Of Boldness and Badness: Insights into Workplace Malfeasance from a Triarchic Psychopathy Model Perspective

Research has shown that individuals with high levels of psychopathic personality traits are likely to cause harm to others in the workplace. However, there is little academic literature on the potentially adaptive outcomes of corporate psychopathy, particularly because the “boldness” psychopathy domain has largely been under-acknowledged in this literature. This study aimed to elaborate on past findings by examining the associations between psychopathy, as operationalized using scales from the relatively new triarchic model of psychopathy (boldness, meanness, and disinhibition), and both adaptive and maladaptive workplace behaviors. Participants were 343 working community adults who completed a series of self-report questionnaires that measured psychopathy and various workplace behaviors, including counterproductive work behaviors (CWB), tactics of influence, unethical decision-making, leadership strategies, team play, and creativity. Structural equation modeling was used to estimate the associations between latent constructs of boldness, meanness, and disinhibition, and the eight different constructs related to workplace behaviors. It was found that boldness preferentially predicted the use of soft tactics of influence, adaptive leadership, and team play, and negatively predicted passive leadership. Meanness predicted unethical decision-making, poor team play, and hard tactics of influence. Disinhibition positively predicted CWB and passive leadership. Meanness also moderated the association between disinhibition and CWB, in that greater scores on both psychopathy domains indicated greater levels of CWB. These findings provide conceptual support for the triarchic model, including the “boldness” domain, which measures adaptive aspects of psychopathy in addition to maladaptive ones, as well as suggest that not all individuals high on psychopathy would be an overt menace to the workplace. The different psychopathy traits may also interact with each other to predict different types or levels of workplace behaviors.     

PORTFOLIO OPTIMIZATION WITH DOWNSIDE CONSTRAINTS

We consider the portfolio optimization problem for an investor whose consumption rate process and terminal wealth are subject to downside constraints. In the standard financial market model that consists of d risky assets and one riskless asset, we assume that the riskless asset earns a constant instantaneous rate of interest,   r > 0  , and that the risky assets are geometric Brownian motions. The optimal portfolio policy for a wide scale of utility functions is derived explicitly. The gradient operator and the Clark–Ocone formula in Malliavin calculus are used in the derivation of this policy. We show how Malliavin calculus approach can help us get around certain difficulties that arise in using the classical "delta hedging" approach.     

Dark personality in dark times: How Dark Triad personality interacts with injustice and politics to influence detachment and discretionary behaviours

Using two-wave time-lagged multi-source data in two studies, we examine how Dark Triad personality (DTP) interacts with contextual variables to influence psychological detachment and discretionary behaviours. In Study 1 (N = 288), we examine the combined effects of DTP and perceived injustice on psychological detachment and organizational citizenship behaviours (OCBs). In Study 2 (N = 461), we examine the combined effects of DTP and perceived organizational politics (POP) on counterproductive work behaviours (CWB) and psychological detachment. We found that Dark Triad personality was positively related to psychological detachment and CWBs and negatively related to OCBs. The effects of the DTP on psychological detachment, OCBs, and CWBs were stronger when perceived injustice and POP was high.     

Low Interest Rates and Household Portfolio Behaviour in Euro Area Countries

This paper examines whether household portfolio structures change in favour of riskier assets when interest rates fall. Using euro area financial accounts data from the financial crisis through the present day, it is shown that the current low interest rate environment has not, up to this point, induced euro area households to add further risky assets to their investment portfolios.     

How Task Structure and Outcome Comparisons Influence Women's and Men's Risk‐Taking Self‐Efficacies: A Multi‐Study Exploration

To explore inconsistent findings in the perceived self‐efficacy and entrepreneurship literatures as they relate to the type of complex, risky decisions (i.e., those that commit financial resources to generate new revenue) made by marketing managers, entrepreneurs, and corporate intrapreneurs, this paper uses a series of four theoretically driven, empirical studies to investigate gender differences in risk‐taking self‐efficacies (i.e., one's perceived abilities to make financially risky, business development decisions). The results indicate the following: (1) no gender differences in risk‐taking self‐efficacies absent a task; (2) after performing a complex, risk‐laden task, the risk‐taking self‐efficacies of subjects receiving negatively valenced outcome information and women were less than those of subjects receiving positively valenced outcome information and men; (3) this effect remains for women when experience in the task domain is high and when diagnostic information about prior outcomes is provided; (4) the reason for the effect appears to be that men and women use information about their prior decision's outcomes differently when assessing their risk‐taking self‐efficacies; and (5) the effect disappears when social cues intended to facilitate accurate performance comparisons are introduced into the task environment. These findings support existing theories, identify areas needing development, and show how these effects can limit participation in both complex, risk‐laden tasks and careers that are thought to involve performing such tasks.     

