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Tag: Business Ethics

  • Cheerful Chatbots Don’t Necessarily Improve Customer Service

    Cheerful Chatbots Don’t Necessarily Improve Customer Service

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    Newswise — Imagine messaging an artificial intelligence (AI) chatbot about a missing package and getting the response that it would be “delighted” to help. Once the bot creates the new order, they say they are “happy” to resolve the issue. After, you receive a survey about your interaction, but would you be likely to rate it as positive or negative?

    This scenario isn’t that far from reality, as AI chatbots are already taking over online commerce. By 2025, 95% of companies will have an AI chatbot, according to Finance Digest. AI might not be sentient yet, but it can be programmed to express emotions.

    Humans displaying positive emotions in customer service interactions have long been known to improve customer experience, but researchers at the Georgia Institute of Technology’s Scheller College of Business wanted to see if this also applied to AI. They conducted experimental studies to determine if positive emotional displays improved customer service and found that emotive AI is only appreciated if the customer expects it, and it may not be the best avenue for companies to invest in.

    “It is commonly believed and repeatedly shown that human employees can express positive emotion to improve customers’ service evaluations,” said Han Zhang, the Steven A. Denning Professor in Technology & Management. “Our findings suggest that the likelihood of AI’s expression of positive emotion to benefit or hurt service evaluations depends on the type of relationship that customers expect from the service agent.”

    The researchers presented their findings in the paper, “Bots With Feelings: Should AI Agents Express Positive Emotion in Customer Service?,” in Information Systems Research in December.

    Studying AI Emotion

    The researchers conducted three studies to expand the understanding of emotional AI in customer service transactions. Although they changed the participants and scenario in each study, AI chatbots imbued with emotion used positive emotional adjectives, such as excited, delighted, happy, or glad. They also deployed more exclamation points.

    The first study focused on whether customers responded more favorably to positive emotion if they knew the customer agent was a bot or person. Participants were told they were seeking help for a missing item in a retail order. The 155 participants were then randomly assigned to four different scenarios: human agents with neutral emotion, human agents with positive emotion, bots with neutral emotion, and bots with positive emotion. Then they asked participants about service quality and overall satisfaction. The results indicated that positive emotion was more beneficial when human agents exhibited it, but it had no effect when bots exhibited it.

    The second study examined if customers’ personal expectations determined their reaction to the bot. In this scenario, the 88 participants imagined returning a textbook and were randomly assigned to either emotion-positive or emotion-neutral bots. After chatting with the bot, they were asked to rate if they were communal (social) oriented or exchange (transaction) oriented on a scale. If the participant was communal-focused, they were more likely to appreciate the positive emotional bot, but if they expected the exchange as merely transactional, the emotionally positive bot made their experience worse.

    “Our work enables businesses to understand the expectations of customers exposed to AI-provided services before they haphazardly equip AIs with emotion-expressing capabilities,” Zhang said.

    The final study explored why a bot’s positive emotion influences customer emotions, following 177 undergraduate students randomly assigned to emotive or non-emotive bots. The results explained why positive bots have less of an effect than anticipated. Because customers do not expect machines to have emotions, they can react negatively to emotion in a bot.

    The results across the studies show that using positive emotion in chatbots is challenging because businesses don’t know a customer’s biases and expectations going into the interaction. A happy chatbot could lead to an unhappy customer.

    “Our findings suggest that the positive effect of expressing positive emotion on service evaluations may not materialize when the source of the emotion is not a human,” Zhang said. “Practitioners should be cautious about the promises of equipping AI agents with emotion-expressing capabilities.”

     

    CITATION: Han, Elizabeth and Yin, Dezhi and Zhang, Han (2022) Bots with Feelings: Should AI Agents Express Positive Emotion in Customer Service?. Information Systems Research.

    Published online in Articles in Advance 02 Dec 2022

    DOI: https://doi.org/10.1287/isre.2022.1179

     

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    The Georgia Institute of Technology, or Georgia Tech, is one of the top public research universities in the U.S., developing leaders who advance technology and improve the human condition. The Institute offers business, computing, design, engineering, liberal arts, and sciences degrees. Its more than 46,000 students, representing 50 states and more than 150 countries, study at the main campus in Atlanta, at campuses in France and China, and through distance and online learning. As a leading technological university, Georgia Tech is an engine of economic development for Georgia, the Southeast, and the nation, conducting more than $1 billion in research annually for government, industry, and society.

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  • Study finds anger over COVID-19 layoffs keeping hospitality workers from returning to jobs

    Study finds anger over COVID-19 layoffs keeping hospitality workers from returning to jobs

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    Newswise — Researchers at the University of Houston Conrad N. Hilton College of Global Hospitality Leadership say many skilled hospitality workers who were furloughed or laid off during the COVID-19 pandemic are angry and unlikely to return to the industry.

    During the first few months of the pandemic in 2020, travel and dining out declined rapidly putting severe financial strain on hospitality organizations, especially those in the lodging and food and beverage sectors. According to the U.S. Bureau of Labor Statistics, the hospitality industry lost nearly 8 million hospitality jobs were lost, making it the hardest-hit industry in the U.S. by the pandemic in terms of workforce reduction.

