“We continue to develop principled and impactful leaders and entrepreneurs, foster innovation for a data and technology driven world, and grow a global presence fueled by local synergies,” said Gareth James, John H. Harland Dean. “I’m proud of our faculty and staff – and energized about the future of our school and students.”

Impacting Business & Beyond

Faculty and staff contribute to the Goizueta and Emory community, but also have significant impact on society and the broader business world. External awards include:

Karen Sedatole, Asa Griggs Candler Professor of Accounting, was named as an editor to the Accounting Review. Sedatole was also elected to the position of president elect for the Management Accounting section of the American Accounting Association.

Emma Zhang, associate professor of information systems & operations management, was named an elected member of the International Statistical Institute. Zhang was also named an associate editor to the Journal of the American Accounting Association.

Ruomeng Cui, associate professor of information systems & operations management, was a finalist for the 2022 Management Science Best Paper Award in Operations Management for her paper, “Learning from Inventory Availability Information: Evidence from Field Experiments on Amazon.”

Panos Adamopoulos, assistant professor of information systems & operations management, was named as an associate editor at Management Science.

Giacomo Negro, professor of organization & management, was appointed as the senior editor of Organization Science and also received an honorable mention for the Robert K. Merton Award for his paper, “What’s Next? Artists’ Music After Grammy Awards.” Negro additionally served as the principal investigator for the 2022 LGBTQ Southern Survey.

Erika Hall, associate professor of organization & management, was named as an incoming associate editor at the Academy of Management Discoveries.

Dan McCarthy, assistant professor of marketing and Marina Cooley, assistant professor in the practice of marketing were recognized by Poets&Quants’.” McCarthy was also a finalist for the Weitz-Winer-O’Dell Award.

John Kim, associate professor in the practice of organization & management, was designated as one of the top instructors by Coursera for Management Consulting courses.

Vilma Todri, assistant professor of information systems & operations management, was named an associate editor to the Management Information Systems Quarterly Journal, one of the top three leading Information Systems journals.

Tonya Smalls, assistant professor in the practice of accounting, has been appointed to serve on the Inaugural Advisory Board for Make-A-Wish Georgia (MAWGA).

Leading the Future Of Emory and Goizueta

Goizueta Business School and Emory also honor academic professionals and leaders for their dedication to excellence through teaching, content development, experiential learning, scholarly inquisition, and commitment.

“We could not be prouder of our exceptional faculty and staff for their remarkable work and dedication throughout the past year,” says Anandhi Bharadwaj, who will step down as vice dean for faculty and research this summer as Professor Wei Jiang prepares to take on the role. “It has been an honor to work alongside our faculty and staff in developing the school and its programs.”

The recipients of these prestigious honors and awards are listed below:

Rajiv Garg, associate professor of information systems & operations management, was awarded the Provost’s Distinguished Teaching Award for Excellence in Graduate and Professional Education. Garg was also honored as the MSBA Distinguished Core Educator.

John Kim, associate professor in the practice of organization & management, was awarded Emory Williams Distinguished Undergraduate Teaching Award.

Giacomo Negro, professor of organization & management, received the Keough Faculty Award. Negro also received the Jordan Research Award.

Marvell Nesmith, associate dean of academic affairs & instructional design, received the Keough Staff Award.

Marina Cooley, assistant professor in the practice of marketing, was honored as the BBA Distinguished Educator and was also recognized for MBA Teaching Excellence (One Year).

Omar Rodríguez-Vilá, professor in the practice of marketing, was awarded the Evening MBA Distinguished Core Educator and was also recognized for MBA Teaching Excellence (Two Year).

Charles Goetz, associate professor in the Practice of organization & management, was awarded Evening MBA Distinguished Elective Educator.

Ray Hill, associate professor in the practice of finance, was recognized for MBA Teaching Excellence (Classic Faculty).

Alvin Lim and David Sackin were awarded MSBA Distinguished Elective Educators.

Rob Kazanjian, Asa Griggs Candler Professor of Organization & Management, was awarded Executive MBA Distinguished Educator (Core).

Kevin Crowley, associate professor in the practice of finance and Narasimhan Jegadeesh, Dean’s Distinguished Chair of Finance, were awarded MAF Distinguished Educators. Crowley was also awarded Executive MBA Distinguished Educator (Elective).

Giacomo Negro, Melissa Williams and Panos Adamopoulos received Goizueta research awards at the levels of full, associate, and assistant professor, respectively.

Goizueta Business School is proud to present the accomplishments of these and other faculty members within our institution. To learn more about the teaching, specialized research, and core interests of each faculty member, check out our faculty profiles and their related publications. 

The post Goizueta Faculty and Staff Shine with Prestigious Accolades and Honors appeared first on EmoryBusiness.com.

