Based on research by Gustavo Grullon, George Kanatas and James P. Weston 

• Advertising doesn’t just reach potential customers. It reaches potential investors.
• Investors have a home bias — they invest in what they know.
• Increasing advertising broadens shareholder base.

In the 2016 Super Bowl, 30 seconds of commercial airtime cost up to $5 million. How did the H. J. Heinz Company spend their expensive time?

With a pack of dachshunds dressed like hot dogs racing in slow motion toward owners dressed like ketchup bottles.

The Heinz “Weiner Stampede” was a viewer favorite, and a fine investment it was. Absurd, yes, but it not only prompted shoppers to remember Heinz at the store – it probably nudged Wall Street investors to buy shares.

Product sales, a team of business school researchers have found, are just one way to measure marketing success.

While most people think of brand recognition simply as a way to reach consumers, there’s another important constituency that responds to familiar names and products: investors.

A study coauthored by finance professors Gustavo Grullon and James P. Weston, and Emeritus Professor George Kanatas, shows that when firms spend more on advertising, they attract significantly more investors. This so-called “home bias” sways individual investors more than it moves institutional investors. But its effect on both is the same: A disproportionate number of investors are drawn to a stock based on familiarity rather than more fundamental information.

“People buy on impulse and on recognition,” Weston explained to Fortune. “With more and more online trading taking place, companies that spend money on big advertising campaigns see this additional benefit from their advertising investment.”

The Rice team’s research was based on a sample of 5,776 firms. Their findings showed that on average a 10 percent increase in advertising expenditures increased the number of independent shareholders by 2.7 percent. Institutional shareholders climbed 0.5 percent.

With more investors, a firm’s shareholder base and liquidity grow. And since a firm’s visibility may increase the breadth of ownership and improve liquidity, it is possible that brand familiarity can also increase a firm’s overall value.

This research has important implications for firms considering the economics of advertising. Old-fashioned marketing — the kind that emphasizes pets, funny slogans, familiar images — influences more than customers. It persuades investors.

Just follow the dachshunds. As the weenie dogs barrel their way across the Heinz commercial, a voice-over tells viewers, "It’s hard to resist great taste.” Whether investing in ketchup or stock shares, buyers agree.

George Kanatas is a Jesse H. Jones Professor Emeritus of Finance

Gustavo Grullon is a Jesse H. Jones Professor of Finance at the Jones Graduate School of Business at Rice University

James P. Weston is a Harmon Whittington professor of finance at the Jones Graduate School of Business at Rice University

To learn more, please see: Grullon, G., Kanatas, G., & Weston, J. P. (2004). Advertising, breadth of ownership, and liquidity. Review of Financial Studies 17(2), 439–461.

By Michael Hardy

This article by Michael Hardy (Rice ’06) originally appeared in the Winter 2016 issue of Rice Magazine. The photo of Will Lyles is by Tommy LaVergne.

Four days after his 30th birthday in 2010, Maj. William E. Lyles was leading a team of Army Green Berets on a mission to meet with tribal leaders in the village of Garmab, in Afghanistan’s remote, mountainous Urozgan Province, when their Humvees began taking small-arms fire. Lyles directed his driver to take up a position on a hilltop to the north of the village, where he jumped out to assess the situation. He was in the process of radioing back to base to request air support when he stepped on a buried IED (improvised explosive device).

“At first I thought it was a mortar round,” Lyles remembered. “All my teeth were loose. My legs felt heavy, but there was this cloud of dust so I couldn’t see what had happened. I was trying to get up and get back in the fight, and I just couldn’t.”

When the dust finally cleared, Lyles saw that his right leg had been severed above the knee and his left leg was gone below the shin. “I didn’t think I was going to make it,” he said. “I tried to take deep breaths, because if you freak out you go into shock, and I knew I wouldn’t have a chance.”

Today, after four years of grueling rehab at the Brooke Army Medical Center in San Antonio, Lyles is a first-year MBA student at the Jones Graduate School of Business. He’s adjusted to life without his legs — he uses a wheelchair and two prosthetic legs to get around now — but the adjustment to civilian life, which included the breakup of his marriage, has been rocky at times. “I miss the Army more than anything,” he said. “I wish I was still able to do what I did, but this is good, too. I’m going to get a chance to lead again, in a different capacity.”

Lyles is part of a large and growing veteran presence at the Jones School — 10 percent of students enrolled across the school’s three MBA programs (full time, professional and executive) have served in the armed forces. In 2009, Rice was one of the first schools to join the Yellow Ribbon Program, which provides federal matching funds to help veterans attend private schools where the post-9/11 GI Bill often doesn’t cover the full cost of tuition.

Former Navy SEAL Jimmy Battista ’13 enrolled in the Jones School in 2011 after a decade in the military. Rice (and Houston) offered ready access to the world’s oil and gas economy, which is where he hoped his post-military career would lead him. “I realized that oil and gas companies operate in similar places to where I was operating — Iraq, Yemen, hard places to operate,” Battista said. Along with his fellow military classmates, Battista founded the Veterans in Business Association (VIBA) to provide mentoring for students making the transition from the military to academia.