    “I don’t think any industry was prepared, but the hospitality industry really wasn’t prepared,” said Juan Madera, the Curtis L. Carlson endowed professor at Hilton College. “Their solution to cutting costs and saving the business was to let people go and then try to rehire them when it was over.”

    Fast forward nearly three years, and the overall U.S. jobs market has surpassed pre-pandemic levels. But the hospitality industry remains far behind in its recovery with roughly 1.3 million jobs still available as of July 2022.

    Madera and his Hilton College colleague, Ph.D. candidate and teaching fellow Iuliana Popa, along with two of his former students, wanted to figure out why. In a study published in the Journal of Hospitality and Tourism Management, the team focused on two basic emotions: anger and fear. They collected data from over 300 online surveys and over 100 responses to a scenario-based experimental study. Participants included hospitality students, as well as current, former, and aspiring hospitality industry professionals.

    “Your job, your livelihood is taken away, so a natural response is fear for your future,” Madera said. “But we found anger was a bigger driver in explaining why these workers aren’t coming back. They were angry over how the industry responded to the pandemic.”

    According to Popa, the results of the study point to a problematic trend for the industry. If skilled workers switch industries due to job loss amidst another industry-wide negative event, it may be difficult for businesses to find qualified employees once the recovery and rehiring begins.

    “I think by and large, people who were laid off or furloughed during the pandemic probably moved on to different industries altogether,” she said. “Something more stable and less dependent on those in-person interactions where their skills were transferable, like business or real estate.”

    Unlike other industries, the hospitality industry already faced challenges in finding and retaining highly skilled workers due to the nature of the business, according to Popa.

    “Workers in the hospitality industry already had it hard, whether it’s low wages or having to work weekends, overnights and holidays,” Popa said. “It’s a very demanding job, so to go through all of that and then be laid off was kind of the last straw.”

    The research team came up with recommendations for businesses to consider going forward, including offering higher compensation and better benefits and doing a better job of protecting workers’ health.

    But Popa said the most important priority should be rebuilding trust with their employees.

    “It’s important that organizations understand this anger among workers and build better communication with them,” she said. “If there’s another crisis in the industry, they’ll want to know there’s a plan in place and that they’ll be protected, financially, emotionally and physically.”

    Despite the massive impact of the pandemic and the ongoing challenge to restore the workforce, Madera said not all hope is lost.

    “There are people who are still motivated to work in hospitality because it’s a unique industry,” he said. “You can travel the country or the world, you have a lot of personal interaction. Even people from outside the industry could be attracted to that.”

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  • Do acquisitions harm the acquired brand? Identifying conditions that reduce the negative effect

    Do acquisitions harm the acquired brand? Identifying conditions that reduce the negative effect

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    Newswise — Researchers from University of Leeds, University of Vienna, and University of Pennsylvania published a new Journal of Marketing article that examines why consumers develop negative reactions towards acquired brands and explains conditions that attenuate that negative effect.

    The study, forthcoming in the Journal of Marketing, is titled “When and Why Consumers React Negatively to Brand Acquisitions: A Values Authenticity Account” and is authored by Alessandro Biraglia, Christoph Fuchs, Elisa Maira, and Stefano Puntoni.

    When Unilever acquired GROM, an Italian gelato company, 83% of consumers polled by a newspaper described the acquisition as “bad news.” This reduced consumer interest led to the closure of several GROM retail outlets, including the ice cream maker’s first store, four years after the acquisition. Similarly, consumer ratings for The Body Shop, a cosmetic brand, plummeted after L’Oréal acquired it.

    Companies often engage in mergers and acquisitions to expand their portfolio and generate growth – the global value of acquisitions amounted to $2.3 trillion in 2019, according to JP Morgan – but there is plenty of anecdotal evidence suggesting that brand acquisitions can potentially generate negative reactions among consumers. Yet little is known about when and why brand acquisitions might trigger these negative reactions.

    This new study explains why consumers develop negative reactions towards acquired brands in terms of lower brand choice and reduced purchase likelihood. As Biraglia explains, “We find that, across product categories, consumers often see an acquired brand as having compromised the authentic values upon which it was founded. This perception is triggered not only when a big company acquires a smaller one, but also when the sizes of the acquirer and acquired brand are comparable. Furthermore, the negative effect appears even in the case of partial acquisition such as 15% of ownership.”

    Conditions that Attenuate the Negative Effect of Acquisitions

    Across ten studies using different methods, research designs, product categories, and brands, the researchers demonstrate that negative brand reactions can be explained by the perceived loss of a brand’s unique values. “Building on this values authenticity account, we find that the negative effect of acquisitions depends on the acquired brand’s values, brand age, leadership continuity, and the alignment between acquiring and acquired brands,” says Fuchs. The conditions that attenuate the negative effect of acquisitions are as follows:

