Ken McGuffin

CEOs who have moved away from their country of origin are more likely to make international acquisitions, with a preference for targets in their birth country, a new study by researchers at the University of Toronto shows.

Using a sample of nearly 1,300 corporate acquisitions over a 14-year period, Ron Shalev, an associate professor of accounting at U of T Scarborough who is cross-appointed to the Rotman School of Management, and his co-authors compared acquisitions, financial and other corporate data with biographical information on the companies’ CEOs at the time of the purchases.

“Foreign-born CEOs are taking an increasing leadership role in the corporate world,” says Shalev of the research. “In our sample, 24 per cent of the acquiring companies have foreign-born CEOs.”

The study, published in the Journal of Accounting Research, was co-authored by Milan-based researchers Antonio Marra of the Università Bocconi and Angela Pettinicchio of Università Cattolica del Sacro Cuore and SDA Bocconi School of Management.

After examining the data, Shalev and his colleagues found that foreign-born CEOs were 43 per cent more likely than domestic-born ones to acquire across borders – and that the phenomenon may be explained by a preference for acquiring in the countries of their birth. When considering all potential international targets that might be on the CEO’s radar, the researchers found that foreign-born CEOs were 17 times more likely to go after a buy in their country of origin versus another cross-border acquisition.

That difference was explained by the CEO having a leg up by knowing more about the country and having local connections. They are also driven by a desire to “give back” to the place where they came from, the researchers say.

The researchers also found that foreign-born CEOs were more than twice as likely to make an acquisition in a former colonizer of their birth country as they were to choose any other potential international target. “The idea is that if a CEO wants to bring pride to the birth country, she would acquire targets in the country that colonized it in the past,” says Shalev.

How are companies involved affected by CEOs tendency to acquire targets in their birth country? The acquiring company’s shareholders see a 1.3 per cent difference in excess returns on acquisitions in the CEO’s birth country, while shareholders of the target company enjoy a 2.9 per cent excess premium due to the purchase.

“This is not something that should prevent the hiring of a CEO,” Shalev says of the findings.

Instead, he says it’s simply an aspect a company’s board should be aware of and, if the CEO has a target in mind in their birth country, to take a harder look at the proposal. “In many cases these acquisitions will be good for the acquirer firm – but not always.”

Can't shake old ideas? Wash them off, suggests U of T Rotman study

Romi Levine — Mon, 12 Jun 2017 17:05:58 +0000

Can't shake old ideas? Wash them off, suggests U of T Rotman study

Romi Levine Mon, 06/12/2017 - 13:05

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A U of T study suggests you may want to set goals after cleaning your hands (photo by Petras Gagilas via Flickr)

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Cleaning your hands doesn't just get rid of germs – a U of T study suggests it also helps wipe away old goals and reorients you toward new ones.

Previously, research has shown that the physical act of cleaning reduces the impact of previous psychological experiences, such as guilt arising from immoral behaviour.

The new research by U of T's Rotman School of Management unpacks the underlying psychology behind cleansing – it includes a component of separation. Researchers say that wiping away dirt serves as a physical proxy for mentally separating ideas that linger from a previous experience – think of the term “beginning with a clean slate.”

The study was published in the Journal of Experimental Psychology.

Researchers initially focused participants on particular goals through word games or a short survey, a process called “priming.”

They then had participants evaluate the goals or use a hand wipe.

Those who were asked to use the wipe became less likely to think of the previous goals, less likely to make behavioral choices consistent with it and less likely to find it important. They were also more easily reoriented towards a subsequently primed goal.

“For people who were primed with a health goal, for example, using the hand wipe reduced their subsequent tendency to behave in a healthy manner – they were more likely to choose a chocolate bar over a granola bar,” says Ping Dong, a PhD student in marketing who conducted the research, with Spike W. S. Lee, an assistant professor of marketing. Dong will be joining the faculty at Northwestern University’s Kellogg School of Management later this year.

While it may be premature to suggest that people intent on achieving goals should significantly alter their personal hygiene routines, the findings do suggest that when it comes to finding practical tricks for redirecting one's priorities, an antiseptic wipe may come in handy.

