2021 Responsible Research in Managements

Much has been written about ethics from a variety of disciplines, with the most dominant influence from philosophers. Philosophers offer normative accounts of what they think people should do. More recently, behavioral scientists have entered the ethical arena, particularly after the collapse of Enron at the beginning of the millennium, to document how people actually behave – or what social scientists would call descriptive accounts, what we actually do. The book “Better” departs from both traditions. It is prescriptive. “Better” focuses on guiding you to be better than the real-world behavior observed and described by behavioral scientists, and better than the set of decisions that you would intuitively make, without believing that any of us will ever achieve the unreasonably high ethical standards provided by philosophical perspectives. While the prescriptive approach of guiding you to be better is different from what has been offered by philosophy and psychology, “Better” draws on both literatures to provide insights on how to be better. Philosophy provides us with a goal state, while psychology provides insight into why we remain so far from the goal state. By integrating these perspectives, “Better” provides optimal prescriptions on how to be better in the world we actually inhabit. 

Women’s increased participation in the paid workforce is widely seen as an important remedy for various social ills such as poverty. But their ability to engage in paid work is obstructed by pre-existing domestic burdens, which extract a heavy toll on women’s time and energy. There is a wide literature documenting women’s work for households and their strategies for managing the time required to accomplish it, but this scholarship tends to position work/life balance as an individual-level time management issue. Women are expected to come up with personal strategies to “have it all.” Drawing on ethnographic research with low income working women from rural India, Goodman and Kaplan’s research finds that women’s ability to engage in paid work outside the home is contingent on the availability and willingness of household members to take up domestic responsibilities. Examining the role that other household members play in facilitating women’s workforce participation shows that it shouldn’t be seen as an individual balancing act but rather as a household negotiation, which has important implications for scholars and policy makers alike. 

How do social media platforms impact the news and information that individuals consume? There is considerable concern that information discovery platforms create “echo chambers” and “filter bubbles” that lead users to biased information. Yet, these commonly used terms are ill-defined and easily misunderstood. To address the critical societal concern of platform-induced polarization, our study integrated ideas spanning multiple disciplines. We established theory to explain mechanisms and clarify outcomes characterizing how social media can influence information consumption. Partnering with Comscore--an online media metrics company--to acquire big data on actual Internet users, we compared online news consumption during periods of high and low social media usage for nearly 200,000 individuals between 2012 and 2016. We found that social media platforms have distinct effects on the diversity and partisanship of news that users choose to consume—outcomes typically conflated in previous research. Finding that various social media platforms impact news consumption in unique ways, we infer how platform design features for connecting users and algorithmically curating content may impact user choices. Our research has informed an important public debate about the impact of social media on society and provides a conceptual framework for future research of polarization, diversity, and news consumption. 

Solving grand societal challenges requires the involvement of both public and private sector. Yet in some situations, both markets and governments fail to create appropriate solutions. Because of their small market size, many rare diseases lack treatments. Efforts of profit-oriented firms and public organizations yielded limited progress in developing treatments for rare diseases. Studying the context of drug development for rare diseases, we show how nonprofit actors can circumvent market and government failures by supporting patient groups in identifying treatment options using drugs developed for other purposes—a practice known as drug repurposing or drug repositioning. Our study identifies the ways in which nonprofit actors can propel drug repurposing by engaging patients in the drug development process, creating platforms and communities for knowledge exchange among diverse stakeholders, and supporting researchers in finding funding opportunities. Our study advances theory and practice on the comparative efficiency of alternative organizational arrangements such as social entrepreneurship for tackling societal challenges. 

This study shows that activist hedge funds disproportionately target socially responsible firms. Such targeting happens because activists hedge funds seek to identify and turn around companies they see as “wasteful,” in the sense that they do not maximize short-term shareholder returns. Given their often-short-term focus, activist hedge funds see companies that act with a long-term vision and that prioritize a broad set of stakeholders as wasteful, and they see corporate social responsibility (CSR) as a signal of such “waste.” Our analysis of 506 activist hedge fund campaigns between 2000 and 2016 shows that a company’s probability of being targeted by an activist hedge fund almost doubles when its CSR increases by two standard deviations. This effect is even stronger when socially responsible companies communicate vaguely and operate in industries where CSR is less common. Our study has important practical implications. For policymakers who care about CSR, our research implies that new regulations are needed to protect companies from hedge fund activism. For sustainability-oriented companies, our findings highlight the importance of clearly communicating CSR strategies to existing shareholders to obtain their backing. Finally, for investors, our paper provides reason to avoid investing in some types of activist hedge funds. 

