Previously Funded Projects 2014-2015

Theodore J. Noseworthy

The proposed research programs under the tenure of this chair will advance our understanding of how consumers respond to innovation. The goal is to develop theory while informing business and policymakers not only about the benefits of properly communicated innovation, but also about the potential costs to susceptible consumers and society. This chair position coincides with an infrastructure grant from the Canadian Foundation for Innovation (CFI) to develop a world-class behavioural lab (The Innovation, Design, and Consumption Laboratory). The CRC/CFI combination presents an ideal balance to help Dr. Noseworthy examine three of his most pressing research programs:

1. How marketers can better communicate disruptive innovation;
2. How consumers may be susceptible to certain food innovations; and
3. How behaviours alter with introduction of certain monetary innovations. This CRC position was designed to help combat Canada’s innovation deficit by helping the private sector transfer knowledge into sustainable commercialized products and services to grow the economy.

The NOESIS: Innovation, Design, and Consumption Laboratory
Principal Investigator: Theodore J. Noseworthy

The proposed infrastructure will assist in advancing our current understanding of how consumers make sense of innovation, and how marketers can better communicate innovative goods and services to facilitate adoption. The end goal is to inform business and policymakers not only about the benefits of properly communicated innovation, but also about the potential costs of ambiguous products to susceptible consumers and society at large. This lab is designed to further three research programs that collectively examine

1. How marketers can better communicate radical (disruptive) innovation;
2. How consumers can be susceptible to food innovations; and
3. How behaviours can alter with the introduction of monetary/currency innovation. The Innovation, Design, and Consumption laboratory will be located in room W254 in the SSB. At the broadest level, the proposed infrastructure will allow Dr. Noseworthy to bridge the divide between scholarly advances on innovation and private sector awareness, and ultimately enhance the future economic sustainability of Canadian businesses.

SSHRC INSIGHT GRANT

Free Trade and Innovation: Evidence from Canada and Around the World
Principal Investigator: Ambrus Kecskés

According to the World Trade Organization, global trade stands at around $45 trillion (as of 2012) or 64% of gross world product. For many countries, international trade accounts for a large proportion of economic output, and it is therefore central to their prosperity. The objective of this study is to examine the effect of international trade on investment in innovation. There are persuasive arguments in favour of free trade and much supportive evidence on countries but limited evidence on the businesses through which commerce is conducted. This study uses micro data to show that greater openness to international trade fosters the growth of new products and services.

Effects of National Level Trust on Bank Risk Taking, Performance and Financial Reporting
Principal Investigator: Kiridaran Kanagaretnam
Collaborator: Gerry Lobo (University of Houston)

The most recent financial crisis has been characterized by many as trust crisis. The opportunistic behavior of bank managers has eroded the trust in banks and bankers, and is an important reason for the stock market collapse during the crisis. Given the importance of trust, the primary objective of our research program is to study whether and how national level trust influences bank financial reporting, risk taking and performance. We plan to address these questions by analyzing a sample of banks from over 70 countries during the period 2000-2006 (prior to the financial crisis) and the period 2010-2014 (after the crisis).

Fundamental Valuation and Applications to Behavioural Finance
Principal Investigator: Mark J. Kamstra
Co-Investigator: Kramer, Lisa A. (University of Toronto)

The importance of market rationality in setting asset prices has gained new currency with recent periods of market turmoil. The prices of financial assets seem influenced, at least in part, by “fads” of investor sentiment. The objective of this research is to test for deviations from fundamental value resulting from changes in investor risk aversion, and to extend these techniques to evaluate deviations from fundamental prices caused by investor sentiment. This research builds on my work on behavioural finance and my work on fundamental valuation. My research on behavioural finance finds large and robust seasonal patterns in asset returns related to a pervasive mood disorder, seasonal affective disorder, or SAD. My research on fundamental valuation, developing valuation models for pricing assets, allows the estimation of prices. If investors exhibit seasonally varying risk aversion, then market prices will appear to be both too low relative to the simulated constant risk aversion fundamental prices in the fall. The results of this research will bear importantly on the determination of appropriate policy reactions to extreme events in financial markets.

