Inspiring Minds - 2020: Research With A Human Face

INSPIRING MINDS

RESEARCH WITH A HUMAN FACE

INSPIRING MINDS RESEARCH WITH A HUMAN FACE

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INSPIRING MINDS RESEARCH WITH A HUMAN FACE

INSPIRING MINDS

RESEARCH WITH A HUMAN FACE At the Villanova School of Business (VSB), a cadre of world-class teacher-scholars are engaged in research that seeks to understand how human behavior drives decision-making. These researchers are exploring the behavioral aspects of business decisions in areas such as consumer preference; financial investment strategies; student career choices; and the way companies are led, governed and controlled. Often called “behavioral” research, and popularized by the Freakonomics books and media, these studies acknowledge and embrace the often unexpected and unforeseen role that humans have in critical business issues and outcomes.

In this edition of Inspiring Minds, we profile a sample of our behavioral researchers and the fascinating subjects they explore, some made possible by the construction of our Laboratory for the Advancement of Interdisciplinary Research (LAIR), a facility dedicated to the exploration of how individuals and groups arrive at options, choices and decisions. Equipped with audio and visual recording equipment for data collection, a flexible layout where different types of studies can be conducted, a control room for observation, and state-of-the-art eye-tracking technology, the LAIR provides opportunities for research using surveys, interviews, focus groups and other primary sources.

Most importantly, this research can help executives and organizations better understand a wide range of business problems and develop practical solutions to them. Led by Associate Dean of Research and Global Engagement Jonathan Doh, this work reflects VSB’s commitment to advancing research with impact.

Joyce E. A. Russell, PhD The Helen and William O’Toole Dean Professor of Management Villanova School of Business @VSB_Dean

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INSPIRING MINDS RESEARCH WITH A HUMAN FACE

HOW CAN MARKETING BENEFIT PUBLIC HEALTH AND CONSUMER WELL-BEING? Many products in the marketplace carry some risk of harm. Frequent fast food consumption, smoking and cannabis use (where legal) may lead to a range of negative health effects. Pharmaceutical drugs can also have adverse side effects, especially when employed beyond their intended use. Dr. Jeremy Kees has examined each of these topics in order to better understand how marketers can help consumers to make decisions about the consumption of risky products.

“The goal is not always necessarily to persuade consumers to make a certain decision,” says Dr. Kees. Rather, his research strives to uncover the best strategies to ensure consumers make an informed decision about the potential benefits and risks of a product before they purchase it.

Sometimes simple information disclosures or disclaimers are effective at influencing consumer behavior. For example, Dr. Kees’ studies have shown that prominently displaying nutrition information on the front of food product packages can facilitate healthier food choices. In other cases, these straightforward informational approaches are not effective but may require more visual messages. Findings from Dr. Kees’ smoking research demonstrate that graphic, emotion-evoking pictorial warnings are the best way to draw consumers’ attention to the risks of smoking. “It is important that consumers are informed of the product risks, which are sometimes not salient at the point of purchase, so that they can make a fully informed decision as to whether the benefit outweighs the risk,” he says. Dr. Kees’ research has important implications for public health and consumer welfare, which is underscored by his partnerships with federal government agencies.

Jeremy Kees, PhD

The Richard J. and Barbara Naclerio Endowed Chair in Business

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RECOGNITION Dr. Kees serves as a special government employee for the Food and Drug Administration (FDA), where he assists with its risk communication research programs.

LAIR: ADVANCING BEHAVIOR RESEARCH AT VSB Jeremy Kees, PhD, The Richard

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LAIR: ADVANCING BEHAVIOR RESEARCH AT VSB Dr. Fragiadakis has involved students in several experiments and is excited to be leading the LAIR going forward. “Through the LAIR, scholars and students can simulate real-world problems and design projects to address them,” Dr. Fragiadakis says.

“Our findings can help inform critical business and policy decisions and prepare students to be effective and informed managers and leaders.”

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Behavioral economics attempts to reconcile the many ways people depart from classic economic predictions. This means we need to continually test proposed solutions using rigorous experiments before widespread implementation.

INSPIRING MINDS RESEARCH WITH A HUMAN FACE

HOW DO INDIVIDUALS RANK AND ORDER THEIR PREFERENCES? Many institutions use matching algorithms that consider individuals’ preferences for goods and services. Examples include assigning students to seats in public schools, public housing units to tenants, cadets to military branches, organ donations to recipients, and undergraduates to university housing. Organizations often use an algorithm called Random Serial Dictatorship (RSD): people state their preferences in order from best to worst, are ordered at random, then the individual ordered first receives her most preferred available option, followed by the second individual and so on. While RSD has several advantages, it does not consider how much someone likes an option relative to another, which can be vital information in some cases.