U of T grads who co-founded booming startup Exact Media named to "Forbes 30 Under 30 List"

ullahnor — Thu, 12 Jan 2017 19:31:08 +0000

U of T grads who co-founded booming startup Exact Media named to "Forbes 30 Under 30 List"

ullahnor Thu, 01/12/2017 - 14:31

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(photo courtesy of Exact Media)

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Other U of T alums on the list: Shopify's Satish Kanwar, Massdrop's Steve El-Hage, ROSS Intelligence's Jimoh Ovbiagele, and Cover's Ben Aneesh.

The co-founders of Toronto-based startup Exact Media, which has been described as the Airbnb of marketing, have been named to the 2017 Forbes 30 Under 30 list of the young innovators and “change-makers” who are redefining industries from marketing to healthcare and education.

They are among several U of T alumni that made it to the list this year. U of T alumni were recognized in categories like consumer technology, law & policy, marketing and advertising, and retail and ecommerce.

Daniel Rodic and Elena Sahakyan are two of the four co-founders of Exact Media, a Toronto-based e-commerce sampling and coupon company. The two, who are graduates of U of T's Rotman Commerce program, were cited in the marketing and advertising category.

Exact Media buys excess space inside parcels that are being delivered to people who have made online purchases. The company then tucks samples of branded products into those spots. Brands pay Exact to find these spaces so that people purchasing towels online may receive a sample of Tide detergent or someone buying a swimsuit may get a bottle of Olay sunscreen.

The company's investors include Tony Hsieh, CEO of Zappos, and it serves clients like Coca-Cola, Procter & Gamble, Unilever, PepsiCo, L'Oréal, Pfizer and Mondelez,

In a recent profile in the Winter 2017 issue of U of T Magazine, Rodic says his career path was changed when he was accepted into The Next 36, an intensive entrepreneurship program co-founded by Ajay Agrawal, the Peter Munk Professor of Entrepreneurship at the Rotman School of Management.

“Through The Next 36, I got funding to start my first business, and that’s what pushed me toward a more entrepreneurial path,” Rodic says.

Rodic says the company grew out of discussions with an executive at Beyond the Rack, an online clothing retailer. The retailer was looking at ways of providing its customers with cosmetics samples. Together, they realized they could slip the samples into Beyond the Rack’s parcels.

With strong financial backing, Exact Media is planning to expand beyond North America within the next 18 months, possibly targeting the United Kingdom, Western Europe or Asia.

U of T team heads to Hult Prize regionals with plan for firewood alternative in refugee camps

lanthierj — Mon, 19 Dec 2016 15:59:24 +0000

U of T team heads to Hult Prize regionals with plan for firewood alternative in refugee camps

lanthierj Mon, 12/19/2016 - 10:59

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Zaatari refugee camp in Jordan (World Bank Photo Collection via Flickr)

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They won with a substitute for firewood made from recycled coffee grounds.

Teams of students with an interest in social entrepreneurship gathered at the University of Toronto’s Rotman School of Management last week to participate in the quarterfinal qualifying round for the Hult Prize.

The prize is a startup accelerator for social entrepreneurship that brings together the brightest college and university students from around the globe to solve the world’s most pressing issues.

Learn more about the Hult Prize

Anger in the sky: U of T research shows air rage a product of class difference

lavende4 — Wed, 04 May 2016 13:56:53 +0000

Anger in the sky: U of T research shows air rage a product of class difference

lavende4 Wed, 05/04/2016 - 09:56

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Does this image make you feel cranky? Forcing economy passengers to walk through first-class compartments increases air rage, says Katy DeCelles (Miguel Medina/Getty Images)

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“I expected there to be more support for a lack of leg room as a contributor to air rage”

A Korean airline executive is jailed after she throws a handful of macadamia nuts at a flight attendant.

A flight from Rome to Chicago has to dump thousands of litres of fuel and land in Belfast after a passenger starts to act belligerently.

A passenger on a flight from Dubai to Birmingham, England, is arrested after he threatens a flight attendant, makes racist remarks and punches an inflight entertainment system.

These are just some of the thousands of incidents of air rage that occur every year. Now, a University of Toronto researcher and her Harvard colleague say they have discovered one of the major causes – and it’s not what you might think.

We blame air rage on long flight delays, shrinking seats and a general decline in civility. But the first empirical research study into the phenomenon pegs another culprit – class inequality – for the reason passengers lose it when taking to the so-called friendly skies.