Support soon coalesced around the idea to create an annual scholarship to cover tuition, fees and living expenses for one veteran to earn a graduate business degree. Jones Graduate School of Business Dean Bill Glick, along with Rice trustees and members of Jones’ leadership team inaugurated the scholarship in 2012. (Lyles is this year’s recipient.)

“Here, veterans get a two-year window after they come out of the military to figure out what they want to do,” Glick said. “And in the process they figure out which parts of their military leadership training actually translate into the business world. They come in with advanced leadership skills in some dimensions, and we give them opportunities to grow and develop. And vets are very good at doing that. They’ve got a great sense of mission.”

Admission officers at the Jones School take into consideration the specific challenges facing veterans — “You can’t take a Princeton Review GMAT course in Kandahar,” one veteran said.

Annie Hunnel, a former associate director of recruiting and admissions at the Jones School, travels the country to meet potential students at service academy career days and veteran job fairs. “When a veteran transitions out of the military, they don’t necessarily understand what their options are,” Hunnel said. “It’s hard to understand how to put that experience in a résumé, how to make themselves attractive to an employer.”

One of VIBA’s earliest supporters was Rice trustee Doug Foshee, the former CEO of the El Paso Corporation and a 1992 Jones School alumnus. “I was aware that many of my fellow Houston CEOs were flying to Boston every year to recruit military veteran MBAs from the Rice University of the North, otherwise known as Harvard,” he said. “That didn’t make a lot of sense to me — why couldn’t we grow our own?”

In a very short period, Foshee said, the Jones School has become known as one of the most veteran-friendly business schools in the country. In fiscal year 2014, it awarded more than $1 million to the Military Scholars Program finalists and $1.7 million overall to veterans in the business school.
That reputation is what helped attract Steve Panagiotou, who, like Lyles, is a former Green Beret. After 10 years in the Army, Panagiotou was trying to decide how to jump-start his career when a friend told him about the Jones School.

“Rice valued my background in the military, and when I came down and got to meet some of the supporters, that clinched it,” he said. “The support was almost overwhelming from the alumni who have been successful in their careers. At that point it was a no-brainer for me.”

As the current president of VIBA, Panagiotou has played a role in sponsoring public events like the Rice Veteran's Leadership Series, which has featured marquee speakers such as Tom Ridge, the first secretary of the Department of Homeland Security, and Pete Dawkins, a legendary American business leader, distinguished veteran, Rhodes Scholar and Heisman Trophy winner.

The group scored a coup in 2013 when it brought to campus six major American authors (four of whom were veterans) to help raise the profile of the Jones School and its veteran-friendly programs. Organized by then-MBA student and VIBA president Mike Freedman ’14, the event featured authors David Abrams (“Fobbit”), Lea Carpenter (“Eleven Days”), Ben Fountain (“Billy Lynn’s Long Halftime Walk”), Bruce Jay Friedman (“Stern”), Karl Marlantes (“Matterhorn: A Novel of the Vietnam War”) and Rice alumnus Bill Broyles Jr. ’66, who served in Vietnam before returning to Texas to co-found Texas Monthly and go on to a distinguished career in screenwriting. In 1983, Broyles was one of the first American veterans to return to Vietnam, this time to “meet my enemy in peace,” as he wrote in the resulting chronicle, “Brothers in Arms.”

The event drew a full house and resulted in substantial discussion about the poignancy and pathos of war, the ethics of reportage and the impact of humor and absurdity in such chronicles. “To be with writers like Karl Marlantes, Bruce Jay Friedman and Ben Fountain was a rare opportunity,” Broyles said. “The discussion was deep and raw and honest, and the Rice vets were incredibly inspiring.”

Though they weren’t part of the program last fall, Broyles, Fountain and Marlantes returned to campus to attend another VIBA-sponsored writer- and vet-friendly event marking the 50th anniversary of the Vietnam War. At that event, Broyles noted “the same spirit of support and comradeship.”

“A small group of dedicated men and women have been fighting a lonely war for almost 15 years now,” he said, “and I’m so proud of Rice for honoring and supporting these veterans and of the veterans for making Rice an even better place.”

Like Panagiotou, Lyles decided to come to Rice after sitting in on classes and meeting veterans already enrolled in the program; being awarded a full scholarship sealed the deal. Despite having lost both his legs in Afghanistan, the recently remarried father of four said he feels blessed to be given a fresh start. “I consider myself probably the luckiest person in the world. I hit the lottery, but instead of money, it’s a second chance at life. And I want to make the most of that second chance.”

Based on research by David Lane

• Researchers need to avoid intense focus on subgroups when the big picture doesn’t support their conclusion.
• Readers of numbers based research and reporting should always be aware of the sample sizes studied.
• Journalists who report on statistics based research should consider taking statistics courses.

Most people know at least a little about the signs of the zodiac, and the supposed characteristics of those born under them. Aries are brave; Cancers tenacious; Scorpios resourceful. But did you know that Sagittarians are prone to funny-bone fractures? Or that Leos tend to be plagued by stomachaches?

It all sounds like nonsense, you say — especially the part about diseases and injuries being linked to astrological signs. But according to David Lane, an associate professor of statistics and management at Rice, those indeed were the findings of a 2006 study that classified patients according to their signs, and then went looking for any differences in incidence of particular ailments.

