The Water Cooler Issue

Make conversations more meaningful.

The best things are often born from a simple conversation: from business partnerships and lasting friendships to game-changing products and novel discoveries.

But the typical conversations at the water cooler—the ones that build collegial bonds and spark creative ideas—slowed during the coronavirus pandemic, as break rooms across the globe emptied and coffee meetings disappeared.

Maintaining our social relationships during the quarantine has been a significant challenge for society, as we fight to stop the spread of COVID-19. But researchers at Temple University can help.

Form stronger social connections with your colleagues and friends by having deeper conversations based on business research. Use the data-driven insights from our researchers to inform decision making and inspire new ways of thinking. Whether your office chats happen on Slack or in a break room in this post-coronavirus world, turn your small talk into something more meaningful.

How FOMO Drives Tourism

It’s 1:30 in the afternoon and you’re at your desk, working your way through the afternoon slump. Suddenly, your phone pings with an Instagram notification. There you see your best friend, lounging in a recliner on the shores of Punta Cana with a strawberry daiquiri in hand.

How FOMO Drives Tourism

It’s 1:30 in the afternoon and you’re at your desk, working your way through the afternoon slump. Suddenly, your phone pings with an Instagram notification. There you see your best friend, lounging in a recliner on the shores of Punta Cana with a strawberry daiquiri in hand.

A familiar feeling sets in: FOMO. It’s short for the fear of missing out, and it might be at its worst when we see that our friends and loved ones are on vacation.

“Travel experience is intangible, hence highly dependent on sharing to signal its social value. That’s essentially why we’re always eager to show off our travel photos and souvenirs after trips,” says Daisy Liu, who recently received her doctoral degree from the School of Sport, Tourism and Hospitality Management (STHM) at Temple University. “People have been sharing their travel experiences for ages, but the invention of social media has obviously taken this to a whole new level. What we want to understand is how the sharing of travel experiences on social media affects consumers’, especially millennial consumers’, intentions to go on a similar trip. Once that feeling of FOMO sets in, are you likely to book a trip, too?”

Together with Laurie Wu, an assistant professor in the school, as well as Robert Li, a professor and director of the U.S.-Asia Center for Tourism & Hospitality Research, Liu is exploring that question. Recently published in the Journal of Travel Research, "Social Media Envy: How Experience Sharing on Social Networking Sites Drives Millennials’ Aspirational Tourism Consumption" examines how travel envy affects millennials’ intentions to take a trip.

In the study, more than 300 millennials between the ages of 18 and 36 were shown potential travel-related social media posts from friends or colleagues. They were asked to imagine that they are busy at work, striving to meet several deadlines when they notice the post. Depending on the participant, the post was made by someone with similar or dissimilar interests, and the vacation depicted was either a luxurious or non-luxurious destination.

Past research has shown that those with low self-esteem are likely to seek acceptance through social comparisons.

“As part of the study, we also had participants take a survey designed to measure their self-esteem. Past research has shown that those with low self-esteem are likely to seek acceptance through social comparisons,” Li says. “So we wanted to know how that might also affect travel envy.”

Overall, Liu, Wu and Li found a number of key takeaways in their research, with the most significant being that participants with low self-esteem were far more likely to visit a destination if the travel experience was shared by someone they perceive to be similar to them. According to the trio, past studies indicate that the millennial generation prefers experiences over material possessions and values authenticity, creativity and uniqueness. This latest study supports that notion.

The research also very much speaks to why micro-influencer (someone with a follower base numbering between 1,000 and 100,000) marketing has become so important, but it also goes beyond that. A micro-influencer is still someone that a prospective tourist does not personally know, whereas a social media friend is someone that they have a relationship with.

The study’s effects could be felt for years to come, especially with regard to destination marketing that targets millennials. Micro-influencer marketing has been proven to be effective but the best way to reach millennials might arguably be through their peers.

“This is why it’s so key for vacation destinations and visitor bureaus to continue to promote social sharing among visitors,” Wu said. “For instance, a few years ago, the Hawaii Visitors and Convention Bureau encouraged visitors to share their stories on social media with the hashtag ‘#letHawaiiHappen.’ This generated nearly 100,000 Instagram posts in a year, and thanks to this study, we know that it likely generated several more tourist visits as well.”