Katy DeCelles, an associate professor in organizational behaviour and human resource management at U of T’s Rotman School of Management, says that visible inequality between first class and economy class passengers is one of the leading causes of air rage – among both groups of travellers.

Air rage incidents are more likely when the plane has a first class cabin, says the study, co-written by Michael Norton of the Harvard Business School. The odds increase when economy passengers have to pass through first class to get to their seats, reinforcing the inequality.

Simply having a first-class compartment made an air rage incident nearly four times more likely, equivalent to the effect of a nine-hour flight delay, the study found. The bad behaviour was higher not only for economy passengers, but those in first class too.

Other factors such as crowdedness, alcohol consumption and long flights can contribute to disruptive incidents, says DeCelles, but her research found their impact was smaller than you might expect.

“I expected there to be more support for a lack of leg room as a contributor to air rage, given the attention that leg room has had – but there wasn't,” says DeCelles, who is also cross-appointed at U of T's Centre for Criminological Research.

Although the study did not delve into the reasons behind its findings, past research has identified that people tend to have poorer health, well-being and behavioural outcomes when they experience comparative deprivation or feel treated unequally or unfairly. This study contributes to the research by showing that even temporary experiences of inequality can have negative effects.

The study has made headlines here at home and around the world, in major news outlets and on social media.

See the CNN coverage

Read the Los Angeles Times article

See the Global News coverage

DeCelles used a database of thousands of documented disruptive flight incidents over several years for a large international airline. The incidents were serious enough to be considered a threat to onboard safety, such as passengers refusing to sit down, yelling obscenities at a flight attendant or interfering with smoke sensors so they could sneak a cigarette. The majority of incidents involved belligerent behaviour or intoxication.

The results have implications for any physical environment where differences in class or status are apparent – such as a tiered stadium or a workplace where lower-level employees have to pass by executive offices to get to their cubicles. Meanwhile, airlines that want to consider how to reduce negative behaviour may want to think about ways to de-emphasize differences between passenger groups, such as using a dual gating system.

“The more you can use those dual gates to board airplanes, separating the first-class cabin from the economy cabin, you're going to have less air rage in both cabins,” DeCelles says.

The study was published earlier this month in the Proceedings of the National Academy of Sciences of the United States of America.

Joseph Rotman leaves $30 million legacy gift to Rotman School of Management

sgupta — Wed, 06 Apr 2016 09:37:56 +0000

Joseph Rotman leaves $30 million legacy gift to Rotman School of Management sgupta Wed, 04/06/2016 - 05:37

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My hybrid is greener than yours: how ‛conspicuous conservation’ affects product innovation

sgupta — Mon, 04 Apr 2016 10:52:50 +0000

My hybrid is greener than yours: how ‛conspicuous conservation’ affects product innovation sgupta Mon, 04/04/2016 - 06:52

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Being seen in public as the driver of a car that's considered socially responsible, such as a Prius, can convey status, researchers say (photo by King Huang via flickr)

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Study by U of T, UC Berkeley examines importance of social comparison

Companies may have a bigger incentive to invest in developing socially responsible products – if those who buy those products feel they can stand a little taller than those who don't, new research says.

Consumers don't just listen to their own conscience when making decisions around buying environmentally friendlier cars or sweat-shop-free clothing, says the study from the University of Toronto's Rotman School of Management. They also consider how those choices will make them stack up against other people.

Previous research categorically suggests that more socially responsible products are more valuable. In contrast, this study uses a theoretical model to show that value – and the incentive to spend money on developing those products – is dynamic.

“We're trying to capture this whole issue of social comparison,” says David Soberman, a professor of marketing at the Rotman School who holds the Canadian National Chair of Strategic Marketing.

Soberman said this is especially important for products that are consumed “publicly” – for example, beverages and clothing known as badge products. He co-wrote the paper with Professor Ganesh Iyer of the University of California, Berkeley.

Among their many findings, the researchers found that companies have the greatest incentive to develop a more socially responsible product when the vast majority of potential users are already category users (true of many mature categories). Here, there is heightened interest in the category's social impact. In addition, greater media focus on the impact of palm oil production on deforestation may create an even bigger incentive to develop a palm oil-free soap.

