Based on research by Jing Zhou, Elizabeth M. Campbell, Hui Liao, Aichia Chang and Yuntao Dong

Every business wants the best and the brightest. Once they spot these top talents, corporations typically lavish time and money to hire, train and groom them for success. Life should be simple for the lucky hires.

But if you’ve ever watched crabs trying to climb out of a bucket, you know it’s not. The closer any one crab gets to the top, the more likely it is to evoke the spite of its fellow crabs, who will try to drag it back down.

A study coauthored by Rice Business professor Jing Zhou shows that while high performers bring substantial value to their organizations and workgroups, they also attract inordinate social attention — not all of it positive. The findings are especially important because high performers are less likely to stay with their organizations or sustain exceptional success if their social experiences at work are difficult.

And for many top performers, that’s clearly the case. A full 30 percent of top corporate employees leave their firms within one year, according to Zhou and coauthors Elizabeth M. Campbell of the University of Minnesota, Aichia Chuang of National Taiwan University, Yuntao Dong of the University of Connecticut and Hui Liao of the University of Maryland. For years, the scholars write, employers assumed that their workplace stars were either too bored or too restless to stay put. Now research shows that they leave their jobs because of how they’re treated.

To add to this body of research, Zhou and her colleagues conducted a time-lagged study of 414 hair stylists working for 120 salons in northern Taiwan. Why salons? Stylists, the researchers explain, work in open spaces where their peers can see their performance. And because salons are magnets for employee chatter, Zhou’s team could easily monitor interactions there.

What they found was a subtle and stressful power struggle. On the one hand, as high performing stylists improved their job performance, peers saw them as beneficial to their own images. Less talented workers attached themselves to rising stars, hoping the reflected light would also illuminate their prospects.

But even as the top stylists reaped attention and support from their peers, they were perceived as threats. Whenever the best performers got attention, those around them became jealous.

This finding soon led to a second discovery. The colleagues of the high performers weren’t just jealous; they were actively working to undermine the high performers at the same time they were supporting them.

The toll was great, Zhou writes. It would be one thing if high achievers knew their colleagues either admired them or hated them. But the unspoken tug-of-war between support and sabotage caused a unique strain.

In such toxic environments, the high achievers found work more stressful than their less-accomplished colleagues. This, the researchers believe, likely accounts for why so many top performers leave their jobs for other opportunities.

To a certain extent, Zhou and her team say, such stress is hardwired into the workplace. Employers value workers who function as a team. At the same time, they prize individuals whose achievements stand out from the group. With such contradictions, the particular stress that plagues high performers may be inevitable.

So what’s the lesson? True, star performers earn higher pay and receive faster promotion. But these perks come at a social cost. No wonder achievers struggle to maintain top performance levels and typically leave their firms sooner than their coworkers.

In general, employers need to closely attend to their employees’ wellbeing, taking into account the unique social stresses that affect high performers. Ideally, managers can craft environments in which the top achievers — and their more average associates — all feel welcome.

According to Zhou and her colleagues, such harmony isn’t just about keeping a few divas happy. Undermining and jealousy, their findings show, actively drive off top performers. It’s only natural for crabs to claw their fellow crabs back into the heap. So it’s up to managers to protect their best performers — or end up with a bucketful of motionless crustaceans.

Jing Zhou is the Mary Gibbs Jones Professor of Management and Psychology in Organizational Behavior at the Jones Graduate School of Business of Rice University. 

To learn more please see: Campbell, E.M., Liao, H, Chuang, A., Zhou, J., & Dong, Y. (2017). Hot shots and cool reception? An expanded view of social consequences for high performers. Journal of Applied Psychology, 102(5), 845-866

By Utpal Dholakia

This article was originally posted on LinkedIn.

I just finished writing a paper called, "All's Not Well on the Marketing Frontlines: Grasping the Challenges of Adverse Technology–Consumer Interactions."

There are far too many technology-driven phenomena that are gathering like storm clouds on the horizon that mainstream marketers are not paying sufficient attention to. There are many examples of this, whether it is the rise of technology-enabled retail fraud by consumers, consumers’ resistance to using self-service technologies and cashless payment methods, the insidious effects of fraudulent negative reviews and social media flare-ups by customers on businesses, the negative effects of consumers' low attention spans and distraction because of smartphone use, survey taking by professional respondents, and the list goes on and on. So I wanted to write about this issue.

Here's the paper's abstract.