    • Consumers develop a lower purchase intention when a previously acquired brand is acquired again by another company, as the original values may have already been diluted during the first takeover.
    • Consumers seem less concerned when the original leadership team remains in charge after the acquisition because this may act as a reassurance that the authentic values are retained.
    • Consumers react less negatively if the values of the acquirer brand align with those of the acquired brand. The negative effect is mitigated if a brand that produces sustainable products is acquired by a brand with sustainability as a core value.
    • Consumers react less negatively when the acquired brand has been established with a strategic orientation towards growth. In these cases, they don’t see the takeover as a loss of the brand’s authentic values. For instance, many start-ups are founded with the desire to get bigger and many communicate this in their statements (e.g., Bill Gates often mentioned his vision to have a “PC on every desk in every home”). Sometimes founders even invoke growth values as the reason for selling the company (e.g., the founder of Dot’s Pretzels explained the acquisition by Hershey’s in November 2021 by saying she had “built the business with the idea of sharing them with everyone.”)
    • Consumers react less negatively if a young brand is acquired. Consumers consider the acquisition of a younger company less disruptive of values authenticity. Conversely, for older companies with a set of values crystallized over decades – or even centuries – we find a more severe negative effect.

    Managerial Implications

    Before the acquisition:

    • “Managers should examine the target brand’s communications and identify whether the vision statement, advertising, social media accounts, and other forms of branding contain any references to growth or reaching a broader range of customers. Such cues may make the acquisition process more favorable in the eyes of consumers,” explains Maira. Targeting brands aligned with the acquiring company’s core values and making this alignment salient can benefit the acquisition process.
    • Similarly, scouting for young, promising brands could prove beneficial, potentially giving the acquirer an aura of patronage and a reputation for investing in nascent businesses.

    After the acquisition:

    • “Managers should carefully plan how to effectively frame acquisition announcements. If the founders/original owners will not be involved after the acquisition, managers may want to consider retaining long-term employees and highlighting this in communications,” suggests Puntoni.
    • When the acquirer has values that align with those of the acquired brand, highlighting this can boost perceptions of the acquisition and nurture the acquired brand.
    • If there is no strong alignment of values between the acquirer and the acquired brand, the research team suggests that managers focus on other aspects that can benefit from the acquisition. For example, an acquirer could highlight an increase in R&D facilities or a potential increase in product quality.

    Full article and author contact information available at: https://doi.org/10.1177/00222429221137817

    About the Journal of Marketing 

    The Journal of Marketing develops and disseminates knowledge about real-world marketing questions useful to scholars, educators, managers, policy makers, consumers, and other societal stakeholders around the world. Published by the American Marketing Association since its founding in 1936, JM has played a significant role in shaping the content and boundaries of the marketing discipline. Shrihari Sridhar (Joe Foster ’56 Chair in Business Leadership, Professor of Marketing at Mays Business School, Texas A&M University) serves as the current Editor in Chief.
    https://www.ama.org/jm

    About the American Marketing Association (AMA) 

    As the largest chapter-based marketing association in the world, the AMA is trusted by marketing and sales professionals to help them discover what is coming next in the industry. The AMA has a community of local chapters in more than 70 cities and 350 college campuses throughout North America. The AMA is home to award-winning content, PCM® professional certification, premiere academic journals, and industry-leading training events and conferences.
    https://www.ama.org

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  • Musk’s Twitter a ‘case study on how not to treat employees’

    Musk’s Twitter a ‘case study on how not to treat employees’

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    Newswise — As Twitter faces an employee exodus, professor of human resource studies Rebecca Kehoe is available for interviews on how the recent chaos is an example for other companies on how not to treat workers.

    Kehoe says:

    “With predictions of a looming recession, we are likely to see more companies facing difficult workforce decisions in the coming months. The recent chain of events at Twitter is a case study for other companies in how not to treat employees in a company’s difficult times. It’s not surprising to see a mass exodus of employees who have seen their colleagues and leaders abruptly laid off and who have been given an ultimatum where the alternative to leaving requires committing themselves to grueling working conditions in service of a CEO who has signaled no regard for their wellbeing or worth.

    “Building employee commitment to a company’s values requires trust, mutual investment, and time. Elon Musk has offered Twitter’s employees none of these, and the employee response is clear.”

    Cornell University has dedicated television and audio studios available for media interviews. 

    – 30 –

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  • There’s no evidence that U.S. aid money sent to Ukraine was then used to invest in FTX as a money laundering scheme

    There’s no evidence that U.S. aid money sent to Ukraine was then used to invest in FTX as a money laundering scheme

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    The news that FTX, the cryptocurrency company, filed for bankruptcy protection amid news it was short billions of dollars has spawned many conspiracy theories being shared on social media. Viral tweets like this one posted on November 13th claim that U.S. aid to Ukraine was laundered back to the Democratic Party through the failed cryptocurrency exchange firm FTX. An article in the conservative site The Gateway Pundit with the headline “Tens of Billions of US Dollars Were Transferred to Ukraine and then Using FTX Crypto Currency the Funds Were Laundered Back to Democrats in US” was shared widely on social media. There is no evidence to support this claim. The Ukrainian government has not invested nor stored money in FTX, according to the country’s Ministry of Digital Transformation. The claim has been rated False.