Managing Risk with Reward

Is your company taking enough risks? Managing a company is a challenge. CEOs need to balance short-term profit with long-term innovation, performance with investment, and shareholders’ interests with employees’ expectations.

Managing Risk with Reward

Is your company taking enough risks?

Managing a company is a challenge. CEOs need to balance short-term profit with long-term innovation, performance with investment, and shareholders’ interests with employees’ expectations.

Some CEOs are natural risk-takers; others may be more risk-averse. Managers need to strike the right balance between “doing what works” and investing in risky innovation.

“But managers are generally more risk-averse than shareholders,” says Connie Mao, professor and Joseph E. Boettner Senior Research Fellow in the Department of Finance at the Fox School.

With their reputations, wealth and human capital at stake, managers are typically less likely to take on risky innovative projects than shareholders would like. For executives, innovation means potential failure; for investors, big risks beget big rewards. And these company shareholders have a safety net that managers don’t: diversified wealth, stemming from investments in many other stocks. Managers’ wealth, on the other hand, is mostly tied to the company.

So how can shareholders—and public policy—affect executive compensation contracts to encourage managers’ willingness to take risks and invest in innovation?

Mao explains that stock options are commonly used to align managers’ incentives with shareholders’. When the company does well, managers benefit from an increased value in their stock, just like shareholders. But when the company performs poorly, managers do not lose. Until now, no one has determined if these incentives motivate a manager’s decision to invest in innovation.

We used this regulation shock to understand the causation.

Mao and her co-author Chi Zhang of the University of Massachusetts at Lowell used a 2005 financial accounting standard, called FAS 123R, to better understand that causal effect. In a pre-FAS 123R world, companies gave out stock options like candy. After 2005, however, companies have to deduct these options from their bottom line, because the standard required companies to change stocks’ value from intrinsic to fair, or market, value in the income statement. The researchers compared a firm’s change in executive compensation and innovation output.

“We used this regulation shock to understand the causation,” says Mao.

The researchers compared companies’ innovation output—measured by the number of patents and others’ citations of those patents—with the changes in the stock options given to CEOs. Mao and Zhang analyzed 6,552 firms’ behavior between 2002 and 2008.

“We documented a significant reduction in patent quantity and quality after the adoption of FAS 123R,” says Mao. This means that “investments in risky innovation projects are dampened due to reductions in option-based compensation as a result of the accounting regulation.”

Innovation is an important economic driver; knowing how to pull that lever appropriately is key to any company and economy. “This study can help boards of directors to design an appropriate executive compensation contract to motivate a manager to invest in innovative projects,” says Mao. “You need to provide managers the right incentive to adopt innovation to move the company, move the economy and move society.”

Mao and Zhang reported their findings in "Managerial Risk-Taking Incentive and Firm Innovation: Evidence from FAS 123R" published by the Journal of Financial and Quantitative Analysis.

So next time when you’re wondering why a manager is making certain decisions about where to invest a companies’ resources, consider the incentives at play. Will a risky decision be penalized if it doesn’t produce immediate profits? Or will playing it safe keep a manager in the job? Armed with a background of accounting regulations, we can better understand otherwise puzzling choices.

From the Break Room to the Ballot Box

Whether you’re at the water cooler or in the boardroom, politics is everywhere. In today’s political landscape, trying to tune out the daily noise can’t stop the impact of presidential administrations, state policies or local elections on business.

From the Break Room to the Ballot Box

Whether you’re at the water cooler or in the boardroom, politics is everywhere. In today’s political landscape, trying to tune out the daily noise can’t stop the impact of presidential administrations, state policies or local elections on business.

Research is no different. From the way social media contributes to political polarization to how data science affects the way campaigns use information, business research can influence everything from federal statutes to presidential debates. To help illustrate this, four faculty at the Fox School share where their subject matter expertise intersects with the political world in their own words.

FAKE NEWS: CAUSE OR EFFECT?

David Schuff
Research Professor and Chair, Department of Management Information Systems

Q. What should voters be most aware of when watching the 2020 presidential campaign?

Political polarization is a big issue right now. Sometimes people get hyper-focused on how fake news leads to polarization, but I don't think you need fake news to create polarization. In particular, social media has become a machine that reinforces biases. If I only want to look at things that are Pro-Biden or Pro-Trump, I can easily put myself in that siloed environment. That has implications for politics, but it doesn’t disappear once these elections are over. You’re still feeding this sort of mechanism that puts you into one group and separates you from others.

