May 30 preview event will explore ‘The DNA of Leadership’

Responding to demand for its executive education programs for professionals in business and leadership roles, Rice University’s Jones Graduate School of Business, one of the country’s top-ranked business schools, will launch its first open enrollment off-campus program in The Woodlands this fall.

Rice Business is partnering with The Woodlands Area Economic Development Partnership to bring the Oct. 7-10 program — The Leadership Accelerator — to the former Chicago Bridge & Iron Co. office buildings in Hughes Landing, 2103 Research Forest Drive.

Program organizers and community leaders will gather at The Woodlands Country Club from 4:30 to 6:30 p.m. May 30 for a special presentation on “The DNA of Leadership.” The event will feature remarks from Brent Smith, senior associate dean for executive education and associate professor of management and psychology at Rice Business; Gil Staley, CEO of The Woodlands Area Economic Development Partnership; and Peter Rodriguez, dean of Rice Business and professor of strategic management.

The Leadership Accelerator: The Woodlands is an immersive four-day course designed to give established managers an opportunity to study the best practices for creating a more cohesive, productive organization. Smith will use case studies, exercises, simulations and extensive discussion to guide managers through the state of the science of leadership. Participants will receive a certificate. View the video at https://youtu.be/SEGmkXEGEy0.

Media interested in covering the May 30 event should RSVP to Jeff Falk, associate director of national media relations at Rice, at jfalk@rice.edu or 713-348-6775.

For more information about Rice Business degree programs and executive education, go to https://business.rice.edu.

For more insights from and information about Rice Business faculty research, visit the school’s Rice Business Wisdom online ideas magazine at https://business.rice.edu/wisdom.

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Based on research by Anastasiya Zavyalova, Brent Goldfarb (University of Maryland) and Sandeep Pillai (Tulane University)

Key findings:

• A 1994 study examined whether participating in certification contests affected the survival of automobile companies during the industry’s inception.
• Recently, researchers replicated the study and found that cumulative contest victories had a legitimizing effect on automobile firms, leading to increased chances of firm survival.
• Even when firms didn’t win, simply participating in contests had a positive impact on firm survival.

Fear of the unknown is an issue for anyone peddling new technology — and at the turn of the 20th century, the automobile industry was struggling to assuage consumer concerns. The “horseless carriage” represented a complete departure from the past, and people then were as wary of it as many of us today are of driverless cars. Then and now, firms have had to prove that a new technology is safe and reliable before they can hope to make a sale.

The future of the automobile was uncertain until 1906, when sales began to take off. Before that, the industry’s survival depended, in part, on its ability to demonstrate the technology was reliable. One way automakers did so was to hold organized races — think NASCAR meets pre-Model T’s — where spectators could see the safety and efficiency of these state-of-the-art machines. Popular magazines of the day reported the results.

In 1994, Hayagreeva Rao, a Stanford University professor of organizational behavior, studied the impact these contests had on the survival of different auto companies. He found that companies whose cars won the races had a higher likelihood of survival overall, thanks to the resulting reputation boost. Rao’s research is frequently cited as a defining study of the relationship between social approval and actual firm performance.

Given the study’s ongoing popularity and influence, Rice Business management professor Anastasiya Zavyalova and her co-authors replicated it using the same sources as the 1994 study. They also included additional contemporary sources, studying a total of 1,176 car manufacturers over the years 1895-1912.

Rao’s original study hypothesized that cumulative contest victories contributed to an increasingly better reputation, and could serve as a predictor of automobile firm survival. This hypothesis held true both in his study and the replication. However, Zavyalova and her team discovered something more — that it wasn’t just victories in the races that predicted firm survival. In fact, firms that placed second or third, or even farther behind, were more likely to survive than firms that didn’t enter the contests at all. 

This finding supports the concept of “loose coupling,” in which firms that simply participate in a race are viewed more favorably by the public, leading to better business outcomes.

Another contribution of the second study was to control for the variables related to the quality of the firms in the dataset. After all, one could argue that the more successful firms produced better automobiles, leading to increased chances of race victories and firm survival alike. To address this, the researchers used several proxies for firm quality to level the playing field. Even with these controls in place, however, the hypothesis held.

Rao’s original study also included a second hypothesis: that companies facing greater uncertainty, such as start-ups, should benefit the most from contest victories. However, neither study’s outcome supported this hypothesis. While start-ups and more established manufacturers both benefited from competing in races, there was no difference in firm survival between the two groups.

So it looks like participating in contests is a fairly clear path to success. But is that always the case?

Zavyalova and her team point out that there’s still room for further research — for example, examining whether contest participation has the same positive effect on firms that make products such as luxury goods or art, where the criteria for “good quality” are far more subjective.

And despite the clear connection between contest participation and firm survival among automobile manufacturers, neither study controlled for two other variables that may have driven both participation and survival: the quality of the cars being raced and the effectiveness of the managers running the firms.  

As modern-day organizations think about whether to enter similar contests, however, these findings suggest that they’re better off at least throwing a hat in the ring. The replication study shows that, win or lose, just showing up at a race counts as a victory.

Goldfarb, Zavyalova and Pillai. “Did victories in certification contests affect the survival of organizations in the American automobile industry during 1895–1912? A replication study.” Strategic Management Journal 39.8 (2018): 2335-2361. https://doi.org/10.1002/smj.2911