    Dr. Nigel Williams, a Reader in Project Management at the University of Portsmouth has this to say…

    The collapse of FTX was catalyzed by a tweet on Sunday, November 6th, by the CEO of Binance, Changpeng Zhao: 

    As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4

    Before this date, however, FTX’s actions were heavily scrutinized by conservative commentators on Twitter despite the fact that FTX donated to both political parties. Even before the collapse, efforts were made to link FTX’s actions to the Democratic Party. For example, on November 4th, Wayne Vaughan, CEO of Tieron tweeted, “Sam [Sam Bankman-Fried. former CEO of FTX] is one of the largest Democrat donors. It’s logical that he’d want to get the bill done before Republicans take control of Congress.”

    On November 8, when it became clear that FTX was floundering, commentators attempted to blame the company’s troubles on their political involvement (example here).  While the results were being tallied, early conspiracy theories emerged (example here). These theories later evolved into the story that now links FTX, the Democrats, and the ongoing conflict in Ukraine when it became clear that the Democratic party performed better than the previous media narrative would suggest.

    While FTX’s bankruptcy has begun to offer insights into possible gaps in financial controls that resulted in their collapse, the full story will not be known until detailed audits are completed. To date, the promoters of the FTX/Ukraine/Democrat narrative have not offered any supporting evidence for their theory.  This is, of course easily explained by these promoters who claim that there is a cover-up and no evidence would be available. 

     

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  • Made by women: Why women buy from women and men buy from women and men

    Made by women: Why women buy from women and men buy from women and men

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    Newswise — Researchers from Technical University of Munich and Copenhagen Business School published a new paper in the Journal of Consumer Psychology that provides fresh insights into how individual purchase decisions are influenced by the gender of the person producing the goods. The research has implications for online platforms marketing handmade products and policymakers seeking to promote socially responsible behavior.

    The article, recently published in the Journal of Consumer Psychology, “Made by her vs. him: Gender influences in product preferences and the role of individual action efficacy in restoring social equalities” is authored by Benedikt Schnurr and Georgios Halkias.

    Nearly 100 million consumers bought handmade products on Etsy in 2021, reflecting consumers’ preference for more personal and unique purchase experiences, according to the authors.  

    The researchers found that female consumers show a strong preference for goods made by women, while male consumers are neutral about the producer’s gender. Through a series of 13 studies, they also discovered that female consumers more strongly believe that their purchase decisions can contribute to restoring gender equality in business compared to their male counterparts.  The authors call this tendency “action efficacy beliefs.”

    Further, their studies suggest that the more female consumers believe that women face gender discrimination in business and the more they want to act against it, the greater their preference for products made by women. In fact, buying from a female producer matters more to women consumers than buying goods from a group of combined male and female producers whose revenues support a gender equality fund.

    In addition, the team found female consumers’ higher action efficacy beliefs drive their choice of women-made products more than their beliefs that those products reflect their own identity – a common motivator of purchasing behavior.

    The desire to reduce social inequalities isn’t enough to change behavior. “Consumers need to believe that their seemingly trivial individual actions can contribute to the cause,” the authors write. “In this sense, consumers need to believe that their action counts.”

    The article offers potentially sales-boosting insights to women producers and online platform managers marketing handmade goods. Additionally, policymakers can leverage the findings to advance gender equity in business.

    Full article and author contact information available at:  https://myscp.onlinelibrary.wiley.com/doi/abs/10.1002/jcpy.1327

    About the Journal of Consumer Psychology

    The Journal of Consumer Psychology publishes top-quality research articles that contribute both theoretically and empirically to our understanding of the psychology of consumer behavior. The Journal is intended for researchers in consumer psychology, social and cognitive psychology, judgment and decision making, and related disciplines. It is also relevant to professionals in advertising and public relations, marketing and branding, consumer and market research, and public policy. Published by the Society for Consumer Psychology since its founding in 1992, JCP has played a significant role in shaping the content and boundaries of the consumer psychology discipline. Dr. Lauren Block (Lippert Professor of Marketing at the Zicklin School of Business, Baruch College) serves as the current Editor-in-Chief.

    About the Society for Consumer Psychology (SCP)

    The Society for Consumer Psychology is the premier voice to further the advancement of the discipline of consumer psychology in a global society. Building upon the Society’s excellence in mentoring young behavioral scientists, the SCP facilitates the generation and dissemination of intellectual contributions and promotes professional development and research opportunities for its members around the globe. Dr. Gita V. Johar (Meyer Feldberg Professor of Business at the Columbia Business School, Columbia University) serves as the current President.

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  • Twitter Layoffs ‘Callous’, Possibly in Violation of Federal, State Law

    Twitter Layoffs ‘Callous’, Possibly in Violation of Federal, State Law

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    Newswise — A lawsuit was filed against Twitter for allegedly violating California’s WARN Act by failing to give enough notice about ongoing mass layoffs.

    Cathy Creighton is the director of the Buffalo Co-Lab at Cornell’s ILR School and a labor law expert. She can speak to the law, implications for Twitter and possible impacts for the wider labor-management landscape.

    Creighton says:

    “Musk’s treatment of his workers is very poor in so many ways. Termination of employment is one of the worst things that can happen to a person as it eliminates a means of providing a person and their family with a living. Employees do not expect to be summarily terminated, especially by a person of such wealth and means as Mr. Musk. Since health insurance is often tied to employment in the U.S., employees who are terminated also lose their health insurance, which can be devastating. Shame on Mr. Musk for treating his workers so callously and shabby.  