Don’t get Lane wrong, though. He in no way defends the notion that diseases and star signs are linked. Neither did the authors of the original study, which was designed as a lesson in the perils of shoddy science. Instead, in an article critiquing the careless use of statistics, Lane warns that research that makes too many statistical comparisons boosts the chances of false conclusions.

In other words, if scholars conducting a study focus on too many subgroups — Geminis and Capricorns, say — rather than on the big picture, they're likely to get inaccurate, even nonsensical, findings.

These studies also pose a special hazard for science reporters. Lacking background in statistics and numeracy, such journalists can easily misunderstand studies that are statistically complex.

Lane uses the New York Times blog of Steve Lohr to illustrate his point. In 2010, the National Bureau of Economic Research published a report on the effectiveness of online education. Lohr quoted the report's authors, who wrote, “A rush to online education may come at more of a cost than educators may expect,” and generally conveyed skepticism about the “rush” to online college learning, especially regarding “certain groups” that “did notably worse online.”

Hispanics who studied online, these authors contended, scored a full letter grade lower than Hispanics who attended a live lecture. Males and low achievers each lost half a letter grade.

To the casual reader, this looked like bad news about online education overall. Readers who weren’t statistically savvy also might have concluded that Latino online learners fare especially badly, and that online classes don’t work as well as in-person teaching for anyone. But none of that was actually supported by the report’s findings.

According to Lane, the blog failed to convey a rather important fact: there is “no credible evidence" for the notion that live lectures have any better outcomes than online ones.

Even more misleadingly, the Times blog didn’t reveal that the sample size for the Hispanics viewing online lectures was only eight people. While the overall group tested was an adequate 312 students, Lohr failed to note the small number of Hispanics who were viewing online lectures.

In other words, the New York Times reported on the performance of Hispanic students in online classes based on a study that included only eight Hispanics in the critical group. “A proper comparison," Lane writes, "would take into consideration the large margin of error that necessarily accompanies the very small sample size used.”

Lane’s article sends up a warning about research findings based on subgroups to the exclusion of the big picture. It’s the scientific equivalent of believing that the cosmos revolves around the Big Dipper.

There’s good reason, in other words, to doubt that Sagittarians have fragile bones. Sound science requires a grasp of statistical complexity – and acknowledgment that the universe holds more than just the stars we can see.

David M. Lane is an associate professor in the departments of psychology, statistics and management at Rice University.

To learn more, please see: Lane, D.M. (2013). The problem of too many statistical tests: Subgroup analyses in a study comparing the effectiveness of online and live lectures. Numeracy, 6(1), Article 7.

Based on research by Arnaud Chevallier

• Have to make a presentation? Make it communicate by knowing your objectives and weaving a story.
• Design powerful slides by knowing the purpose of each and backing that up with great visuals.
• Tailor your presentation for its listeners.

Hatching an audiovisual presentation is tedious work. Sitting through someone else’s bad presentation is even worse.

Like them or hate them, though, presentations are crucial to doing business, according to Arnaud Chevallier, former Rice University professor. Strong presentations are especially key when dealing with work teams – all the more so if you're suggesting major changes in their workplace.

In his recent book Strategic Thinking in Complex Problem Solving, Chevallier looks at a range of communication strategies with special attention to the business bête noire of AV presentations. One of the most common traps, he says, is believing your AV show is merely informational. If transmitting data were all that was needed, after all, it would be more sensible to email a list of bullet points and send everyone back to their desks.

Instead, most presentations aim at getting viewers to act. To do so, the presenter needs to ask herself: What does this presentation need to convey to convince viewers to do what I want?

Our rational selves will have a quick answer: supply evidence. But this only goes so far in changing people’s minds. Aristotle was right -- persuasion relies not on logic alone, but appealing to logic (logos), character/reputation/credibility (ethos) and emotion (pathos).

Persuaders from African griots to Walt Disney animators know how to do this. Tell a story. Not only are we conditioned from childhood to learn from stories, we like them.

In the workplace, however, it's also crucial to shore up ideas with evidence. To do this effectively in an AV presentation, Chevallier suggests, use taglines rather than slide titles. Taglines, declarative sentences that contain both a subject and a verb, summarize a slide’s main idea while the image backs the idea up visually. The goal is a presentation that makes sense to someone outside the room who’s scrolling through the slides on her own.

Great storytelling that grips an audience and teaches at the same time isn’t easy. But it is a teachable skill, based on rhetorical tools. This is one reason why reading to children at an early age is powerful. If they soak in enough examples of excellent narrative, the elements of presenting a good case or story can sink into their brains as well.

Within and outside of business, Chevallier says, a well-told story appeals to listeners' emotions and rationality both. Workplace storytellers can do this by customizing not only their content but also their delivery style, including tone of voice, which can affect listeners as much or more than what’s actually said.

The first step in the process, Chevallier says, needs to be a grand entrance. Make your introduction, the element that journalists call a lede, smashing. If an audience isn't convinced in the five minutes that they want what’s on offer, attention will wander. Chevallier's own book demonstrates the point neatly: Its first paragraph describes Chevallier’s true-life hunt for his beloved lost beagle.