Overconfidence Mediates How Perception of past Portfolio Returns Affects Investment Behaviors

Investors’ perception of past portfolio returns predicts their investment behavior, but does this relationship mediate by overconfidence? Taking into account different aspects of overconfidence, this paper examines whether overconfidence manifested as illusion of control, miscalibration and better-than-average mediates the association between perception of past portfolio returns and investment behavior. In a survey study with individual and institutional investors from Malaysia, the results indicate that perception of higher past portfolio returns increases investors’ trading, percentage of risky share investment and the number of financial asset holding, through the mediating channel of better-than-average effect. While individual investors are influenced by this overconfidence mechanism, institutional investors are not sensitive. This finding has theoretical implication for overconfidence model, house money effect and naïve reinforcement learning. Practically, the results imply that individual investors should be careful about underlying overconfidence biases as it can lead to inefficient decisions.     

A NOTE ON THE EFFECTS OF TAXES ON OPTIMAL INVESTMENT

We integrate two approaches to portfolio management problems: that of Morton and Pliska (1995) for a portfolio with risky and riskless assets under transaction costs, and that of Cadenillas and Pliska (1999) for a portfolio with a risky asset under taxes and transaction costs. In particular, we show that the two surprising results of the latter paper, results shown for a taxable market consisting of only a single security, extend to a financial market with one risky asset and one bond: it can be optimal to realize not only losses but also gains, and sometimes the investor prefers a positive tax rate.     

A gender perspective on the use of supplemental healthcare plans

Because employer‐provided health coverage represents the main source of health insurance for Americans and its costs for employees are rising, accurate knowledge about health coverage would seem to be crucial for making sound decisions on choosing the plans that best meet the specific needs of a family. However, previous research suggests that most employees have little understanding of the scope and monetary value, or even the existence of many components of their health benefit package. This paper re‐examines employees’ general financial learning efforts and knowledge level, and how they relate to participation in and importance attached to supplemental healthcare plans. We find that, while self‐directed financial learning and general financial knowledge significantly predicted plan participation and the importance attached to them, demographic factors, such as gender, age and job classification, dominated the supplemental healthcare decisions.     

Book Reviews

In a world of limited resources, marketing managers tasked to deliver shareholder value face decisions about how to maximise the returns on their marketing portfolio. Risk is less often considered. In finance the picture is very different; financial portfolio management is concerned with both risk and returns. The central innovation in this paper is the application of modern portfolio theory (MPT) to the management of marketing portfolios in food retailing and in drinks manufacturing. The authors develop a model that calculates an efficient frontier of marketing portfolios that maximise overall return within certain risk constraints, first for a simple two-segment marketing world and then for a more realistic multi-segment portfolio. However, marketing portfolios differ from financial ones in the sense that the allocation of marketing spend affects the returns from the portfolio. Therefore, a second innovation, an extension of MPT to take account of marketing spend allocation decisions, has been developed. Using this model, marketers can determine the risk and the returns of marketing investments, helping them select an optimal portfolio. This would go some way to ensuring that marketing contributes to shareholder value creation, currently one of its major challenges.     

Why and how do founding entrepreneurs bond with their ventures? Neural correlates of entrepreneurial and parental bonding

This paper investigates why and how founding entrepreneurs bond with their ventures. We develop and test theory about the nature of bonding in a functional magnetic resonance imaging (fMRI) study of 42 subjects (21 entrepreneurs and 21 parents). We find that entrepreneurs and parents show similar signs of affective bonding, that self-confidence plays a role in bonding style, and that the degree to which entrepreneurs include their ventures in the self and to which parents include their child in the self influences their ability to make critical assessments. Our findings suggest that bonding is similar for entrepreneurs and parents and that venture stimuli influence reward systems, self-regulatory functions, and mental factors that are associated with judgment.     