    “Twitter may be running afoul of federal and state law. Under the federal Worker Adjustment and Retraining Notification Act (WARN Act), when there is a mass layoff, employers must give 60 days’ notice to employees. It does not seem that employees received such notice. Additionally, California law requires 60 days’ notice and there are higher penalties for violating the law. Failure to give proper notice under the California WARN Act results in a penalty of $500 per day per employee. Additionally, the employer must pay employees’ health insurance claims as if the employee had their employer health insurance plan during the notice period.

    “Employees who are unionized would receive notice and an opportunity to bargain over a layoff. Tech workers in the U.S. who are looking at their employers following Elon Musk’s lead might want to consider unionizing their workplaces. A unionized workforce has many protections that nonunion employees do not have – this is just one example.”

    Cornell University has dedicated television and audio studios available for media interviews.

    – 30 –

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  • Words Matter in Food Freshness, Safety Messaging

    Words Matter in Food Freshness, Safety Messaging

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    Newswise — ITHACA, N.Y. – Changing the wording about expiration dates on perishable food items – which is currently unregulated and widely variable – could help reduce food waste, according to a new Cornell University-led study.

    A survey of consumers found that certain wording – “best by,” as opposed to “best if used by,” for example – had the potential to reduce food waste, but that results varied depending on the type of food in question. Predictably, the more perishable a food item, the greater the likelihood of discarding it. 

    This work has implications for both policy proposals regarding date labels and the market impacts of reducing food waste.

    “Some consumers might do a sniff test to see if food is still good, while others might just look at the date label and throw it away,” said Brad Rickard, professor in the Charles H. Dyson School of Applied Economics and Management, and senior author of “Date Labels, Food Waste and Supply Chain Implications,” which published in the European Review of Agricultural Economics.

    “And the truth is, with very few exceptions, these date labels that are used in the United States are not regulated,” Rickard said. “And they’re not food safety dates; they’re just food quality dates.”

    Co-authors were Shuay-Tsyr Ho, assistant professor of agricultural economics at National Taiwan University; Florine Livat, associate professor of economics at the Kedge Business School in Talence, France, and a former visiting scholar at Dyson; and Abigail Okrent of the U.S. Department of Agriculture’s Economic Research Service. 

    Rickard and his colleagues found that the words “use” or “use by” seemed to speak more directly to the perceived food safety implications of consuming food past the date listed on the package, and could therefore lead to an increase in food waste. The wording “best by” seemed to refer solely to food quality beyond a certain date and led to less waste.

    The motivation for this work, Rickard said, stems from the “wild west” landscape of food date labels which is expected to be driven, in part, by manufacturers’ desire to sell more product. Nearly a year ago, the Food Date Labeling Act was introduced in both the U.S. House of Representatives and the Senate in an effort to reduce the discarding of safe food.

    “You go into the yogurt section at the grocery store,” he said, “and you see many different labels – some say ‘use by,’ some say ‘best by,’ some say ‘best if used by’ or ‘fresh by,’ ‘sell by.’ And there are no rules about this.”

    In the survey, the researchers asked participants to rate, on a 1-5 scale (5 being extremely likely) their likelihood of discarding 15 different food and beverage items that were one day past the stated date code. In the first section of the survey, the question included only the expiration date code (i.e. date/month/year); the second section repeated this exercise but with both a date code and a date label that included one of 10 different wording variations. 

    Four of the date label variations followed those that have been widely adopted in the U.S.: “Best if used by”; “Best by”; “Use by”; and “Sell by.” The other six featured a date label and a biosensor, a visual indication of food quality. Biosensors – which detect microbe growth and change colors accordingly – are popular in some European markets, but are not as common in the U.S.; for the survey, the researchers chose biosensors with the colors green (fresh), blue (less fresh) and purple (past fresh).

    The 15 food items selected for the survey – including bread, cookies, chicken, packaged salad greens and canned soup – all typically use date labels. Survey results showed an increase in discard intentions with the “Use by” and the “Best if used by” date label, inferring that food with these date labels were more often discarded and replaced.

    Rickard also said the novelty of the biosensor technology resonated with the U.S. survey participants, and when it was presented to participants as green (fresh), it led to substantially lower discard rates.

    One of the unintended consequences of a more uniform approach to date labels, the researchers note, is a potential increase in food waste depending on the wording of the label, as well as an increase in the re-purchasing of perishable items high in protein, fat and cholesterol. 

    “If you tell all food manufacturers that all their ‘best by’ dates are now going to ‘best if used by’ dates, that might actually increase food waste,” Rickard said. 

    This research was supported by a grant from the USDA National Institute of Food and Agriculture, as well as through the USDA Hatch Project NYC. 

    For additional information, see this Cornell Chronicle story.