The prevailing marketing worldview is one of technology optimism, which holds that consumers and marketers are influenced by technological advances in positive ways. In contrast, the central thesis advanced in this paper is that at the organizational frontlines where marketers inform, persuade, observe, and co-create products and services with customers, technology commonly produces unforeseen and unexpected effects on customers with significant negative implications for marketers, the so-called “Adverse Technology-Consumer Interactions” or ATCIs. Marketers play an instrumental role in producing or exacerbating an ATCI, yet have few incentives to fully investigate the underlying reasons, understand its scope, or find solutions. Academic researchers, on the other hand, are uniquely poised to identify ATCIs, investigate them in-depth by considering their industry-wide import, develop appropriate theoretical frameworks, and design and test solutions to alleviate their effects. These ideas are developed through the detailed consideration of two ATCIs, falling response rates to customer surveys, and customer reactance to frequent price changes. Promising research opportunities are highlighted in each case.

The entire paper is available here.

It's very much work in progress, so I would love to hear thoughts and criticisms.

- Utpal Dholakia.

Utpal Dholakia is the George R. Brown Professor of Marketing at Jones Graduate School of Business at Rice University.

Based on research by Douglas A. Schuler; Robert E. Hoskisson (George R. Brown Emeritus Professor of Management), Wei Shi and Tao Chen

• In China, where information on public companies is scarce, a visit from a high official is a coveted signal of government confidence.
• Such visits result from complex, longtime bonds between the state and the firm.
• Depending on the status and location of the host company, some high-level visits have more market value than others.

For a Chinese business owner, when the sixth Premier of the State Council of the People’s Republic of China inspects your factory, it’s likely to be one of the biggest days of your career: the modern equivalent of a royal handshake.

It may signal that your firm is the kind of enterprise the Chinese government supports. It may mean your firm’s sector holds strategic importance for the most populous country on earth. And if your business or economic sector is suffering a global downturn, it indicates that one of the world’s most powerful states supports your efforts.

Surprisingly, though, there’s little literature about the interactions that make such high-profile appearances happen. Does a visit from the Chinese premier or president mean more for some types of firms than for others? Is it more important for a privately held firm than for a state-owned enterprise? And is it more or less significant for a firm in parts of China not normally exposed to such attention?

Rice Business Professor Douglas Schuler and Emeritus Professor Robert E. Hoskisson joined Wei Shi of Indiana University’s Kelly School of Business and Tao Chen of Nanyang Business School in Singapore for a close look at high-level visits and their implications. To conduct their research, the team first combed the Internet for accounts of such visits. Then they did a deep dive into reports of 84 visits by Wen Jiabao, Chinese premier from 2003 to 2013, and Hu Jintao, Chinese president from 2002 to 2012, to study the impact of these visits to firms on the Shanghai Stock Exchange.

Official visits, the team found, largely took place in the context of previously existing relationships between managers and government representatives. And though the visits ultimately occurred after senior government officials requested them, advance work always came first. Curiously, the researchers found, these visits weren’t necessarily designed to influence government policies. Instead, they were a continuation of relationships that were already flourishing.

In China, government looms large in business, and information about the health of a given firm may be opaque. So government visits send a message of assurance, especially to investors. That said, the researchers found that the impact of a high level government visit varied, depending on factors that include the firm’s ownership status and even its location.

The researchers found that a visit had the greatest impact on stock prices of firms in provinces not known for economic development. They found a similar positive effect from visits to privately-owned companies, as opposed to public companies, which are mostly government-owned but publicly traded.

While China’s government has a direct interest in propping up state-owned businesses, a visit to a privately-owned business telegraphs its willingness to stake its reputation on that company. It may also suggest that firm managers have a personal government link, worth its weight in gold in Chinese business.

Political connections do enhance a company’s appeal. But for the Shanghai stock market, a high-level visit to a company that’s not politically connected may be even more impressive. It signifies a scrappy business that has overcome ordinary obstacles and been recognized by the premier or president strictly on its merits. Investors around the world, it seems, still love a rags to riches story.

Douglas A. Schuler is an associate professor of business and public policy at Jones Graduate School of Business at Rice University. 

Robert E. Hoskisson is the George R. Brown Emeritus Professor of Strategic Management at Jones Graduate School of Business at Rice University.

For learn more, please see: Schuler, D.A., Shi, W., Hoskisson, R.E., & Chen, T. (2017). Windfalls of emperors’ sojourns: Stock market reactions to Chinese firms hosting high-ranking government officials. Strategic Management Journal, 38(8), 1668-1687.

Based on research by Michelle "Mikki" Hebl, Eden B. King and Charles L. Law

Being gay, lesbian or bisexual in the workplace often means facing choices that are deeply unfair. Choose to come out and risk being stigmatized. Hide your orientation and prepare for a career weighted with the immense stress of secrecy. Theoretically, there are good reasons for businesses to embrace a workforce with diverse sexual orientations. First, much workplace discrimination is illegal, and litigation is pricey. More importantly, disdaining 5 to 15 percent of your workforce (the estimated percentage of the workforce population who are gay, lesbian or bisexual) means lagging behind the competition in the ability to recruit and retain top talent. But in reality, the legal protections prohibiting discrimination against employee’s sexual orientation are often limited and what should be the rational business choice isn’t always made. 

