Report from the Research Frontier: November 2018

New findings: corporate sustainability includes political involvement; sharing economy strategy is location-specific; and big data challenges sustainability

Every month, researchers publish dozens of articles on business sustainability. NBS highlights insights at the frontier of knowledge. See all monthly highlights.

Big Data Poses Challenges for Sustainability

Big data can be used to make operations more sustainable. Charles Corbett(UCLA Anderson School of Management) focuses on ways that big data can pose challenges to sustainability. His review identifies challenges related to:

• Social and ethical issues. Examples are many. Algorithms can discriminate against groups of people. Hacks regularly compromise personal data. Control over data has become a kind of power. And, companies often use data to make technology increasingly addictive.

• Use of the wrong data. Available data can — inappropriately — drive priorities. Instead, people should define objectives and only then identify appropriate indicators. Data may also mislead if they are inaccurate, or analyzed in ways that misrepresent reality.

• People’s ability to process information. Big data won’t automatically lead to better decisions, unless data are presented in ways that people can readily understand and use. More information could even lead to cognitive overload and worse decisions.

• Energy use. Managing and storing data are resource intensive.

Government and other elements of society should address these challenges through governance mechanisms, ownership structures, and other approaches — before big data grow even larger.
Article: Corbett, C. 2018. How Sustainable Is Big Data? Production and Operations Management, 27(9), 1685 -1695.

Sharing Economy Firms Need Different Strategies to Succeed in Different Places

“Sharing economy” firms such as Uber and Airbnb are trying to gain market share internationally. Bilgehan Uzunca (Utrecht University) and colleagues report that Uber’s strategy for entering new countries is disruptive and defiant; the company makes little effort to accommodate local rules and expectations. AirbnB, by contrast, takes a relational and gradual approach, cooperating with governments to set rules.

The effectiveness of these different strategies depends on whether the country has strong institutions (e.g. effective government and NGOs). In countries with strong institutions, AirBnB’s approach has been more effective than Uber’s. For example, in the Netherlands, Uber experienced so much government opposition that it had to abandon its disruptive strategy.

But in developing countries, with weaker institutions, Uber’s independent approach can work better. In Egypt, for example, Uber has filled voids left by the government, specifically around transportation safety. By contrast, AirBnB’s more passive approach hasn’t led to strong market share in Egypt.

Article: Uzunca, B., Rigtering, J.P., & Ozcan, P. 2018. Sharing and shaping: A cross-country comparison of how sharing economy firms shape their institutional environment to gain legitimacy. Academy of Management Discoveries, 4(3), 248-272.

Corporate Political Involvement is Part of Sustainability Impact

Many companies have taken meaningful steps to improve their own environmental performance. But while corporate political actions such as lobbying can have a greater impact on environmental quality, they are ignored in most current sustainability metrics. Tom Lyon (University of Michigan) and his co-authors argue that sustainability metrics should be expanded to critically assess firms based on the sustainability impacts of their public policy positions.

To enable such assessments, firms must become “as transparent about their corporate political responsibility (CPR) as their corporate social responsibility (CSR),” the authors write. In turn, rating systems should demand such information from firms and include evaluations of corporate political activity in their assessments of corporate environmental responsibility.

Lyon, T.P, Delmas, M.A., Maxwell, J.W., Bansal, P., Chiroleu-Assouline, M., Crifo., P., Durand, R., Gond, J-P., King, A.A., Lenox, M., Toffel, M.W., Vogel, D.J., & Wijen, F. 2018. CSR Needs CPR: Corporate Sustainability and Politics. California Management Review, 60(4), 5-24