Are Outside CEOs Detrimental to Innovation?

by Olivier Chatain, SMJ Associate Editor The slow down in investment in innovation in large corporation is obviously concerning but it is also puzzling. In a recent SMJ paper, Trey Cummings and Anne Marie Knott argue that some of that decline may be the unintended consequence of corporations relying on outside CEOs. According to the authors, the emphasis on general managerial skills these outside CEO  bring to the organization has a side effect of reducing the CEO’s detailed understanding of the link between long term R&D efforts and the long term performance of the firm. Why would outside CEOs entail … Continue reading Are Outside CEOs Detrimental to Innovation?

How Do Investors React to Covert Political Activity of Corporations?

by Aija Leiponen   Corporate political activity in the United States has been a growing and increasingly controversial phenomenon following the Supreme Court’s decision in the Citizen’s United case (2010). In Citizen’s United, the Supreme Court stated that because of freedom of speech considerations, the government cannot restrict political expenditures of corporations. Corporations may have many reasons to contribute and influence political processes, for example, in regulated industries such as energy utilities to weaken the constraints on their business. Nevertheless, managerial implications of covert political investments are not well understood. In particular, do investors support such activism? A new study … Continue reading How Do Investors React to Covert Political Activity of Corporations?

Research Chatter 2: (How) Do Managers Add Value?

by Aija Leiponen   In this episode we discuss recent research on the economics of management. How do managers add value to companies… and to economies? Given their value, why are good management practices so slow to spread? Research cited in the discussion: 1) “New Empirical Economics of Management” Bloom, Lemos, Sadun, Scur, and Van Reenen. Centre for Economic Performance working paper, April 2014 Click to access op041.pdf 2) “Does Management Matter: Evidence from India” Bloom, Eifert, Mahajan, McKenzie, Roberts NBER working paper January 2011. 3) “Measuring what matters for management practices” Bennett and Snyder SSRN working paper, September 2013. … Continue reading Research Chatter 2: (How) Do Managers Add Value?