    -30-

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  • Socially Responsible Companies Laid Off More Workers Than Their Peers During the COVID-19 Pandemic

    Socially Responsible Companies Laid Off More Workers Than Their Peers During the COVID-19 Pandemic

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    Newswise — A good track record in corporate social responsibility (CSR) is not a guarantee that the company will continue to focus on CSR in times of crisis. According to a new study from the University of Vaasa, US companies with a history of high CSR laid off more employees during the COVID-19 pandemic than their peers.

    Doctoral candidate Veda Fatmy says that the high level of CSR may not be a good indicator of job security during economic crises, such as the financial and unemployment crisis brought on by the Covid-19 pandemic.
    – In fact, high-CSR firms were shown to have laid off significantly more employees in the U.S. in 2020. The number of laid-off workers was 1.5 times higher, says Fatmy, who defended her doctoral dissertation on Friday 4th of November.
    According to Fatmy, this phenomenon may be due to these companies’ higher resources and strategic agility, which improves the outcomes of complicated restructuring decisions.
    – This new finding serves also as a warning that CSR may not always benefit workers and other vulnerable stakeholders. Employees should remain cautious about the effectiveness of CSR. While social responsibility is meant to safeguard the well-being of the employees and the community at large, during crises these values may be left by the wayside in pursuit of short-term gains.

    Do companies and their employees benefit from CSR?
    Veda Fatmy’s doctoral dissertation focuses on contemporary CSR-related policies and how they shape stakeholders’ expectations, corporate behaviour, and financial outcomes.
    Companies with high levels of social responsibility are more likely to be inclusive and diverse, uphold a higher standard of transparency, and offer higher benefits and compensation. These features help attract highly skilled workers, which contributes to the competitive advantage of the firm. However, it is not a good idea to rely blindly on the company’s track record on corporate social responsibility.
    Fatmy has researched, whether CSR policies that support sexual minorities have an effect on the company’s financial performance. The results show that LGBTQ friendliness has a positive effect on the profitability and value of US companies. The doctoral study also finds that LGBTQ-friendly companies are more innovative and produce more useful patents than other companies.

    The positive effects of CSR are influenced by local socio-political factors
    Local values may influence how socially responsible activities affect the bottom line. According to the dissertation, the effect of progressive LGBTQ policies on profitability and market value was weaker or non-existent for US companies headquartered in politically or religiously conservative regions.
    Demographic and cultural factors not only transform the effects of CSR on firm performance but also help determine the extent to which a firm may engage in socially responsible practices. For instance, religiosity, factored in as both external influence from the community and internal firm culture, is positively associated with overall CSR. Specifically, firms that are more religious perform better at product responsibility, emissions reductions, and responsible use of resources.
    Fatmy’s doctoral research was conducted using a sample of publicly traded U.S. firms. The effects of LGBTQ-friendliness on firm performance are studied over the period 2003–2016, and on innovation over 2003–2017. Religiosity’s effect on CSR is studied over the period 2012–2020, and the effects of CSR on COVID-19 layoffs are studied using data from 2012–2020.

    Dissertation
    Fatmy, Veda (2022) Essays on Corporate Social Responsibility and its Efficacy in Value Creation. Acta Wasaensia 493. Doctoral dissertation. University of Vaasa.

    Public defence
    The public examination of M.Sc. Veda Fatmy’s doctoral dissertation”Essays on Corporate Social Responsibility and its Efficacy in Value Creation” was successfully held on Friday, 4th of November at noon at the University of Vaasa. Professor Markku Kaustia (Aalto University) acted as the opponent and Professor Sami Vähämaa as the custos.

    https://www.uwasa.fi/en/newshub/news/socially-responsible-companies-laid-more-workers-others-during-covid-19-pandemic

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  • The increase in funding for the IRS is not going create an army of agents that will come after you

    The increase in funding for the IRS is not going create an army of agents that will come after you

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    The Inflation Reduction Act that President Biden signed on Tuesday includes a $79 billion injection for the Internal Revenue Service (IRS). Many political figures and members of the media are reacting incredulously to this long-sought budget increase for the nation’s tax agency. In discussing this budget increase, Senator Chuck Grassley suggested in an interview on Fox News last week that the IRS “are they going to have a strike force that goes in with AK-15s already loaded, ready to shoot some small-business person in Iowa with these? Because I think they are going after middle class and small business people…” On August 11th, Fox News host Brian Kilmeade warned his viewers that “Joe Biden’s new army” of armed IRS agents could “hunt down and kill middle-class taxpayers that don’t pay enough.” We find these hyperbolic claims to be false. Although the IRS intends to hire more people, Treasury Department officials say not all new hires will work on enforcement and increased revenues won’t come from middle-income earners. Treasury Secretary Janet L. Yellen directed IRS Commissioner Charles P. Rettig not to use the new funding to increase enforcement of taxpayers earning less than $400,000. The IRS is a bureau of the Treasury Department.

    Overall, IRS audits dropped by 44% between 2015 and 2019, according to a 2021 Treasury Inspector General for Tax Administration report. Last year the Treasury Department had proposed a plan to hire roughly 87,000 IRS employees over the next decade if it was allocated enough money. The IRS will be releasing final numbers for its hiring plans in the coming months, according to a Treasury official. But those employees will not all be hired at the same time, they will not all be auditors and many will be replacing employees who are expected to quit or retire.