In an article published in The Encyclopedia of Industrial and Organizational Psychology, Rice Business professor Michelle "Mikki" Hebl explores the gamut of workplace challenges for gay, lesbian and bisexual workers. Misconceptions about these employees, she found, are still widespread. First of all, employers and coworkers who stigmatize homosexual or bisexual employees often misunderstand their orientation as a choice. The subsequent treatment based on this misinformation can be viciously destructive.

Another common misperception is that sexual orientation can be easily concealed. To the contrary, many gay, lesbian or bisexual workers are actually outed by co-workers, Hebl notes. Because of this possibility, gay, lesbian and bisexual employees often spend an inordinate amount of their work time and energy simply managing their coworkers’ response to their sexual orientation.

And while some people characterize sexual orientation as simply a political issue, those who are gay, lesbian and bisexual employed in a toxic workplace are often not seen simply as undesirables. They can be considered actual threats, their sexual orientation capable of somehow altering the identities of fellow workers. In some cases, associations with HIV and AIDS can lead to gay, lesbian and bisexual workers being treated as physical risks.

Because of these obstacles, many workers are forced into painful choices at work. Do I put my partner’s photo on my desk? Do I mention my weekend plans?

To reduce this burden on productive workers, Hebl writes, businesses should codify their formal rules about managing harassment. Informally, companies need to create a culture in which people of different sexual orientations are supported rather than punished for their sexual orientation.

But companies should know this road won’t always be easy. Some workers will balk at a more diverse environment. The existence of clear policies, moreover, doesn’t guarantee that subtle forms of discrimination won’t take place. But the consequences of not establishing policies are considerable, including litigation and high turnover rates.

In the best of all worlds, the burden of change should not be on the gay, lesbian and bisexual workers themselves. But it’s not a perfect world, so Hebl also proposes strategies to help employees maximize workplace acceptance.

These days, evidence suggests that in some cases, disclosing one’s sexual orientation has benefits. Especially in supportive organizations, it often makes sense for people to reveal their sexual orientation after a period of time and with the support of other employees.

At the same time, Hebl notes, employees may be likely to bully gay, lesbian and bisexual employees whose orientation is the only thing that’s is known about them. Thus, gay, lesbian and bisexual workers face a challenge well-known to other minority employees: delivering exceptional work and displaying exceptional character in order to attempt to allay discrimination.

From an institutional perspective, employers can support their individual gay, lesbian and bisexual employees in myriad ways. Companies can create a welcoming culture by offering same-sex partner benefits. Anti-discrimination policies, frequently voiced, send a message of safety to gay, lesbian and bisexual employees. Such measures require both awareness and real commitment, but the extra efforts pay off well beyond the day-to-day business of hiring and retention. They also encourage open-mindedness, creativity and commitment – and in the end, a more competitive work product.

Michelle Hebl is the Martha and Henry Malcolm Lovett Chair of Psychology at Rice University and a professor of management at Jones Graduate School of Business at Rice University.

For more information please read: Hebl, M., King, E. & Law, C. (2007). Gay, lesbian, and bisexual issues at work. In S. G. Rogelberg (Ed.), Encyclopedia of industrial and organizational psychology (Vol. 1, pp. 264-266). Thousand Oaks, CA: SAGE Publications Ltd.

This article originally appeared in the Houston Chronicle. 

Dustin Windham's at the grill on the roof of Houston House apartments, watching Gulf Coast shrimp turn perfectly pink.

It's Wednesday night. As he cooks, his broad-shouldered silhouette framed against the lights of downtown high-rises, a table of guests, most meeting for the first time, share stories about Harvey. Waiting for the shrimp, they look over a spread of roasted organic sweet potatoes, guacamole made from scratch, a cole slaw of fresh purple cabbage and shredded carrots. And plenty of local beer and wine.

If Windham had his way, this is how we would eat every night, all over the city.

It's what he learned to do when he served in the Peace Corps in Azerbaijan. Used to the wall-to-wall abundance of the estimated 38,000 supermarkets in the U.S., he was forced to eat there in a new way.

That's because there weren't any supermarkets. Instead, he says, everyone went about once a month to the bazaar for staples, and the rest of the time picked up what they needed from the produce stand or the butcher shop. Walking home from work, Windham would stop for a few ingredients — some fish, some seasonal vegetables, some baked-that-day bread — and then go cook, usually with friends. "Most Americans don't get that opportunity," he says, "but I learned that it's a better way to do it."