Dr. Daniel Fragiadakis has proposed a modification to RSD that lets it consider this preference intensity. Depending on how people respond to this adjustment, they may receive options that are better, worse or on average no different than those they would obtain under RSD. In a controlled laboratory experiment, Dr. Fragiadakis finds that his novel algorithm brings people better options on average compared to RSD. “Behavioral economics attempts to reconcile the many ways people depart from classic economic predictions. This means we need to continually test proposed solutions using rigorous experiments before widespread implementation,” Dr. Fragiadakis says.

Findings from Dr. Fragiadakis’s research suggest that algorithms can be carefully designed to prioritize welfare-improving strategies. In other words, while we know that individuals may not behave “rationally,” we know they are predictable.

“It is important to design algorithms that are accessible to real people,” says Dr. Fragiadakis. “Designing mechanisms based on our intuition is the first step. The next step is testing whether our intuition is correct.”

Daniel Fragiadakis, PhD Assistant Professor, Economics Faculty Academic Director, LAIR

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INSPIRING MINDS RESEARCH WITH A HUMAN FACE

WHAT LEADS TO THE SUCCESS OR FAILURE OF TEAMS? Work teams are ubiquitous in modern organizations. The promise of teams has always been the idea of “synergy”—that the whole might be greater than the sum of its parts. Organizations have tried their best to turn this potential into reality, but the truth is that work teams are incredibly complex structures.

As a lifelong sports fan and athlete, Dr. Narda Quigley has experienced both the highs of “Cinderella” teams and the lows of underperforming teams. In her research, she has examined the drivers of effective work teams, including leadership and team member composition; team processes, including knowledge sharing, conflict and cohesion; and the cultural and organizational context within which teams must work.

A common challenge in research examining work teams has been the complex nature of data collection given that teams are dynamic over time. Dr. Quigley has collected field data from a variety of sources, from teams working in a large aerospace engineering firm to student teams working on semester-long projects to temporary virtual teams working in the lab. She makes a point of collecting data over multiple points in time to try to better capture the underlying causal mechanisms that might explain the results of her studies. “Too many studies on work team effectiveness try to test complex theories with data collected at one point, which means that you can’t really tease out the sequencing of what comes first,” Dr. Quigley explains.

Her recent work has explored the ramifications of cutting-edge statistical techniques, such as longitudinal growth modeling, to help researchers and practitioners build more accurate models of effective teams over time. In her work with student teams at VSB, she underscores the importance of early attention to team charters and norms, from both the task/strategic and interpersonal/relational perspectives, as this has an important impact on the trajectory of team effectiveness for the rest of the team’s lifespan.

Narda Quigley, PhD Professor, Management

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Dr. Quigley’s recent work has explored the ramifications of cutting-edge statistical techniques, such as longitudinal growth modeling, to help researchers and practitioners build more accurate models of effective teams over time.

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I feel fortunate to be at an institution that allows me to take students under my wing and support their intellectual journeys.

INSPIRING MINDS RESEARCH WITH A HUMAN FACE

HOW DO PROSPECTIVE STUDENTS CHOOSE THEIR COLLEGE, MAJOR AND PROFESSIONAL DIRECTION Attending college is an important decision for every family, especially given the escalating cost of college and rising student loan debt. How do students choose their application portfolios? What are the benefits of attending college in terms of skill acquisition and future earning? And how do they differ across college majors? Dr. Xiaoxiao Li has examined these topics to better understand two important phases of life—college education and early career—which are of particular relevance for our students. For college choice, it’s crucial to know whether nonacademic factors, such as family resources and price sensitivity, or academic abilities are the driving force. Dr. Li’s research indicates college selection is largely predetermined by nonacademic factors and preexisting beliefs. “This finding carries important policy implications,” says Dr. Li. “For instance, highly qualified but under-resourced students may be intimidated by the tuition rates in selective colleges or have limited information regarding education opportunities through parental knowledge.”

To ease such college mismatch, policies should be oriented towards funding opportunities and informing those students of their possibilities of success in selective colleges. However, given the costs, traditional universities may not be worth it for everyone. Evidence from Dr. Li’s research shows the monetary return for education is smaller than previously believed, after rigorously taking into account the fact that smart people choose to obtain more schooling.