The Mismeasure of Psychopathy: A Commentary on Boddy’s PM-MRV

Boddy and his colleagues have published several articles on “corporate psychopathy” using what they refer to as a Psychopathy Measure—Management Research Version (PM-MRV). They based this measure on the items that comprise the Interpersonal and Affective dimensions (Factor 1) of the Hare Psychopathy Checklist-Revised (PCL-R), a widely used copyrighted and controlled instrument. The PM-MRV not only misspecifies the construct of psychopathy, but also serves as an example of the problems associated with an attempt to form a “new” scale by adapting items from a proprietary scale. The PCL-R measures a superordinate construct underpinned by four correlated dimensions or first-order factors, not just the two in the PM-MRV. The other two dimensions are Lifestyle and Antisocial, which together form Factor 2 of the PCL-R. As defined by the PCL-R, psychopathy requires high scores on both Factor 1 and Factor 2. Lack of validity aside, even if the PM-MRV were to be a useful measure of Factor 1, it would not discriminate between psychopathy and other “dark personalities,” such as Machiavellianism and narcissism, which, along with psychopathy, form the Dark Triad. This lack of discrimination stems from the fact that each of these personalities shares features measured by Factor 1 and, by implication, by the PM-MRV. Research findings based on the PM-MRV may have some meaning with respect to dark personalities in general, but their relevance to psychopathy, as measured with the PCL-R, is tenuous at best.     

Turning dissatisfied into satisfied customers: How referral reward programs affect the referrer׳s attitude and loyalty toward the recommended service provider

Referral reward programs are becoming a popular tool for acquiring new customers and bonding existing ones. Yet their benefits are contentious, since such campaigns are prone to the opportunistic behaviour of customers who merely want to reap the reward. This paper examines how participating in a referral campaign affects opportunistic recommenders. By conducting two experimental studies, this article shows that giving counterattitudinal referrals enhances the communicator׳s attitude and loyalty toward the recommended provider. However, the positive effect depends on the reward size. While referral reward programs with small incentives strengthen the recommender׳s attitude and loyalty, no impact was found for referrals with large rewards. The results show that a stronger focus on reward programs is worth considering, since service providers can benefit from opportunistic customers with regards to the bonding effect.     

Why did the equity home bias fall during the financial panic of 2008?

Investors tend to put most of their wealth in local stocks; theories of portfolio choice and uncertainty aversion jointly predict that this home bias should increase during a financial crisis. Yet, using a sample of 45 countries, I document that the equity home bias fell during the financial panic of 2008. Exploiting bilateral stock holdings, I find that investors actively increased their home bias, but large valuation changes subsumed these trades. Across countries, the change in home bias is consistent with partial portfolio rebalancing and increased information asymmetries during the crisis.     

When in peril, retrench: Testing the portfolio channel of contagion

The impact of past gains and losses on international investors' risk aversion is an important factor in the propagation of financial shocks across countries. We first present a stylized model illustrating how changes in investors' risk aversion affect portfolio decisions and stock prices. We then examine empirically the behavior of international mutual funds. When funds' returns are below average, they reduce their exposure to countries in which they were overweight and vice versa. An index of “financial interdependence” that reflects the extent to which countries share overexposed funds helps explain the pattern of stock market comovement across countries and the pattern of contagion during crises.     

Cross-reward effects in a coalition loyalty program: The impact of a point currency devaluation

While single-brand reward programs encourage customers to remain loyal to that one brand, coalition programs encourage customers to be “promiscuous” by offering points redeemable across partner stores. Despite the benefits of this “open relationship” with customers, store managers face uncertainty as to how rewards offered by partners influence transactions at their own stores. We use a model of multi-store purchase incidence and spend to show how the value of points shared among partner stores can explain patterns in customer-level purchases across them. We also allow reward spillovers to be moderated by three measures of store affinity that characterize a coalition’s portfolio: the relative popularity, geographic distance, and overlap in product categories between each pair of stores.For the coalition studied, popularity affinity was the main determinant of the valence of cross-reward effects, both before and after the devaluation. In contrast, category and geographic affinity had a smaller and more heterogenous impact. Through the use of an event where the loyalty program uniformly devalued the entire coalition’s value of reward points, we show that cross-reward effects changed (lessened), leading to larger financial losses for the most popular stores. While we do not observe changes to the composition of the coalition’s portfolio, our results also suggest that the value of a shared reward currency may be driven by the inclusion of smaller partners.     