Next, a presentation needs to glide through information as surely and swiftly as a kayak through water. Meander or plod and readers jump ship.

Finally, even in corporate settings, we remain visual animals. Whether it's used as a record or to make a point, a slide needs to arrest the eye. Overall, Chevallier notes, people learn best from words and pictures presented together. Attention to details also pays off: a consistent template, proper font size and style, and a color that contrasts with the font, all make a difference. Avoid fussy graphics or crowding a slide with visual noise.

And make sure to mingle the spoken word with complementary information. A good AV slide gives a plain message, not much text and visuals that enhance the concept conveyed by the slide. Allotting one slide per idea, and using punchy declarative sentences, helps viewers focus the visuals while digesting what they've just heard.

Finally, presenters should see their last slide as top real estate. That’s the one that will loom above during Q&As following the presentation. So don't waste it thanking the audience or listing credits. Instead, use that all-important last word to summarize the biggest idea with intriguing language, eye-pleasing graphics and a swift, certain message. Focus, detail, story, simplicity. That’s all it takes.

And it’s always easier said than done.

Arnaud Chevallier is a former associate vice provost and professor at Rice University.

To learn more, please see: Chevallier, A., (2016). Strategic Thinking in Complex Problem Solving, Oxford University Press. 

Based on research by Sean Wang (former Rice Business professor), Charles Ham and Nicholas Seybert

• Narcissist CEOs tend to invest heavily in research and development and mergers and acquisitions rather than in overall firm maintenance.
• As a result, firms perform less well under leaders who are narcissists.
• Despite this, narcissist CEOs tend to be paid better than their counterparts.

You’ve just been named CEO of a Fortune 500 company. Your ego fills the room. The laws of gravity don’t apply to you.

And naturally, you want to make an impact. So you pour money into mergers and acquisitions, and when you’re not trying to acquire another firm, you guide company resources into research and development. You’re a genius, and the world will soon be clinging to your every new product.

The only problem: Your company will likely underperform. Research by former Rice Business visiting professor Sean Wang (now at Cox School of Business at SMU), along with Nicholas Seybert of the University of Maryland and Charles Ham of Washington University at St. Louis, reveals the high costs of an out of control CEO ego.

The researchers’ first challenge was establishing who could legitimately be called a narcissist. What does the term mean, exactly? While there are varying definitions, Wang’s team focused on narcissism as a basic personality trait rather than a mental illness. As a personality trait, narcissism is associated with entitlement, vanity, authority and a sense of superiority.

To spot narcissists, the team took a novel approach: They examined their research subjects’ signatures. Signature size turns out to be a handy measure for egos, because it doesn’t require participants to answer direct questions about their personalities — and because participants are unlikely to know that ego can affect something as simple as a signature.

Just having a big ego, though, does not a narcissist make. To validate a link between a person’s signature and narcissism, the researchers asked 53 graduate business students to provide their signatures by signing a document, and then to take a personality survey that measured narcissism. The findings documented that indeed there was a strong correlation between signature size and narcissism.

Next, the researchers obtained data from prior psychology research on employee perceptions of 32 technology-firm CEOs. Of the 24 CEOs for whom the researchers also had signature samples, they found a significant correlation between narcissism and signature size.

Armed with these findings, Wang and his colleagues were able to extrapolate the narcissistic traits of thousands of CEOs whose signatures were readily available on proxy statements and other corporate documents. The researchers ultimately studied 741 CEOs from 411 firms during the period between 1992 and 2015, corresponding to 6,361 firm-year observations with a median of eight fiscal years per CEO.

They found a pronounced behavior pattern. Firms led by narcissistic CEOs invested more in high-exposure areas such as research and development and mergers and acquisitions, but shied away from routine capital expenditures for day-to-day productivity. This trend was even more pronounced during periods of financial slack, suggesting that narcissistic CEOs prefer an aggressive management style whenever possible. Financial productivity delivered by these narcissistic CEOs in terms of profitability was lower than their less egotistic counterparts.

The research has multiple implications. Narcissistic leaders, past research shows, are prone to make bad decisions — in part because they are bad listeners. As a result, they often dominate the decision process without incorporating feedback or ideas from others. Ironically, they mistakenly perceive this behavior as a signal of competence and strong leadership.

To counter these bad habits, the researchers say, during periods of financial sluggishness investors and corporate boards should combat excessive narcissist-led investment by pushing for higher dividend payouts. Given that narcissistic CEOs overinvest in R&D, investors also need to closely monitor whether such investments represent real innovation or just vanity. Finally, boards of directors should be aware that narcissistic leaders tend to command higher salaries – and consider whether their CEO falls into this category, and is essentially getting higher pay for inferior performance.

In short, to really be as boss as they see themselves, narcissistic corporate leaders need to recognize their tendencies and rigorously check their egos. Boards, meanwhile, should closely monitor their CEO’s priorities in directing firm resources. It could be the writing on the wall. 

Sean Wang is a former visiting assistant professor of accounting at Jones Graduate School of Business at Rice University. He is now an assitant professor at Cox School of Business at SMU.

To learn more, please see: Ham, C., Seybert, N., & Wang, S. (2018). Narcissism is a bad sign: CEO signature size, investment and performance. Review of Accounting Studies, 23(1), 234–264.