    As reported by AP…

    The IRS currently has about 80,000 employees, including clerical workers, customer service representatives, enforcement officials, and others. The agency has lost roughly 50,000 employees over the past five years due to attrition, according to the IRS. More than half of IRS employees who work in enforcement are currently eligible for retirement, said Natasha Sarin, the Treasury Department’s counselor for tax policy and implementation.

    Budget cuts, mostly demanded by Republicans, have also diminished the ranks of enforcement staff, which fell roughly 30% since 2010 despite the fact that the filing population has increased. The IRS-related money in the Inflation Reduction Act is intended to boost efforts against high-end tax evasion, Sarin said.

    Albany Law School Professor Danshera Cords shares her insight on this budget increase to the IRS…

    The Inflation Reduction Act appropriated $79 billion over 10 years to the IRS to improve three areas: taxpayer service, enforcement, and operations. Since 2012, it has been widely reported on the degree to which budget appropriations have resulted in declining service levels, aging IT, and falling staffing levels. Commissioner of the Internal Revenue Charles Rettig, an appointee of President Trump, has repeatedly sought budget increases to jump start the hiring and technology to more sophisticated audits of higher income individuals, businesses and crypto-assets. Given the aging infrastructure, computer systems that are out of date, and a filing backlog, the expenditures have long been needed.

    This appropriation is intended to help implement a plan to improve the IRS’s infrastructure in each of these areas. According to IRS data, in FY2012 the IRS had nearly 90,000 full-time employees. As a result of budget reductions, retirements, hiring freezes, the number of employees had dropped 12.9% to 78,661 in FY 2021.

    Restoring the IRS to previous staffing levels with new employees is more likely to help the average taxpayer than threaten them in any way. Moreover, hiring new enforcement staff including auditors, requires time and new personnel need training. Within its FY2021 budget, examination and collections personnel comprised more than five times the budget as investigations, consistent with prior years. New initiatives to combat fraud in higher income brackets require more sophisticated technology and better trained personnel.

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  • Relief from high gas prices is not likely to come from more drilling, as many politicians are demanding

    Relief from high gas prices is not likely to come from more drilling, as many politicians are demanding

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    U.S. consumer prices were 9.1 percent higher in June than a year earlier, the biggest annual increase in four decades. Gasoline prices are one of the major factors, as the price of gas affects commuters, the delivery of food and other goods, as well as those aching to travel this summer. The good news is that the price of gas has fallen in recent weeks by about 40 cents per gallon, the longest decline since the collapse in energy demand in early 2020, when the pandemic kept many consumers at home. Nevertheless, gas is still averaging about $4.57 per gallon (as of July 15) according to AAA. That’s a pretty steep leap up from the average of $3.15 per gallon we were paying last year. 

    So of course, gas prices and domestic energy production have become a political tool that Republicans use to condemn the policies of the Biden administration. On July 14, Ohio Republican congressman Jim Jordan tweeted, “Inflation isn’t getting better until gas prices go down. And how do you get gas prices down? Drill DOMESTICALLY. Sadly, Joe Biden and the Democrats refuse to.” The tweet was shared by thousands.

    We rate this claim as mostly false due to its inaccuracy. Policies and decisions by the Biden administration have nothing to do with the current price of gasoline. The one-two punch of recovery from the COVID-19 pandemic followed by Russia’s invasion of Ukraine is the reason for the high gas prices. The price of crude oil, which is a major factor in the price of domestic fuel, is controlled by the supply and demand of oil globally. According to the American Petroleum Institute (API), the main factors impacting gasoline prices are the cost of global crude oil (61 percent), refining costs (14 percent), distribution and marketing costs (11 percent) and federal and state taxes (14 percent). In other words, when the price of a barrel of crude oil rises in the global market, we see an eventual rise in the price of gas domestically. 

     As reported by Maria Azzurra Volpe in Newsweek back in May…

    There’s no specific body or policy that regulates the oil and gas industry in the U.S. but federal, state and local governments each regulate various aspects of oil and gas operations. Who regulates what mostly depends on land ownership and whether the territory is covered by federal regulations or state laws.

    In general, according to research by the American Geosciences Institute (AGI), most drilling and production is regulated by state laws, while federal regulations mostly safeguard water and air quality, worker safety, and exploration and production on Native American and federal lands.

    In addition, there isn’t much a sitting U.S. President can do to get more oil from U.S. producers. Brittany Cronin of NPR has written an excellent article explaining how difficult it would be for U.S. producers to drill for more oil.

    U.S. crude production currently stands at 11.6 million barrels per day, according to the latest data from the U.S. Energy Information Administration. That’s below March 2020 levels, when the country was producing 13 million barrels per day of crude oil.

    Farzin Mou, vice president of intelligence at Enverus, an energy analytics company, warns that boosting supply was not easy even before the coronavirus pandemic wreaked havoc on the supply chain.

    “The point from which you drill a rig to the point that you can turn it online, it takes about six to eight months typically,” she said.

    Now add in the difficulties that oil producers are facing to procure materials like sand and steel, and it becomes clearer that producers are unlikely to provide a quick fix to current gas prices.