Dr. Li is also pursuing other important topics such as gender discrimination and immigration. In one project, she is working with undergraduates Olivia Moyer ’22 VSB and Olivia Pfeiffer ’22 VSB on gender discrimination issues in business leadership positions and the implications for firm performance. “Our students are brilliant,” says Dr. Li. “In 10 weeks, we brainstormed ideas, searched literature, collected and cleaned data, conducted statistical analysis, and presented results at the VSB Research Day. I feel fortunate to be at an institution that allows me to take students under my wing and support their intellectual journeys.”

Xiaoxiao Li, PhD

Assistant Professor, Economics 10

INSPIRING MINDS RESEARCH WITH A HUMAN FACE

HOW DO CHANGES IN THE AUDIT ENVIRONMENT AFFECT AUDITOR BEHAVIOR AND DECISION-MAKING? As public companies expand their global reach and leverage cutting-edge technologies, audit firms are evolving to meet client demands and further enhance their own effectiveness and efficiency. Dr. Denise Hanes Downey examines how changes introduced by the increasingly global nature of auditing affect auditor behavior and decision-making. “Auditing by nature is a jurisdictionally based practice, which means that U.S. auditors typically focus on U.S. standards and U.S. operations of public companies. Increasingly, however, U.S. auditors are relying on others in foreign jurisdictions to perform a piece of the financial statement audit. How this shift in the audit environment affects auditor behavior has important implications for investor protection,” says Dr. Downey.

Dr. Downey’s research finds that the global breadth and complexity of large, multinational companies presents challenges for U.S. auditors, typically requiring them to work with numerous audit teams around the globe. While working with knowledgeable, experienced, global auditors helps to mitigate challenges, Dr. Downey’s research highlights that U.S. auditors fail to adjust their perspective to account for differences introduced by global work arrangements (e.g., language and culture). “Given the regulatory pressures and accelerated reporting deadlines in the U.S., it is seemingly difficult for U.S. auditors to consider the local context and incentives of the other auditors they rely on globally,” Dr. Downey says. In studying how to encourage greater engagement and coaching of foreign auditors, Dr. Downey’s research emphasizes the importance of having consistent participation of foreign auditors on the engagement for multiple years, as U.S. supervisors are more motivated to expend the time and effort to coach subordinates when it carries a future benefit.

Denise Hanes Downey, PhD

Kevin Tedeschi ’71 Assistant Professor, Accounting

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RECOGNITION Dr. Downey’s research is recognized as influential to regulators and auditors alike, reflected in her ongoing work as a senior Economic Research fellow at the Public Company Accounting Oversight Board (PCAOB) and her recent ranking as a top academic in a study of the production of practice-relevant research.

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An alarmingly large percentage of U.S. citizens must turn to social services to meet their basic needs, but inefficiencies and complexities make it difficult to successfully navigate these services.

INSPIRING MINDS RESEARCH WITH A HUMAN FACE

HOW CAN WE IMPROVE THE WELL-BEING OF THE MOST VULNERABLE CONSUMERS? In a rapidly globalizing economy, one of the criticisms levied against marketing researchers is that they focus on a singular type of “typical” consumer (western, affluent, educated, young adults) to the exclusion of other groups. Dr. Aronté Bennett recently turned her attention to more vulnerable groups in an effort to understand how marketing systems could be leveraged to improve their well-being.

Dr. Bennett’s most recent research projects focus on two frequently overlooked consumer groups: refugees and recipients of social services. She considers the ways in which marketing systems can be reimagined to think beyond their material well-being to improve their holistic well-being. Shifting the measure of success from material to holistic well-being permits the consideration of concepts not often examined: stability and dignity.

Facing a mounting international immigrant crisis, the resettlement and stabilization of refugees is a pressing concern. Access to goods and services in the marketplace is essential in creating safe, stable environments.

Unfortunately, refugees often lack this access due to the challenges they face. In a recent paper, Dr. Bennett pinpointed the tension points during refugees’ journeys and developed a marketplace framework intended to engage and empower refugees to become contributing members of their adoptive communities.

Dr. Bennett also aims to improve the well-being of consumers domestically.

She notes, “An alarmingly large percentage of U.S. citizens must turn to social services to meet their basic needs, but inefficiencies and complexities make it difficult to successfully navigate these services.” Through a series of interviews with recipients and providers of social services, Dr. Bennett’s research provides insights into the ways in which the marketplace can be designed to allow for more effective provision of social services, and in doing so, maintain the dignity of its recipients while improving their well-being.

