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BY STEVE RUDOLPH

Whether they are striving to find solutions to current business challenges or advancing scholarly dialogue, Carlson School faculty have reached elite status in terms of research productivity. The following represents a sampling of some of their current work.


Effect of Health Information Technology

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Health information technology (IT) has been touted as having the potential to prevent medical mistakes and possibly reduce health care costs by billions of dollars. Professor Stephen Parente thinks it could even transform the entire health care system by enabling us to measure the value of the care patients receive.
        But is health IT delivering on its bold promises? And what has been the impact of health IT at the individual level?
        Focusing their research on the Medicare population of some 45 million people, Parente and his University colleagues Jeffrey McCullough and Robert Town analyzed every hospital admission over a 10-year period (more than six million observations) to see whether patients became injured or suffered an adverse event while hospitalized.
        “The thought is if the hospital has invested in information technology over a period of time the chances of those injuries should be going down, thus creating value for the consumer,” Parente says.Stephen Parente Quote
        On a global scale, the researchers didn’t find the effect they were looking for. However, when they focused on patients who had numerous specialists involved in their care, the data showed health IT made a discernible difference.
        According to Parente, the data showed that there’s only so much a doctor or nurse can remember and having the system support their efforts resulted in better care. While the study found the patient benefits of health IT currently don’t exceed its costs, Parente still sees it playing a vital role in improving productivity and other quality measures.
        “Investing in health information technology should be thought of in the same way as modern businesses think about investing in the Internet,” says Parente. “You need to have this to be in business but the system has to go much more global to reach that tipping point where everyone expects it to do something amazing.”
        Recently presented at a National Bureau of Economic Research, Inc. event, “The Effect of Health Information Technology on Patient Outcomes” has generated interest in Washington, D.C. and could guide future research on and implementation of health IT.
        “The obvious things we thought we’d find weren’t there,” says Parente. “But now we know where to look to find where this technology can really make a difference and provide the most value.”


Was Napster Really the Day the Music Died

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The crash of a plane carrying rockers Buddy Holly, Richie Valens, and “The Big Bopper” in 1959 has long been referred to as “the day the music died.” But was the real deathblow to the supply of important recorded music the introduction of Napster and file-sharing technology?
        “Since 1999 when Napster appeared, revenue from recorded music to the record labels has fallen from a third to almost a half depending on which country you look at,” says Professor Joel Waldfogel, the Carlson School’s Frederick R. Kappel Chair in Applied Economics.
        Economic theory would dictate that if the recording industry can’t make money from the sale of recorded music, it won’t be able to afford to bring new artists and new music to market. Using a novel dataset that allowed him to quantify the amount of good music coming to market over time, Waldfogel set out to assess whether Napster had such an effect on the creation of new music.Joel Waldfogel Quote
        “The kind of whacky idea that I came up with was to look at critical retrospective best-of lists,” says Waldfogel of the approach that produced the paper, “Bye, Bye, Miss American Pie? The Supply of New Recorded Music since Napster,” which was presented at the National Bureau of Economic Research, Inc.’s Digitization Workshop in July.
        Converting critics’ lists that reflected the best albums or songs of a 10-, 20-, or 50-year period to indices, Waldfogel was able to produce a long-run time series of the quantity of music that meets an importance threshold over time. His findings validated the musical importance of the 1960s, noted a decline in the quantity of music we cared about in the 1970s (disco, anyone?), observed a pickup in the 1990s, and then found another drop in the late-1990s.
        However, much to his surprise the quantity of good new music didn’t continue to decline or even plunge after Napster’s introduction.
        “Compared to the tales of woe and legitimate-sounding concerns that maybe we wouldn’t get any good new music after Napster, there’s no evidence of this at all,” says Waldfogel. “Relative to historical trends and standards, we’re at a pretty high level.”
        Waldfogel speculates that the same technological changes that cut into sales revenues have made it easier to bring music to market. And while recorded music isn’t selling like it used to, artists are able to use their music as an advertisement for the other product they have—live performances.
        “Even in a world where it’s harder to make money selling recorded music, I would expect us to continue to see lots of new recorded music,” he adds. Words that are music to any fan’s ears.