Based on research by Anastasiya Zavyalova, Michael D. Pfarrer and Rhonda K. Reger

• The media tend to focus their storytelling on firms that have plenty of readily available information about their identities.
• For some people, an organization’s identity dovetails with their personal identities. For others, the organization’s identity clashes with their own self-images. Because of this, an organization can experience both celebrity and infamy at the same time.
• Celebrity is harder to sustain. Infamy is harder to shed.

Everybody wants to be famous. Big corporations are no exception, and with good reason. Like any starlet, a company that’s seen as a “celebrity” enjoys all kinds of perks. That’s because the link between the firm and its customers is emotional; when a firm is a celebrity, the relationship can feel a lot like love.

A recent study by Anastasiya Zavyalova of the business school, Michael D. Pfarrer of the University of Georgia and Rhonda K. Reger of the University of Tennessee at Knoxville (formerly of the University of Missouri) reveals in new depth the advantages and limits of corporate fame.

Most importantly, the researchers write, celebrity has consequences. As soon as a firm finds itself bathed in public acclaim, it opens itself to infamy in the eyes of those who dislike the firm’s identity.

Consider 84 Lumber Company’s recent Super Bowl ad depicting a Latin American family’s struggle to make its way to the Unites States. Facing a wall at the border, they seem to have lost their dream. Then they find a wooden door and pass through it.

Viewers responded with intense approval–and equally intense hostility. “Almost lost a job for having 84 Lumber as my supplier,” wrote contractor Zack Mayberry on the company’s Facebook page. “Development told subs they could not use 84 Lumber. Spent almost 1 mil last year. Have to find a new supplier to support my needs.”

Whenever a company makes a choice, consumers are touched in a multitude of ways. Effectively, Zavyalova writes, these consumers are like political constituents. What the researchers define as corporate “celebrity” is a form of love based on the total of a company values. “Corporate infamy,” as the researchers define it, is a deeply personal rejection of a firm’s values.

It’s up to the constituents whether a firm enjoys celebrity, endures infamy–or both. A firm can pioneer a critical technical innovation, but that’s not enough to earn celebrity status: For that, it needs to take a stance on socially significant issues.

Major media create these narratives, connecting a firm’s actions with storylines that resonate for the public. By highlighting a firm’s non-conformist persona, for instance, media can present it as if it were an individual fighting for social change. Online retailer Etsy is one such company, attracting hundreds of stories about its corporate diversity ethic, from aggressively recruiting young females to insisting on a gender balanced senior team.

But the same firm that ignites fame with some consumers can stoke infamy with others. That’s because narratives with social import can fuel deeply personal, often contradictory, responses. Some consumers may feel personally attached to the firm; others will be alienated by a set of values that differs from their own. The more media attention the firm receives, the higher the likelihood that it will evoke intense feelings.

Take the example of fast-food restaurant Chick-fil-A, focus of heavy media attention for its corporate opposition to same-sex marriage and support of the “biblical definition of the family unit.” Same-sex marriage supporters responded with a wave of protests, including a nationwide boycott. As a result, supporters of traditional marriage defended the chain and its values, with nationwide gestures such as “eat at Chick-fil-A days.”

Like any media star, even the most adored celebrity firm can’t keep its sparkle without a little work. It needs to continually freshen material about its socially important innovations, just as a character in a TV series undergoes regular transformations in the course of a year. Even so, emotional traction gets harder and harder to sustain. Most television characters lose their social relevance over time; celebrity businesses do, too.

Corporate infamy, on the other hand, is the opposite: It’s hard to forget. Each new tidbit that makes people hate a brand makes it that much harder for the firm to shed a negative cast. Most firms one day shed their celebrity glow, whether they want to or not. Infamy, however, sticks like flop sweat.

Anastasiya Zavyalova is an associate professor at Jones Graduate School of Business at Rice University.

To learn more, please see: Zavyalova, A., Pfarrer, M., & Reger, R. (2016). Celebrity and infamy? The consequences of media narratives about organizational identity. Academy of Management Review, doi:10.5465/amr.2014.0037.

Based on research Haiyang Li, Yan Anthea Zhang, Yu Li, Li-An Zhou and Wieying Zhang

• People from developing countries who study and work in developed nations bring distinct strengths and weaknesses to businesses when they return home to emerging markets.
• Overall, these “returnee” entrepreneurs under-perform in terms of firm growth and survival compared to those local entrepreneurs who haven’t worked or studied abroad.
• But state ownership and firm age can mitigate the performance gap between the “returnee” entrepreneurs and local entrepreneurs.

In today’s world, people blessed with strong technical skills often move from developing home countries to more developed countries for study or work. Many later return home with burnished technical and business skills. But how do these skills translate when they start companies of their own at home?

Two Rice Business professors, Haiyang Li and Yan Anthea Zhang, collaborated with three professors in China to investigate.

To evaluate the success of companies started by locals with overseas experience, the team studied technology businesses founded between 1995 and 2003 in Zhongguancun Science Park (ZSP), China’s largest technology cluster. The team analyzed the firms’ growth in employment size, sales and profit, as well as their survival rate.

