Erik Brynjolfsson on Big Data: A revolution in decision-making improves productivity

MIT Sloan Prof. Erik Brynjolfsson

There is a fundamental change underway in the way that companies make decisions. Instead of relying on a leader’s gut instincts, an increasing number of companies are embracing a new method that involves data-based analytics. This ‘Big Data’ revolution is occurring mainly because technology enables firms to gather extremely detailed information from and propagate knowledge to their consumers, suppliers, alliance partners, and competitors.

Companies that use this type of ‘data driven decision making’ actually show higher performance. Working with Lorin Hitt and Heekyung Kim, I analyzed 179 large publicly-traded firms and found that the ones that adopted this method are about 5% more productive and profitable than their competitors.  Furthermore, the study found a relationship between this method and other performance measures such as asset utilization, return on equity and market value. There is a lot of low-hanging fruit for companies that are able to use Big Data to their advantage. Read More »

Corporate Social Responsibility pays for itself: Here's the evidence

Caroline Flammer, Lecturer, Global Economics and Management

In recent years, the call for corporate social responsibility has grown louder, and many companies have committed to serious CSR programs.

However, a big question for companies is to what extent CSR—specifically behavior that  affects the  environment—actually alters shareholder value. Is it  better to pursue a single bottom line, or do shareholders benefit more when a company supports the “triple bottom line” that includes people, the planet, and profits?

It’s easy to see that a company’s environmental footprint can sometimes make a big difference in shareholder value, as when the BP oil spill, in April 2010, sent BP’s stock price plummeting from $59.50 that day to $28.90 by the end of June, reducing shareholder value by half. But that was a dramatic event, the biggest offshore oil spill in U.S. history. What about lesser happenings at other companies?

To find out, I tracked hundreds of articles in The Wall Street Journal for relevant press coverage on responsible and irresponsible environmental behavior by U.S. publicly-traded companies from 1980 to 2009. Then I analyzed how the stock market had reacted to those events and looked for trends over the past three decades.

To read more, please visit Forbes at: http://www.forbes.com/sites/forbesleadershipforum/2011/08/30/csr-pays-for-itself-heres-the-evidence/