Research@Smith
Fall 2012 | VOL 13 | NO 2
2
International Business
Capitalism as Crime Prevention
4
Customer Service
To Be or Not to Be…More Productive
6
Management
Hostile Customer Encounters
8
Management
Room for Equity?
Fall
2012
VOL 13 | NO 2
Research@Smith summarizes research
conducted by the faculty of the
Robert H. Smith School of Business
at the University of Maryland.
Dean
G. Anandalingam
ASSOCIATE DEAN OF FACULTY & Research
Michael Ball
Editor
Rebecca Winner
Contributing Writers
Carrie Handwerker, Gregory Muraski
PHOTOGRAPHY
Tony Richards
Design
Lori Newman
Research@Smith is published
two times a year by the
Robert H. Smith School of Business
University of Maryland
3570 Van Munching Hall
College Park, MD 20742
www.rhsmith.umd.edu
We’d like to put Research@Smith directly
into the hands of academics, executives,
policymakers, and others who are interested
in learning about the latest research
conducted by Smith School faculty. To
request a copy of this publication or make an
address correction, contact Rebecca Winner
via e-mail, editor@rhsmith.umd.edu, or
phone, 301.405.9465.
Learn more about Smith research:
www.rhsmith.umd.edu/smithresearch
Dean’s
column
The research program at the Smith School of Business
is excellent across many different fields. This issue
of Research@Smith deals with topics as disparate
as healthcare management, capital controls and
enhancing service productivity. While there may not
seem to be a theme in content, what is true across
these pieces is the level of rigorous research and
analysis coupled with close attention to an important
issue affecting an industrial sector today.
The Smith School faculty has always been ranked
in the top-10 in research by Financial Times
(No. 8 in 2012), Business Week (No. 2 in 2010) and
the UT-Dallas productivity ranking (better than
No. 10 in each and every field!). What is even
more impressive about the faculty is that they are
all working on important global issues such as the
financial crisis, healthcare cost and management,
sustainability, and cybersecurity.
Our faculty frequently appear as experts in the
media as well. In just the last two months Smith
professors have been quoted in outlets such as CNN,
CNBC, and ABC News, as well as the New York Times,
The Washington Post, The Wall Street Journal,
the Financial Times, Bloomberg BusinessWeek,
CNN Money/Fortune, and many more.
They are also available to leaders in the business
community, whether through formal consulting
projects, thought leadership events around the region
or research projects with our Centers of Excellence.
If you are interested in learning more about
partnership opportunities, please contact
Greg Hanifee, our assistant dean of executive
programs, for more information.
G. “Anand” Anandalingam
Dean, Robert H. Smith School of Business
University of Maryland
Research@Smith
page
2
page
8
Capitalism as Crime Prevention
Room for Equity?
Research by Kislaya Prasad
Capital controls spur black markets
and murder rates.
Research by Liu Yang
High-level female leadership can
neutralize the gender wage disparity.
page
4
To Be or Not to Be…More Productive
Research by Roland Rust
Lower customer service productivity can
often lead to a better bottom line.
page
6
Hostile Customer Encounters
Research by Rellie Derfler-Rozin
Managers can mitigate the effects that verbally
abusive customers have on employees.
page
10
Research Briefs
Featured Researchers
page
12
Executive Profile: Rick Clinton,
Verizon Wireless Mobile
fALL2012
INTERNATIONAL
BUSINESS
economic
growth up
Capital controls spur
black markets and murder
rates.
Research by Kislaya Prasad
Capitalism as
Crime Prevention
Policymakers around the world have responded to the recent global financial crisis by
implementing new economic measures that reverse a four-decade-old liberalization
trend. This new permissiveness toward economic controls that measure capital and
currency restrictions, capping interest rates, and imposing import and export licenses,
are finding their way back into the policy toolkit. Though occasionally effective, these
measures can be overused. And aside from economic arguments against restrictions,
history shows a seamy side effect to governments manipulating the free flow of currency
and goods — black market violence.
homicide
down
Kislaya Prasad, professor and director of the Smith School’s Center for International
Business Education and Research, investigated this phenomenon through India’s recent
history. His findings link a declining rate in homicides to that government’s 1991
transition to a free market economy that involved a dramatic loosening of controls
on trade, manufacturing and currency. Prasad analyzed India’s intentional homicide
rate and its dependence on the differential between the Mumbai and London price
of gold. Prior to 1991 the import of gold into India was heavily restricted, creating a
divergence between Indian and international gold prices. This differential — a measure
of the attractiveness of smuggling — is found to predict changes in the homicide rate.