Businesses started by entrepreneurs who spent time abroad turned out to have some striking advantages — and disadvantages — compared to their homebody compatriots. In general, the returnees had higher educational levels and technical skills. For example, in the team’s sample, about 80 percent of the returnees who started new businesses had either a master’s degree or a PhD, compared to 28 percent of the non-travelers who started new companies. In these businesses, all of which are in the high tech industry, higher education levels correlated with higher levels of success.

Travel also seemed to fuel creative thinking. In ZSP, more than 57 percent of returnees held one or more patents. Because of their exposure to the high-technology markets in both developing and developed countries, the returnees could spot and exploit technological gaps. These gaps often provide opportunities for innovating and for building new companies in an emerging market.

But the advantages of education and work abroad came along with drawbacks. Like Rip Van Winkle, returnees often find that vast cultural shifts have occurred in their absence. They may no longer understand how their home country’s market works, or be stymied by an emerging market that operates differently from the developed markets to which they’ve grown accustomed. While abroad, moreover, they may have lost chances to nurture local contacts and business connections. For a new business, a lack of local knowledge and connections can be hobbling.

There are ways to compensate. In China, the researchers found, partnering with government is especially powerful. When the government has controlling interest in a venture, the returnee owners enjoy much improved access to key resources and connections.

Partnerships between government and returnees also have a salubrious effect on a venture’s overseas business. International suppliers, customers and other potential partners often distrust government-owned companies. These stakeholders may have greater confidence in business leaders who have lived and worked in a developed market environment, and know the rules of the road. This familiarity allows returnees to collaborate more effectively with the overseas stakeholders, strengthening trust. And trust is good for business.

Along with government affiliation, a firm’s advancing age can also work in favor of returnees.  As a venture ages, it builds its own track record and business relationships. The more local relationships the venture creates, the less important its initial lack of local relationships becomes.

In China as in the United States, experience abroad seems to fuel innovation (the majority of new patents granted in the United States include a foreign-born inventor). But as in any country, business connections count. The trick for ambitious technology workers from the developing world is to amass a repertoire of overseas skills, education and cultural expertise — and persuade their own governments of its value.

Haiyang Li is a Professor of Strategic Management at the Jones Graduate School of Business at Rice University.

Yan Anthea Zhang is a Fayez Sarofim Vanguard Professor of Management in Strategic Management at the Jones Graduate School of Business at Rice University. 

To learn more, please see: Li, H., Zhang, Y., Li, Y., Zhou, L., & Zhang, W. (2012). Returnees versus locals: who performs better in China’s technology entrepreneurship? Strategic Entrepreneurship Journal, 6(3), 257-272.

By Utpal Dholakia

It may sound like sacrilege to some, but Rice Business professor Utpal Dholakia argues that the same principles that have drawn people to organized religion can, and have, been used by marketers to draw people to their products.

The following originally appeared in the Harvard Business Review online.

Organized religion has shaped virtually every aspect of human behavior for thousands of years. Some historians have even argued that religion was integral to human survival. Perhaps it’s not surprising, then, that savvy marketers have figured out that they can use some of the same basic principles to connect with their customers – and that brands have taken on such importance to consumers.

And yet the narrowly formulated, self-serving, and consumption-focused beliefs and values, rituals, and communities provided by brands usually have little to offer beyond the boundaries of their products and services. Thoughtful marketers should have an understanding of how this is shaking out – how some brands are adopting the characteristics of organized religion – so they can think critically about whether this is something they want to do.

Scholars have found that every organized religion offers three key benefits to its followers, a) a set of core beliefs and values, b) symbols, myths, and rituals, and c) relationships with members of a likeminded community. Here are a few of the ways in which brands have begun using these elements to create “congregants,” not just customers:

• Core beliefs and values. The essence of any religion lies in a set of beliefs and moral values. Just consider how fully many of us embrace precepts such as “Impossible is nothing,” “Challenge everything,” or “Make the most of now.” Each of these slogans sounds inherently good, worth adopting and even building our lives around. Yet their origin is not some divine revelation or millennia-old discourse, but the minds of clever copywriters. Also common to every religion is belief in a divine, benevolent, supreme being. And today, figures like Jeff Bezos and the late Steve Jobs have been described as our “saviors” in how they’re portrayed. For instance, when Mr. Bezos purchased the Washington Post in August 2013, many media experts called him “journalism’s savior.” And the international edition of Fortune magazine recently depicted Bezos as the Hindu god Vishnu on its cover. Stories about the magnetic, larger-than-life founders of Amazon and Apple provide a rich mythology that draws consumers to these brands.
• Symbols, myths, and rituals. Rituals are repeated behaviors that follow a script and possess symbolic meaning. Over centuries, people have practiced religious rituals to mark rites of passage such as birth, marriage, and death, to mark certain times of each year like the end of the harvest season, to please divine powers, and to ward off misfortunes. Rituals impose order and structure to our lives, and assure us about our place in the scheme of things. While we continue to follow many rituals established by religion ― wedding vows or the Thanksgiving meal, for instance ― we have also adopted many rituals associated with brands. Activities like a particular way of eating an Oreo cookie (twist, lick, then dunk), participating in the “VW wave” (waving to another Volkswagen Beetle driver to say hello and signal solidarity), or using special, made-up words like “Venti” or “Frappuccino” at a Starbucks store every morning provide some of the same benefits as religious rituals do. Consumer psychologists have shown that creating new rituals for customers is a great way to heighten their enjoyment and to build strong brands.
• Relationship with a community. Through the ages, religious life and social life went hand in hand. People belonged to the same religious congregation their entire lives, and relied on fellow members for companionship, financial assistance, and social support. They found their friends, well-wishers, and spouse, and socialized their children there. Today, brand communities, fan clubs, and social networks provide many of these same benefits. Many motorcycle enthusiasts spend their weekends and vacations with their Harley Owners Group at rides and rallies. In user forums and chatrooms of companies like Hewlett Packard, Microsoft and Texas Instruments, tech enthusiasts devote hours upon hours helping others solve their problems without pay. Brands like Jeep, the Russian camera maker Lomo, and Samuel Adams organize “Brandfests” to bring together customers for enjoyable and educational experiences. In such venues provided and managed by brands, people socialize, form friendships, and even romantic relationships.

