This issue's topics: Organization Studies and Operations Managementby Ryan Underwood | Intellectual Capital, Summer 2014 | Comments | Print |
As members of one of the nation’s top research universities, Owen faculty always have something interesting on their minds. Here’s a portion of what two faculty members are currently pondering.
Who: Bart Victor, Cal Turner Professor of Moral Leadership. Victor joined Owen in 1999 after serving as a faculty member at the Institute for Management Development in Lausanne, Switzerland, and before that, at the University of North Carolina’s Kenan-Flagler Business School. In addition to his scholarly research, Victor has served as the faculty sponsor for Project Pyramid since 2004, teaching the classroom component of the cross-disciplinary student initiative focused on addressing poverty around the world.
What he’s researching: Poverty—specifically, the role that corporations, business leaders and nongovernmental agencies can play in helping alleviate it. Emblematic of the types of issues he researches is Victor’s work examining how resource-poor populations view loans versus charitable donations. When faced with a choice between working off a loan and receiving a charitable donation, many people would opt for the loan, he says. “Accepting a charitable gift is part of a transaction that has certain costs. It’s costly for a person to demonstrate a need; it’s costly to find ways to show gratitude.”
Similar insights led Victor into business as an academic discipline in the first place. Working as a community organizer in Chicago in the 1970s—“before it was the cool thing to do,” he quips—Victor saw that no matter how many well-meaning people and agencies stepped into his rough neighborhood offering help, the single most reliable factor to improve life was when someone got a good job. “Then one day I looked around and realized that the only person getting a good job from what I was doing happened to be me. That’s when I got interested in business,” he says. In addition to starting several companies, Victor went on to receive his Ph.D. in Business Administration from UNC’s Kenan-Flagler in 1985.
Why it’s important: At first glance, it might seem odd to find someone researching poverty at a business school—institutions traditionally focused on wealth creation. But Victor says his work simply explores the other side of a significant resource asymmetry that exists in the world. For example, he recently started a project with Mark Ratchford, assistant professor of marketing, and Miguel Palacios, assistant professor of finance, examining people’s behavior in the Ultimatum Game. In this scenario, strangers bargain over how to split a particular amount of money. If one person makes an offer and the other accepts it, both get to keep the money; if the offer is rejected, nobody gets anything. Under a rational actor model, a person should be able to offer a small amount, even as little as $1, since both participants would be better off than they started. But researchers have found that people typically offer around $400 to help ensure the deal is accepted, a decidedly irrational outcome. Victor and his fellow Owen researchers now want to flip that experiment on its head, looking at how behavior changes a person who has to ask for money outright, rather than bargain over it.
Why this perspective matters: Just ask Facebook, which recently paid $15 billion to acquire the instant message system WhatsApp, mainly to acquire large swaths of users in emerging markets. Victor says that’s part of a longer continuum that includes companies like Coca-Cola, whose global strategy started with the premise that a Coke should be within arm’s reach anywhere in the world. Implicit in such a strategy lies a strong moral component: “If you believe people are without potential, why would you bother wanting to reach them?”
Who: Associate Professor of Operations Management Mumin Kurtulus joined Owen in 2005 after receiving his Ph.D. from INSEAD, located near Paris. Born in Bulgaria, Kurtulus lived in Turkey and France before coming to Nashville. Last year he won Owen’s Research Productivity Award and in 2012, was a finalist for the school’s James A. Webb Jr. Teaching Award.
What he’s researching: Much of the work Kurtulus has done involves retail supply chains. Within those networks, he has focused on a specific kind of collaboration between manufacturers and retailers known as category captainship. This is a practice in which a retail chain turns over control of its shelf space in a particular category (e.g., cosmetics) to a dominant manufacturer. “I want to identify the conditions where not only the manufacturer—the category captain—and the retailer benefit from this,” he says, “but the other manufacturers can benefit from this approach too.”
Why it’s important: To many observers, a set-up in which a single manufacturer is responsible for deciding which items to display, how to display them, and how to price them may seem like an egregious breach of competitive principles. But Kurtulus finds that in an ideal scenario, a strong category captain can help lift the tides of both the retailer and other brands within the same segment. “Over the past 30 years or so, the retailing business has become very challenging. Many retailers today operate on razor-thin margins,” Kurtulus says. Category captainship—a practice that started with a handful of large retailers, but is now growing among smaller companies—has proven to be an effective way to grow margins.
One of his recent papers uses the example of Kashi, a division of Kellogg’s. Because of the manufacturer’s efforts to develop a better retail display strategy while helping educate consumers about natural and organic products, the entire category saw a boost, with at least one retail company reporting a 15.5 percent sales increase across the category. Of course, that’s an ideal outcome. What matters to Kurtulus is understanding what variables contribute to a mutually successful collaboration between retailers and suppliers. Conversely, he wants to know what pitfalls companies and manufacturers should avoid.
photo credit: Chad Driver, John Russell