MIT Sloan School of Management News Briefs

News Briefs offers you timely leads about research and other work by MIT Sloan faculty that can help you with stories you are developing now — or might be developing in the future. Please contact us if you'd like further information about either a topic or its author.

January 2007

Rick Locke on working conditions in suppliers' factories
Findings help Nike, Inc. to evolve its compliance strategy

“Global brands are more likely to influence the improvement of working conditions in their suppliers' factories in developing countries by providing technical assistance to suppliers and empowering employees on shop floors. New research by Professor Locke found this approach to be more effective than monitoring codes of conduct, which is currently the leading way that global brands and labor rights organizations address poor working conditions.” More >>

Senge on climate change
Anti-tobacco campaign offers lessons about getting consensus on global warming

The same kind of public, scientific and business consensus that emerged to force strong support for anti-smoking laws and other actions may now be forming around the complex problem of climate change, says Professor Peter Senge. Though it is not yet fully formed, Senge sees the same “gradual welling of public opinion” and changes in “mental models” that ultimately made anti-tobacco actions acceptable to both the public and politicians now taking shape around climate change. More >>

Suri on economic growth in Africa
Humanitarian programs play essential role in economic development

Tavneet Suri sees strong links between human development efforts and long-term economic growth in Africa. Helping people get healthy and educated is not only good social policy, but should also be seen as an investment in the economic future, even in the continent's most hard-pressed nations, she says. At the same time, AIDs and other problems could jeopardize hard-won economic gains in some nations. More >>

Michael Braun on homeowners insurance
Homeowners are “leaving money on the table” due to a reluctance to file small claims

Professor Braun has found that a majority of homeowners could save money on their homeowner insurance premiums if they increase the deductibles on their policies, due to their reluctance to report small claims to their insurers. His findings have relevance for both homeowners and insurance companies who could potentially save money by processing fewer small claims along with better identifying customers more apt to file such claims. Braun tested his theory using a dataset provided by State Farm, the largest underwriter of personal lines insurance programs in the United States. More >>

Schmalensee on software platforms
New book describes how “invisible engines” transform business

A book co-authored by Dean Richard Schmalensee describes how powerful software platforms play a critical role in innovation and the economy. The importance of these “invisible engines” extends far beyond cell phones and game devices such as Sony's PlayStation, according to Schmalensee and his co-authors. Software platforms have transformed nearly every major industry for the past quarter century and are shaping tomorrow's innovations and economies as well. More >>

Gustavo Manso on the positives of failure
Early failure can lay the foundation for longer term innovation

Challenging traditional economic theory, Manso says that rather than being automatically seen in negative terms, failure should be tolerated and even encouraged as a necessary step toward success, especially in innovation-driven sectors. As more and more workers and others test out new ideas and concepts, they are likely to encounter short-term failure. But, says Manso, lessons learned from such failure often lead to eventual and lasting success. More >>

Malone sees ambitious goals for new center using “wikis” to solve problems
Center for Collective Intelligence uses new ways to find solutions

CCI director Professor Thomas Malone seeks to use the power of the Internet and other new technologies to harness the collective power of large numbers of people to help solve a wide range of business, scientific, and societal problems. Malone, whose influential 2004 book, The Future of Work, examined how information technology enables business to organize itself in new ways, now is helping CCI examine how people and computers can be connected in order to act more intelligently in collective ways than they can as individuals. More >>

Erik Brynjolfsson's new take on search engines
Search engines expand markets for niche products

Internet search engines have not only greatly helped consumers locate products, they have also made it much more practical and profitable for companies to produce, market and sell niche products, according to new research by Professor Brynjolfsson. As search costs keep getting lower, on-line sellers can now make money by carrying products once seen as too unprofitable to market or distribute. Indeed, Brynjolfsson found, on-line consumers actually benefit more from increased product variety than from lower prices. More >>

LaFond on Sarbanes-Oxley
Rather than just adding to costs, financial reporting can benefit firms

Despite criticism in Congress and elsewhere about the Sarbanes-Oxley Act's costs and other burdens, Professor Ryan LaFond finds that the law's reporting and disclosure standards can actually lead to lower costs of capital for businesses that either already have strong internal controls or that remediate prior weaknesses. His study is among the first to document potential benefits, rather than just costs, of compliance with the act. More >>

Doyle on state gasoline tax proposals
Consumers don't reap the full benefit of cuts in state gasoline tax cuts

Rising pump prices have triggered proposals to reduce or suspend state gasoline taxes, but such plans would offer drivers only least limited relief. Professor Joseph Doyle analyzed what happened in states that temporarily suspended their gas taxes in earlier years and finds that gas prices fall by significantly less than the full amount of the actual tax cut. Gas station owners benefited from such gas tax suspensions more than consumers. More >>