Minority Board Directors Held Back by Glass Ceiling and “Myopic” Biases

Diversity remains a troubling issue in the upper echelons of U.S. business today. A stunning 81 percent of board members in top firms are white and male, according to the Standard & Poor 500 Index. So what prevents women and minority directors making it to the top? Goizueta’s Grace Pownall, professor and area coordinator of accounting,and Justin Short, assistant professor of accounting, together with Zawadi Lemayian of Washington University parsed 12 years of data on gender, ethnicity, and compensation to get insight into who holds power in U.S. board rooms. In Behavioral and Experimental Finance, research results point to two critical roadblocks that continue to stymie the career trajectory of aspiring Black, female, and minority directors: the glass ceiling effect that reduces the talent pool; and what Short et. al. call “myopic” bias entrenched in corporate America.

“The glass ceiling is a bottleneck for diverse talent,” says Short. “But we also see minority directors fail to secure promotions once they’re on the board. We conjecture that this is down to biased or myopic thinking on the part of chairs and peers.” Leaders need to be cognizant of the cut-off points that tie to ethnicity and gender in the U.S. and elsewhere, say the researchers; not least of all because of risk to innovation. “Without diversity, any organization risks deferring to group think, and sourcing creativity and ideas from the same, small pool of shared experience,” says Short. “There’s still work to be done because diversity at top levels of American business should be commonplace.”

B2B Firms Need to Smarten Up before Using AI in Procurement

Procurement, the process of buying in goods, products or services from external suppliers, is critical in the B2B market. But it’s costly, labor-intensive, and time-consuming. To speed and drive efficiencies in supply chain management, procurement managers are turning to artificial intelligence (AI). On the one hand, AI can automate the process of obtaining pricing quotes using tools like AI Assist and chat boxes. Then there’s the “smart control” that AI can leverage to identify the best potential suppliers via algorithms that collect and analyze market information.  Cut-and-dried benefits then for decision-makers? Not quite, says Goizueta’s Ruomeng Cui, assistant professor of Information Systems and Operations Management of research to appear in Manufacturing & Service Operations Management. Because unless your AI system is fitted with the smart control, you run the risk of getting higher price quotes from suppliers than you would if you used human procurement purchasers. And it’s down to how suppliers interact with automated chatbots. Together with colleagues from Rutgers University and Tianjin University, Cui ran a large-scale field experiment using China’s Alibaba trading platform and integrated chat program, Aliwangwang. What they found is that suppliers essentially “discriminate” against chatbot buyers when it comes to quoting prices. “Suppliers see chatbots as lacking expertise around their products,” says Cui. “The fact they don’t have to lower prices to build professional relationships with chatbot buyers means they tend to quote higher than they would otherwise.” This effect is mitigated, however, when buyers signal to suppliers that they also use the smart control: an AI-powered recommendation system. Caveat emptor, say Cui and her co-authors: by all means use AI in your procurement processes, just be smart about it. 

Do Multinationals Enjoy an IT Advantage in Emerging Markets?

We know that digital technology helps firms compete globally. But does IT give foreign firms the edge over local businesses for exploiting opportunities in emerging markets? Yes and no, says Goizueta George S. Craft Professor in Information Systems & Operations Management Benn Konsynski, and his co-authors. Their latest paper in Journal of Management Information Systems looks at data from a large sample of local and international businesses operating in India and reveals two key insights. First, they find that foreign players using IT to boost organizational capabilities do tend to have the advantage over incumbents when it comes to partnering with other companies – a key factor in their ability to scale operations in emerging markets. However, in areas like marketing and customer services, technology gives local firms the edge over foreign competitors, likely because of superior knowledge and understanding of local markets. Konsynski and colleagues shed authoritative new light on two critical areas: how both context and contingency shape outcomes for firms leveraging digital technologies to compete; and the perhaps unforeseen challenges that await newcomers looking to expand operations in emerging markets, which remain an attractive opportunity for international companies.

If PPP Relief is so Attractive, why are so few Small Firms Taking it up?

The Paycheck Protection Program (PPP), part of the U.S. Government’s CARES Act, is a relief package that offers highly subsidized financing to small businesses. With anescalating value, PPP reaches deep into the pockets of Federal Reserve with the aim of helping corporate America weather the economic contraction and job losses due to the pandemic. Yet, despite the “positive shock” it represents to struggling firms, PPP uptake has been far from universal. Not only that, but a significant proportion of firms applying for PPP actually return them to the government without using them. So what’s going on? It has to do with the indirect costs imposed on borrowers, says Goizueta’s Tetyana Balyuk, assistant professor of finance, in the National Bureau of Economic Research: Working Paper. She and colleagues from Johns Hopkins Carey and Fuqua School of Business looked at publicly listed firms that applied for PPP funds using databases maintained by the Securities and Exchange Commission. “These firms are worried about ex-post audits and investigations into recipients of these PPP funds, which are conducted by the government. Specifically they’re worried about subjectivity of these types of audits, and the broad powers the government has to pursue litigation.” The solution to this, she says, is to focus on the objective standards for PPP eligibility, and similarly objective standards for the conduct of ex-post audits. “Among other measures, policy-makers might want to look at delineating safe harbors to circumscribe litigation, which has been a standard practice in securities law since the 1930s.”

