Below are the abstracts for academic publications I’ve published. Usually only a small number of academics (and an even smaller number of non-academics) find this page interesting compared to the other work I do.
The Robot Revolution
Managerial and Employment Consequences for Firms
Management Science (2021) 67(9): 5586-5605.
As a new general-purpose technology, robots have the potential to radically transform employment and organizations. In contrast to prior studies that predict dramatic employment declines, we find that investments in robotics are associated with increases in total firm employment but decreases in the total number of managers. Similarly, we find that robots are associated with an increase in the span of control for supervisors remaining within the organization. We also provide evidence that robot adoption is not motivated by the desire to reduce labor costs but is instead related to improving product and service quality. Our findings are consistent with the notion that robots reduce variance in production processes, diminishing the need for managers to monitor worker activities to ensure production quality. As additional evidence, we also find that robot investments predict improved performance measurement and increased adoption of incentive pay based on individual employee performance. With respect to changes in skill composition within the organization, robots predict decreases in employment for middle-skilled workers but increases in employment for low- and high-skilled workers. We also find that robots predict not only changes in employment but also corresponding adaptations in organizational structure. Robot investments are associated with both centralization and decentralization of decision-making authority depending on the task, but decision rights in either case are reassigned away from the managerial level of the hierarchy. Overall, our results suggest that robots have distinct and profound effects on employment and organizations that require fundamental changes in firm practices and organizational design.
Corporate governance and the rise of integrating corporate social responsibility criteria in executive compensation
Effectiveness and implications for firm outcomes
Strategic Management Journal (2019) 40(7): 1097-1122.
Practitioner-oriented version of abstract:
This paper examines the effectiveness and implications of integrating environmental and social performance criteria in executive compensation (CSR contracting)—a recent practice in corporate governance that is becoming more and more prevalent. We show that CSR contracting mitigates corporate short-termism and improves business performance. Firms that adopt CSR contracting experience a significant increase in firm value, which foreshadows an increase in long-term operating profits. Furthermore, firms that adopt CSR contracting improve their environmental and social performance, especially with respect to the environment and local communities. Overall, our findings suggest that CSR contracting directs management's attention to stakeholders that are less salient but financially material to the firm in the long run, thereby improving a firm's governance and its impact on society and the natural environment.
Awards received:
Winner of the 2017 Moskowitz Prize for Best Paper in Sustainable and Responsible Investing (UC Berkeley)
Winner of the 2017 Fiegenbaum Best Paper Award, Israel Strategy Conference
Winner of the 2017 Distinguished Paper Award of the Business Policy and Strategy (BPS) Division of the Academy of Management
Second Prize, 2017 Investment for Impact Research Prize for outstanding research pertaining to the social impact of capital (UC Berkeley)
Honorable Mention, 2017 Investor Responsibility Research Center (IRRC) Institute Research Award
Selected for Best Paper Proceedings, Academy of Management, Business Policy and Strategy (BPS) Division (2017).
Power to the outsiders
External hiring and decision authority allocation within organizations
Strategic Management Journal (2020) 41(9): 1628-1652.
Practitioner-oriented version of abstract:
This study examines how the effectiveness of hiring managers and high-skilled nonmanagerial employees from outside the firm is related to how much decision authority they are granted. I show that for both types of employees, external hiring predicts greater decision authority allocated to each respective level of the organization. For managers, external hiring predicts a greater likelihood of organizational change when more decision authority is granted. Similarly, for high-skilled nonmanagerial employees, external hiring predicts the development of more novel innovations when more decision authority is given. Overall, the results suggest that hiring talent from outside the firm by itself is not sufficient to expect benefits to the organization—instead, firms must also empower outside hires with the authority needed to translate their knowledge into performance.
Complementarity of performance pay and task allocation
Management Science (2019) 65(11): 5152-5170.
Complementarity between performance pay and other organizational design elements has been argued to be one potential explanation for stark differences in the observed productivity gains from performance pay adoption. Using detailed data on internal organization for a nationally representative sample of firms, we empirically test for the existence of complementarity between performance pay incentives and decentralization of decision-making authority for tasks. To address endogeneity concerns, we exploit regional variation in income tax progressivity as an instrument for the adoption of performance pay. We find systematic evidence of complementarity between performance pay and decentralization of decision making from principals to employees. However, adopting performance pay also leads to centralization of decision-making authority from nonmanagerial to managerial employees. The findings suggest that performance pay adoption leads to a concentration of decision-making control at the managerial employee level, as opposed to a general movement toward more decentralization throughout the organization.
Corporate governance and executive compensation for corporate social responsibility
Journal of Business Ethics (2016) 136: 199–213.
We link the corporate governance literature in financial economics to the agency cost perspective of corporate social responsibility (CSR) to derive theoretical predictions about the relationship between corporate governance and the existence of executive compensation incentives for CSR. We test our predictions using novel executive compensation contract data, and find that firms with more shareholder-friendly corporate governance are more likely to provide compensation to executives linked to firm social performance outcomes. Also, providing executives with direct incentives for CSR is an effective tool to increase firm social performance. The findings provide evidence identifying corporate governance as a determinant of managerial incentives for social performance, and suggest that CSR activities are more likely to be beneficial to shareholders, as opposed to an agency cost.