Knowledge at Wharton

When Givenchy dressed Audrey Hepburn for her role in the 1961 film Breakfast at Tiffany’s luxury was still exclusive the particular provenance of the refined social elite. By 1980 all that was changing. When Brooke Shields announced that nothing came between her and her Calvins the message was not that Calvin Klein jeans were for her alone; it was that they were for everyone. In the 20-year span between the film and the ad luxury entered the mass market -- and quite arguably stopped being truly luxurious as Dana Thomas cultural correspondent for Newsweek suggests in her book Deluxe: How Luxury Lost Its Luster.

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After riding a wave of unprecedented industry growth an established technology manufacturer experiences a sudden market downturn. What should it do? Whereas managers often push for quick bottom-line analysis when facing uncertainty Wharton management professor Sarah Kaplan says that the best move might be to encourage employees to engage in ”framing contests ” in which they champion alternative strategy scenarios. In a new research paper titled ”Framing Contests: Strategy Making under Uncertainty ” Kaplan looks at how employees’ frames shape strategic decisions calling into question traditional notions about hierarchy and power in firms.

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Though the subprime mess and rising oil prices slammed the U.S. economy during much of 2007 other emerging markets -- especially China and India -- seem to be on a roll. China’s growth rate of more than 11% is likely to continue and India too should be able to sustain a high rate of GDP growth even if it slows from last year’s 9%. Latin America meanwhile is cautiously optimistic but could see a moderate decline in 2008. The Knowledge at Wharton Network sites -- including Universia Knowledge at Wharton China Knowledge at Wharton and India Knowledge at Wharton -- spoke with Wharton faculty and other experts about what to expect during the coming year.

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Western companies looking to do business in Asia especially in China don’t always confront a homogenous market and the ways that consumers make decisions about what to buy aren’t always predictable according to a group of marketing experts who spoke at the 2007 Wharton Asia Business Forum. Like developed-world consumers many urban Chinese people are technologically savvy and comfortable seeking product information on the web. But unlike them they don’t typically show brand loyalty and are often more motivated by price than perceptions of product quality or prestige. Panelists included executives from Estee Lauder Bain & Co. Colgate Palmolive and Swain Tours.

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Contrary to management theories developed in the Industrial Age employee satisfaction is an important ingredient for financial success according to a new research paper by Wharton finance professor Alex Edmans. His findings also challenge the importance of short-term financial results and may have implications for investors interested in targeting socially responsible companies. The paper is titled ”Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices.”

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The January 3 Iowa caucuses and the January 8 New Hampshire primary showcased the 2008 presidential campaign’s ongoing political dogfight as candidates battled for their parties’ nominations. Under the surface however the scrum represents a tipping point in the use of the Internet as a campaign tool say experts at Wharton. In many respects the 2008 race resembles any sophisticated Internet marketing campaign that lets consumers swap information connect with friends and perhaps make a purchase -- or in this case a donation. Indeed selling a candidate may not be much different than selling any other high-end item although possibly less effective.

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The ability to ”connect the dots” -- work the connections between local conditions and global forces and between the non-profit private and government sectors -- is necessary whether you work in the private sector or for a conservation group according to Carter S. Roberts president and CEO of the U.S. World Wildlife Fund (WWF). During a recent Wharton Leadership Lecture Roberts spoke about corporations’ responsibility to promote environmental initiatives the need for communication skills the WWF’s latest successes and the importance of thinking about in advance ”what you want your legacy to be.”

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This month more than half of Americans probably made health-related New Year’s resolutions but few are likely to stick to them. Employees at CFI Westgate Resorts in Orlando Fla. might consider themselves lucky: They have an incentive to get healthy. If they join in the company-wide weight-loss contest and reach their goals they could win cash prizes or a luxury vacation. Westgate isn’t the only employer trying to push employees especially obese ones into healthy lifestyles. But using incentives and in some cases penalties to change employee behavior raises a host of legal moral and practical questions according to Wharton experts and others.

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In Germany labor unions traditionally have had seats on corporate boards. At Japanese firms dozens of loyal managers cap off careers with a stint in the boardroom. Founding families hold sway on Indian corporate boards. And in China Communist Party officials are corporate board fixtures. But as companies continue to globalize should they consider adopting one uniform model of corporate governance? Or do global investors benefit from diverse governance structures? Wharton faculty and others offer their opinions.

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At the beginning of 2008 crude prices are at record highs creating immense wealth for oil-exporting nations in the Middle East. Yet the Arab economies also face what economists call ”a demographic bulge of a fast-growing labor force” -- and the challenge of creating enough jobs for the population. This is happening at a time when the arrival of China and India is raising the competitive stakes for other emerging economies that want to make their mark on the global economic stage. How are the Arab economies dealing with these challenges? Howard Pack a professor of business and public policy at Wharton and Marcus Noland a senior fellow at the Peterson Institute for International Economics address these issues in a book titled The Arab Economies in a Changing World. Knowledge at Wharton recently spoke with Pack about his book.

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