What are the Costs – and Opportunities – to Retailers in Returned Merchandise?

In 2018, a staggering 10% of all retail sales –around $369 billion – were returned to the original seller. For retailers, this is vastly challenging. First there’s figuring out how to respond; then there’s the huge financial loss from returned stock. And then there’s simply trying to work out what to do with unwanted merchandise and how to absorb it back into the inventory. But is there an opportunity here for retailers, too? Goizueta’s Ryan Hamilton, associate professor of marketing, and Sandy D. Jap, Sarah Beth Brown professor of marketing,believe so. Together with Wharton Professor and former dean of Goizueta Business School, Thomas S. Robertson, they’ve published their research in Journal of Retailing.

The researchers dive into literature surrounding the returns market – a market so valuable it is “ripe for more research” – and found that returns policies can build reputation, drive customer loyalty, and secure competitive advantage. “Consumers today increasingly expect to be able to return goods easily,” says Jap, “and it’s a burden for retailers. But also an opportunity to deliver a customer experience that drives brand loyalty.” For those retailers, returns provide the chance to exchange goods, or even cross or upsell to customers who return to stores or sites to bring back original purchases. The trick, says Jap, is to “get it right.”An easy returns policy may build erputation for great customer service; too lax a policy and you might end up “training” customers to make returns, she says. There’s the risk to reputation, too, in how retailers absorb or dispose of returned goods: are their policies sustainable and environmentally friendly? More to explore in the potential trade-offs here, says Jap, and she and her co-authors call for more research into this evolving stage in the purchase journey.

Achievement? It’s All in the Eye of the Beholder

There is a well-documented gap in achievement between U.S. social classes  that hurts the perception of, standing, and prospects for people from lower-class, high-school educated backgrounds, vis a vis their higher-class counterparts with college degrees. One way of attenuating this gap might be to rethink the way society measures achievement, says Goizueta Assistant Professor of Organization and Management, Andrea Dittmann. Instead of assessing people’s skills and aptitudes through the lens of individual achievement, might it not be just as helpful to measure ability based on how well people work together, as a part of a team? Together with Nicole Stephens of Kellogg and USC Marshall’s Sarah Townsend, Dittman ran four studies of outcomes for students working alone or in groups. The work published in Journal of Personality and Social Psychology portrayed consistent results: when working individually, higher-class students are better able to showcase their strengths. But in groups, this advantage disappears. In fact, when people from lower-class contexts work in teams, they demonstrate unique strengths that can set them apart from more privileged counterparts. Dittman and co-authors call for gateway institutions – institutes of higher education and workplaces – to integrate these findings into practices and procedures that reflect that one style of achievement is not superior to the other, but simply different.

Is There a Case for Sharing Less Information in Financial Statements?

There’s broad consensus in the world of finance. Disaggregation – the practice of breaking down different components or sources of earnings in a financial statement – is good. After all, for investors looking to predict a company’s earnings from one year to the next, all information is good information, right? Not necessarily, says Goizueta Professor of Finance, Teri Yohn; it all depends on what type of information is being shared. Together with colleagues from Colorado, Indiana, and OSU, Yohn hypothesized that not all disaggregated components in earnings statements are heterogeneous. Not all information might be specific to one year, and that’s problematic. “Investors assume that disaggregation highlights one-off specificities that impact earnings – things like restructuring costs– but won’t have a de facto impact on the future earnings of a company,” says Yohn. However, her research, published in The Journal of Accounting Studies, shows that disaggregation also trawls up homogeneous things – the same components that impact earnings year over year. This can lead to confusion on the part of investors, and actual mistakes in forecasting future earnings. “Our paper has two clear takeaways,” Yohn says “For investors: don’t assume that disaggregation only highlights the one-offs in earnings specific to a given timeframe.” For regulators and standard-setters who have pushed for more disaggregation in recent years, Yohn and her co-authors urge deeper reflection about what type of disaggregation should be included in financial statements, or not.

Learn more about our Goizueta Business School faculty, their research, specialties, and areas of interest. #GoizuetaKnows

The post Knowledge Creation Spring 2021 appeared first on EmoryBusiness.com.

If we deploy automation without thinking strategically about intelligence, too, isn’t AI likely to backfire on us?

Airplane manufacturer, Boeing, made headlines in 2019 for all the wrong reasons. Its 737 Max aircraft was indefinitely grounded after two fatal crashes in the space of just six months had claimed the lives of 346 people. Investigation into the accidents revealed that updates to an automated system – the Maneuvering Characteristics Augmentation System, known as MACS – had failed to integrate one of two intelligent sensors, meaning the system lacked a critical security backstop. As the aircrafts switched into autopilot mode shortly after takeoff, the error sent them both into fatal nosedives within minutes.