In contrast, development incentives are lower when there is less consumer participation and less social concern attached to a category – think powerboats or single malt whiskey. However there may still be an incentive to innovate even in categories with low consumer participation, so long as the innovation offers a potential status bump for those who do buy it.

Gaining status through purchases of socially responsible products, such as hybrid cars, has been dubbed “conspicuous conservation.” Previous research has put the social status value of buying a Toyota Prius – a distinctively hybrid car – as high as US$7000 U.S., even leading to tangible social advancement in regions where green consciousness is high.

"The fruits of a firm’s labour to develop socially responsible products are going to pay off the most when you are in a market that is fully covered and when the social comparison effects are strong," says Soberman.

The paper is forthcoming in Marketing Science.

(Visit flickr to see the original of the photo used at top of article)

Ken McGuffin is a writer with the Rotman School of Management at the University of Toronto

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Engagement ring fail: what doomed diamonds tell researchers about consumers

sgupta — Thu, 18 Feb 2016 10:16:25 +0000

Engagement ring fail: what doomed diamonds tell researchers about consumers sgupta Thu, 02/18/2016 - 05:16

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Beyond colour, cut and clarity? It's not just physical characteristics that define a market, says Anne Bowers. “Social characteristics” also count. (photo by Diamond Expert via flickr)

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Study finds value drops for jewels associated with “I don't” or “unhappily ever after”

We're told diamonds are forever. But new research reveals that when relationships tank, so does the value of the rings meant to honour them.

A U of T study examining the resale of diamond engagement rings shows that a diamond's value is affected by the story people attach to it and whether it fits with their ideas about what a good ring needs to be.

Rings portrayed as products of divorce and other failed relationships are much less likely to sell – or more likely to sell at lower prices – than rings without a negative history.

Previous academic research claiming that conformity to a single, defined market category is associated with a product's success is not the whole story, according to Anne Bowers, an associate professor of strategic management at the Rotman School of Management. The assumption in these cases is that consumer expectations are fully met when an item cleanly fits into a category.

“In some sense, these findings are the exact opposite," Bowers says. “Here's a product that, technically speaking, fits exactly the criteria for an engagement ring, and yet you still have problems.”

Two parts of the study revealed similar findings. Analysis of data from 1.5 million eBay listings of diamond solitaire engagement rings over a 13-month period showed that rings with no disclosed negative history were most likely to sell, and at a higher price. Rings whose sellers disclosed a divorce or other failed relationship – marked by such comments as “not going to happen,” or “right ring, wrong guy” – were less successful.

A separate attitudinal survey showed that even though participants believed a diamond ring from a divorce was most likely to be authentic -- as compared to a ring from a happy marriage or a jewelry store – these particpants were reluctant to pay a comparable price for it.

The results mean that researchers should "think more carefully about what it is that defines whether or not you fit into a market,” Bowers says. “Social characteristics” are part of this process.

If marketers can tap into or develop different consumer expectations – such as an interest in the size or cut of the stone or simply getting the best possible price – there is potential to make inroads on the primary ring market. This is what online used-ring marketer I Do Now I Don't has been trying to do.

As for the lovelorn stuck with a ring to unload? “Actual purchases versus number of rings listed suggest that sales are rare in online markets,” Bowers says. “Anecdotally speaking, if you want money quickly, the best hope you have is to try to sell it back to the jeweller you bought it from. But be prepared to take a big loss.”

The study is published in Advances in Strategic Management.

(Visit flickr to see the original of the photo used at top)

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Empathy is key to political persuasion, new research says

sgupta — Mon, 16 Nov 2015 10:22:03 +0000

Empathy is key to political persuasion, new research says sgupta Mon, 11/16/2015 - 05:22

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Conservative Geoffrey Pollock and Liberal Chrystia Freeland fail to win each other over during a political debate (photo by Jospeh Morris via flickr)

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The key is to frame your argument in a way designed to appeal to that person's moral principles

It's not news that liberals and conservatives are lousy at winning each other over.

But if they really care about making even modest in-roads with each other, they'll pay attention to research showing that arguments based on a political opponent's moral principles, rather than one's own, have a much better chance of success.