Q: What’s causing extreme polarization?

Fake news is not the fundamental, underlying cause. Marketers, engineers, all these agents have figured out that this mechanism exists—that puts you into a group and separates you from other groups—and learned how to exploit that. The more siloed you get, the less likely you are to understand other points of view or even be exposed to them. Disinformation just naturally accelerates that process.

Q: Is this the fault of social media or is it a symptom?

Social media platforms reward things that are popular. They guess what you want to see based on what you have seen. I'll go through the Facebook feeds of my friends that are super conservative and friends that are super liberal, and they are completely different worlds. More worrying, none of the content from the other world crosses over. We know that's been happening for a while, and it may be accelerated by fake content.

ACTIVELY MAKING A DIFFERENCE IN CLIMATE CHANGE

Todd Schifeling
Assistant Professor, Department of Strategic Management

Q: Given the current focus on cleaner energy sources, why do coal plants continue to operate?

Alternative energy sources like renewables and natural gas have become cheaper and more accessible. Regulations designed to curb the negative effects of coal have also put pressure on older plants to either pay for costly updates to their systems or shut their doors. Despite this, scholars suggest that part of the explanation for why coal plants continue operating in the face of these pressures is “inertia.”

Q: Why is inertia a powerful phenomenon?

Inertia causes firms to be slower to respond to changes in its environment. The financial incentives might line up to retire a coal power plant, but managers may have other pressures to keep it open. Many stakeholders are vested in the continuing operation of the plants, such as workers, local communities that receive tax payments and employment, and states with related industries like coal mining.

All these stakeholders typically want coal plants to keep operating. There are many simultaneous forces pushing coal plants to retire, but managers often have community support to keep the plant open, and they can pass on any marginal cost increases to offset regulations onto that community.

Q: How does activism have an effect on inertia?

At this point, coal energy is not only more polluting but also often more expensive than alternatives. So then why wouldn't you retire a coal plant? In this case, activists can operate as inertia busters to encourage managers to adapt more readily to changes in their environment.

For example, the Sierra Club has spent an enormous amount of money on campaigns targeting coal plants in several ways, either by highlighting the costs of coal or the opportunities to pivot to new technology. This all drives down inertia’s effect by making the stakeholders confront some of the negative externalities and encouraging managers to finally adapt to the changes.

THE STATISTICS OF ELECTIONEERING

Edoardo Airoldi
Millard E. Gladfelter Professor of Statistics and Data Science
Director of the Data Science Institute

Q: How do presidential elections in the U.S. make use of data and network analysis?

Campaigns want to know who is more likely to donate or more likely to volunteer, so that they can invest their time into targeting those individuals. A lot of campaigns use third-party apps on major social media sites to gather user information, like their names, demographic data and friends lists. This lets campaigns analyze these networks of actors that are so central to election outcomes.

For example, the 2012 Obama campaign used a Facebook app that could not only view a user’s information when they signed up, but also see limited data about that user’s friends. That’s what makes network analysis so important. The Obama campaign created a model to decide which of the app users’ friends might themselves be Obama supporters and expand their supporter base.

Q. Has data collection and analysis changed since 2012?

Since 2016, Facebook has given users more control over their data and how it is collected by third-party apps. Research suggests that most users are unsophisticated and do not take advantage of this, but it has still changed the amount of access that third-party developers have.

In contrast, the models have become more accurate. And once a user’s information is out in the world, it can’t be undone. Companies have gotten better at linking users across databases and tracking them over time. This information is less uniformly good, but overall, the ability for analysts to predict user behavior is still pretty impressive.

Q. How else could all of this data analysis cause problems?

Data collection is not always the problem. What everyone should watch out for is the computer algorithm that’s processing that data. We live in a world of algorithms that affect our everyday lives. For example, the Google Maps algorithm suggests specific routes based on data it has collected, but a local might still know shortcuts that Google does not.

However, there are concerns about the fairness of algorithms. Judges have begun to use algorithms to help recommend sentences to convicted criminals based on their calculated level of recidivism. If your algorithm is biased against a certain population, it may produce different results for one group over another. People are worried about AI taking over the world, but really algorithms are taking over the world.