On one hand, it’s easy to see why these powerful tactics would appeal to marketers. On the other, as consumers, worshipping an iPhone or a Tesla cannot teach us to be happy or content with our lives. Nor can a Harley Owners Group necessarily provide us with the genuine friendship and intimacy that a caring spouse, life-long friend, or neighbor can. So as shoppers, we may be best served by enjoying the benefits that brands provide, yet acknowledging there are limits. And as marketers, we might want to ask ourselves if the value of what we’re selling lives up to our power to sell it.

Utpal M. Dholakia is a professor of marketing at Jones Graduate School of Business at Rice University. This story appeared in the February 18, 2016, online edition of Harvard Business Review under the title “Brands Are Behaving Like Organized Religions.”

By G. Anthony Gorry (1941-2018)

Memory’s Encouragement, by Tony Gorry, the Friedkin Professor Emeritus of Management at Rice University, was published by Paul Dry Books, Inc. 2017.

Among My Souvenirs

I was running errands and, needing directions, I called up my car’s navigator. “Turn left at the next intersection,” she guided me; “proceed one-half mile.” After shopping, I pressed the icon for my home. As my digital companion chimed in, I said, “Wait, I don’t need your help to find my way back.” Talking to a machine is something I do often these days. I closed the display. “Certainly I can remember where I’ve been.” True in this case, but would I always find my way back home?

This talk with my machine made me think of another trip, one almost eight years ago: a return to my hometown to attend my fiftieth high-school reunion. My sixty-eighth birthday had been approaching, and the tug of nostalgia drew me back for the first time since that graduation. In anticipation, I rummaged through the contents of an old shoebox that had languished in the back of a closet for years. It held a motley collection of photographs, yellowed newspaper clippings, school programs, awards, and an old Bulova watch my father bought for me after he returned from the war.

The shoebox was a welcoming gateway to another country rich in presence. I felt immediately reconnected to places I’d lived and left long ago. My past emerged to prepare me for my homecoming.

I was struck by the way in which memory transformed time and space. I was there at my desk in 2008, but I was also in the world of my youth, many miles and decades away. I held a photograph taken at my grandmother’s house, where I had lived while my father was fighting in Europe. It was probably 1944, and there I stood, almost four years old, with my wagon on the front porch. Though the picture was black and white, I knew that the wagon was red; my coat, blue; its six buttons, shiny brass. I could nearly smell the cool air of that spring day when sun-dappled snow still covered much of the ground.

In moments like this, I imagine myself a wanderer, one who has hurried along earlier pathways and now nears the end of his journey. I move more slowly, I take more breaks to ponder where I’ve been, to reflect on beautiful vistas of the past as well as rocky stretches, slippery crossings, and my wanderings off course— and the people I have met along the way. Remembrance pushes the present aside.

In a bookcase by my desk I have a copy of Homer’s Odyssey, the story of another homecoming. With its nymphs, goddesses, and monsters, the epic is a catalog of delights and wonders. It is also an account of a harrowing voyage through danger, terror, and gloom. Odysseus has plundered the stronghold on the proud heights of Troy, and now Poseidon, enraged most recently by Odysseus blinding Polyphemus, the cyclops, resists the hero’s return to Ithaca, where his wife and son have awaited his homecoming for twenty years.

Though my homecoming little resembled Odysseus’s heroic journey, one of his encounters reminds me of our life in the digital age. During the penultimate leg of his journey, when Odysseus is adrift at sea, Poseidon blasts his raft. Clinging to wood from the wreckage and barely escaping drowning, Odysseus washes up on shore, naked and exhausted. After a night’s sleep, he awakes in confusion. What place is this? Who lives here? How will they receive him?

His questions are answered when he meets Nausicaa, the daughter of the king in this land of Scheria. It is, she says, a place distant from other lands. Its inhabitants, the Phaeacians, are dear to the immortal gods. Indeed, the Phaeacians often encounter Olympians strolling in their midst.