Liberalization caused the gold price differential to decline and this dramatically affected
the homicide rate. After rising steadily through the 1980s, the murder rate declined
sharply after the initiation of reforms.
“A variety of social institutions — courts of law for instance — have been devised
to manage conflict between agents engaged in trade,” Prasad explains. “When a
transaction becomes illegal, people lose access to such institutions and end up resolving
conflicts through violence. Rationing leads to black markets, tariffs lead to smuggling,
and disputes among black marketers and smugglers are settled — often violently
— outside the courts. Liberalization in India had the effect of putting a lot of black
marketers and smugglers out of business.”
Prasad expanded the study to 100-plus countries. Analyzing two decades of data, he
shows restrictions on trade — measured in a variety of ways, including using the black
market exchange premium — are associated with a lower homicide rate across those
countries. Prasad says his research was inspired by Edward Luce’s “In Spite of the Gods:
The Strange Rise of Modern India” (Doubleday, 2007), which tells the story of India’s
free market transformation from “license Raj”— a system in which “you couldn’t hire,
fire, change the size of your labor force or build an extension to a plant without first
securing a government license,” he says. The controls extended to imports and exports,
which made it very lucrative to smuggle not just precious metal, but also alcohol,
electronics, and industrial inputs like polyester filament yarn. These factors created an
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FALL 2012 : VOLUME 13 : NUMBER 2
environment in India analogous to the alcohol prohibition era in U.S. history.
“Similar to Al Capone’s notoriety in American folklore of that era, the likes of
Haji Mustan and Chhota Rajan became wealthy and infamous as Indian gangsters,
largely through gold smuggling.”
Manipulating the flow
The organized crime culture is discussed in Luce’s book, which includes remarks by
an Indian police officer that provided the spark for Prasad’s study: “The mafia dons
were making most of their money from smuggling gold and electronic goods. Since
the 1990s restrictions have been lifted so there is much less money to be made in
smuggling. They still have protection rackets and prostitution rings, but these are not
as lucrative. Ten years ago we would have two or three gang killings every day.
Now it is a few each month.” Prasad says lessons of his research for policymakers will
be apparent. “Criminalizing transactions that people seek to engage in is rarely a good
idea, especially now as governments around the world are tempted to institute new
economic controls.”
economies.
The takeaway for executives is more subtle, he adds. Any business transaction potentially
brings disagreement and conflict. But unlike smaller and perhaps homegrown
companies in developing markets, foreign companies tend to be insulated from black
market crime. Firms with sufficient capital can access “an emergent and thriving dispute
resolution industry of third-party mediators and private, judicial arbitrators in countries
with weak public legal infrastructures,” says Prasad. These companies still must prepare
to use these private sector dispute resolution mechanisms, just as they would the public
court system, to better manage contract disputes.
Prasad’s findings could also generate further investigation into the relationship between
other forms of control and violent crime. “Mexico’s tightened control on the drug trade
has coincided, and likely correlates with, a striking rise in crime in the last three-to-five
years,” he says. “But whether to lift controls on an addictive commodity is a much more
difficult and complex question compared to loosening restrictions on trade.”
“Economic Liberalization and Violent Crime,” is forthcoming in the Journal of Law and
Economics. For more information, contact kprasad@rhsmith.umd.edu. ■
RESEARCH@SMITH
3
of capital can lead to the
mafia culture expanding
and contaminating their
customer
service
when
United Airlines
improved
its labor
productivity
32
Percent
Passenger
revenues
declined
17
Percent
Lower productivity can often
lead to a better bottom line.
Research by Roland Rust
To Be or Not to Be…
More Productive
Automating customer service functions has become a popular strategy to improve
service productivity and cut costs. But too much service productivity can actually cut
into a company’s revenue, according to recent research from Roland Rust, Distinguished
University Professor, David Bruce Smith Chair in Marketing, and executive director of
the Smith School’s Center for Excellence in Service, and Ming-Hui Huang, Distinguished
Faculty Fellow at the Center.