    In an analysis published Washington Post in March, Glenn Kessler answers the question, “Can the U.S. truly change oil prices by encouraging more drilling and allowing pipelines?”

    Not really. The United States in 2020 was the biggest oil producer in the world and also the biggest consumer — but it is just one player in a global oil market. (“Oil” includes crude oil, all other petroleum liquids, and biofuels.) Much of what happens in the market is beyond the government’s control.

    In 2021, the United States slipped to third place in oil production, behind Russia and Saudi Arabia. That’s mainly because large shale companies committed to Wall Street that they would continue to limit production and return more cash to shareholders — “an effort to win back investors who fled the industry after years of poor returns,” according to the Wall Street Journal. Scott Sheffield, chief executive of Pioneer Natural Resources, told investors in February: “$100 oil, $150 oil, we’re not going to change our growth rate.”

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  • ICBioethics Earns Pittsburgh Business Ethics Award

    ICBioethics Earns Pittsburgh Business Ethics Award

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    Press Release
    –

    Feb 26, 2016


    Pittsburgh, PA, February 26, 2016 (Newswire.com)
    –
    ​The Institute of Consultative Bioethics (ICBioethics) has been named the winner of a Pittsburgh Business Ethics Award in the Small Business category.

    The 15th Annual Pittsburgh Business Ethics Awards (PBEA) were presented by the Pittsburgh Chapter of the Society of Financial Service Professionals during the PBEA Awards Ceremony and Luncheon Banquet at the Omni William Penn Hotel in Pittsburgh, Pennsylvania, on Wednesday, February 24. Co-presenters were the David Berg Center for Ethics and Leadershipat the University of Pittsburgh, the Rotary Club of Pittsburgh, and the Allegheny Conference on Community Development.

    “We believe exemplary organizations are those that clearly convey their values, then put them into action visibly and consistently.”

    Dr. Kathy Detar Gennuso, CEO

    The awards are designed to recognize U.S. companies that demonstrate a firm commitment to ethical practices in their day-to-day operations, philosophies, and response to crises and challenges. ICBioethics’ CEO, Dr. Kathy Detar Gennuso, commented, “We are very honored to receive this award focused on business ethics.” During the awards ceremony, it was noted that the company’s name contains the word “ethics.” Dr. Gennuso commented on this, “Indeed, it’s all part of the broader umbrella of ethics, a set of moral principles to guide one’s behavior. In our case, our product EthAssist® helps healthcare professionals learn more about or review principles and issues related to bioethics, sometimes referred to as clinical or medical ethics. More important, we want EthAssist to help users also bridge from the theory to the practical application of bioethics, like being able to demonstrate respect for patient autonomy and patient rights, or understanding what to do when conflicts of interest arise. We also look at organizational ethics in healthcare facilities such as hospitals, academic organizations, and hospice facilities, as that plays a big role in developing a culture of ethical behavior.”

    ICBioethics’ product and services involve bioethics, but the PBEA award pertains to the business ethics within the company itself, especially how it relates to its customers, employees, business associates, and the community at large. Accepting the award on behalf of the company, COO Rich Gennuso stated, “Our business ethics are measured in part by how we work with our customers. When we formed the company in 2011, our goal was to make every client into a referenceable account who would actually see our business ethics in action.” He added, “In our team meetings, when evaluating approaches to a particular challenge, we still always ask ourselves, ‘What is the ethical thing to do?’ It’s actually part of the team discussion.”

    During the ceremony, several speakers commented on the importance of moving beyond the focus of what “not to do” towards building a culture of “what is ethical to do.” “We couldn’t agree more!” stated Dr. Gennuso. “That’s why our company was formed, and that’s what we do internally as an organization and what we strive to achieve with our clients.”

    Each year hundreds of firms are nominated. Applications are received in the fall in three categories: small, medium, and large business. Then three finalists are selected in each category at the beginning of each year, and the winners are announced at the awards ceremony. ICBioethics was nominated by Debbie Schlaegle, Director of Business Development at Clearview Federal Credit Union. She commented, “I get a sense of our business members’ ethical standards as we work on business plans and finances, and I’ve been nominating outstanding organizations for the award for several years. I am delighted that one of my nominees was selected for the award this year, and I think it’s a reflection of the exceptional businesses that choose to partner with Clearview. We’re happy to serve local businesses like ICBioethics that value their employees, their work and their community as much as we do.”

    “We believe exemplary organizations are those that clearly convey their values, then put them into action visibly and consistently,” Dr. Gennuso said. “Without that happening, morale can drop and motivation lag, and soon the execution of the obligations and responsibilities of the entire organization are negatively impacted, especially under rapidly changing conditions that naturally occur when growing a business. Because we wanted ICBioethics to be exemplary, our first task was to set a solid foundation internally so that we could assure ourselves, as well as our clients, that we were committed to keeping ethics firmly rooted at the center of our organization.”

    About ICBioethics

    The Institute of Consultative Bioethics (ICBioethics) is a western Pennsylvania based provider of comprehensive, customizable, knowledge delivery software and coaching/consulting services that support health care and other highly regulated industries, as well as academic organizations that train professionals. For more information, visit www.icbioethics.com.

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