These tragedies highlight an issue with automation that needs more focused attention says Goizueta’s Ruomeng Cui, assistant professor of information systems and operation management. And it’s this: if we deploy automation without thinking strategically about intelligence too, is AI likely to backfire on us?

Cui is an expert in operations strategies in digital retail and platform markets. To better understand the challenges surrounding automation and intelligence in operational processes, she teamed with Shichen Zhang of Tianjin University and Rutgers’ Meng Li to explore how AI brings value in the procurement space.

With Deloitte reporting that almost 45% of Chief Procurement Officers globally are now using, piloting, or planning to integrate AI into their operations, these insights should provide interesting food for thought, says Cui.

“AI isn’t just about being quicker, it’s also about being smarter. It can deliver automation but can also deliver predictive intelligence; and while these two dimensions might be correlated, one doesn’t necessarily imply the other – as the Boeing example demonstrates,” says Cui.

From the tech perspective, there’s a lot of buzz about how AI is helping to drive decision-making, she adds. But there is still plenty that we don’t know about the operational dimensions to using artificial intelligence.

“With international procurement, you’re basically talking about big retailers going in and requesting prices for goods or products from wholesale suppliers. And that’s a process that could, in theory, lend itself very well to AI, since it can automate simple (and tedious) tasks over and over again. So there’s a significant potential gain in companies outsourcing this kind of task to the machine.”

But although the potential might be clear, Cui and her colleagues believe that simply automating these processes might not in fact yield optimal results; and could in fact work against buyers by encouraging suppliers to quote higher prices than they might in personalized, human transactions.

Who Comes Out Ahead on Price? Humans or AI Chat Bots?

“We speculated about the possibility of wholesalers discriminating against the AI,” says Cui. “Specifically, we wanted to know if the sellers would quote higher prices to AI bots than they would to human buyers, because at the end of the day these bots are just machines; they don’t bring the authenticity or sincerity of human beings.”

Cui was also keen to understand whether AI bots equipped with predictive intelligence would fare better: whether the “smartness dimension” would offset any potential discrimination on the part of wholesalers.

“We wondered whether signaling intelligence in some way would make suppliers trust the bots more and how that might impact price quotes.”

To put all of this to test, Cui, Zhang and Li created a landmark field experiment – the first of its kind to explore AI in the procurement setting – using Alibaba 1688, the largest B2B platform in China.

The platform connects 30 million enterprise buyers and suppliers in 49 major categories, and uses a built-in instant chat system called Aliwangwang that enables buyers to contact suppliers for product specifics and prices. Buying companies are allowed to embed autonomous chatbot features in Aliwangwang in order to automate communications.

Cui et. al collaborated with a large, Chinese retail company using the 1688 platform to buy car accessories.

“The company sends out requests for prices via human procurement managers and an automated chat bot,” says Cui. “So we could see pretty clearly how price quotes vary when it’s AI or actual human beings making the contact with the suppliers.”

In the first part of the experiment, Cui et. al programmed the AI bot to simply identify suppliers and request price quotes automatically. These quotes were then compared to those received by the human procurement managers. In total, the researchers parsed just under 4000 product price quotes from just under 4000 wholesale suppliers.

What they found was consistent price discrimination against the chat bots.

“We found that when there is just automation, suppliers give a significantly higher quote to the AI bots than they do to human agents,” says Cui. “The effect is consistent: chatbot, female, and male buyers receive an average price discount of 18.01%, 19.15%, and 20.96%, respectively. In other words, simply automating the process using AI doesn’t actually help they buyer, and actually seems to backfire in this setting.”

Cui puts this down to something called algorithm aversion: human distrust or dislike of machines and robots.

When Machines are Smart, Discounts Rise

“When wholesalers are just asked over and over for their prices, they know that they are dealing with a machine and the intuition is that the machine is not intelligent, that it doesn’t have market expertise, and that it isn’t capable of decision-making. There’s no incentive to build relationships or to engage in any kind of negotiating dynamic here.”

However, this kind of price discrimination effectively disappears when the AI bots are programmed to evince some form of intelligence.

“In the second part of the experiment, we added the dimension of smartness,” says Cui.

“We used an algorithm to analyze different suppliers, and to make selections based on the lowest market prices for goods. When each supplier received the request from the AI bot, they also got a message telling them about this process. In other words, the bot was programmed to signal the capability of being smart and selective. And here we saw significantly different results.”

Looking at the data, they found that “smart” chat bot was getting higher price discounts than human peers. Male buyers, female buyers and smart bots were discounted 21.04%, 18.76% and 22.57% respectively.

“There’s a long tradition of asking for prices in person and building human relationships – especially when companies are working with smaller sets of suppliers. But this is changing. As AI ramps up we’re seeing more and more applications in industry and automation is on the up especially in those first few rounds of screening and asking around.”

