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It’s widely believed that the most successful entrepreneurs are young. Bill Gates, Steve Jobs, and Mark Zuckerberg were in their early twenties when they launched what would become world-changing companies. Do these famous cases reflect a generalizable pattern? VC and media accounts seem to suggest so. When we analyzed founders who have won TechCrunch awards over the last decade, the average age at the time of founding was just 31. For the people selected by Inc. magazine as the founders of the fastest-growing startups [...]
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Online reviews can play a big role in influencing people’s purchase decisions, but what makes a review most persuasive one way or the other? Certainly bad reviews can dissuade customers, but it turns out that some good reviews can too. Our research on persuasion and marketing is the first to find that a moderately positive review can be more persuasive than an extremely positive review. In research to be published by the Journal of Consumer Research in October 2018, we found that a moderately positive review is even more persuasive when the default rev [...]
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When an employee at your company asks for a raise, is that person treated fairly? Most organizations would like to say yes. But new data from PayScale, a compensation software and data company (disclosure: I work there), reveals that too often this is not the case. We surveyed more than 160,000 workers between November 2017 and April 2018 as part of our PayScale Raise Anatomy study, which resulted in two major findings. First, companies generally do a poor job of communicating why people don’t get raises. Second, there are significant racial gaps in whose rais [...]
It’s a concrete fact that women earn less than men do. The true gender pay-gap is not known with certainty, but, when comparing equally qualified people doing the same job, most estimates by labor economists put it at 10% – 20%. The crucial question remains its cause. One common explanation is that women are less likely to negotiate their salaries. We’ve seen this in both bestselling business memoirs like Sheryl Sandberg’s Lean In and in previous studies like the research-based Women Don’t Ask.
Gaining access to [...]
The myth that 75% of all mergers fail has long been dispelled. It was based on a statistic related to announcement day effect that failed to capture the reality of corporate value creation. M&A does boost companies’ growth and value, our new research shows, but the bet-the-company deal isn’t the route to success. Indeed, infrequent large deals do tend to hurt value creation. Instead, it is a steady stream of transactions — known as programmatic M&A — that delivers the real wins. But these transactions need to reach particular thresholds [...]
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It is no secret that many employees face work environments that are not very engaging. A 2016 poll by the Gallup Organization shows that only 13% of employees worldwide are engaged at work. And when it comes to enhancing employees’ engagement (i.e., energy, enthusiasm, and focus), much of the popular narrative has focused on organizational factors such as job design, leadership, or culture. But these factors are often outside of an employee’s control. As a result, beyond trying to find the right fit professionally, the overall picture seems to suggest that e [...]
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Conventional wisdom suggests that negotiators need alternatives to succeed. Alternatives give negotiators the confidence to negotiate offers more ambitiously, to push for more optimal outcomes, and to walk away from the table when needed. But negotiators often have no alternative at all. For example, a recent survey by GMAC suggests that the average MBA graduate only has a single job offer to choose from, suggesting that many MBAs have to negotiate their job offer without an alternative to fall back on.
So what can you do if you lack an alternative? How can you w [...]
“If you went to bed last night as an industrial company, you’re going to wake up this morning as a software and analytics company.” Jeff Immelt, former CEO of General Electric
The second wave of digitization is set to disrupt all spheres of economic life. As venture capital investor Marc Andreesen pointed out, “software is eating the world.” Yet, despite the unprecedented scope and momentum of digitization, many decision makers remain unsure how to cope, and turn to scholars for guidance on how to approach disruption.
The first thing they [...]
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Leaders today hear a lot about the importance of having good networks. For example, firms with better-connected CEOs can obtain cheaper financing, and firms with well-connected board directors see better performance. We wanted to explore whether the diversity of CEOs’ networks might affect their firms.
Our study, published in the Journal of Corporate Finance, found that CEOs with strong connections to people of different demographic backgrounds and skill sets create higher firm value. We also found that this greater firm value comes from better corporate inno [...]
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There is a paradox when it comes to what we expect in leaders. On the one hand, we believe that effective leaders display humility — they bring out the best in others, are open to admitting their shortcomings and mistakes, and give appreciation and credit to their followers. Recent public scandals demonstrate what lack of humility can do in a public setting. Take United Airlines CEO Oscar Munoz, whose initial response to the violent removal of a fare-paying passenger from one of the company’s planes led to a public backlash. Or the notorious [...]
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The relentless rise of online retailers has led to deep soul searching among brick-and-mortar retailers to find ways to compete. The traditional methods of competing through convenience, assortment, and pricing are largely ineffective against online retailers who outperform brick-and-mortar retailers in these dimensions. The last arrow in the quiver is to use service as a way to distinguish themselves from online retailers. Yet, research suggests that retailers tend to view store associates as an expense to be controlled rather than as a medium to provide bett [...]
The Miriam and Ira D. Wallach Division of Art/The New York Public Library
The Industrial Revolution, which brought together large-scale coal-based industries like mining, steel, pottery, and textiles, helped create the foundation of modern society and wealth. At the same time, the early industrial economies that formed in this era were also associated with brutal working and living conditions. Our research, recently accepted by the Journal of Personality and Social Psychology, shows that areas where coal was king may still be feeling the effects.
In countries like the UK and the U.S. that in [...]