Aronté Bennett, PhD

Associate Chair, Associate Professor, Marketing & Business Law 14

INSPIRING MINDS RESEARCH WITH A HUMAN FACE

DO COGNITIVE BIASES SHAPE INVESTMENT DECISIONS AND SUBSEQUENT FINANCIAL PERFORMANCE? The human brain makes 2,000 to 10,000 decisions in a single day. Despite the brain’s sheer horsepower, decisions are often influenced by one’s surroundings, emotions, past experiences and even the actions of others. In fact, many decisions are made using simple heuristics, or mental shortcuts, that can lead to predictable errors in judgment and observable outcomes. If everyday life decisions are impacted by these “cognitive biases,” then why shouldn’t we expect such biases to be present in the way individuals make investment decisions? Dr. Benjamin Scheick utilizes the unique features of commercial real estate markets to better identify the broader existence and impact of investor psychology on investment.

“Real estate markets provide an interesting laboratory for investigating behavioral influences on financial investment given the lack of consistent price revelation and the challenges associated with efficiently processing local information,” explains Dr. Scheick. His research has focused on how psychological biases, such as overconfidence, impact investment performance and portfolio allocation decisions in both public and private commercial real estate markets.

Findings from Dr. Scheick’s research suggest that investor overconfidence can have a significant impact on real estate market performance and in certain situations lead to prolonged periods of asset mispricing. His research also demonstrates that this mispricing can be further fueled by the actions of lenders who continue to provide credit to overconfident investors. Dr. Scheick’s findings have important policy implications as they suggest that adjustments to credit availability can be an important tool for counteracting the adverse effects of misguided investor behavior.

Benjamin Scheick, PhD

Associate Chair, Associate Professor, Finance & Real Estate

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RECOGNITION Dr. Scheick has received multiple research grants from the Real Estate Research Institute and has worked on sponsored research projects funded by the National Association of Real Estate Investment Trusts (NAREIT). In 2018, Dr. Scheick was named one of the top 40 real estate researchers in the world for his significant contributions to the leading academic real estate journals over the 2014-2018 period.

INSPIRING MINDS RESEARCH WITH A HUMAN FACE

ENDOWED CHAIRS & PROFESSORSHIPS Recruiting, retaining and promoting outstanding faculty members requires the resources and distinction that can only be provided through endowed professorships and chairs. Along with our named assistant professorships and emerging scholars, endowed chairs and professorships in the Villanova School of Business provide a pool of funds in perpetuity to support the teaching, research and professional development of top scholars.

Stephen J. Andriole, PhD

Michael Pagano, PhD

Thomas G. Labrecque Professor of Business Technology Professor, Accounting & Information Systems

The Robert J. and Mary Ellen Darretta Endowed Chair in Finance Professor, Finance & Real Estate

Jonathan Doh, PhD Associate Dean of Research and Global Engagement Herbert G. Rammrath Endowed Chair in International Business Co-Faculty Director, The Elenore and Robert F. Moran Sr. Center for Global Leadership Professor, Management & Operations General Editor, Journal of Management Studies

Jeremy Kees, PhD Richard J. and Barbara Naclerio Endowed Chair in Business Professor, Marketing & Business Law Faculty Director, Center for Marketing & Consumer Insights

Matthew Liberatore, PhD John F. Connelly Endowed Chair in Management Professor, Management & Operations

Thomas Monahan, PhD John M. Cooney Professor, Accounting & Information Systems

David Nawrocki, PhD Katherine M. & Richard J. Salisbury, Jr. Professor, Finance & Real Estate

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Pankaj Patel, PhD Frank J. and Jane E. Ryan Endowed Chair in Strategy and Innovation Professor, Management & Operations

John A. Pearce II, PhD VSB Endowed Chair in Strategic Management & Entrepreneurship Professor, Management & Operations

Quinetta Roberson, PhD Fred J. Springer Endowed Chair in Business Leadership and Professor of Management

Charles R. Taylor, PhD John A. Murphy Professor of Marketing Professor, Marketing & Business Law

CENTERS OF EXCELLENCE VSB’s commitment to research and academic rigor is evident through the school’s six Centers of Excellence. These initiatives are designed to focus attention on critical business issues and to leverage the expertise of VSB faculty in a cross-disciplinary way. They support faculty research, teaching excellence, curricular development, and the intersection of research and business practice.

Daniel M. DiLella Center for Real Estate The Elenore and Robert F. Moran Sr. Center for Global Leadership Center for Business Analytics Center for Church Management Center for Marketing and Consumer Insights Innovation, Creativity, and Entrepreneurship Institute

CONNECT WITH US Villanova School of Business @VU_Business @VillanovaSchoolofBusiness @villanovabusiness

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Villanova School of Business 800 East Lancaster Avenue Villanova, PA 19085

APRIL 2020