Breaking the Cycle: How the News and Markets Created a Negative Feedback Loop in COVID-19
New research from CBS Professor Harry Mamaysky reveals how negativity in the news and markets can escalate a financial crisis.
New research from CBS Professor Harry Mamaysky reveals how negativity in the news and markets can escalate a financial crisis.
Adapted from “Global Value Chains in Developing Countries: A Relational Perspective from Coffee and Garments,” by Laura Boudreau of Columbia Business School, Julia Cajal Grossi of the Geneva Graduate Institute, and Rocco Macchiavello of the London School of Economics.
Adapted from “Online Advertising as Passive Search,” by Raluca M. Ursu of New York University Stern School of Business, Andrey Simonov of Columbia Business School, and Eunkyung An of New York University Stern School of Business.
This paper from Columbia Business School, “Meaning of Manual Labor Impedes Consumer Adoption of Autonomous Products,” explores marketing solutions to some consumers’ resistance towards autonomous products. The study was co-authored by Emanuel de Bellis of the University of St. Gallen, Gita Johar of Columbia Business School, and Nicola Poletti of Cada.
Co-authored by John B. Donaldson of Columbia Business School, “The Macroeconomics of Stakeholder Equilibria,” proposes a model for a purely private, mutually beneficial financial agreement between worker and firm that keeps decision-making in the hands of stockholders while improving the employment contract for employees.
At Columbia Business School, our faculty members are at the forefront of research in their respective fields, offering innovative ideas that directly impact the practice of business today. A quick glance at our publication on faculty research, CBS Insights, will give you a sense of the breadth and immediacy of the insight our professors provide.
As a student at the School, this will greatly enrich your education. In Columbia classrooms, you are at the cutting-edge of industry, studying the practices that others will later adopt and teach. As any business leader will tell you, in a competitive environment, being first puts you at a distinct advantage over your peers. Learn economic development from Ray Fisman, the Lambert Family Professor of Social Enterprise and a rising star in the field, or real estate from Chris Mayer, the Paul Milstein Professor of Real Estate, a renowned expert and frequent commentator on complex housing issues. This way, when you complete your degree, you'll be set up to succeed.
Columbia Business School in conjunction with the Office of the Dean provides its faculty, PhD students, and other research staff with resources and cutting edge tools and technology to help push the boundaries of business research.
Specifically, our goal is to seamlessly help faculty set up and execute their research programs. This includes, but is not limited to:
All these activities help to facilitate and streamline faculty research, and that of the doctoral students working with them.
The nature of competitive equilibrium is investigated for brands competing in a multi-attribute product space when consumer preferences for product attributes follow nonuniform distributions. Subgame-perfect equilibria are established in a 2-stage game, where firms choose positions in the first stage and prices in the 2nd stage. Two types of entry scenarios are investigated. In the first, the number of brands is given exogenously, and all of them choose positions simultaneously.
We show for the general dynamic lot sizing model how minimal forecast horizons may be detected by a slight adaptation of an earlier 0(n log n) or 0(n) forward solution method for the model. A detailed numerical study indicates that minimal forecast horizons tend to be small, that is, include a small number of orders.
A recently published meta-analysis of the impact of strategic planning on financial performance omitted a major study of corporate planning practice in Fortune 500 manufacturing firms. This article briefly reviews that study in light of the results of the meta-analysis. Additional analysis examines performance and firm survival over a longer time period than in the original work. The overall conclusion is that a small but positive relationship between strategic planning and performance exists, and persists.
A recently published meta-analysis of the impact of strategic planning on financial performance omitted a major study of corporate planning practice in Fortune 500 manufacturing firms. This article briefly reviews that study in light of the results of the meta-analysis. Additional analysis examines performance and firm survival over a longer time period than in the original work. The overall conclusion is that a small but positive relationship between strategic planning and performance exists, and persists.
We address the Joint Replenishment Problem (JRP) where, in the presence of joint setup costs, dynamic lot sizing schedules need to be determined for m items over a planning horizon of N periods, with general time-varying cost and demand parameters. We develop a new, so-called, partitioning heuristic for this problem, which partitions the complete horizon of N periods into several relatively small intervals, specifies an associated joint replenishment problem for each of these, and solves them via a new, efficient branch-and-bound method.
Why do some new ventures succeed while others fail? What is the essence of entrepreneurship? Who is most likely to become a successful entrepreneur and why? How do entrepreneurs make decisions? What market, regulatory, and organizational environments foster the most successful entrepreneurial activities? Entrepreneurship research is plagued by these and other fundamental unanswered questions, for which there does not exist a cohesive explanatory, predictive, or normative theory.