He lost 30 pounds, and he had an idea: Why can't we create that opportunity in Houston? Why can't we eat like that here?

It's a city that could stand to lose a few pounds itself. Almost 66 percent of Texans are overweight, nearly 28 percent obese. According to Roberta Anding, a dietitian and professor at Baylor College of Medicine and Rice University, food-related diseases plague Harris County: The rate of diabetes here is higher than the national average, and it's even worse for people of color; 70 percent of adults surveyed recently by the Houston Health Department take medication for high blood pressure.

Harris County also has one of the highest death rates among the most populous U.S. counties from obesity-linked cancers.

"We have a link between the amount of produce on your plate and disease," Anding says. Meanwhile, the average Texan gets just 1.6 servings of fruits and vegetables a day (The U.S.D.A. recommendation is 5). Forty percent of Texans report eating less than one serving a day. Anding says, "We have a crisis of diet."

And it's a complex crisis, compounded by many other factors, none of them simple to solve in and of itself. One is a basic lack of access to those fruits and vegetables. In 2015, the Chronicle reported that as many as 500,000 Houstonians live in "food deserts," defined by the absence of a supermarket in a one-mile radius. Calories have to come from somewhere, though, and they tend to be found at corner and convenience stores and fast food restaurants — where processed foods are most readily available.

Another is education. Even if you can access fresh fruits and vegetables and fish and lean meats, you have to know how to cook them when you get home. It is not self-evident what to do with a beet.

And another is time. "Parents are busy," says Dr. Faith Foreman, the assistant director of the Houston Health Department. "They're trying to get kids to school, trying to do homework, get dinner, and they start all over tomorrow. It's tempting to hit McDonald's on the way home. It's easy to do that."

These factors lead to a sad conclusion: Our cities are filled with people who aren't eating — and therefore aren't feeling — all that well. "It's a complex problem," Foreman says, "and it requires a complex response."

What cities tend to do, says Doug Schuler, an assistant professor of business and public policy at Rice University, is identify what he calls "supply-side" and "demand-side interventions." You can try to change the foods that people want or change how they get it. In Houston, these interventions range from education programs in elementary schools to shopping tours to city-backed loans like the one Pyburn's Farm Fresh Foods received in 2014 to develop a store in OST/South Union, a food desert.

But even then, consumer behavior is hard to impact.

Six months after that Pyburn's opened, a survey conducted by the Health Department found that there wasn't an increase in the amount of vegetables, whole grains, fish and other seafood that residents purchased there.

"We didn't see much change," says Beverly Gor, a registered dietitian who works for the city.

The same was found to be true in New York City, where a new supermarket developed in a food desert in the Bronx didn't change consumer behavior, either: "The neighborhood welcomed the addition, and perceived access to healthy food improved," concludes Margot Sanger-Katz. "But the diets of the neighborhood's residents did not."

Time, education, access and consumer behavior: Windham wants to provide another intervention, albeit from the private sector, that could help Houstonians with all of these. In 2015, with business partners Michael Powell, Jamal Ansari and Kelly Windham, he founded Grit Grocery.

Windham says he's not a foodie, but Grit Grocery is kind of a foodie's dream. It's a farmers market on wheels, a bodega that parks on your block, stocked with fresh produce and proteins as well as local pasta, cheese, honey, bread and more.

It attempts to replicate for a low-slung, far-flung city pockmarked with food deserts the experience that Windham had in Azerbaijan.

Grit first rolled out in five Houston neighborhoods — downtown, EaDo, Midtown, Museum District and Magnolia Grove — parking in the evenings near apartment buildings when residents were getting home from work. And it was a hit. "It made it easier for me to cook," says Megan Sip, who lives in EaDo and shopped at the truck near her apartment by BBVA Compass Stadium.

"It became a nice community aspect, too," she says. "I'd meet other neighbors out there. It's almost like a watercooler at the office."

Now, while the original truck still makes occasional appearances, Windham is looking to finance through an equity crowdfunding campaign a fleet of trucks, which he will need to match the scale of his ambition — and the scale of this city. Eventually, Grit will also be coupled with a mobile app that will let customers order easy-to-cook preset "meal bundles" that can be tossed in a pan with some olive oil and will include a feature that helps them organize dinner parties.

It's slow food meets high tech.

Already, he has the support of customers like Sip, who says she wants to invest, and Mayor Turner, who calls it a "tremendous opportunity" to create more access and sees an intervention like it as crucial to his Complete Communities initiative.

Foreman says, "It's definitely an opportunity not to solve, but reduce, food insecurity in food deserts. They're on the right track."

