How can biases affect entrepreneurial decision making? toward a behavioral approach to unicorns

International Entrepreneurship and Management Journal - How can cognitive biases affect the birth and evolution of entrepreneurial ventures? In Entrepreneurial Decision Making (EDM), this lively...     

PLAYING THE FERTILITY GAME AT WORK: AN EQUILIBRIUM MODEL OF PEER EFFECTS

We study workplace peer effects in fertility decisions using a game theory model of strategic interactions among coworkers that allows for multiple equilibria. Using register‐based data on fertile‐aged women working in medium‐sized establishments in Denmark, we uncover negative average peer effects. Allowing for heterogeneous effects by worker type, we find that positive effects dominate across worker types defined by age or education. Negative effects dominate within age groups and among low‐education types. Policy simulations show that these estimated effects make the distribution of where women work an important consideration, beyond simply if they work, in predicting population fertility.     

Strong comparative statics of equilibria

Some results in the monotone comparative statics literature tell us that if a parameter increases, some old equilibria are smaller than some new equilibria. We give a sufficient condition such that at a new parameter value every old equilibrium is smaller than every new equilibrium. We also adapt a standard algorithm to compute a minimal such newer parameter value and apply this algorithm to a game of network externalities. Our results are independent of a theory of equilibrium selection and are valid for games of strategic complementarities.     

The effect of corruption on bidding behavior in first-price auctions

When the owner of an object sells it through an auction run by an agent of hers, corruption may appear. In a first-price auction, corruption can make honest bidders more or less aggressive, or their behavior can remain unchanged. We identify sufficient conditions for each of the three possibilities. We analyze the effects of corruption on efficiency, bidders’ welfare and expected revenue. Our results apply as well to the situation—unrelated to corruption—where one of the bidders is granted a right of first refusal.     

Immigration,remittances and business cycles

Using data on border enforcement and macroeconomic indicators from the U.S. and Mexico, we estimate a two-country business cycle model of labor migration and remittances. The model matches the cyclical dynamics of unskilled migration, and documents the insurance role of remittances in consumption smoothing. Over the cycle, immigration increases with the expected stream of future wage gains, but it is dampened by a sunk emigration cost. Migration barriers slow the adjustment of the stock of immigrant labor, enhancing the volatility of unskilled wages and remittances. Changes in border enforcement have asymmetric welfare implications for the skilled and unskilled households.     

Nudging using the ‘dish of the day’ strategy does not work for plant‐based meals in a Danish sample of adolescent and older people

Adequate nutrition is an important factor for health and well‐being in adolescents and later years. Fruits and vegetables are part of a healthy diet as important source of nutrients, but their intakes are lower than the recommendations in European countries. This study aimed to compare the choices made by adolescents and older people between three similar dishes, one based on meat, one on fish and one on vegetables, in two different conditions: a neutral (control) situation and an intervention situation in which the vegetable‐based meal was designated ‘dish of the day’. The comparisons of choices will be made within the same age group (adolescents in the control group vs. adolescents in the intervention group; older people in the control group vs. older people in the intervention group). A quasi‐randomised field trial design was used with a sample of 94 adolescents (aged 10–19 years) and 97 older people (aged ≥65 years), who were randomly allocated to intervention or control groups. In the control situation participants were asked to choose between three similar meals, one meat, one fish and one the VeggiEat dish. In the intervention, the VeggiEat dish was labelled the ‘Dish of the day’. All dishes were provided free of charge, displayed side by side in the same order and served in same portions. The dish choices showed no differences between the control and intervention groups in both age groups, and no differences were found among the other variables analysed. This nudging strategy, ‘dish of the day’, seems not to work for the Danish sample of adolescents and older people. Future nudging studies with these populations are needed in order to find the best strategy to move adolescents' and older people's food habits toward a healthier pattern.     

Outsourcing versus integration at home or abroad and firm heterogeneity

This paper analyzes the location (at home or abroad) and the mode of organization (outsourcing versus integration) of intermediate inputs production, using data on a sample of Italian manufacturing companies and focusing on the role of firm heterogeneity. We find evidence of a productivity ordering where foreign integration is chosen by the most productive firms and domestic outsourcing is chosen by the least productive firms; firms with medium-high productivity choose domestic integration, firms with medium-low productivity choose foreign outsourcing.     

Performance measurement in R&D: exploring the interplay between measurement objectives, dimensions of performance and contextual factors

Measuring research and development (R&D) performance has become a fundamental concern for R&D managers and executives in the last decades. As a result, the issue has been extensively debated in innovation and R&D management literature. The paper contributes to this growing body of knowledge, adopting a systemic and contextual perspective to look into the problem of measuring R&D performance. In particular, it explores the interplay between measurement objectives, performance dimensions and contextual factors in the design of a performance measurement system (PMS) for R&D activities. The paper relies on a multiple case study analysis that involved 15 Italian technology-intensive firms. The results indicate that firms measure R&D performance with different purposes, i.e. motivate researchers and engineers, monitor the progress of activities, evaluate the profitability of R&D projects, favour coordination and communication and stimulate organisational learning. These objectives are pursued in clusters, and the importance firms attach to each cluster is influenced by the context (type of R&D, industry belonging, size) in which measurement takes place. Furthermore, a firm's choice to measure R&D performance along a particular perspective (i.e. financial, customer, business processes or innovation and learning) is influenced by the classes of objectives (diagnostic, motivational or interactive) that are given higher priority. The implications of these results for R&D managers and scholars are discussed in the paper.     

Priorities and targets: supporting target-setting in healthcare

Management by objectives requires selecting the appropriate number of indicators to measure objectives and then defining high-priority indicators. Failing to address these two issues often results in the so-called ‘performance paradox’. This paper describes an algorithm applied in the healthcare sector in the Italian regions. The resulting performance evaluation system is able to detect priority indicators in the target-setting phase, improving management and saving costs.     

The performance implications of resource and pay dispersion: The case of Major League Baseball

Research summary: Building on research in strategic management that has found that high levels of pay dispersion are detrimental to firm performance; we examine the potential dependence of those findings on similar dispersion in the latent potential of those resources to contribute to performance. We find that congruence between resource value dispersion and pay dispersion is positively related to organizational performance. Additionally, we find that this congruence moderates the effects of both organizational resources and organizational pay levels on organizational performance. These findings contribute to a growing line of research that explores the implications of key human resource value and pay combinations for organizational performance. Managerial summary: While differences in income between key employees (i.e., dispersed pay) can instill feelings of inequity and be detrimental to organizational performance, such differences may also increase the odds of attracting star talent and help performance. In the context of Major League Baseball (MLB), we find that performance improves when dispersions in pay are congruent with the dispersion in the contributions that team members make to their organizations. We also find that the positive effects on performance of higher total pay and of level of organizational talent are enhanced by congruent pay and contribution dispersions. These findings suggest organizations may benefit from consistent dispersions in pay and talent and that important contributions by key organizational members need to be visible when organizations have dispersed pay structures. Copyright © 2016 John Wiley & Sons, Ltd.