In this paper we develop a model for a capacitated production/distribution network of general (but acyclic) topology with a general bill of materials, as considered in MRP (Material Requirement Planning) or DRP (Distribution Requirement Planning) systems. This model assumes stationary, deterministic demand rates and a standard stationary cost structure; it is a generalization of the uncapacitated model treated in the seminal papers of Maxwell and Muckstadt (1985) and Roundy (1986).
This essay reviews the literature on the role of the financial factors in the Depression, and draws some lessons that have more general relevance for the study of the Depression and for macroeconomics. I argue that much of the recent progress that has been made in understanding some of the most important and puzzling aspects of financial-real links in the Depression followed a paradigm shift in economics.
This paper extends the analysis of transactions cost models of vertical integration to multilateral settings. Its main focus is on supply assurance concerns which arise when several downstream firms are competing for inputs in limited supply. Integration reduces supply assurance concerns for an integrating firm but it may increase them for others. Therefore, to explain the scope of any firm, one must consider the overall network of production and distribution relations.
We consider an inventory system with compound Poisson demands replenished by discrete production of units on a single-server facility. This facility may start a vacation at any production completion epoch; at the completion of a vacation the inventory level is inspected to decide whether or not to resume production. Unit production and vacation times are independent and identically distributed with general distributions.
Manufacturing and service organizations routinely face the challenge of scheduling jobs, orders, or individual customers in a schedule that optimizes either (i) an aggregate efficiency measure, (ii) a measure of performance balance, or (iii) some combination of these two objectives. We address these questions for single-machine job scheduling systems with fixed or controllable due dates.
We develop a simple O(n log n) solution method for the standard lot-sizing model with backlogging and a study horizon of n periods. Production costs are fixed plus linear and holding and backlogging costs are linear with general time-dependent parameters. The algorithm has linear [O(n)] time complexity for several important subclasses of the general model. We show how a slight adaptation of the algorithm can be used for the detection of a minimal forecast horizon and associated planning horizon.
We consider distribution systems with a single depot and many retailers each of which faces external demands for a single item that occurs at a specific deterministic demand rate. All stock enters the systems through the depot where it can be stored and then picked up and distributed to the retailers by a fleet of vehicles, combining deliveries into efficient routes. We extend earlier methods for obtaining low complexity lower bounds and heuristics for systems without central stock.
We consider a production/distribution network represented by a general directed acyclic network. Each node is associated with a specific "product" or item at a given location and/or production stage. An arc (i, j) indicates that item i is used to "produce" item j. External demands may occur at any of the network's nodes. These demands occur continuously at item specific constant rates. Components may be assembled in any given proportions.
We analyze incomplete long-term financial contracts between an entrepreneur with no initial wealth and a wealthy investor. Both agents have potentially conflicting objectives since the entrepreneur cares about both pecuniary and non-pecuniary returns from the project while the investor is only concerned about monetary returns.
This note shows that in environments without externalities or aggregate feasibility constraints, extremely simple mechanisms can be used to approximately ("virtually") implement social choice functions in iteratively strictly undominated strategies.
Four groups are identified among 113 Fortune 500 manufacturers that approach innovation quite differently. The groups are based on 27 measured elements of formal and informal organization, corporate strategy, and corporate environment. Both financial performance and product innovation differ significantly among the groups. A group of 42 firms that invest heavily in innovation perform the best financially, with a smaller group of firms that are not innovative but which follow a strategy of acquisition performing nearly as well financially.
Four groups are identified among 113 Fortune 500 manufacturers that approach innovation quite differently. The groups are based on 27 measured elements of formal and informal organization, corporate strategy, and corporate environment. Both financial performance and product innovation differ significantly among the groups. A group of 42 firms that invest heavily in innovation perform the best financially, with a smaller group of firms that are not innovative but which follow a strategy of acquisition performing nearly as well financially.
Four groups are identified among 113 Fortune 500 manufacturers that approach innovation quite differently. The groups are based on 27 measured elements of formal and informal organization, corporate strategy, and corporate environment. Both financial performance and product innovation differ significantly among the groups. A group of 42 firms that invest heavily in innovation perform the best financially, with a smaller group of firms that are not innovative but which follow a strategy of acquisition performing nearly as well financially.
The reorder point/reorder quantity policies, also referred to as (r, Q) policies, are widely used in industry and extensively studied in the literature. However, for a period of almost 30 years there has been no efficient algorithm for computing optimal control parameteres for such policies. In this paper, we present a surprisingly simple and efficient algorithm for the determination of an optimal (r*, Q*) policy. The computational complexity of the algorithm is linear in Q*.
We consider inventory systems with several distinct items. Demands occur at constant, item specific rates. The items are interdependent because of jointly incurred fixed procurement costs: The joint cost structure reflects general economies of scale, merely assuming a monotonicity and concavity (submodularity) property. Under a power-of-two policy each item is replenished with constant reorder intervals which are power-of-two multiples of some fixed or variable base planning period.