Consider Alaska Airline’s automated check-in system at Anchorage Airport. Though
passengers were initially wary, by 2008, 73 percent of passengers were choosing to
check in using the automated kiosks on the airline’s website. That improved Alaska
Airline’s productivity by 18 percent. It also saved money: it costs the airline $3.02 to use
an agent to perform each passenger check-in, while self-service costs between 14 and
32 cents per check-in. The airline was able to reduce its workforce by 10 percent and
increase its earnings by 25 percent. But for every success story there is a corresponding
cautionary tale. United Airlines improved its labor productivity by 32 percent, and then
received the lowest customer satisfaction scores in the airline industry for the next three
years running. Its passenger revenues declined 17 percent over the same period, the
worst decline of any US airline.
Rust, with co-author Huang, National Taiwan University, gathered data from more
than 700 other companies in two time periods across a variety of industries, including
wholesale and retail, information and technical services, finance and insurance,
education and healthcare, and food and recreation. They found that when prices and
profit margins are higher, the most profitable service productivity levels tend to be
lower. Firms in highly competitive industries, with high prices and profit margins and
relatively low wages, should provide higher levels of “high-touch” service, even at the
expense of productivity. In industries where wages are high, prices and margins are low,
and the market isn’t very competitive, higher productivity — with its correspondingly
lower cost — results in a better bottom line. Each firm’s optimal level of productivity
is based on those variables, and when productivity is too high or too low,
profitability suffers.
The tradeoff between service quality and productivity should be considered in the same
light as any strategic variable, says Rust: “Productivity is a strategic decision. Companies
tend to think about the cost side exclusively — “the lower our costs are, the better our
bottom line.” But that ignores the revenue side — customer satisfaction has a very large
impact on revenue.” Managers should be able to use the model Rust and his co-author
created to examine the effectiveness of their own firms’ productivity levels. All the data
from the study’s empirical analysis are in the public domain, so any firm could replicate
it. By inserting their firm’s own data into the author’s empirical equation, managers can
get a better idea about whether they are over- or under-productive.
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FALL 2012 : VOLUME 13 : NUMBER 2
$
Firms of all sizes, across all industries, should carefully consider the strategic trade-offs
between service productivity and quality, the authors find. But small companies may
need to be even more careful about their productivity strategy than large companies.
Small companies don’t enjoy the same economies of scale as big firms, so it is difficult
for them to compete on cost and price. High-quality customer service to a niche market
can help a smaller business out-compete larger firms that have a cost advantage.
The results of the study lead to some straightforward recommendations for firms’
productivity strategy. “If you have a small number of customers you have to treat
them really well,” says Rust. “Any defense contractor serving the federal government
understands that. Also, the more money you’re making from each customer, the more
important it is to treat them well. To treat customers well, you place less emphasis
on productivity.”
“All other things being equal, productivity is good. The problem is, all other things are
not equal. Companies want to show productivity gains, but that is not always a good
strategy. As technology improves, a higher level of productivity is justified, but at a
given level of technology higher productivity can be counter-productive.”
Large companies have the hardest time finding the optimal level of productivity,
according to Rust and Huang’s research. They have found that on average, large
companies are about 9 percent too productive. Most of these companies, Rust and
Huang conclude, would actually make more money if they were less productive. A side
societal benefit is that decreasing service productivity would also put more people to
work, leading to better economic conditions, which would in turn benefit the society.
“Optimizing Service Productivity” was published in the Journal of Marketing. For more
information about this research, contact rrust@rhsmith.umd.edu. ■
RESEARCH@SMITH
5
All other things being
equal, productivity is
good. The problem is,
all other things are not
equal. Companies want
to show productivity
gains, but that is not
always a good strategy.
MANAGEMENT
customer
hostility
employee
gets
anxious
employee
makes
mistakes
more
customer
hostility
Managers can mitigate the
effects that verbally abusive
customers have on employees
Research by Rellie Derfler-Rozin
Eliminating Service
Errors from
Hostile Customer
Encounters
“The customer is always right” and “service with a smile” is the commonly accepted
wisdom when it comes to keeping customers happy. But this mantra perpetuates a dark
side — a power imbalance between the customer and front-line worker in crowded retail
stores, fast food restaurants, 24/7 call centers and other settings in the service sector.