The takeaway for procurement executives, she says, is to get smarter about the use of AI. “Automation is the future because of the huge gains it offers in productivity. But to get the better results, you really need to be thinking about the smartness element in tandem with the automation piece, and you need to align the development of both as you roll out AI in your operations.”

That smartness can be simple. It can take the form of nuanced messages that signal intelligence. The key, says Cui, is to be strategic. “AI is a strategic tool, not just a timesaver, and you can’t let the automation part get way ahead of its intelligence. You need it to be smart or it might just backfire.”

The post Do Wholesalers Discriminate Against AI in Procurement Practices? appeared first on EmoryBusiness.com.

Remote working not only appears to work, but it appears to have a number of advantages—savings in office maintenance costs and time spent commuting, not to mention enabling organizations to safeguard productivity when there’s a major shock or crisis. But is it all good news? Or good news for all?

A new paper by Ruomeng Cui, assistant professor of information systems and operations management at Emory’s Goizueta Business School, reveals an important drop in the productivity of female academics around the world in the wake of the COVID-19 lockdowns. In fact, in the ten weeks following the initial lockdown in the United States, their productivity fell by a stunning 13.9 percent relative to that of male colleagues. And it’s likely to do with the disproportionate burden of responsibility for household needs and childcare that persistently falls on women, Cui said.

“We know that gender inequality persists both in the workplace and at home, and we were curious to see how the lockdown scenario would attenuate or exacerbate the situation for women,” Cui said.

Anecdotal evidence from her own field—academia—showed that in the weeks following the stay at home mandate in March, there was an upswing of around 20 to 30 percent of papers submitted to journals. However, the overwhelming majority of these were being authored by men.

Intrigued, Cui teamed up with Goizueta doctoral student Hao Ding and Feng Zhu from Harvard Business School to conduct a systematic study of female academics’ productivity and output during this period.

“We knew that the lockdown had disrupted life for everyone, including academics. With schools and kindergartens closed and people taking care of work and household obligations at home, we intuited that women would be affected more than men as they are disproportionately burdened with domestic and childcare duties,” Cui said. For female academics this would theoretically be particularly acute, as the critical thinking that goes into research calls for quiet, interruption-free environments.

To put this to the test, Cui and her co-authors created a large data set covering all the new social science research papers produced by men and women, across 18 disciplines and submitted to SSRN, a research repository, between December 2018 to May 2019 and then from December 2019 to May 2020.

From this set, they were able to extract information on titles, authors’ names, affiliations, and addresses to identify their countries and institutions, as well as faculty pages to distinguish between men and women. In total they collected just under 43,000 papers written by more than 76,000 authors in 25 countries.

Looking at the data, Cui and her colleagues were able to compute the total number of papers produced by male and female academics each week and then compare the productivity of both before and after the start of the lockdown.

Prior to the pandemic, the 2019 period showed no significant changes in productivity in either gender. But in the 10 weeks following the shock of lockdown, a clear gap emerges between men and women, with female academics’ productivity falling by just under 14 percent in comparison to their male colleagues. Interestingly the effect was more pronounced in top-ranked research universities. This is likely because top schools require faculty to publish research as the primary requisite for promotion, so men would be motivated to continue authoring papers before and after the lockdown.

These findings lend solid, empirical clout to the notion that women do take a hit to productivity when care and work time are reorganized, Cui noted.

“We see clearly that women are producing less work as a consequence of working from home. In the field of academia, that has huge implications as achieving a permanent position, or tenure, is generally linked to your research output,” she said. “So, there is a serious fairness issue there. If women are producing less because the burden of household responsibility is greater for them than for men, then you’re likely to see fewer female academics get tenure through no fault of their own.” Indeed, one of the other findings of the study shows that while productivity fell, the quality of female-authored research measured by downloads and citations did not.

Then there’s the issue of teleworking and gender. With a significant proportion of the world’s white-collar organizations still working from home and unlikely to head back to the office any time soon—and as many schools and childcare facilities remain closed due to the pandemic—Cui is concerned that productivity as a measure of value and a marker of success might mean the odds are further stacked against women. And not just in academia.

“We looked at universities in particular, but our findings can really be externalized to any other industry because the underlying issues here are universal. So, with remote working becoming normalized, I think there’s a real onus on organizations of every type to think about how to mitigate these unintended consequences,” she said. “There needs to be more thought about how we measure value or potential of employees.”

Cui calls for organizations and institutions to consider these factors when they evaluate male and female workers in the present context and looking to the future. Among the kinds of proactive moves they might consider are to make training programs for male and female employees that explore fairness and encourage a more even distribution of responsibility in the home and for children.

“There’s nothing to be gained in prioritizing productivity as a tool for evaluation and just giving women more time, say, to produce as much,” Cui warned. “You’re just left with the same scenario of women doing more than their fair share. Solving this issue is really much more about being aware of it, getting educated about it, and changing your mindset.”

The post Lockdown teleworking impacts productivity of women more than men appeared first on EmoryBusiness.com.