To Split or Not to Split

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A rash of corporate financial scandals in the past decade left many governance mechanisms under fire. One in particular that became a target of shareholders was the chief executive officer (CEO) also serving as the company’s chairman of the board – a structure some believe allows the CEO to effectively be his or her own boss.
        Often over the objection of the board, shareholders forced numerous firms to split the roles. But, considering that historically 80-85 percent of firms have combined the CEO and chair roles, can duality really be that bad?
        Assistant Professor Aiyesha Dey and her co-authors Ellen Engel (University of Chicago) and Xiaohui Liu (University of Texas, Dallas) sought to examine the implications of combining and splitting the CEO and chair roles and discovered that, as with so many things, there isn’t a one-size-fits-all answer.Aiyesha Day Quote
        In their study, the researchers examined what factors help determine why a firm decides to combine rather than separate the roles. They found, among other things, that firms with complex operations and/or the presence of powerful, established CEOs tended to opt for the dual role. Companies that weren’t as focused on research and development were more likely to split them.
        Dey and colleagues then linked these factors to performance consequences of firms that were forced to split the roles to test what happens when firms that should have a combined leadership structure are forced to separate the two roles.
        “We found that the firms that were forced to separate the roles of the CEO and the chairman performed worse immediately following the announcement of the split and afterward,” says Dey. “In particular, the firms where the economic factors suggested they should have the roles combined did much worse.”
        Dey hopes her research, which was the first to document a link between economic determinants of board leadership structures and the corresponding performance consequences, will prevent shareholders and investors from imposing blanket governance rules on firms.
        “You need to think about firm-specific costs and benefits when deciding which leadership structure is better,” adds Dey.
        “Sarbanes-Oxley has already mandated a list of checks and balances and you have independent lead directors who hold executive meetings even when the CEO is the chair. If you have a CEO who has a proven track record, let the CEO lead the firm with vision and expertise,” she says.


Can Doing Good Be Bad for Business

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Doing good isn’t always good for business, according to research from Assistant Professor Carlos Torelli. His discovery found corporate social responsibility (CSR) efforts have the potential to backfire for luxury brands associated with a self-enhancement concept.
        “When people see brands advertised, they implicitly bring to mind abstract meanings. With BMW, for example, people think status and self-enhancement,” says Torelli, author of Doing Poorly by Doing Good: Corporate Social Responsibility and Brand Concepts. “When all of a sudden people see a message that communicates pro-social things about BMW, they feel a disconnect – there’s a sense of discomfort trying to put these two things together.”
        According to Torelli and co-authors Alokparna Basu Monga (University of South Carolina) and Andrew M. Kaikati (University of Georgia), this motivational conflict is triggered by the simultaneous activation of self-enhancement and self-transcendence values and an accompanying subjective experience of disfluency (something does not feel right).Carlos Torelli Quote
        In their studies, the researchers identified familiar luxury brands such as Rolex and BMW and presented participants with information suggesting that these brands were also pro-social brands engaged in CSR. Subjects were then asked to evaluate the messages compared to a control condition where the brand only communicated what it typically does – self-enhancement and status appeal.
        “What we found is that people evaluated the brands more negatively when they were communicated with a pro-social agenda compared to the control condition. Interestingly enough, brands that were not luxury in terms of their self-enhancing nature didn’t have this effect,” says Torelli.
        While the study suggests CSR presents a danger to luxury brands, Torelli’s research found it is possible to counter the subjective experience of disfluency.
        “If you’re a luxury brand and you’re trying to communicate your pro-social actions, you have to put people in a mindset to think carefully about the message and to be prepared to reconcile the information. If you communicate that, you don’t get the negative reaction,” he says.
        For use in a television commercial, Torelli suggested this could be achieved by prior presentation of exemplars that counter the subjective experience of disfluency, such as reminding viewers of well-known philanthropists. The introduction of a sub-brand could also serve to discount it by signaling to consumers that a brand is engaging in inconsistent actions.

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