SSHRC INSIGHT DEVELOPMENT GRANT

Developing Business Analytics Capability for Competitive Advantage
Principal Investigator: Murat Kristal

This research will draw on both streams of research, and focus on driving insights from multiple case studies to develop constructs and a theoretical framework on dynamic Business Analytics capability development. My research will address the following questions:

• How does an organization develop successful dynamic business analytics capabilities?
• How can this development be measured and benchmarked?
• What are the important antecedents that a firm starting out on BA capability development should possess?
• What are common pitfalls that firms investing in BA capability should avoid?
• Why are some organizations more successful than others at implementing dynamic BA capabilities?

The final results from this study and the broader research program will contribute to knowledge of both the use of business analytics in organizations, and the development of dynamic capabilities.

Moral Reasoning, Social Preferences, and Honest Reporting
Principal Investigator: Sylvia Hsu
Co-Investigator: Janne Chung

The purpose of this project is to examine the interaction between moral reasoning and social preferences in individuals’ ethical decision making. Conventional economic theory suggests that ethics is of “no value” in self-interested agents’ decision making. However, recent empirical research shows that a proportion of ethical people forego economic payoffs in preference of behaving ethically. Because of social preference concerns, individuals’ behavior may differ from that predicted by agency theory. In contrast to conventional economics theory, social psychology suggests that individuals’ decisions are influenced by moral motivation. When individuals resolve ethical dilemmas, they evaluate two important moral concerns: harm/care and fairness. Kohlberg (1969, 1976) proposes a cognitive moral development model to theorize the cognitive aspect of moral decision making. The objectives of this project are to address two previously untested research questions by integrating the economics and social psychology literature. First, how does distributional fairness affect the ethical decisions of individuals with different moral cognitive processes? Second, when facing different levels of monetary payoff for misreporting, how do managers with different levels of moral reasoning provide financial reporting? The results will contribute to business and ethics research and provide implications for business management in enhancing moral behavior.

SSHRC CONNECTIONS GRANT

Social Impact Research Lab Project Planning Workshop
Principal Investigator: Geoffrey Kistruck

The Social Impact Research Lab (SIRlab) is a participatory action research initiative housed at the Schulich School of Business, York University. It is comprised of a global network of business scholars that draw upon a diverse range of management theories to help not-for-profit organizations and social enterprises design and pilot test improvements to their poverty alleviation models. To date, the team of scholars has undertaken research project in over 30 different counties in Africa, Asia, and Latin America. SIRlab’s network of scholars decided to begin to focus their collective efforts on a single geographic region each year, for example, 2015 on Ghana. The country of Ghana was selected for several reasons including its geographic centrality (SIRlab’s network of scholars exists in North America, Europe, and Asia), its relatively stable political system, and a growing opportunity for establishing new market linkages between the rural poor and flourishing urban centres. The inaugural workshop at York University acts as a catalyst in building direct relationships between SIRlab scholars, Ghanaian scholars, and Ghanaian practitioners.

SSHRC PARTNERSHIP DEVELOPMENT GRANT

Social Impact Research Lab
Principal Investigator: Geoffrey Kistruck

The Social Impact Research Lab (SIRlab) is a newly formed partnership based at the Schulich School of Business, York University. It is a collaborative effort comprised of three primary types of actors;

1. Strategic management scholars from developed country institutions (i.e. Canada, U.S.) that possess a passion for designing and pilot testing theoretically-based improvements to poverty alleviation models;
2. Management scholars from developing country institutions (i.e. Ghana, Tanzania) that possess a desire to strengthen their knowledge of current management theories and combined qualitative and quantitative research methodologies in the context of poverty alleviation; and
3. Non-profit organizations and social enterprises (i.e. CARE, Technoserve, Accion) who are willing to acknowledge shortcomings in their existing programming, and to experiment with potential solutions in order to achieve greater impact and efficiency in the scaling of their overall efforts. Thus, the overarching goal of the SIRlab partnership is to build stronger networks between both academic and non-academic audiences from diverse contexts for the direct sharing and co-creation of knowledge with regard to the role of business in poverty alleviation.