When futures contracts are settled with respect to underlying asset prices, received theory suggests that the differences between futures prices and implied forward prices (from the term structure) are strictly due to marking to market, ceteris paribus. Empirical evidence appears to indicate that such differences are small for contracts with short maturities. What happens when the futures contract settles to yields implied by future prices of underlying assets?
This paper is concerned with the general dynamic lot size model, or (generalized) Wagner-Whitin model. Let n denote the number of periods into which the planning horizon is divided. We describe a simple forward algorithm which solves the general model in 0(n log n) time and 0(n) space, as opposed to the well-known shortest path algorithm advocated over the last 30 years with 0(n2) time.
This paper examines the allocative role of class shares that pay dividends based upon the performance of the individual activities of multi-activity firms. The firms considered operate under economies of scope and technological uncertainty in an incomplete asset market. Investor unanimity about the choice of production plans and a constrained Pareto optimum are attained when all firms in the economy issue a class of shares for each of their activities.
In this paper we consider a class of single-server queueing systems with compound Poisson arrivals, in which, at service completion epochs, the server has the option of taking off for one or several vacations of random length. The cost structure consists of holding cost rate specified by a general non-decreasing function of the queue size, fixed costs for initiating and terminating service, and a variable operating cost incurred for each unit of time that the system is in operation.
Demandable-debt finance by banks warrants explanation because it entails costs of bank suspension, liquidation, and idle reserve holdings. An explanation is developed in which demandable debt provides incentive-compatible intermediation where the banker has comparative advantage in allocating investment funds but may act against the interests of uninformed depositors. Demandable debt attracts funds by giving depositors an option to force liquidation. Its usefulness in transacting follows from information-sharing between monitors and nonmonitors.
We analyze a continuous-time, two-stage production/inventory system. In the first stage, a common intermediate product is produced in batches, and possibly stored. In the second phase, the intermediate product is fabricated into n distinct finished products. Several finished products may be included in a single production batch of limited capacity to exploit economies of scale. We propose a planning methodology to address the combined problem of joint setup costs and capacity limits (per setup).
Japan's capital markets have played a crucial role in the recent increase in the globalization of international capital markets. As a result it has become important to understand the similarities and differences in the way Japanese markets operate in comparison to the more familiar Anglo-American environment. One of the major differences that has attracted a great deal of attention is the relatively high average price/earnings [PE] ratio (Viner [1988]) for the stocks listed on the Tokyo Stock Exchange.
In this paper, a new algorithm for computing optimal (s, S) policies is derived based upon a number of new properties of the infinite horizon cost function c(s, S) as well as a new upper bound for optimal order-up-to levels S* and a new lower bound for optimal reorder levels s*. The algorithm is simple and easy to understand. Its computational complexity is only 2.4 times that required to evaluate a (specific) single (s, S) policy. The algorithm applies to both periodic review and continuous review inventory systems.
Customer orientation is a fine ideal. Making it a reality is difficult for many organizations. Provides a framework to guide management through the process of building a customer-driven philosophy. It is hoped that by means of such a framework it will be possible to evaluate an organization's customer orientation profile, and to provide the basis for a comparison of interorganizational approaches.
Customer orientation is a fine ideal. Making it a reality is difficult for many organizations. Provides a framework to guide management through the process of building a customer-driven philosophy. It is hoped that by means of such a framework it will be possible to evaluate an organization's customer orientation profile, and to provide the basis for a comparison of interorganizational approaches.
In this paper we propose a model for describing consumer decision making among assortments or menus of options from which a single option will be chosen at a later time. Central to the derivation of the model is an assumption that consumers are uncertain about their future preferences. The model captures both the utility of the items within the assortments as well as the flexibility the items offer as a group. We support our model empirically with two laboratory experiments. In the first experiment we test the underlying assumptions.
This article examines the use of share repurchase as a takeover deterrent. The main result is that in the presence of an upward-sloping supply curve for shares, the takeover cost to the acquirer can be greater if the target firm distributes cash through share repurchase than if it chooses either to pay a cash dividend or to do nothing. Because shareholders willing to tender the distribution of remaining shareholders toward a more expensive pool. Examining the equilibrium behavior of all players in a stylized takeover game, conditions exist under which repurchase deters takeover.
In many important combinatorial optimization problems, such as bin packing, allocating customer classes to queueing facilities, vehicle routing, multi-item inventory replenishment and combined routing/inventory control, an optimal partition into groups needs to be determined for a finite collection of objects; each is characterized by a single attribute. The cost is often separable in the groups and the group cost often depends on the cardinality and some aggregate measure of the attributes, such as the sum or the maximum element.