Grit Grocery comes at an interesting time. As food-delivery services like Instacart and meal-kit ones like Blue Apron increase in popularity, supermarkets are changing — they're being forced to. In "Grocery: The Buying and Selling of Food in America," Michael Ruhlman traces that change. There might always be Targets and Walmarts — the American version of the bazaar — but many supermarkets have become less super, smaller, focusing less on processed foods and more on fresh produce and proteins.

"Our generation," says Windham, "is learning how to interact with food again. We're recognizing that food preferences are changing."

Now that Amazon has purchased Whole Foods, this change might become only more accelerated. One of Ruhlman's sources, the co-CEO at Midwestern supermarket chain Heinen's, predicts that supermarkets will continue to shrink in size: "If Amazon has its way," he tells Ruhlman, "that stuff in the center of the store will all be delivered to your door. And we'll go back to the old days, where it's all specialty stores."

How small with they shrink? How special will they be?

Windham's betting that it might be as small as a single truck, parked in the right place, providing the right few things at the right time. Maybe that will help the city with food deserts, with diabetes and high blood pressure, with obesity.

"You can have convenient and healthy," he says.

But there's also a reason he named the company "grit." He knows that addressing all these problems isn't going to be easy.

Based on research by Vikas Mittal, Rahul Goving and Rabikar Chatterjee

• For national retailers, a new model shows how to satisfy consumers based on their psychological preferences and geographic location.
• Managers can use this model for better efficiency in their efforts to meet customer needs.
• The model can also give insight into the preferences of like-minded individuals with shared socioeconomic or demographic characteristics.

Will the Jetsons be the reality of the Millennials’ middle age? After all, videoconferencing is already the norm thanks to Skype and Facetime. Drones deliver our packages. Amazon owns Whole Foods, so pressing a button for breakfast might not be far off. As science turns fiction into reality, major retailers from Amazon to Wal-Mart to Kroger need to stay attuned to consumers if they want to stay relevant.

From Sydney to Pittsburgh to Houston, researchers are developing new tools to adapt their strategies to local demands. Rice Business Professor Vikas Mittal collaborated with colleagues Rahul Govind and Rabikar Chatterjee to create such a tool, which they call Spatially Dependent Segmentation (SDS).

Over the years, marketers have segmented customers either based on geography or their psychological beliefs. In one segmentation model, people living in the same zip code are classified as belonging to one segment (e.g., urban or rural). In another approach, customers are classified according to similar beliefs (such as prioritizing price or prioritizing service). The SDS approach does something different: It simultaneously considers consumer psychology and geographic location.

First, the scholars gathered multiple observations about consumer attitudes and needs in each area under analysis. Next, they incorporated estimates that group together similar units into spatially contiguous market segments. This allowed them to estimate consumer satisfaction levels in market segments that were spatially contiguous.

Developing market segments around concentrations of consumers with similar values, culture, and socioeconomics helps big retailers pinpoint ways to satisfy consumers at individual stores, even in very different neighborhoods. For example, big retailers no longer need to view all rural customers through the same lens. By clustering areas with similar consumer profiles, retailers of all kinds can more accurately choose products, services, and pricing, as we`ll as provide training to employees and enough parking for customers at individual stores. For larger retailers, the improved precision makes managing a range of stores less cumbersome. The scholars’ model neatly improves efficiency while permitting better response to consumer demand.

While Mittal and his fellow researchers measured satisfaction of like-minded, neighboring consumers, they noted that their new methodology could apply to shopping scenarios beyond brick and mortar. As shopping moves online, for example, retailers can use this information to make recommendations during live online searches. Their model can also shed light on the tastes of like-minded individuals who live in very different communities.

As the reach of retailers continues to globalize and technologies to evolve, it’s easy to imagine the SDS model helping map regions for drone deliveries. It could also help big retailers spot interpersonal and other links between consumers in given areas. And it could shed light on how and why electoral voting patterns differ across regions and socio-economic groups. Adapting marketing and management strategies to specific stores and their customer base can helps ensure that each person who puts in a breakfast order finishes their bacon and eggs (or kale and quinoa) fully satisfied. Satisfied consumers are loyal customers — the secret to long-term success.

Vikas Mittal is the J. Hugh Liedtke Professor of Marketing and Management at the Jones Graduate School of Business at Rice University.

To learn more, please see: Govind, R., Chatterjee, R., & Mittal, V. (2017). Segmentation of Spatially Dependent Geographical Units: Model and Application. Management Science. 1941-1956.

By Peter Rodriguez

Within the walls of academia, research is cherished and revered, the genuine ‘coin of the realm’ for any serious scholar. Outside the walls, research often appears more like a dalliance, the luxurious hobby of the academic’s lifestyle or the abstruse and unproductive exercise of impractical but well-funded scientific minds.