NSERC DISCOVERY GRANT

Simulation-Optimization Methods and Modelling-to-Generate Alternatives for Planning Under Uncertainty
Principal Investigator: Julian S. Yeomans

Simulation-optimization (SO) is a computational approach for incorporating significant uncertainties into the determination of best solutions to complex planning problems. This research will investigate a variety of methods that improve the performance of SO both by decreasing its computing time and by producing better quality solutions. Furthermore, most large, “real world” applications typically contain components that are very difficult to incorporate into corresponding computational models and tend to be riddled with unquantifiable design specifications. While mathematically optimal solutions might provide the best solutions to these modelled problems, they are generally not the best answers to the underlying “real” problems as there are invariably unmodelled objectives and unquantified issues not considered during model construction. Hence, in practice, it is considered more desirable to generate a number of very dissimilar alternatives that supply completely distinct perspectives to the formulated problem. In response to this multi-solution creation requirement, several approaches referred to as modelling-to-generate-alternatives (MGA) have been developed. This project will demonstrate that SO can be used as an effective MGA method for large-scale policy planning under uncertainty.

NSERC ENGAGE GRANTS

Leveraging Supply Chain Automation Expertise to Develop Supply Chain Analytics Capabilities
Principal Investigator: Henry Kim

According to IDC, firms worldwide spent $35B on analytics software in 2012, and the market is expected to exceed $50B by 2016. This substantial and high-growth market complements the revolution in ‘Big Data.’ Therefore, this market is of strategic importance in ensuring competitiveness of Canadian ICT industries, and so Canadian companies like QLogitek are looking to invest in raising their presence in this market. QLogitek is interested in leveraging its expertise and relationships in the supply chain space and to capitalize on current opportunities in analytics to strengthen and develop its capabilities in supply chain analytics. QLogitek’s core competencies include

1. Its expertise in supply chain automation and integration services;
2. Its knowledge of, and relationships with, its clients in key industries as well as SEB partners; and
3. Its access to clients’ and SEB partners’ data assets. With support from the ENGAGE grant, the objectives of this research collaboration are to develop a strategic plan for new solutions offerings in supply chain analytics that best leverage QLogitek’s core competencies, and to develop a use case/prototype of the most promising offerings.

CANADIAN INTERNET REGISTRATION AUTHORITY

How Do Canadian Organizations Benefit From Helping Develop the Firefox Web Browser
Principal Investigator: Ellen R. Auster
Co-Investigator: Mekki MacAulay

The purpose of this research, which is part of a broader research agenda into open source strategy, is to help understand how the participation of Canadian organizations in Mozilla’s Firefox project has contributed to their competitiveness, skills development, network, reputation, and/or growth over time. The benefit for researchers is that it challenges the standard business assumption that “giving it away” is “bad for business”.

THE SWIFT INSTITUTE

The Scope of International Mutual Fund Outsourcing
Principal Investigator: Douglas Cumming
Co-Investigators: Armin Schwienbacher and Feng Zhan

This research examines the causes and consequences of mutual fund outsourcing to different types of service providers: advisors, custodians, administrators, and transfer agents. The data indicates outsourcing is less common among bank-managed funds, funds of leading groups, but more common among funds that are distributed through third parties. Moreover, initial subscription fees are lower among funds that outsource non-advisory services, while annual management fees are not different among funds that outsource. The effect of service outsourcing on subscription fees occurs only for funds targeting institutional investors; retail investors enjoy no fee gains. The outsourcing of advisor services is associated with greater fund risk, but also with higher risk- adjusted performance (Sharpe ratio). However, the positive link with performance disappears when controlling for endogeneity, suggesting that fund managers optimally outsource advisory services in response to expected performance gains. Consistent with our predictions, outsourcing of other services does not impact portfolio decisions. Their impact is through lower subscription fees.