Can evidence-based policymaking (EBP) help multinationals and governments address the wicked problems of the UN Sustainable Development Goals (SDGs)? Yes! EBP requires policy decisions that are informed by good evidence. Wicked problems, however, are systemic, ambiguous, complex and conflictual, where politics usually trumps evidence and solutions are never first best or permanent. Using EBP to “solve” a wicked problem looks impossible. Despite the difficulties, the authors argue that EBP provides actionable and practical policy advice for tackling the SDGs and apply their arguments to SDG 5 Gender Equality. The leading gender inequality indexes are compared and assessed as evidence relative to SDG 5’s goals, targets and indicators. The authors argue that progress on SDG 5 requires more than good evidence; in addition, governments and multinationals must view themselves as stakeholders in global society. Policymakers are encouraged to develop public-private partnerships to address SDG 5. Business executives are encouraged to use the ex-ante SDG Materiality Matrix developed in the paper to prioritize the SDGs and build them into global corporate social responsibility strategies. Several principles of responsible research are illustrated including service to society, involvement and impact on stakeholders, sound methodology, and multidisciplinary contributions. 

Women and ethnic minorities are under-represented in the vast majority of organizations, even in industries in which there are sufficient numbers of qualified women and minority candidates. Past research has shown that managers’ stereotypes and biases are responsible for this deficit, but the literature has identified few solutions. This research identified an easy to implement intervention––grouping job candidates into different categories––that can nudge decision makers to choose more diverse candidates without restricting the hiring manager’s choice in any manner. Eight experiments provided support for this idea in multiple diversity contexts. Specifically, the authors found that grouping job candidates by gender, ethnicity nationality, or university led people to choose more diverse candidates on the grouping dimension without lowering the average competence of the selected candidates. This research provides a solution for organizations that want more diversity but are unable to do so, and thus contributes both to better business and to a better world. 

As more women break through the proverbial ‘glass ceiling’ to reach upper echelon positions, the issue of how executive gender impacts corporate decisions and actions has gained heightened salience. Our research examines whether CFO gender affects the likelihood of irregularities in a firm’s financial statements. Although a rich and diverse literature examines the causes and consequences of financial misreporting, it is based on firms ‘caught’ engaging in financial misconduct. This is problematic because the vast majority of companies committing financial fraud are never caught. Based on the literatures about gender differences in ethics and risk-taking, we hypothesize that, relative to firms with male CFOs, those with female CFOs will have lower likelihood of financial misstatements. We also hypothesize that the effect of executive gender on firm behavior will be stronger in situations of higher managerial discretion, such as when analyst coverage and institutional ownership are low. Results, based on a large sample of public firms in the United States over the 1996 to 2018 time-period, provide support for our predictions, thereby extending knowledge about whether and when CFO gender affects firm financial misreporting. We hope our research will advance scholarship at the interface of executive gender and corporate governance literatures. 

Reimagining Capitalism in a World on Fire argues that the private sector could play a major role in driving the kind of systemic, political changes we need if we are to solve the great global problems of our time. In a world in which climate change threatens the future of the planet and inequality and exclusion is shaking our societies to their roots, business has both a moral and an economic case for moving beyond a single-minded focus on shareholder value to a broader concern with the health of the economic, social and institutional systems on which we all rely. The book explores what this might look like in practice, and how it might add up to profound change. I draw on fifteen years of research to suggest that firms can drive change by becoming explicitly purpose driven, embracing the opportunity to create shared value, rewiring global capital markets, and embracing cooperation across industries and regions. These moves could not only serve to catalyze local change but could also lay the groundwork for business to become a crucial ally in rebuilding our institutions in ways that can provide long term, systemic solutions to the problems that we face. 