The failure of academic leaders to communicate the fundamental honesty, rigor and power in great research is our most humbling marketing failure. It keeps us up at night. And it keeps the good stuff, the scientific wisdom, the very hard-won stuff, out of reach for so many who really need it. Now, more than ever, the value of science and of proven research and scholarship needs to be smartly and widely shared.

Some like to water down the complexity of scientific studies to make it palatable and less intimidating. But adding sugar to the medicine steals the integrity of scientific processes and turns professors cold to the process. As a result, academics too often seek only their own kind when sharing successful research.

We can do better, by working hard to craft well-written, honest and authentic pieces on the best research done by scholars at Rice. I am immensely proud of the engaging, brief and refreshingly smart pieces that follow in this inaugural print edition of the best of Rice Business Wisdom. There’s nothing more gratifying to a professor than knowing they helped make someone smarter — and through these works on our research, we can.

On behalf of all my colleagues at Rice, and scholars everywhere, I hope you will read, enjoy and share them widely.

-- Dean Peter Rodriguez

Peter Rodriguez is a Professor of Strategic Management and the Dean of the Jones Graduate School of Business at Rice University.

By Phil Shook

After months of public debate, the FCC voted on Thursday, December 14, 2017, to repeal Net Neutrality, the Obama-era rule requiring Internet service providers to treat all Internet data equally, and not charge differently based on user, content, website or similar variables. The decision could transform how millions of Americans get their online information and how much they pay for it.

The vote pitted telecom giants like AT&T and Comcast against powerful tech companies like Facebook and Google as well as consumer and Internet activists.

Spearheading the repeal effort were President Donald Trump and Ajit Pai, his appointee to head the FCC, who argued that repeal would spur Internet growth and innovation, and is essential to a free Internet. It’s a case that AT&T has made for more than a decade. “Why should they be allowed to use my pipes?" Ed Whitacre, the company’s former chairman and CEO, argued in 2005. "The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo or Vonage or anybody to expect to use these pipes free is nuts.”

Repeal opponents, however, argue that ending net neutrality will allow telecoms to levy different rates on different types of Internet communication. It could also make it harder for entrepreneurs to compete with established tech companies, according to critics such as Rice University Engineering School Professor Moshe Vardi, director of the Ken Kennedy Institute for Information Technology.

In the absence of net neutrality, Vardi said, a company like AT&T could decide to raise the price on internet telephony like Skype. “That means that if Moshe Vardi, a Rice professor, wants to launch a service called Vardype, which would compete with Skype, his small company cannot afford the high price demanded by AT&T,” Vardi continued. “So Vardype has to pass the cost to its customers.” Even if Vardype were much better than Skype, Varid said, the inability to draw enough paying customers would force it out of business.

In addition to expecting return on their investment, the telecoms maintain, net neutrality impedes them from investing in new technologies. Repeal critics counter that net neutrality is not merely about “pipes,” or broadband. “If the customer wants a bigger pipe, the customer should have to pay more for it,” Vardi said. “What happens inside that pipe on the Internet highway: That is the business of the customer.”

As of the summer of 2017, a majority of U.S. American consumers appeared to agree. In a national survey of more than 1,000 Americans conducted by Consumer Reports last July, fifty-seven percent of respondents backed net neutrality, 16 percent opposed the rule, and about a quarter had no opinion. A larger majority – 67 percent – said the telecoms shouldn’t be allowed to modify or edit the content that consumers try to access on the Internet.

Meanwhile, economist Hal Singer, an opponent of the original net neutrality rule, warns that simply repealing and depending on courts to protect consumers and competition may not work as intended. Designed to protect consumers and competition, Singer wrote, the legal system is also expensive and slow. “If the net neutrality concern is a loss to edge innovation,” he said, “a slow-paced antitrust court is not the right venue."

Below, some background on how net neutrality works.

What exactly is net neutrality?

Net Neutrality, a term coined by Columbia University media law professor Tim Wu in 2003, is the principle that Internet service providers (ISPs) must treat all data on the Internet the same, without discriminating or charging differently by user, content, website, platform, application, type of attached equipment, or method of communication.

The regulation was an extension of the longstanding concept of a common carrier, originally used to describe the role of telephone systems.

Under net neutrality, the large Internet providers were prevented from requiring customers to pay to get their content delivered more quickly than their rivals, or for throttling other services and websites by block customer access to sites like YouTube or online newspapers.

FCC chairman Pai’s proposal, passed on Thursday, allowed telecom companies to sell customers a basic internet plan that might include only limited access to Google and email. For Facebook and Twitter, for example, a customer may need to pay for a more expensive plan.

The ISPs argued that the common carrier concept, which originally assigned the companies to the same status as utilities, was an outmoded and overly restrictive concept for a modern technology like the Internet.