LAHORE UNIVERSITY OF MANAGEMENT SCIENCES

Culture, Scripts and Negotiation
Principal Investigator: Christopher Bell
Co-Investigators: S. Quratulain and A.K. Khan

We explore how culture- and society-specific negotiation scripts are related to outcomes of naïve negotiators in complex, multi-issue negotiations. A script is a cognitive knowledge structure that integrates mental representations of events, behaviors, objects, and ideas. Cultures or societies may differ in the types or content of situations they provide, with correspondingly different scripts for similar situations. In Pakistan and China, retail exchanges are typically characterized by bargaining and competitive negotiation. In Canada, most retail marketplace experiences are structured exchanges with clearly set prices and little opportunity to bargain. These differences in the form and availability of bargaining experiences will be integrated into negotiators’ scripts. Pakistani and Chinese negotiators’ performance will be determined by a script characterizing negotiation as a competitive, distributive, zero-sum game, whereas Canadian negotiators’ performance will be relatively more consistent with a cooperative interaction between partners.

MITACS OF CANADA

Credit Ratings for Small and Medium Enterprises
Principal Investigator: Melanie Cao
Co-investigators: Huaxiong Huang (York University), and Sebastian Jaimungel (University of Toronto)

Our industry partner for this grant is the Dominion Bond Rating Service Ltd. (DBRS), a privately owned Canadian Company. DBRS is a globally recognized credit rating agency. It provides timely credit rating opinions for a broad range of entities, including financial institutions, corporate entities, government bodies and various structured finance product in North America, Europe, Australasia and South America. The objective of this grant is to help DBRS build a regression model to evaluate credit ratings for small and medium enterprises. The challenge of this project is that most of small and medium enterprises are private companies which do not have stock market data. My co-applicants and I intend to propose a theoretical framework to overcome this challenge.

SIEMENS AG, VIA THE CENTRAL EUROPEAN UNIVERSITY

Conference on “Educating for Integrity”
Principal Investigator: Wesley Cragg

This grant is from Siemens, the German multinational via the Central European University to organize a conference on “Educating for Integrity” to be held at York University in November, 2015. The conference will bring together scholars, business, government, and voluntary sector leaders from North and Central America to examine and discuss the issue of corruption and bribery, how to effectively address the challenges it posed for business and the economy through education and the development of courses and training on the part of business schools, institutions of higher education generally and executive training on the part of universities, professional organizations and associations and corporations.

STATE SECRETARIAT OF RESEARCH, DEVELOPMENT AND INNOVATION, MINISTRY OF ECONOMY AND COMPETITIVENESS, SPAIN

The Globalization of Spanish Firms in Latin America: Springboard Subsidiaries, Innovation and Local Spillovers
Principal Investigator: Anoop Madhok
Co-Investigator: J. Pla-Berber and C. Pilar

This project is focused on analyzing investments in Latin America carried out by multinational firms through their subsidiaries located in Spain, i.e., units acting as headquarters out of their domestic region (extra-regional headquarters). These subsidiaries become key actors creating high added value for the various entities involved and offer unique competencies for the network that are very useful to enhance global competitiveness. In addition, the project identifies and explores the organization mechanisms critical to create and gain access to relevant knowledge in order to achieve better innovative performance. The project contributes to recent literature on the relationship between headquarters and subsidiaries, and also includes aspects from the literature on economic geography, competence creation and innovation.

NATIONAL SCIENCE FOUNDATION OF CHINA

The Relationship between Alliance Network and Firm Innovation Performance: A Cross-level and Dynamic Perspective
Principal Investigator: Justin Tan

This project attempts to investigate how factors at different levels of alliance network work on the innovation performance of firms, and how organizational innovation mechanism co-evolve with the development of alliance network, by integrating the three broad theoretical perspectives, network theory, cross-level theory and co-evolution theory. A multiple method design, including meta analysis, case study, and simulation, is adopted in our research. We would first identify the factors at three levels of alliance network that work on organizational innovation performance, with a longitudinal study of the Chinese 3G industry based on TD-SCDMA standard, and meta analysis of literature. After that a simulation model based on multi-agent will be built to facilitate the analysis, to investigate how factors at and cross the three levels of alliance network work on the organizational innovation performance, and how organizational innovation mechanism and alliance network co-evolve with each other. This project has potential to contribute to the social network analysis, and Chinese-based theory building and empirical practice.