are interested in learning more about the process of replication.

This work is licensed under a Creative Commons Attribution 4.0 International License CC-BY.

Volume 4
Issue 170028
ISSN 2052-4463 (Online)

Journal Article

Adverse incentives in crowdfunding

Management Science 63 (3): 587–608
Thomas Hildebrand, Manju Puri, Jörg Rocholl (2017)
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.

© 2016 INFORMS

Volume 63
Issue 3
Pages 587–608