Concerned that she might be seen unchaperoned with a naked stranger, Nausicaa sends Odysseus on alone to her father’s palace. There Homer reveals an otherworldly stamp on Phaeacian buildings and crafts. The palace is a marvel, airy and luminous, with the luster of the sun and moon. Bronze-paneled walls with azure moldings of lapis lazuli lead to the reception hall where the post and lintel are silver on silver and where gold handles curve on the doors. The entrance is flanked by hounds sculpted from silver and gold. Odysseus learns that Poseidon has made the Phaeacian ships as “swift as a wing or a thought.” They need neither pilot nor rudder to travel miraculous distances and still return in a single day.

A large garden fronts the Phaeacian palace. There the interpenetration of the heavenly and the mundane is striking. Apples, pears, figs, olives, and grapes grow profusely, giving their bounty regardless of season. As he scans this wondrous garden, Odysseus sees clusters of green grapes, others still ripening on the vine, some drying in the sun, and still others being crushed for wine. While currants dry in one part of the garden, vintners tromp purple grapes in another, and in yet another the new grapes are just losing their blossoms. It is not only the materiality of Scheria that has been touched by the gods. Time, too, has been transformed. In this garden the past, present, and future commingle. Yet despite these marvels, nostalgia retains its grip on Odysseus. He yearns for Ithaca, his wife and son.

The Scherian garden may be just poetic fancy, but my garden of the past is unworldly in its own way. There I cultivate remembrances and shape what I know about the past. In reverie I construct personal edifices, some gleaming, others shadowed. In memory, what was long ago can suddenly be close at hand; what was far, now near. A strange garden, with its own strange physics, but one I lately tend with care, for its produce enriches and encourages me.

Tony Gorry was the Friedkin Professor Emeritus of Management at the Jones Graduate School of Business at Rice University.

Based on research Douglas A. Schuler, Kathleen Rehbein and Colby D. Green

• Corporate political activity looms increasingly large on the U.S. landscape.
• Events in the market, including China’s increasing heft as an economic power, suggest rich areas of research that could one day make corporate political activity its own academic field.
• Even so, research into this activity hasn’t emerged as a distinct field.

Companies’ efforts to yank the levers of power are drawing intense scrutiny. Growing populist movements question corporate sway in citizens’ lives, while the U.S. Supreme Court’s ruling in "Citizens United v. Federal Election Commission" has loosened government reins on corporate political giving. Even before assuming office, the Trump administration did not hesitate to intervene in corporate decisions about where to source production or how to price multi-year governmental procurement contracts – choices that clearly could reverberate politically.

But does this activity merit its own academic field? Not yet, according to Douglas A. Schuler, a professor at Rice Business, Kathleen Rehbein of Marquette University and Colby D. Green, a Rice doctoral candidate.

Corporate political activity, Schuler, Rehbein and Green say, is any effort by firms to sway public policy to advance the firms’ market goals. Firms might do this individually or via industry trade groups through lobbying, political contributions or testimony at public hearings that bear on their business.

The framework for the trio’s research is a 2008 study by D.C. Hambrick and M.J. Chen, who identified three traits fundamental to an academic field. These are differentiation from other disciplines, mobilization of the supporters of the discipline and legitimacy of the discipline to those outside it.

To reach their conclusion about corporate political activity as an academic field, the researchers looked at several metrics associated with those three things. Among them: course requirements for students working toward masters degrees in business administration; conferences and scholarly communities on corporate political action; and views about the publications devoted to the topic.

The results spoke volumes.

Researchers studying corporate political activity do ask questions that other disciplines don’t, Schuler and colleagues found. And their lines of inquiry distinguish them from scholars in related fields such as management, economics, political science and sociology.

Researchers in other fields, for instance, have studied how corporate political activity affects public policy. Specialists, in contrast, look at the motivations for that activity. One such paper shows that corporate political involvement rose after firms proposed mergers that needed regulatory approval.

At the same time, business school leaders say that articles in the two journals most specialized in addressing corporate political action don’t count for much when they assess underlings who must publish to advance their academic careers. There’s also a relative lack of corporate political action research in more established management and strategy journals.

Back in the classroom, of the MBA programs at the top 20 business schools ranked by Bloomberg Businessweek, only four – Harvard, Stanford, Yale and Rice – require courses in corporate political activity. Most other schools on the list offer the topic as an elective.

Similarly, the Association to Advance Collegiate Schools of Business International, an accrediting agency, lists courses that tackle corporate political activity as central to graduate management programs. But it doesn’t go as far as to label the topic a unique field.

Applying these findings to their framework, Schuler and his colleagues conclude that as an academic field of study it still falls short.

They see opportunities for fostering deeper interest, however. China, in particular, provides plenty of fodder for research into the intersection of company and government behavior. The topic is increasingly pressing with the growing international market strength of Chinese companies under a state-centered, authoritarian government.

But Schuler’s group also notes that the birth of any new discipline has its own political component – inside academia. Any time a new field emerges, it can siphon attention and funding from existing disciplines.

There’s no question, in other words, that the U.S. and international political environments offer rich material for the examination of corporate political activity. But at least for now, specialized study of this topic must remain in political campaigns, governmental offices, news shows and editorial pages. The academy will have to wait.

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

Schuler, D.A., Rehbein, K. & Green, C.D. (2016). Is Corporate Political Activity A Field? Business & Society. 58(7) 1376–1405