After the coronavirus pandemic forced most of the country into lockdown, online shopping soared. According to CCInsights.org, by the end of April 2020 there was a 146% year-over-year increase in U.S. and Canadian online retail orders. Amazon was so overwhelmed by the combination of increased demand, logistical nightmares, and warehouse worker safety issues that the company announced significant delays in its Amazon Prime shipping speeds. When the company announced it would prioritize the shipping of essential items, the online retailer’s third-party sellers were left to manage their own shipping — something Amazon usually did for them. Shoppers who placed orders for non-essential products at the end of March sometimes received estimated delivery dates of more than a month away.

While consumers often received their orders sooner than the 30-day estimate, for Prime shoppers used to getting their items delivered for free the next day, the change in delivery speed was a shock. Amazon shoppers turned to alternative outlets that promised much quicker delivery speeds. Companies with strong e-commerce positions and supply chains, such as Walmart, took advantage of Amazon’s situation.

“People are very sensitive to delivery and how fast they can get products,” said Ruomeng Cui, assistant professor in information systems & operations management. “Maybe, just maybe, Amazon would be able to deliver faster than one month, but they chose to promise customers one month — that was their choice.” Unfortunately for Amazon, by setting conservative delivery speed promises, they exacerbated an already bad situation.

According to Cui’s paper “Sooner or Later? Promising Delivery Speed in Online Retail” (Ruomeng Cui, Tianshu Sun, Zhikun Lu and Joseph M. Golden), optimizing delivery speed promise can have a substantial effect on a company’s sales. How substantial? Without changing the actual delivery speed itself — only the delivery speed promise — Cui’s research showed that when the retailer promised customers one day faster shipping, sales increased, profits increased, and customers spent more on each order.

“It’s a very critical decision for retailers to try to determine how to manage delivery and how to manage the information aspect of delivery,” added Cui.

The idea to study delivery speed promise came about a few years ago, as Cui talked with some colleagues — fellow “geek PhDs” like her, she said — one of whom was Joseph Golden, co-founder and CEO of Collage.com, an online retailer that helps users create one-of-a-kind products using personal photos. The colleagues were chatting about Collage.com’s operations strategies and what levers the company could manipulate to optimize its operations.

Collage.com works with 13 vendors scattered across the U.S. to produce its users’ creations. Once completed, a third-party shipper like UPS or FedEx delivers the products to customers. When a customer orders a custom coffee mug with a photo on it, the order will go to one of the Collage.com vendors with the capability to produce the item. Given that there are likely several vendors who can do so, the order routes to the vendor closest to the customer. Since some customers live closer to vendors than other customers, it follows that those who live nearby would receive their completed orders faster. But at the time Cui and her PhD friends had their conversation, Collage.com’s shipping options were standardized.

“Everybody got the same estimate — the same delivery promise — which is not the optimal way,” said Cui. “For customers in cities that are closer to that vendor, they’ll get their product faster. For customers who are farther away, obviously they’ll get the product slower.”

Not long after, Cui approached Golden about doing what she called “a natural experiment.” Have the company change its delivery promise to match the actual delivery speed. “Their old, previous information and delivery speed disclosure policy was naïve in the sense that everybody got the same estimate,” explained Cui. “The only thing that we would change was the information.”

For a period of six months, from September 2016 to March 2017, Cui and her colleagues collected Collage.com’s transaction-level dataset of 212,340 transactions from 462 SKUs. These orders came in from 7,090 cities. During the first half of the experiment, Collage.com used its original shipping strategy. Throughout the second half of the experiment, the company implemented a new shipping disclosure policy where customers were given different delivery speed times based on how close they were to vendors. The researchers then used the transactional data to compare the before and after results of the disclosure change.

According to Cui’s research, “The delivery speed became faster in 13.5% of cities, slower in 58.5% of cities and did not change in 27.9% of cities.” The faster speed was dubbed “aggressive disclosure” and the slower speed “conservative disclosure.” Given that all of Collage.com’s shipping was outsourced, there was no shipping infrastructure to build or change — nor was there an in-house physical delivery setup to alter. All that changed was the delivery speed information and what consumers expected of the delivery speed.

Cui and her fellow researchers studied five outcome variables that measured sales and expenditures: number of orders, profits, order values, item prices, and shipping expenditures. They also studied three outcome variables that measured customers’ experiences and that could indicate future customer retention: product return, satisfied or not, and satisfaction score.

Cui and her colleagues concluded, “The change in disclosure strategy significantly affects consumers’ purchasing behavior. In particular, when the retailer promises customers one day faster shipping, sales increase by 0.73%, profits increase by 2.0%, and customers spend 3.5% more on each order.” For a company with $1 billion in profits, the addition of a faster shipping option could give the company a two percent boost in profits, adding $20 million to its bottom line.  

The research also illustrated that a slower delivery speed promise negatively affected the variables in a similar way.