CHANGING COMPANY CULTURE IN #METOO

Leora Eisenstadt
Associate Professor, Department of Legal Studies

As a business law expert, Leora Eisenstadt has examined topics such as employment protection for retaliation against whistleblowers, how to craft more inclusive Title VII provisions to keep up with changing social identities, and the ever eroding work-nonwork divide. More recently, Eisenstadt has explored the changes made by companies to their HR policies and workplace culture in the #MeToo era.

Listen to her expert opinion on the Fox School’s Instagram TV.

Bias and Betting: Why You Can’t Always Count on Your Favorite Team

For many loyal sports fans, the idea of favoring the opposing team is unheard of. But what if someone told you that your devotion actually hurts your odds of winning a bet?

Bias and Betting: Why You Can’t Always Count on Your Favorite Team

“Your fan identity makes you a worse gambler,” says Thilo Kunkel, associate professor at the Fox School of Business and School of Sport, Tourism and Hospitality Management (STHM). “The more you identify with your favorite team, the worse gambler you are if you bet on that team.”

Kunkel claims that favoritism impairs the accuracy of sports bets. For superfans everywhere, this may come as a surprise. However, through his research that involved data from a smartphone gambling application, over 500 soccer fans and nearly 54,000 sport-related predictions, Kunkel found that the biggest fans will overestimate the odds of their favorite team winning.

So, how can you compensate for your identity biases in order to win big?

Blinded by Bias

Across the globe, “the big game” can take on many forms for sports fans. However, thanks to a movement of legalizing sports betting in the U.S., you can easily select a team you expect to win and put money on it.

Individuals with very high levels of team identification were less accurate than the more casual fan.

Most superfans will bet on their favorite team—call it superstition, juju or enduring loyalty. But this unwavering decision impairs your judgment, says Kunkel, because you underestimate the opposing team.

The study found that over 73% of app users predicted that their favorite team would win, but those teams only won 39% of the time. Kunkel concluded that individuals with very high levels of team identification were less accurate than the more casual fan. “Highly identified fans may believe that they are more likely to make accurate predictions based on their emotional bond with their team and experience of being loyal fans, instead of analyzing sport context knowledge thoroughly,” says Kunkel.

Together with Yiran Su, PhD ’19, and former student Sangwon Na, Kunkel published the study, called "Do Not Bet on Your Favorite Football Team,” in the European Sports Management Quarterly. The researchers anticipate that the findings will bolster fans’ ability to predict correctly—and help app developers improve the business of sports betting.

Gamified Betting

As part of Kunkel’s research, he explores his interest in gamification with fantasy sport app developers. From his findings, he shares feedback to help monetize the apps. By adding features that enhance the user experience and help users improve their betting accuracy, Kunkel says developers could drive users to purchase a paid version of the app. For example, he suggests a virtual betting coach, who will guide users to place smarter bets. This type of gamification, he says, will help companies monetize the betting experience.

How to Bet Smarter

Kunkel recommends these three tips for smarter betting: acknowledge the bias, consider that you may be overestimating your favorite team and do more research. Through his research, Kunkel found that superfans put too much faith in their teams and think, “‘I know everything about the sport, I don’t need to do background reading,’” which clouds fans’ judgment.

Kunkel even admits to favoring his teams from time to time. “I will still bet on my favorite team, but I will make sure I consider the other factors associated with it.” One reliable factor he always considers is the home-team advantage concept. When your favorite team plays at their home court, they are able to maintain their routine. “However, if they travel, there may be factors such as a different time zone, sleeping in a hotel or general lack of sleep that gives the away team the disadvantage.”

While sports betting has yet to be legalized in all 50 states, Kunkel is optimistic about the widespread impact of his research. His study not only affects individuals placing smarter bets, but extends to improving gamified applications, and even sporting teams forming partnerships with fantasy applications. “We will see the betting industry becoming bigger and bigger within the U.S. And it’s not just the betting aspect, but also the gamified ways of engaging fans beyond the actual game-day experience.”

Get the Issue

For more stories of research impact, sign up to receive On the Verge, a free research publication from the Fox School, coming September 2020.

Sign Up for Free

The Fox School of Business was founded in 1918—and we have been rising and redefining since day one. For over a century, we have prepared generations of pioneering researchers, daring entrepreneurs, tough executives, creative professionals and thought leaders to make big impacts on the real world. At the Fox School, we transform the way we do business by being On the Verge of leading research.

For more stories of research impact, sign up to receive On the Verge, a free research publication from the Fox School, coming September 2020.