When a dissatisfied, verbally-abusive patron exploits this upper hand, the frontline worker absorbs the heat and the business suffers as well. Previous studies have
measured the broader implications of this dynamic, including worker burnout and loss
of customers. But the real-time dynamics of the conflict and immediate fall-out from a
hostile-costumer encounter are just as crucial because they affect the way an employee
actually deals with the task at hand, according to new research from Rellie Derfler-Rozin,
assistant professor of management.
Derfler-Rozin found that a customer service worker under duress from a verbally abusive
customer is prone to error in the heat of the moment. This compounds the customer’s
frustration and creates a vicious cycle of dysfunction. “It’s worse if the encounter
involves a high-status customer and you factor in the worker’s fear of losing his or her
job — especially in this economy slowed by recession,” she says.
Derfler-Rozin and her co-authors subjected university students in Israel and England to
simulated customer requests that ranged from aggressive to neutral in tone. She then
measured cognitive performance, memory recall and overall functioning of the students
handling those customer requests. Students who encountered several aggressive
customers in a row performed had much worse performance on those tasks. Even
brief encounters with an angry, hostile customer impaired memory, general cognitive
performance and task performance.
Verbal abuse can distract the person on the receiving end into making errors, says
Derfler-Rozin, and this has serious implications for customer service workers, who need
to be efficient at multitasking.
“The employee has to talk with the customer and instantly appear empathetic and able
to understand the problem and its solution, all while executing a complex computer
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FALL 2012 : VOLUME 13 : NUMBER 2
task,” says Derfler-Rozin. “Hostility from the customer interferes with the worker’s ability
to recall information and likely disrupts the thinking processes that are needed to meet
the complexity of the given task.”
So when customers aggressively confront workers get their problems resolved, they may
actually be creating a climate that results in less-effective service. It creates a lose-lose
situation for the customer, the employee, and ultimately the firm that risks losing the
customer’s business.
Companies can mitigate the problem by preparing their front-line service employees
to deal with hostile customers, says Derfler-Rozin. Role-plays that simulate an angry
encounter give employees the chance to practice listening with empathy to the
complaint while simultaneously working through the complex computer task necessary
to find the appropriate service solution. Practicing those skills in a safe environment can
help employees be more effective in an actual hostile situation.
However, managers should also take care to protect their service employees from the
unreasonable and irrational, when a customer’s legitimate frustrations can result in a
verbal assault on the employee. In those instances, managers should act to protect
employees from abusive customers. Allow employees to terminate calls from difficult
customers, or to stop interacting altogether with someone who is repeatedly offensive,
says Derfler-Rozin. This signals that management cares about employees, and the
resulting boost in morale and motivation will improve the service environment overall.
“When customers exhibit verbal aggression, employees pay cognitive costs,”
was published in the September 2012 Journal of Applied Psychology and co-authored by
Amir Erez, University of Florida; Ravit Rozilio, Haifa University; and Anat Rafaeli,
Shy Ravid and Dorit Efrat Treister from Technion Institute of Technology, Israel.
For more information, contact rderfler@rhsmith.umd.edu. ■
RESEARCH@SMITH
7
Managers of customer
service workers can
mitigate employee
error induced by stress
from verbally abusive
customers by simulating
hostile-customer
encounters during task
training exercises and by
eliminating employee
exposure to repetitively
abusive customers.
MANAGEMENT
Female corporate
leadership can neutralize the
gender wage disparity
Research by Liu Yang
women’s pay
lags behind
men by about
80
Percent
women
hold only
6
Percent
of all CEO and
top executive
positions.
Room for Equity?
Despite incremental gains the past several decades in America, pay for full-time working
women lags behind that for men. The median disparity — about 80 percent — ranges
from near neutral in low-paying service sectors to approaching 60 percent among
high-level professionals, including the women holding just 6 percent of all CEO and
top executive positions.
However, this small, under compensated fraction of America’s business leaders are
creating a culture of change in companies they lead, according to recent research from
Liu Yang, assistant professor of finance.
“When women hold senior leadership positions, they cultivate more female-friendly
cultures inside their firms, and subsequently improve career prospects for those
women,” says Yang.
