SKK GSB MBA Sungkyunkwan Univ .

How to Distribute benefits Fairly Even When External Factors Interfere?

2024-09-11

Professor Frank Huettner of Sungkyunkwan University’s SKK GSB has published a paper in the prestigious journal Games and Economic Behavior on a method for plausibly distributing benefits, even when outsiders can exert externalities. Professor Huettner, along with Professor André Casajus of HHL Leipzig Graduate School of Management and Professor Yukihiko Funaki of Waseda University, conducted research on the Shapley value and its extensions. The Shapley value is a concept that provides a fair method for distributing the benefits gained by multiple participants working together. It calculates the contribution of each participant to the overall value of the project and proposes a fair distribution of rewards. The traditional Shapley value is difficult to apply in situations where external factors can exert externalities. In this paper, Professor Huettner and his co-authors address how to plausibly distribute benefits even when external factors interfere. To illustrate the impact of externalities, consider a scenario where LG and BMW are negotiating a deal to divide the benefits of 100 billion KRW from using LG's batteries in BMW vehicles. The traditional Shapley value might suggest dividing these benefits 50-50. However, the benefit might depend on whether LG's Swedish competitor Northvolt reaches an agreement with BMW's competitor Mercedes-Benz. If Northvolt and Mercedes-Benz collaborate, the estimated benefit between LG and BMW could drop to 80 billion KRW. In this case, Northvolt and Mercedes-Benz exert external effects on BMW and LG, making the traditional Shapley value inapplicable. The scenario might be even more complex, involving potential collaborations between BMW and Northvolt, Mercedes-Benz and LG, or even technological partnerships between Northvolt and LG, further complicating the value distribution problem. The authors refine and extend a previous approach to better account for these complex scenarios, offering a more comprehensive and conclusive way to distribute value. Their generalization of the Shapley value can be employed in situations like the above example, providing a fair allocation method that takes into account the potential actions of external entities. Original Journal: http://doi.org/10.1016/j.geb.2024.06.004

Prof.Lee "Non-clinical interactions with staff lead to higher impact on patient satisfaction than clinical interactions"

2024-08-06

Professor Nah Lee of Sungkyunkwan University’s SKK GSB has published a paper in the prestigious marketing journal, 'Marketing Letters', demonstrating that non-clinical aspects lead to greater impact on patient satisfaction than clinical aspects. Prof. Lee, with a co-author Richard Staelin (Duke University's Fuqua School of Business), analyzed a set of 317 thousand Google reviews of U.S. acute care hospitals. The output of these analyses shows that non-clinical factors, such as kind doctors and staff and clean facilities, have roughly twice the impact on patient satisfaction compared to clinical factors, like diagnosis and treatment outcomes. Evaluation of each factor was independent from each other and often patients had ‘mixed’ evaluation where some factors were positively evaluated while others were negatively evaluated. Furthermore, patients did not evaluate hospital services by separating specific staffs (doctors, nurses, or other employees), or different departments (ER, surgery, billing, etc.). Instead, patients assessed their satisfaction based on their overall perception of the service received from the entire team of staffs providing the hospital care. These findings have important implications for understanding the voice of the customers for hospitals and other businesses. While clinical factors are important for increasing patient satisfaction, non-clinical factors are also crucial, so hospitals should make strategic decisions on which aspects to invest in depending on the feedback received from the patients. The methodology used in this paper can serve as a simple roadmap for analyzing the massive amount of online customer feedback, which can help firms better understand their customer satisfaction and address areas that need improvement. Original Journal: https://doi.org/10.1007/s11002-024-09738-2