The value of communicating delivery times

From a customer satisfaction standpoint, the conservative disclosure lowered customer satisfaction while the aggressive disclosure didn’t affect the company’s satisfaction score, although it did increase product returns when shipping speed was overly aggressive and products were delivered late. “These results indicate that in our research context, promising customers a faster delivery speed can boost sales and profitability but at the cost of a higher product return rate,” the researchers wrote. They go on to caution retailers that promising a conservative shipping speed can be costly. “It’s a careful balance that companies need to think about — how to manage customers’ expectations properly,” explained Cui.

Cui emphasized that this research is all about information. “Information is the frontier of how you communicate with your customers,” she said. “It’s a holistic customer experience story. It should be a proper, optimal point of how fast or how slow I want to promise [delivery to] my customers.”

While Collage.com is a relatively unique company, Cui believes the findings apply to any online retailer. “The same logic applies to a lot of companies — Amazon, Walmart, Home Depot, everybody,” she said.

At several industry conferences where she presented the Collage.com research, company representatives approached her to share their remarkably similar results from similar changes in their delivery speed disclosure policies.

“I’m confident that the results are quite consistent—even the magnitude—are very consistent across a lot of retailers,” she said. “This set of results could be very valuable to any online retailer facing a similar situation.”

Crafting the delivery promise

Given online retailers’ adoption of machine learning, Cui believes companies could tweak their algorithms to explore what products and which types of customers are more tolerant to over-promising as it relates to the delivery speed promise. “Companies can then use the analysis to customize and differentiate the types of products that adopt different types of information strategies,” Cui said. “Just change your algorithm, learn and incorporate some of the data-driven decisions and methods.”

Going forward, Cui hopes to customize algorithms for companies in an effort to help them dynamically optimize how to promise the correct delivery speed to customers. While many companies, like Collage.com, don’t own their own delivery function and can’t change the actual delivery speed by changing infrastructure, these companies can “manage the information,” said Cui. “It’s easy, and I think it should be the retailer’s responsibility and job to optimize.”

“I want to advocate for all retailers to think strategically in their information aspect,” said Cui. “Don’t let such an easily fixed lever just sit there at almost zero cost.”

The post Optimizing the delivery speed promise can boost sales appeared first on EmoryBusiness.com.

The winners of this year’s Roberto C. Goizueta Award for Leadership are Michael Battat 20BBA and Major Jason “J” Waidzulis 20MBA. Nominated by a member of the Goizueta community (faculty, staff or a fellow student), the award recognizes one graduating BBA student and one graduating MBA student who embody the values and leadership qualities exhibited by Roberto Goizueta. Nominations are reviewed by a selection committee composed of BBA and MBA program deans and several professors, and the winners are chosen with six leadership criteria in mind: love of learning; inspirational leadership; creative thinking; courage and commitment; transparency and trust; excellence and integrity.

Established in the fall of 2018 and endowed by The Goizueta Foundation, each student receives $25,000 as part of the award. Student recipients also identify the faculty member most influential in shaping their time at Goizueta. Battat selected Jeff Rosensweig, associate professor of finance and director of The Robson Program for Business, Public Policy, and Government.

Waidzulis identified Ken Keen, senior lecturer in organization & management and associate dean for leadership. Rosensweig and Keen will each receive a $5,000 honorarium.

“It’s an honor to be recognized for leading in a way that reflects the legacy of Roberto Goizueta,” said Waidzulis. “It’s also extremely meaningful because selection required nomination and support from a community of world-class faculty, staff and colleagues at the Goizueta Business School. They have inspired me over the past two years, and it makes me feel good knowing that I have been able to pay it forward by impacting the lives of others.”

For more details about the award recipients, visit emory.biz/leadershipaward.

Faculty accolades

Karen Ton, assistant professor of accounting, received the Emory Crystal Apple for Excellence in Undergraduate Business Education in February. Sponsored by the Residence Hall Association, the Crystal Apple Awards honor faculty members who go above and beyond in their search for knowledge and involvement in the Emory community. Students provide the nominations, and this year the committee received more than 200 nominations.

In March, Emory’s Office of Technology Transfer recognized Daniel McCarthy, assistant professor of marketing, and David Schweidel, professor of marketing, at their 14th Annual Celebration of Technology & Innovation. The pair were highlighted for their 2019 technology innovation—a software that can derive brand insights from mobile location data.

While mobile location analytics software has existed for a while, McCarthy and Schweidel have developed a privacy-preserving methodology to infer a brand’s customer base size and share of wallet within a category by separately identifying customers’ location and time-invariant preferences both for brands and specific stores.

Ruomeng Cui, assistant professor of information systems & operations management, was awarded a 2019 Alibaba Innovative Research Award for her proposal entitled “Causal Inference and Optimization: Dynamic Treatment Strategies in Coupon and Pricing Applications.” The awards are given annually by the Alibaba Innovative Research (AIR) program, a bridge that connects the Alibaba Group with researchers from top universities and research institutes around the world. AIR provides research funding, real-life business scenarios and other necessary support to successful applicants.