A little history

The four largest national wireless carriers haven’t always been subject to rules. That changed in 2015. In 2014, former president Barack Obama recommended that the FCC reclassify broadband Internet service as a telecommunications service as a way to preserve net neutrality.

Back then, the FCC received 3.7 million comments supporting the status of the Internet as a telecommunications service. The outpouring of comments pressured the FCC to uphold net neutrality. (This time around, almost 22 million comments have been filed with the U.S. government on the issue although there have been charges that there have been faked submissions in favor of repeal).

In 2015, the FCC ruled in favor of net neutrality. Broadband access was reclassified as a telecommunications service, and Internet service providers had to obey the requirements of common carrier status.

After the Net Neutrality rule took effect later in 2015, United States Telecom Association, an industry trade group, filed a lawsuit against the FCC challenging the rule. A U.S. appeals court upheld the FCC’s Net Neutrality policies by 2-1 the following year.

In 2017, after President Donald Trump took office, his newly appointed FCC commissioner Ajit Pai announced the agency took issue with a ‘utility-style regulatory approach’ to the telecommunication industry’ and would contest the Net Neutrality rule. The agency voted to end the rule in December of 2017.

Down this superhighway before

The big telecoms have violated net neutrality in the past. In 2007, Comcast was caught secretly throttling, or slowing, uploads from peer-to-peer file sharing (P2P) applications. The company continued blocking these applications such as BitTorrent, until the FCC ordered them to stop. AT&T was caught limiting access to FaceTime, so only users who paid for its new shared data plans could access the application. And in July, 2017, Verizon Wireless was accused of throttling after users noticed that videos played on Netflix and YouTube were slower than usual. Verizon said it was conducting “network testing” and that net neutrality rules permit “reasonable network management practices.”

Taking sides

Heavyweights in technology and business have lined up on both sides of the issue.

Supporting repeal of Net Neutrality were such luminaries as Bob Kahn, inventor of TCP/IP, the fundamental communication protocols at the heart of the Internet; Prize-winning economist Gary Becker, the co-founder of Netscape; Marc Andreessen, co-author of Mosaic web browser; Peter Thiel, co-founder and former CEO of PayPal, and Nicholas Negroponte, an architect and founder of the MIT Media Lab.

Among the industry stars and web pioneers supporting Net Neutrality were Tim Berners-Lee, an Oxford University professor and inventor of the World Wide Web; Steve Wozniak, co-founder of Apple Inc., and Vinton Cerf, a Web pioneer who is recognized as ‘the father of Internet.’

Now what?

Even after the December 2017 vote, supporters and detractors of Net Neutrality generally agree on one thing: The decision by FCC commissioner Pai is not likely to be the final word. Lawsuits were already underway within the same week to challenge the FCC’s actions, and the political winds could shift again.

RBW: Why did you decide to start publishing concise, online translations of faculty research?

KR: Former Rice Business Dean William Glick, like our current dean, Peter Rodriguez, believed that academic thought leadership must provide the foundation for the education provided at the business school. Personally, I felt that while my faculty colleagues were regularly making major discoveries or adding to the common body of knowledge in business in impressive ways, it was largely a well-kept secret. Obviously, our students experience the benefits of learning from such thought leaders firsthand when they take their courses. But outside of that, our stakeholders — students, alumni, corporate partners, friends, etc. — were largely in the dark about faculty research.

RBW: What do you think is most often misunderstood about business school research?

KR: The idea of what academic research in business entails is itself often misunderstood. Sometimes I joke with people who look surprised when I say I’m doing accounting research, ‘Are you wondering what we can research when debits always equal credits?’ In reality, the type of research academics do is like creating a landscape to be viewed from a satellite. You won’t necessarily see the minute details of the plants — that is, the details a business professional may need to address in the real world. Instead, you’ll get a map or framework that can help you navigate new opportunities and practical problems. I’d view Business Wisdom as a success if it means that anyone can immediately understand the research focus of one of my colleagues — and why it’s relevant for shaping their business practices.

RBW: What's the difference between a Rice Business Wisdom piece and a reference to a journal article in a mainstream media story?

KR: The news media tends to focus on news that can elicit an immediate emotion, response or action. If I tried to follow the advice from every piece of health research I see discussed in media, I would be restocking my kitchen every other day and starting a new exercise regimen. Most times, the type of research we do doesn’t fit the bill for immediate gratification, although there are exceptions. The recent Houston Chronicle article by my colleagues Erik Dane and James Weston, “Should I Stay or Should I Go?” (p. 10), is a case in point. Business Wisdom was created as a vehicle to transmit the timeless discoveries that my colleagues make, but it is well complemented by articles like this one, in which the relevance of the school’s thought leadership becomes readily apparent.

