Publication records

In October 2016, the Digital Society Institute hosted a workshop dedicated to the topic of vulnerabilities at large and in particular of vulnerabilities in security products. The workshop included talks from Thomas Dullien (former Google Project Zero), Matthias Luft (ERNW), Dr. Christoph Peylo (T-Labs) and a comment from Michael Kranawetter, (Head of Information Security Microsoft Germany).

Research Question: This paper analyses the effect of a sustained period of low interest rates on the outlook for the German banking sector. Low interest rates provide a particular challenge for German banks, which are highly dependent on interest income and exhibit relatively high cost-income ratios. It is thus an open question whether German banks will manage to earn their cost of capital in this environment. Contribution: We analyse the interest earnings from loans and the interest expenses for deposits, i.e. the core business interest margin of a bank. We consider different future interest rate scenarios and analyse the extent to which they cause a further narrowing of the core business interest margin. Finally, we test whether a special feature of German accounting standards could serve as a buffer in sustaining profitability for some time. Results: Our results indicate that a sustained period of low interest rates will increase the pressure on the core business interest margin earned by German banks. Even if interest rates stayed constant at current levels, the core business interest margin of German banks would be reduced by 16% over the next four years. Moreover, this projected decline in the core business interest margin will result in only 20% of German banks earning a cost of capital of 8% by the end of this decade. However, by applying a special feature of German accounting standards and using hidden and open reserves, German banks may alleviate this decline to a certain extent.

We study the optimal pricing problem of a monopolistic firm facing customers with limited attention and capability to process information about the value (quality) of a single offered product. We model customer choice based on the theory of rational inattention in the economics literature, which enables us to capture not only the impact of true quality and price, but also the intricate effects of customer’s prior beliefs and cost of information acquisition and processing. We formulate the firm’s price optimization problem assuming that the firm can also use the price to signal the quality of the product to customers. To delineate the economic incentives of the firm, we first characterize the pricing and revenue implications of customer’s limited attention without signalling, and then use these results to explore Perfect Bayesian Equilbiria (PBE) of the strategic pricing signalling game. As an extension, we consider heterogeneous customers with different information costs as well as prior beliefs. We discuss the managerial implications of our key findings and prescribe insights regarding information provision and product positioning.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

As charismatic leaders are more inclined to have personality traits predisposing them to unconventional, extreme and sometimes self- destructive behavior, there is a question of how those behaviors affect the followers, namely their acceptance of the leader and their willingness to share the leader’s vision. This study explores the interface between potential followers’ attribution of causes of positive and negative behavior of charismatic leaders, and the connection between the leader and followers through shared vision. The study proposes a measure to explore how the followers make attributions of positive or negative events for charismatic and non-charismatic leaders, and the extent to which they are likely to share the vision of a charismatic or a non-charismatic leader using a sample of real business executives. The study finds that the respondents are significantly more likely to share the vision of the charismatic leader, particularly following negative events involving the latter, and are significantly more likely to view negative behavior as less important, more acceptable and more caused by personal reasons. Charismatic leaders may be better able to ‘weather the storm’ when negative events happen compared to the non-charismatic ones. The paper concludes with a suggestion for a new maintenance model of charismatic leadership.

Organizational network research has demonstrated that multiple benefits accrue to people occupying brokerage positions. However, the extant literature offers scant evidence of the process postulated to drive such benefits (information brokerage) and therefore leaves unaddressed the question of how brokers broker. We address this gap by examining the information-brokerage interactions in which actors engage. We argue that the information-brokerage strategies of brokers differ in three critical ways from those of actors embedded in denser network positions. First, brokers more often broker information via short-term interactions with colleagues outside their network of long-term relationships, a process we label “unembedded brokerage.” Second, when they engage in unembedded brokerage, brokers are more likely than are actors in dense network positions to intermediate the flow of information between the brokered parties, consistent with a tertius gaudens strategy. Conversely, and third, when they broker information via their network of long-term ties (embedded brokerage), brokers are more likely than are densely connected actors to facilitate a direct information exchange between the brokered parties, consistent with a tertius iungens strategy. Using a relational event model, we find support for our arguments in an empirical analysis of email communications among employees in a medium-sized, knowledge-intensive organization, as well as in a replication study. The theory and evidence we present advance a novel, temporal perspective on how brokers broker, which reconciles structural and process views of network brokerage. Our findings substantiate the notion of brokers as a dynamic force driving change in organizational networks, and they help to integrate within a unitary explanatory framework tertius iungens and tertius gaudens views of brokerage.

© 2016, INFORMS