Business School Research Roundup: March 2016

The importance of trust in today’s business world. Why a startup founder may not be the best person to take a company forward in the long term. How the credibility of academic researchers may relate more to their gender and ethnicity than to the quality of their work. 

If you’re looking for some light reading – MBA style – this weekend, then look no further than these recent research highlights from Harvard Business School, UBC Sauder and Kellogg School of Management.

Trust placed at center of Kellogg School project 

Trust is a term that has come to resonate strongly with the general public.  While a joint initiative between Northwestern University’s Kellogg School and Chicago Booth recently demonstrated that the US public’s trust in its banks has returned to its highest levels since the financial crisis, public trust in large corporations has remained low.   

There is plenty of scope, therefore, for a new project on the subject of trust rolled out by the Kellogg School at the start of this month. The Trust Project aims to collate and expand upon past research into the subject and to relate it to a context today in which technology and globalization continues to remove boundaries between people, organizations and markets.

“The purpose of the project is to advance the level of discussion on trust,” says Kent Grayson, a marketing professor at the Kellogg School and the project’s faculty coordinator. Its first phase showcases different perspectives on trust through a series of videos featuring Kellogg faculty as well as business practitioners and academics from across the Northwestern University community.  

For example, one project contributor is Kelly Michelson, a professor in pediatrics who talks about the role of communication in building trust in a healthcare context: “It’s a common aspect of our humanity, and something that comes up again and again in my work,” Michelson says.

The inclusion of business practitioners, according to Grayson, will show the tangible interplay between academic research and industry practice as well as providing “a broader view of the ways trust plays into our everyday decisions”.

Should the startup founder stand aside?  

A startup founder may not always be the best person to guide a new company as it expands over the long term and, in fact, could inadvertently be working against its chances of successful growth, according to Harvard Business School (HBS) professor, Ranjay Gulati.

“Often, our research shows, the biggest obstacles are the entrepreneurs themselves,” Gulati and PhD student, Alicia DeSantola, write in the Harvard Business Review.

While the charisma and skillset of a startup’s founder can be critical to its short-term gains, the authors explain, as a new business expands its needs become more complex and this is where a startup founder may start working against its interests in trying to oversee every aspect of the organization’s operations.

The authors recognize that a startup founder can be a valuable source of continuity from an enterprise’s beginnings, but ultimately venture capitalists (VCs) often like to bring in new CEOs. However, in their discussions with VCs, these researchers find that owing to a greater availability of capital in recent fundraising markets, “many founders are retaining the CEO role even when investors think they should be replaced.”

Highlighting the potential problem of this eventuality, the authors also cite previous research from Noam Wasserman, which demonstrates how a startup founder who retains CEO-status or board control as the company grows can negatively impact on its prospects by reducing its pre-investment valuation by as much as 22%. Wasserman, author of The Founder's Dilemmas, has taught an MBA elective on the same subject as a faculty member at HBS. 

We all hold unconscious levels of bias says UBC Sauder study 

Do you lean more towards a more elitist or egalitarian view of the world? Ideology, in this sense, could be affecting the way you view the credibility of academic research, albeit unconsciously.

Those more inclined towards an elitist world view attributed greater credibility to white male researchers, while those more predisposed towards egalitarian beliefs tended to favor everyone other than white male researchers according to new research from UBC Sauder.

“In the business world, the statements made by academic experts can influence decisions, so it’s vital to be aware of how ideology influences whether people believe what comes from the mouth of an academic,” said Karl Aquino, a professor at UBC Sauder and coauthor of ‘What Makes Professors Appear Credible’.

UBC Sauder’s study used a survey to gauge the ideological leanings of 900 participants in the US, Canada and India, before asking them to read research reports that included photographs of its academic authors and to then assess the work’s credibility.

“Elitists and egalitarians are equally susceptible to evaluating people in ways that reinforce their beliefs,” Aquino added.