K. Ramesh is the Herbert S. Autrey Professor of Accounting at Jones Graduate School of Business at Rice University.

Based on research by Ajay Kalra and Wei Zhang

• Circumstances play a major role in consumer choice and satisfaction.
• Customers who book hotels far in advance are more likely to pick expensive hotels — and to be happy with them.
• Time and emotion color how consumers feel about their hotel accommodations.

An office worker gazes dreamily at their computer, looking for the perfect hotel for their vacation in Venice. For an instant, they hovers on a website offering simple but clean accommodations at a modest price. Then they scroll onward, hitting “submit” on a high-end destination with a spa, trendy restaurant and lavish linens. Why did they choose the sumptuous hotel instead of the economical one? And how will they feel about that choice at the end of their stay?

Researchers used to assume that shoppers balanced quality and price in order to make their choices. But there’s far more to it than that. Research shows that variables that may seem totally circumstantial play a powerful role both in consumer choice and in later satisfaction. If the daydreaming office worker had booked their room from home instead of work, for instance, they would have likely picked the cheaper option. And whether they went upscale or moderate, if they paid three months in advance instead of three weeks, they would have liked their hotel more.

Ajay Kalra, a professor at Rice Business, studied shoppers’ use of online travel sites to discern how they choose and rate hotels, and how circumstantial variables sway their decisions. Contrary to conventional wisdom, he found, outside factors such as distance traveled and the date that a hotel was booked affected both the quality of accommodation travelers chose and even their perception of the hotel after their stay. For instance, travelers heading to distant cities chose better hotels than those staycationing near home. Yet curiously, these long-distance travelers came away less happy with their lodgings than those who stayed nearby.

Time made a difference too. Customers who reserved early chose better hotels and rated them more highly than travelers who booked at the last minute. Even the hour of day mattered: Travelers who booked during the workday chose higher-quality hotels than those who booked during their time off. Yet those who booked from work rated hotels more harshly than those who chose from home.

What could be behind the impact of such seemingly irrelevant details? Working with Wei Zhang of the Ivy College of Business at Iowa State University, Kalra found that standard economic approaches offered little explanation. So the researchers turned instead to psychological theory. What they found suggests that managers should track circumstantial variables as well as more standard metrics in order to predict consumer choices.

The key to the unusual findings, Kalra and Zhang argue, is the power of the past. According to a model called construal-level theory, variables that seem completely random wield power because of the emotional impact of time. As events grow more distant, consumers see them in a more abstract way, sometimes through rose-colored glasses. In contrast, they tend to view recent events in a more detailed and specific way. Thus, variables that at first glance seem random can predict consumer selection and satisfaction with some accuracy.

To get a deeper understanding of these patterns, Kalra and Zhang used the lens of “consumption episodes,” breaking trips down into related purchases such as airfare, hotels and meals. The idea is that most vacation shoppers seek a peak experience, so they buy the highest quality product they can afford across all areas. Traveling far and then staying at a mediocre hotel could undermine the peak experience, so those traveling greater distances seek out higher quality lodging, food and the rest.

Exhaustion, stress, hunger or just a long day at work can affect decision-making. Research into a model called depletion theory shows that judges make a higher percentage of favorable decisions after snack breaks, and that people who are tired are more likely to splash out on pricey consumer items. This may explain, Kalra and Zhang suggest, why vacationers who book hotels from the office crave more luxurious accommodations than those who reserve from the comfort of their couches at home.

Timing and payment method can also affect customer choice. According to the theory of prospective accounting, the pain of paying is dulled when done far in advance, for example by credit card. Consumers who prepay for vacations experience a gulf between payment and consumption, so the vacation feels free. This could account for the high satisfaction rate among travelers who book hotels far in advance.

Teased from data and analyzed through social science, Kalra’s findings offer concrete guidance for sellers and consumers alike. Managers need to accept that some aspects of consumer rating satisfaction are completely out of their control — and they should make sure their superiors know this too. This is particularly important in companies that evaluate employee performance on customer satisfaction metrics.

Consumers, especially travelers, it turns out, have more control over their experience than they might imagine. It may be hard to predict the weather in Europe or the construction schedule outside your hotel room window, but book early enough to forget paying, and click “submit” from the living room with a cat curled nearby, and you just might treat yourself to a free upgrade.

Ajay Kalra is the Herbert S. Autrey Professor of Marketing at Jones Graduate School of Business at Rice University.

To learn more, please see: Zhang, W. & Kalra, A. (2014). A joint examination of quality choice and satisfaction: The impact of circumstantial variables. Journal of Marketing Research, 51(4), 448-462. .