Vilma Todri, assistant professor of information systems & operations management, is this year’s recipient of the Emory Williams Distinguished Undergraduate Teaching Award. The award recognizes faculty with a record of excellence in teaching and was established by Emory Williams, a 1932 Emory College alumnus and long-time trustee.

The post Leadership awards announced appeared first on EmoryBusiness.com.

Plenty, says Goizueta’s Ruomeng Cui. In fact, forward-thinking organizations would do well to factor logistics into the integral design of their strategy.

And that’s because, according to her new research, the ability to deliver products to customers in a manner that is both timely and efficient has a direct and significant impact on revenue and retention rates.

Together with Rutgers’ Meng Li and Qiang Li, Cui who is Assistant Professor of Information Systems and Operation Management, has analyzed huge quantities of data from a clash between e-commerce behemoth, Alibaba, and China’s largest logistics firm, SF Express in June 2017.

Differences between the companies led to Alibaba suspending SF services for a period of 48 hours between June 1 and June 3, 2017. The financial fallout from the dispute was impressive – much greater than Cui and her co-authors had hypothesized. Alibaba sales fell by a stunning 16.42 percent during the course of the SF Express outage and picked up again by 18.83 percent when normal services were resumed.

And these findings have implications for all businesses operating in the e-commerce space, says Cui.

“Alibaba is the world’s largest online retail platform. Its activities dwarf that of its nearest rival, Amazon,” she said. “We were able to exploit this unique event in 2017 to gain real insight into the economic value of logistics to the biggest e-commerce entity on the planet, so in that sense, our findings have relevance for anyone operating in this space.”

Going into the study, says Cui, she and her colleagues had expected to find “some negative impact on sales” as a result of the dispute. They were, in fact, stunned by the “magnitude” of customer reaction.

“The study also provides insight into how customers value logistics as an integral function of the online shopping experience. We figured that if you remove the best logistics option, then some –but not all – of your customers are going to care. And we hypothesized that this might play out in the Alibaba scenario through a downtick of maybe 3 or 5 percent in sales. At more than 10 percent, the magnitude of the actual response was honestly surprising.”

Using a public data set provided by Alibaba, the researchers sifted more than 1 million transactions attached to 130,000 stock keeping units (SKUs) across China, between June 1 and 3, 2017. Because only a relatively small proportion of goods were affected by the SF Express dispute, they were able to isolate, compare and contrast data from this group with sales data across other, unaffected products.

Breaking down their findings, the researchers found that the withdrawal of SF Express from the Alibaba platform had a more deleterious effect on in-demand or “star” products, on expensive products and on products that were not discounted than on marked-down or long-tail goods.”

“This stands to reason,” says Cui. “Customers will turn to competing retail platforms for the star products, just as they will expect expensive goods to be delivered in a reliable manner to protect them from damages or loss. Conversely, with cheaper or discounted SUKs, customers are willing to sacrifice the service in exchange for a bargain or a price markdown.”

Significantly, Cui and her colleagues found that the SF Express clash had relatively little impact on Alibaba customer logistics ratings – a finding that calls into question the reliability of these ratings as a metrics mechanism.

“Giving logistics services a rating is essentially an ex-post activity,” explains Cui. “In other words, customers evaluate a product or service after they have received it. In the Alibaba case, the customers affected by the logistics dispute don’t make the purchase – they’ve already left the platform and won’t bother to evaluate the service. They’re lost customers. So this rating is no longer relevant as a metric.”

With the ongoing crisis in bricks and mortar retail, e-commerce is a market continues to pick up momentum. Cui argues that logistics should be prioritized in the online retail context.

“Customers search, compare and place an order online. Delivery is, therefore, a critical component of the customer life cycle; it’s where they get to receive the physical product and experience the service for the first. Until now, quantifying the value of logistics quality on retail platforms has been almost impossible, because it’s just too costly for companies to manipulate the service quality at the company or platform level at the risk of losing billions of dollars. The Alibaba case demonstrates that not only do logistics matter – they are a competitive differentiator. I’d go further and say that logistics should inform operations strategy as a front-stage revenue driver that companies should proactively compete over.”

A number of companies, Amazon included, are now exploring the option of integrating or in-sourcing logistics in the effort to improve delivery quality. And this is potentially a very good practice, says Cui. She also recommends that online retailers explore the advantages of pursuing a long-tail strategy in their product offerings as a shield against competition from direct service.

“Retail platforms should also evaluate their product characteristics – whether they are star products, luxury or long tail – and consider tailoring the delivery to the product. But essentially, whatever tactic a firm opts to pursue, the key takeaway is that logistics and operations strategy are much more than a backstage cost. They are a critical competitive differentiator that should be integrated into your organization’s strategy.”

Visualizing the Research

The post Cui: Delivery partnerships key for online sellers appeared first on EmoryBusiness.com.