Prof. Lim’s warning about the AI bubble

2024-08-01

Professor Terence Lim of Sungkyunkwan University’s SKK GSB has warned in the newspaper column that the recent investor and corporate enthusiasm about AI technology may be another bubble in the making. In his column titled "The More You Look, The More Expensive A Few Stocks are" in the Korea Economic Daily, Prof. Lim predicted, "The AI bubble will suddenly burst when the market realizes that AI application revenue models are not easy." Since last year, the stock market's liquidity had increased despite the US Fed’s quantitative tightening and flooded into a few big tech stocks on the back of the investor enthusiasm for AI. In the first half of this year, 55% of the S&P 500 index's rise was driven by NVIDIA, Microsoft, Eli Lilly, Meta, and Amazon. Notably, NVIDIA 's stock price jumped from 25 times the expected earnings for 2024 at the beginning of the year to 45 times in just six months. NVIDIA's current stock price reflects the massive AI-related investments already taking place and the expectation that these investments will continue to grow rapidly. Jim Covello, Head of Global Equity Research at Goldman Sachs, pointed out the issues such as overly optimistic expectations for AI technology and the lack of concrete framework on how AI technology will be used to improve productivity. As the economy starts to slow more visibly in the coming months and corporate earnings fall short of expectations, the companies will likely break free from the compulsion to invest in AI, which has uncertain returns. The market will also become more rational. The U.S. economy is already gradually cooling, and the liquidity that fueled the stock market's rise is now ebbing. It is generally the most appropriate time to hedge against the eventual stock market correction when everyone is steeped in optimism. Original article: : https://www.hankyung.com/article/202407183040i

The Hidden Truths of Corporate Scandals

2024-07-31

Professor Jung-Hoon Han of Sungkyunkwan University’s SKK GSB has published a paper in the prestigious Strategic Management Journal, revealing how media and public interest in corporate misconduct is determined. Prof. Han, with co-authors Timothy G. Pollock (University of Tennessee – Knoxville) and Srikanth Paruchuri (Texas A&M University), recently published a research paper titled “Public enemies? The differential effects of reputation and celebrity on corporate misconduct scandalization” in the Strategic Management Journal. When firms engage in misconduct, widely known firms tend to attract media attention. This is because they are already highly visible, and the positive evaluation they have received clashes the harm they have caused. Nonetheless, there can be multiple ways through which firms become well known. On the one hand, firms can gain “high reputation” based on the rational assessment of their consistently superior performance and capability. On the other hand, firms can cultivate emotional resonance from stakeholders through unconventional and attractive behaviors and traits, leading them to be treated like “celebrities.” The firms listed on Fortune’s “Most Admired Companies” ranking exemplifies high-reputation firms. Tesla, which had rarely recorded solid financial performance until recently but nonetheless have cultivated a strong fan base, can be considered a celebrity firm. The rational and emotional bases underlying the evaluation of high-reputation and celebrity firms can create differences in how their misconduct is treated by the media. People are likely to engage in rational information processing when viewing high-reputation firms’ misconduct. Thus, high-reputation firms’ misconduct is more likely to be publicized by the media – and become scandalized – when the misconduct is objectively severe, for instance, a data breach that has exposed 500 million customer accounts. Celebrity firms’ misconduct is less likely to be scandalized under such circumstances because overlooking factual details is a typical characteristic of emotional information processing. However, perceived severity may not always match objective severity. For instance, when United Airlines violently removed a passenger in 2017, the incident created an intense collective perception of severity and sparked a scandal, even though the harm was practically limited to a single individual. Such collective perception of severity increases the likelihood celebrity firms’ misconduct becomes scandalized because it fuels the public’s emotional interest in the firms. In contrast, perceived severity weakens the likelihood of high-reputation firms’ misconduct being scandalized because the public interest is likely to diminish with repeated exposure to the same information. These findings have important implications for firms’ crisis management because what people expect from firms differs based on the rational and emotional information processing. High-reputation firms should focus on providing detailed information about the cause of their misconduct and their remedial plans. Celebrity firms, in contrast, should focus on tempering emotional fervor and buzz surrounding their misconduct and try to devise creative and unconventional remedial actions that could potentially revive stakeholders’ positive emotional resonance. Original Journal: https://doi.org/10.1002/smj.3638 As shown in the graph above, as the objective severity of misconduct increases, the effect of reputation gradually increases (a), while the effect of attachment decreases and becomes statistically insignificant (b). Conversely, as the perceived severity increases, the effect of reputation gradually decreases to a statistically insignificant level (c), while the effect of attachment becomes increasingly stronger (d).

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