Decision Making & Negotiations

Managing Change: Cases and Concepts, 3e by Todd Jick and Maury Peiperl is comprised of six modules that introduce common threads in the ensuing case studies and readings on organizational change. The materials in this edition — cases and readings — have been chosen and arranged to introduce change as an integrated process. Cases in the text represent a wide variety of change situations. Accompanying many cases are readings, likewise chosen to reflect a broad range of issues.

This article discusses the diffusion process in an online social network given the individual connections between members. The authors model the adoption decision of individuals as a binary choice affected by three factors: (1) the local network structure formed by already adopted neighbors, (2) the average characteristics of adopted neighbors (influencers), and (3) the characteristics of the potential adopters. Focusing on the first factor, the authors find two marked effects. First, an individual who is connected to many adopters has a greater adoption probability (degree effect).

Direct advertising—sending promotional messages to individual customers—is increasingly used by marketers as a result of the recent improvements in consumer reachability. Most current methods to calculate optimal budgets for such advertising campaigns consider customers in isolation and ignore word-of-mouth communication (WOM). When the customer base forms a network (as is the case in telecom or social network databases) ignoring WOM clearly leads to suboptimal advertising budgets. This paper develops a model to help address this challenge.

The Internet has increased the flexibility of retailers, allowing them to operate an online arm in addition to their physical stores. The online channel offers potential benefits in selling to customer segments that value the convenience of online shopping, but it also raises new challenges. These include the higher likelihood of costly product returns when customers' ability to "touch and feel" products is important in determining fit.

This paper reviews the pattern of bank failures during the financial crisis and asks whether there was a link with corporate governance. It revisits the theory of bank governance and suggests a multiconstituency approach that emphasizes the role of weak creditors. The empirical evidence suggests that, on average, banks with stronger risk officers, less independent boards, and executives with less variable remuneration incurred fewer losses. There is no evidence that institutional shareholders opposed aggressive risk-taking.

This paper shows that Chief Executive Officers (CEOs) meaningfully affect firm performance. Using variation in CEO exposure resulting from the numer of days a CEO is hospitalized, we provide estimates of the effect of CEOs on firm policies, holding firm and CEO matches constant. We have four main findings. First, CEOs have an economically and statistically significant effect on profitability, revenue, and investment outcomes. Firms whose CEOs are hospitalized underperform when their chief executives are sick but otherwise exhibit similar performance relative to other firms.

In the wake of the crisis of 2008 and onwards, it has become fashionable to return to the work of Hyman Minsky and Charles Kindleberger, and cite them as showing the ubiquity of crises, how they are an inevitable result of human nature, and how they have therefore to be carefully and thoroughly regulated against. Charles Calomiris considers this view, first clearly distinguishing between financial crises and banking crises.