Yang examined data recently made available by the U.S. Census Bureau’s Longitudinal
Employer Household Dynamics program. She identified and tracked separate sets of
workers laid off from the same firm and subsequently employed by another. The data
included 461,449 workers in 9,244 closing plants across 23 states between 1993 and
2006. Yang looked at the differences in outcomes for groups of laid-off workers
re-employed into the same firms, under male or female managers.
Yang and co-author Geoffrey Tate, University of North Carolina, measured changes in
wages according to gender in the transition between employers. When women went to
work for male managers, they started at their new firms with an average wage disparity
of five percent. “However, the gap was cut in half in a female-managed company,”
Yang says. “The results, at a minimum, suggest that women in leadership are necessary
to implement a shift toward egalitarian hiring and compensation policies.”
It is often suggested that the gender-wage gap is a result of the female worker’s
tendency to prioritize family ahead of career, limiting work hours or not devoting extra
personal time in order “to get ahead.” Women are less productive and less competitive
than men, goes the argument; hence, they make less money. But Yang’s research
suggests that wage disparities are generated through management and depend on
the leader’s gender.
Male-led firms paid women less than men in every wage group, Yang found, including
workers over 55, for whom the constraints of family are less likely to differ by gender.
Yang notes that even in women-led firms, pay for women ages 25-35 lags behind that
for other female age groups, perhaps indicating that women of child-bearing age tend to
focus more on family. However, “managers and shareholders appear to unfairly project
such a quality to all women, in effect penalizing those in other age groups,” she adds.
Women in the highest wage brackets working in male-led firms had the highest wage
disparity when compared to their male counterparts. “This further erodes the notion
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FALL 2012 : VOLUME 13 : NUMBER 2
$
$
that gender wage disparity is driven by women sacrificing career advancement in favor
of family,” she says. “Managerial bias, rather than lack of qualifications, fuels the gender
wage gap.”
Yang says the study adds to the growing literature on the way “CEO style” and
managerial policies affect corporate outcomes. Female leadership creates an
environment that is more conducive to the advancement of other women within the
organization. Female leadership also appears to create a gender-equal culture in which
more workers feel treated fairly and more incentivized and loyal toward the firm.
“Shareholders of male-led firms should take note of these implications,” she says.
“Female Leadership and Gender Equity: Evidence from Plant Closure” is under
review from the Journal of Financial Economics. For more information, contact
lyang@rhsmith.umd.edu. ■
Creating Wage Equity in Your Firm
How can company leaders maximize productivity through ensuring both female and
male employees are treated fairly with equal growth and advancement opportunity?
■ Regularly review salaries, promotions and benefit increases to identify potential
gender-based inequity
■ Ensure resources, such as work space and equipment, are allocated regardless
of gender
■ Ensure deserving women are appointed to vital policymaking or
leadership committees
■ Look for, and guard against, invisible gender biases in job performance reviews
RESEARCH@SMITH
9
Firms can take
advantage of capable
women leaders and
position them to nurture
a culture of gender
equity and subsequent
broader base of
incentivized workers
that feel treated fairly.
research briefs
Another Repatriation
Tax Holiday?
U.S. law makers should avoid, or at
least restructure, giving American
firms another tax holiday in attempts
to get them to reinvest their foreign
earnings domestically, according to
research by Mike Faulkender, associate
professor of finance. His findings show
the reinvestment from tax holiday
created by the 2004 American Jobs
Creation Act (AJCA) — which cut
the tax rate from 35 to 5 percent
— was marginal and primarily from
smaller companies. Big firms applied
very little repatriated funds to
new investment.
With the highest corporate income
tax rate among industrialized nations,
U.S. companies are keeping more than
$1 trillion in foreign subsidiaries to
delay paying federal taxes. Faulkender
advocates creating a more competitive
tax rate to create incentives for
long-term domestic investment.
“Investment and Capital Constraints:
Repatriations Under the American
Jobs Creation Act,” is forthcoming in
Review of Financial Studies.
Managing Your Emotions to
Manage Better
A person’s ability to manage their
feelings translates to better job
performance for managers, according
to a study by Myeong-gu Seo,
associate professor of management
and organization. Seo found
managers with high emotional
intelligence (EI) were better at dealing
with stress and emotions triggered
by the demands of managing diverse
teams, functions and lines of business,
with multiple stakeholders and
competing agendas.