A conceptual model is developed that describes the relationships among consumer values, utility, and ownership of durables. These relationships are tested empirically using data on a variety of discretionary durables collected from a sample of 735 adults. Results support the model structure and suggest that augmenting the List of Values (Kahle 1983) with a measure of materialism improves prediction of value-related consumer behavior.
A meta-analysis of results from 320 published studies relates environmental, strategic, and organizational factors to financial performance. The 320 empirical studies that were reviewed were published between 1921 and 1987. Findings from the most frequently studied relationships include: 1. Industry concentration was addressed in almost 100 studies; over 1,100 tests show a clear directional effect. 2. Growth, analyzed in 88 studies, is consistently related to higher financial performance. 3. Market share is positively associated with financial performance. 4.
Similarity scaling often requires subjects to produce such a large number of judgments that fatigue may become a problem. Yet it remains unclear just how respondent fatigue affects similarity perceptions and resulting judgments. The present study uses a categorization perspective to examine the effects of fatigue on similarity judgments. The results suggest that subjects rely increasingly on category membership as they progress through a similarity judgment task.
Meta-analysis has become a popular approach for studying systematic variation in parameter estimates across studies. This article discusses the use of meta-analysis results as prior information in a new study. Although hierarchical prior distributions in a traditional Bayesian framework are characterized by complete exchangeability, meta-analysis priors explicitly incorporate heterogeneity in prior vectors.
A shopping mall, new office towers, a convention center, an atrium hotel, a restored historic neighborhood. These are the civic agenda for downtown development in the last third of the twentieth century, a trophy collection that mayors want. Add a domed stadium, aquarium, or cleaned-up waterfront to suit the circumstances, and you have the essential equipment for a first-class American city.
This article presents an exploratory investigation into longitudinal patterns of influence in group decision-making. In particular, we focus on how the outcomes of past decisions affect group members' relative influence in future joint decisions. Results suggest that past outcomes play an important role in the resolution of disagreements when group member preferences are equally intense. Losers in prior decisions are likely to win in the future (and vice versa) due to what appears to be promotion of equity in the group.
In most vehicle routing problems, a given set of customers is to be partitioned into a collection of regions each of which is assigned to a single vehicle starting at a depot and returning there after visiting all of the region's customers exactly once in a route. In this paper we consider problem settings where the cost of a route may depend on its length ϑ as well as m, the number of points on the route, according to some general function f(ϑ,m), assumed to be nondecreasing and concave in ϑ.
A central assumption of meta-analysis is that the sample of studies fairly represents all work done in the field, published and unpublished. However, if studies with "poor" results are less likely to be published, a potential publication bias is present. The authors propose a maximum likelihood approach to estimating publication bias for the situation in which censorship based on effect size may occur. An explicit hypothesis test is provided for testing whether or not censorship is present.
The ultimate success of new product R&D depends as much on customer acceptance as on technological breakthroughs. In this article, Susan Holak and Donald Lehmann focus on customer acceptance by exploring the manner in which the general attributes of Rogers (relative advantage, compatibility, complexity, divisibility and communicability) plus perceived risk combine to form the intention to buy an innovation. Results demonstrate a causal structure among these attributes and lead to various implications for R&D guidelines and product design.
Federal cutbacks in urban aid in the 1970s forced cities to finance redevelopment projects with their own resources. Freed from federal rules and regulations, cities responded with invention, devising new financial strategies that proved to be powerful alternatives to direct federal aid. The process that fostered the solutions—public-private dealmaking—transformed the nature of city development practice, raising with it troublesome issues of accountability. This article describes these financial strategies and the nature of public subsidies in the deals.
We consider distribution systems with a depot and many geographically dispersed retailers each of which faces external demands occurring at constant, deterministic but retailer specific rates. All stock enters the system through the depot from where it is distributed to the retailers by a fleet of capacitated vehicles combining deliveries into efficient routes. Inventories are kept at the retailers but not at the depot.
We consider a single-server queueing system with Poisson arrivals and general service times. While the server is up, it is subject to breakdowns according to a Poisson process. When the server breaks down, we need to repair the server immediately by initiating one of two available repair operations. The operating costs of the system include customer holding costs, repair costs and running costs. The objective is to find a corrective maintenance policy that minimizes the long-run average operating costs of the system. The problem is formulated as a semi-Markov decision process.
This study reports on the ex-post performance of survivor REITs and RECs over a 14.5-year period covering several business cycles. The results show that the systematic risk and risk-adjusted returns of REITs and RECs are quite different, especially during periods of low growth in real GNP. Relative to the overall stock market, survivor REITs, in particular, equity REITs, exhibited less volatility and higher returns than previous studies revealed.