Financial dollarization

We present a portfolio model of financial intermediation in which currency choice is determined by hedging decisions on both sides of a bank’s balance sheet. We show that minimum variance portfolio (MVP) allocations provide a natural benchmark to estimate the scope for dollarization of assets and liabilities (financial dollarization) as a function of macroeconomic uncertainty. Within this benchmark, we find that financial dollarization displays high persistence whenever the expected volatility of the inflation rate remains high in relation to that of the real exchange rate, even after price stabilization has been achieved. The empirical evidence confirms that MVP dollarization approximates financial dollarization closely for a broad sample of countries.     

Successful Psychopaths: Are They Unethical Decision-Makers and Why?

Successful psychopaths, defined as individuals in the general population who nevertheless possess some degree of psychopathic traits, are receiving increasing amounts of empirical attention. To date, little is known about such individuals, specifically with regard to how they respond to ethical dilemmas in business contexts. This study investigated this relationship, proposing a mediated model in which the positive relationship between psychopathy and unethical decision-making is explained through the process of moral disengagement, defined as a cognitive orientation that facilitates unethical choice. The results of the study supported this model, and implications for theory and practice are discussed.     

The interactive effects of product and brand portfolio strategies on brand performance: Longitudinal evidence from the U.S. automotive industry

Product and brand portfolio extensions are effective marketing strategies to meet customer needs and to create a competitive advantage in the marketplace. Nevertheless, product and brand portfolios can get out of control easily leading to a loss of market focus and market share. This study examines how product portfolio and branding decisions affect brand performance (unit sales and market share). Prior research in marketing has investigated the effects of product portfolio and branding strategies on firm performance in isolation. However, these decisions are rarely isolated events. Usually, for multi-product and multi-brand companies, product portfolio decisions are determined in conjunction with branding decisions. Using a dynamic panel generalized method of moments estimation on a comprehensive dataset from the U.S. automotive industry between 2007 and 2013, this study examines the extent to which product and brand portfolio characteristics interact to affect brand performance. Findings reveal that while brand portfolio scope augments the positive effects of portfolio depth and innovativeness on brand performance, it attenuates the positive effects of product portfolio breadth on brand performance. Also, brand positioning in auto industry enhances brand performance only when considered jointly with product portfolio breadth, depth, and innovativeness. Finally, the present study discovers critical managerial trade-offs between product and brand portfolio decisions, as product and brand portfolio decisions are intertwined and a careful examination of the existing product and brand portfolio characteristics seem to be warranted to maximize brand performance.     

Professional financial advice,self‐control and saving behavior

This study investigates whether professional financial advice (“PFA”) can assist households in making better‐informed financial decisions and whether PFA may help households achieve better self‐control in implementing financial plans. In particular, we examine the effects of PFA and self‐control ability on saving behavior, as well as the interaction of PFA and self‐control on saving behavior. We extend the dual‐self model of impulse control and derive three hypotheses: (a) people with higher levels of self‐control save more than those with lower levels of self‐control; (b) PFA has a positive effect on saving behavior; and (c) people with lower levels of self‐control benefit more from obtaining PFA than those with higher levels of self‐control. We use a German household panel dataset SAVE, which was collected annually from 2005 to 2009. Respondents are asked whether they have discussed financial matters with financial advisors in banks, insurance companies or financial service providers. Using a number of behavioral proxies of self‐control, we create an aggregate measure of self‐control through factor analysis. We estimate a fixed‐effects model to identify the effects of PFA and self‐control on financial assets. Empirical results show that both PFA and self‐control have a significant positive relationship with financial assets. The interaction term of PFA and self‐control is a significant predictor of financial assets. We discuss conclusions for the financial advising industry and public policy aimed at consumer financial literacy.