Seo surveyed 346 part-time Smith
MBA students and their work
supervisors. He found that people
with high EI understand and
interpret emotional cues and use that
information to guide and inform their
decision making. He also had teams
of MBA students evaluate each other’s
teamwork and found students with
high emotional intelligence were seen
as contributing more to the group.
This effect was even stronger in
diverse teams.
“Emotional Intelligence, Teamwork
Effectiveness, and Job Performance:
The Moderating Role of Job Context,”
was published in the March 2012
Journal of Applied Psychology.
When Silence Isn’t Golden
Products with no online reviews
are likely of low quality because
consumers with bad experiences
tend to refrain from posting a
review, according to research from
Ritu Agarwal, Robert H. Smith Dean’s
Chair Professor of Information
Systems, and Guodong “Gordon”
Gao, assistant professor in the
Department of Decision, Operations
and Information Technologies.
The researchers compared online
ratings of physicians from
RateMDs.com with reviews from a
patient survey to find doctors who
rated low in the survey were less likely
to be rated online. They also found
that online ratings skewed excessively
high or low because patients who
have extreme experiences are more
likely to rate online, and consumers
who are overwhelmingly happy or
upset to tend to exaggerate their
experiences.
“The medical community is so
worried that ratings websites will
become a channel for disgruntled
patients to vent and ruin their
reputations, but we find just the
opposite,” Gao said. “It’s more likely
that patients are recommending
their doctors rather than ‘naming
and shaming.’”
“A Changing Landscape of Physician
Quality Reporting: Analysis of Patients’
Online Ratings of Their Physicians
Over a 5-Year Period”, was
published in the Journal of Medical
Internet Research.
Uncovering Risks in
Emerging Markets
Entering any new market can be risky
for a company, but political prowess
and mastery of new analytic tools can
improve the chances for success, says
Bennet Zelner, associate professor
in the logistics, business and public
policy department.
He studied businesses entering
emerging markets to come up
with best practices for managing
interactions with political, social and
economic institutions. Zelner says
companies should use data-mining
and language-parsing technology
to monitor news and conversations
online and in the media. Companies
can learn a lot about a region’s
social norms and values and use that
information to assess risk, identify
critical stakeholders and develop an
influence strategy. Zelner says the
strategy also helps when crafting a
communications strategy and creating
a long-term presence in the
new market.
“The Hidden Risks in Emerging
Markets,” appeared in the April 2010
issue of Harvard Business Review.
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FALL 2012 : VOLUME 13 : NUMBER 2
Air Passengers Drive to
Save Money
In a year, nearly 4.7 million travelers
saved $480 million by flying to
U.S. airports, then driving over the
border to their Canadian destination,
according to research by Martin
Dresner, professor and chair of
logistics, business and public policy,
and Smith coauthors Robert Windle,
professor of economics, and doctoral
student Omar Sherif Elwakil. The
frugal travelers saved an average
of 28 percent over the cost of
Canada-based arrivals and departures,
but cost Canadian airports $1.3 billion
in missed revenue in 2008.
Transborder fares are two to three
times higher than those for flights
between U.S. cities despite the 2005
U.S.-Canada “Open Skies” agreement.
Elwakil says more open competition
would help right the problem.
“Transborder Demand Leakage and
the U.S.- Canadian Air Passenger
Market” is accepted for publication
in Transportation Research Part E:
Logistics and Transportation Review.
RESEARCH@SMITH
11
featured
researchers
Rellie Derfler-Rozin assistant
professor of management and
organization, received her PhD
in organizational behavior from
London Business School. She focuses
her research on how behaviors
and decisions at the workplace are
affected by psychological anxieties
that relate to threats to fundamental
needs, such as the need to maintain
status in a group and the need to
belong to a group. Her recent work
examines employees’ responses
to discretionary-versus-rule-based
allocation systems, behaviors of
employees that are at risk of being
socially excluded at the workplace,
and the relationship between task
variety and ethical behavior.
Kislaya Prasad is a research
professor of decision, operations
and information technology whose
principal research focus is on the
computability and complexity of
individual decisions and economic
equilibrium, innovation and diffusion
of technology, and social influences
on economic behavior. He is also the
director of the Smith School’s Center
for International Business Education
and Research. Recent projects
include medical treatment variations
and diffusion of technologies in
medicine, complexity of choice under
uncertainty, and experimental tests
of contract theory. His research is
currently funded by a grant from
the National Science Foundation.