Businesses have a big role to play in a capitalist society. They can tip the scales toward the benefit of the few, with toxic side effects for all; or they can guide us toward better, more equitable long-term solutions. “Better Business: How the B Corp Movement is Remaking Capitalism” tells the story of a new corporate framework that can help all companies accountably and sustainably implement a stakeholder governance model and commit to putting social benefits, the rights of workers, community impact, and environmental stewardship on equal footing with financial shareholders. Informed by over a decade of research and animated by interviews with the B Corp movement’s founders and leading figures, “Better Business” examines the history of the B Corp movement and how leading companies and entrepreneurs have spearheaded a rigorous evaluation and certification of corporate performance whereby success is not just judged on earnings, but also on contribution to society and the environment. The book not only explores the rapid growth of companies choosing to certify as B Corps, both in the United States and internationally; but more importantly explains why the tools and processes developed by this movement are vital for all corporations. 

The 11th Sustainable Development Goal is to make cities inclusive, safe, resilient, and sustainable. With over half of humanity living in urban spaces, it represents a critical challenge. To understand how organizations can contribute to this goal, the authors explore how the density of local environmental nonprofit organizations (LENOs) promotes city sustainability, and how critical socio-economic features of cities alter this effect. To accomplish this, the authors rely on a panel of 100 U.S. metropolitan statistical areas (MSAs) over 12 years and apply multivariate methods. They uncover three fundamental discoveries: (i) a higher density of LENOs is associated with a reduction in toxic contamination and an increase in the adoption of voluntary environmental standards at the city level; (ii) the positive association between LENOs and city sustainability is higher in cities that have greater education levels, are more innovative, host large corporations’ headquarters, and have a higher per capita income; and (iii) in cities with higher income inequality, the relationship between LENOs and city sustainability is reduced. This work aligns with several responsible management research principles by providing knowledge that benefits society, offering concrete policy and managerial guidance on a complex social problem, and adopting a sound methodology.

This research demonstrates how beliefs and practices reinforced by the world’s major religions account for 37% of the gender wage gap. Cross-disciplinary integration of literatures inform development of a theoretical framework that explains why religiosity (defined as how important religion is to members of a culture) widens the gender wage gap by emphasizing starker differentiation between men and women in three domains: domestic responsibilities, sexuality, and agency. Two datasets—from 140 countries and the 50 states in the United States—offer robust evidence of religiosity’s effects, and the results apply across all 6 major world religions—Christianity, Islam, Hinduism, Buddhism, folk religions, and Judaism. Religiosity also affects the speed of wage gaps narrowing over time, such that the U.S. wage gap is forecasted to close in 28 years in secular states versus 109 years in religious states. Experimental evidence indicates that merely priming religious values results in paying women less for the same work. However, experimental interventions also reveal a potential remedy: Explicitly promoting gender-equitable policies blocks the effect of religiosity on gender-inequitable pay. This research highlights exemplary research transparency and methodological rigor, and has been featured in news, media, and practitioner outlets (e.g., HBR Idea Watch). 

Achieving greater social justice in organizations often depends on majority group members taking risks to challenge the status quo on behalf of their colleagues from stigmatized groups. But how do employees enact courage in this regard, and what are the effects of their courageous acts on employees from stigmatized groups who witness them at work? We conducted four studies to answer these questions, using qualitative and quantitative data collected from 428 transgender employees. We hypothesized that when cisgender (i.e., non-transgender) employees engage in these acts of oppositional courage for social justice at work, they communicate a powerful, public message to their transgender colleagues that they are valuable members of the organization. This message of value, in turn, has important implications for transgender employees’ job satisfaction and emotional wellbeing. As a part of the research, transgender employees were asked to provide accounts of their exposure to these courageous behaviors in support of their trans identities at work. They reported witnessing their cisgender peers engage in courageous acts that involved advocating for their rights, defending them in interpersonal situations, and educating others on transgender issues. Using experimental and field survey designs, the researchers then tested their hypotheses and found support for them.