Knowledge at Wharton

Gregory Mankiw head of the White House Council of Economic Advisors ignited a firestorm of debate this month when he said outsourcing of U.S. jobs is probably a good thing in the long run. As tends to happen with hot-button issues in presidential election years sensible discussion of this question was soon drowned in an uproar of political posturing. Experts at Wharton and the Boston Consulting Group point out that outsourcing is as old as the corporation. Increasingly sourcing work overseas is no longer a tactical option that can help firms save a few dollars here and there; it is a strategic necessity for any company that cares about its long-term competitiveness.

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To celebrate the 25th anniversary of Nightly Business Report the most watched daily business program on U.S. television Wharton and NBR this month announced their list of the 25 most influential business leaders of the past 25 years. Andy Grove co-founder of Intel won the No. 1 position but the list also included Bill Gates Warren Buffett John Bogle Jeff Bezos Jack Welch and Oprah Winfrey among others. Can these leaders’ attributes help you become a better business leader in your own organization?

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We might like to believe that the way to get ahead in the corporate world lies in hard work and brain power. But in his new book Career Warfare: 10 Rules for Building a Successful Personal Brand and Fighting to Keep It David F. D’Alessandro chairman and CEO of John Hancock Financial Services a Boston firm that in 2003 managed assets worth $140 billion for its clients stomps firmly on that idea.

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You might think that with the passing of another year the corporate scandals that have rocked American business would be showing signs of petering out. They are not. In the past few months disclosures of allegedly unethical or illegal practices have rocked the mutual-fund industry and some of its blue-chip names even as the head of the New York Stock Exchange was forced to resign over the size of his compensation package. Knowledge at Wharton spoke to ethics experts a business historian and a Wall Street executive in an attempt to understand why the country has witnessed misbehavior of breathtaking scope in the first few years of a new century.

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Do cherry pickers – those consumers who are extremely sensitive to price and go from store to store to pick the best-priced items and leave the rest – really save a lot of money? A recent paper by Wharton marketing professor Stephen J. Hoch and Edward J. Fox a marketing professor at the Cox School of Business at Southern Methodist University found that consumers not only save money but that the savings are enough to offset the time it takes to do the extra shopping. In addition the researchers found a substantial number of shoppers are savvy and diligent enough to make cherry picking pay off.

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Leadership doesn’t just start at the top. Leaders can also be found at the bottom of an organization and at just about every place in between. In this special report by Knowledge at Wharton and The McKinsey Quarterly the management journal of consulting firm McKinsey & Co. experts from McKinsey and Wharton point out that regardless of whether people are on the top line or the front line they should explore ways to exercise their leadership potential to the fullest. That is the only way in which they can create meaningful working lives for themselves and the organization can get the most from their efforts.

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Actors athletes and executives are among the most populous inhabitants of the rarified atmosphere of multimillion dollar incomes. Why is it then that corporate executives are coming under fire for excessive pay when athletes like Michael Jordan and entertainers like Oprah Winfrey seem to stir no such feelings of resentment? Part of the answer suggest Wharton faculty and others is that people see – and get – a direct benefit from what athletes and entertainers provide.

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The recording industry has a pricing problem. People do not want to pay $15-20 for a compact disc when they can download the same music for free over the Internet. The industry’s solution appears as novel as the technology that is giving it such headaches: launch hundreds of lawsuits against otherwise law-abiding consumers who download music. As G. Richard Shell a legal studies professor and author of a forthcoming book on competitive legal strategy notes this same tactic was tried 100 years ago against Henry Ford. It didn’t work then and it won’t work today.

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Managers traditionally have built their careers by concentrating on specific disciplines such as finance or marketing. Such specialization however pales in comparison to the value that executives can generate when they fuse together insights from various fields into a cohesive whole. That was the message that the heads of three companies -- ARAMARK Commerce Bancorp and Contigroup Companies -- delivered when they spoke recently at Wharton.

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Fans of the hit TV comedy “The Jerry Seinfeld Show” may remember an episode in which Jerry’s friend George leaves his car parked at work so that the boss will think George is putting in long hours even when he’s not. The idea of course is that George’s apparent productivity will net him a higher raise or bonus. Wharton professor Maurice Schweitzer would call George’s behavior “an attempt to invoke the input bias – the use of input information (in this case the false impression of long hours) to judge outcomes.” As extreme as this example might seem business decisions are frequently made based on input that is either biased or manipulated as Schweitzer and colleague Karen Chinander suggest in a new paper entitled “The Input Bias: The Misuse of Input Information in Judgments of Outcomes.”

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