Prasad is also a guest scholar at the
Center on Social and Economic
Dynamics, The Brookings Institution,
Washington, D.C.
Roland T. Rust is Distinguished
University Professor and David Bruce
Smith Chair in Marketing and founder
and executive director of two research
centers: the Center for Excellence in
Service and the Center for Complexity
in Business. He is also visiting chair
in marketing science at Erasmus
University (Netherlands), International
Research Fellow of Oxford University’s
Center for Corporate Reputation
(UK) and International Fellow at the
CTF Service Research Center at
Karlstad University (Sweden). He was
chair of the department of marketing
at Maryland for eight years, during
which he presided over a dramatic
improvement in the marketing
faculty — in his last year as chair the
department ranked number one in
the world in number of publications
in the top four marketing journals.
Liu Yang, assistant professor of
finance, focuses her research on
theoretical and empirical corporate
finance in the areas of mergers and
acquisitions, corporate restructuring,
corporate governance, labor
economics and financial institutions.
Her recent work on merger waves
examines how and why public and
private firms act differently during
merger waves. She also uses corporate
restructuring events to compare the
quality of human capital in focused
and conglomerate firms and to
investigate how female leadership
affects the gender wage gap
for workers.
Executive Profile
Rick Clinton
Rick Clinton, associate director of knowledge management for Verizon Wireless, has
a big job. And he’s part of a big team — over 1,000 people manage the business of
customer service, building tools and offering content that supports call centers on the
company’s 800 line and technical support line, as well as on Verizon’s website.
“After I finished my
EMBA, I went from a
team of 9 to a team
of 35. The value to the
business I deliver is
significantly higher.”
Like many companies, Verizon Wireless has put increased focus on knowledge
management, says Clinton. The company’s ongoing challenges and opportunities arise
from the dramatic evolution in wireless technology: smart phones now function as
portable computers, and have been widely adopted — 95 percent of people in the U.S.
carry some kind of cell phone.
“Now people are in the process of going from lines of service to points of connectivity,”
says Clinton. “The average family will have over 100 points of connectivity in their
house. That is how Verizon manages customers now — it’s not really about lines of
service, it’s about connection and data consumption.”
That business model change has also brought a change in the company’s value
proposition, which has shifted to providing data for everything that needs network
connectivity. Competition in this space is fierce. Companies with the biggest throughput
will be the ones to attract and retain customers, says Clinton, which is why Verizon
“doubled down” on FIOS and towers and its 4G network. Verizon also aims to compete
on customer service, which is why Clinton’s role is so important.
“What I’m trying to figure out these days is how do we become the best in customer
service without the customer having to call us?” says Clinton. “When we create tools
and content, we’re shifting the focus to making everything available to customers
directly, so that customers can do exactly what they want, when they want. People
don’t want to pick up a phone, wait in line and talk to us. They want to solve their
problems at their own pace, in their own time.”
Clinton has been with Verizon since 1995, when it was still Bell Atlantic Mobile. He
started by running a store in Frederick, Md.; went on to became an account executive
in corporate sales, then moved into marketing to expand his understanding of the
industry. He went on to be a product development manager, then an associate director
managing flash services. Clinton transitioned to his current role earlier this year, due
in part to the skills he gained in the Smith School’s Executive MBA program. “After I
finished my EMBA, I went from a team of 9 to a team of 35. The value to the business
I deliver is significantly higher,” says Clinton.
Clinton says he chose Smith because of the focus on leadership and entrepreneurship.
“Although I work for a big company, I consider myself an intrapreneur,” says Clinton.
“That’s what appealed to me, having the skills to build something that is enduring and
will survive.”
Learn more about the Smith School’s executive MBA, custom and open executive
education programs online, www.rhsmith.umd.edu/execed.
12
FALL 2012 : VOLUME 13 : NUMBER 2
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undergraduate, full-time and part-time MBA, executive MBA, MS, PhD, and executive education programs, as
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programs in learning locations in North America and Asia. More information about the Robert H. Smith School
of Business can be found at www.rhsmith.umd.edu.
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