Researchers Matthew Feinberg and Robb Willer decided to investigate the idea after watching the increasing polarization in American politics.

"We were trying to figure out ways to overcome the polarization," says Assistant Professor Feinberg, who teaches organizational behaviour at the University of Toronto's Rotman School of Management. Willer is a sociologist at Stanford University.

Read their opinion piece in The New York Times

The pair ran a series of experiments that had participants come up with arguments of their own for someone of the opposite political viewpoint. A theoretical framework of values was used to define what qualified as a liberal or conservative argument.

The results showed that both groups were extremely poor at developing arguments that would appeal to their political opposite, even when specifically asked to do so. Worse, some participants in both camps actually attacked the morality of those they'd been asked to convince.

"Most people are not very good at appealing to other people’s values," says Professor Feinberg.

Liberals asked to appeal to conservatives for support of same-sex marriage had only a nine per cent success rate in developing arguments based on conservative values of loyalty, authority or purity (such as, "our fellow citizens deserve to stand alongside us …").

Only eight per cent of conservatives came up with liberal-friendly arguments about why English should be adopted as the official language of the United States, based on principles of fairness and protection from harm (e.g. "there will be less discrimination").

Conservatives were more inclined to support universal health care when presented with what researchers called purity-based arguments, for example that more uninsured people might lead to more disease spread. Liberals showed an uptick in support for higher military spending when shown an argument based on the principle that the military and the employment opportunities it provides help to reduce inequality.

The study's findings are timely as Canadian political operatives analyze results of their recent federal election and party organizers in the U.S. consider how to build bridges with voters for that country's election in 2016.

"Instead of alienating the other side and just repeating your own sense of morality, start thinking about how your political opposition thinks and see if you can frame messages that fit with that thought process," suggests Professor Feinberg.

The paper was recently published online in Personality and Social Psychology Bulletin.

(See the original of the photo on flickr)

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Meet the U of T experts ranked among world's top management thinkers

sgupta — Tue, 10 Nov 2015 15:57:49 +0000

Meet the U of T experts ranked among world's top management thinkers sgupta Tue, 11/10/2015 - 10:57

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Don Tapscott, Roger Martin and Richard Florida are three of the world's top management thinkers according to Thinkers50

Ken McGuffin

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Rotman School of Management

The University of Toronto’s Rotman School of Management is the only Canadian school in the bi-annual Thinkers50 ranking of world’s leading management thinkers – for the second time in a row.

Three U of T faculty members with the Martin Prosperity Institute (MPI) were named to the Thinkers50 at a gala dinner in London, UK on Nov. 9, including two in the top ten. Another two MPI fellows also made their debut in the ranking,

With a total of five thinkers in the ranking, U of T accounts for 10 per cent of the total.

Professor Roger Martin, the former dean of the Rotman School and current Institution Director of its MPI, placed seventh in the ranking and was cited for his work in Strategy, Integrative Thinking and Social Entrepreneurship.

Martin was also the joint winner, with Sally Osberg, Skoll Foundation President & CEO, of the Social Enterprise Award. Their book, Getting Beyond Better: How Social Entrepreneurship Works, was published by Harvard Business Review Press, earlier this year.

Ken McGuffin

Foreign-born CEOs more likely to acquire assets across borders - particularly in their home countries: Study

Can't shake old ideas? Wash them off, suggests U of T Rotman study

U of T grads who co-founded booming startup Exact Media named to "Forbes 30 Under 30 List"

Read more about Rodic and Sahakyan

Read more about Satish Kanwar

Read more about Ovbiagele

U of T team heads to Hult Prize regionals with plan for firewood alternative in refugee camps

Read more about the Hult Prize at U of T

Learn more about the Hult Prize

Anger in the sky: U of T research shows air rage a product of class difference

See the CNN coverage

Read the Los Angeles Times article

See the Global News coverage

Joseph Rotman leaves $30 million legacy gift to Rotman School of Management

My hybrid is greener than yours: how ‛conspicuous conservation’ affects product innovation

Engagement ring fail: what doomed diamonds tell researchers about consumers

Empathy is key to political persuasion, new research says

Read their opinion piece in The New York Times

Meet the U of T experts ranked among world's top management thinkers

Read more about Martin and Getting Beyond Better