In a study examining styles of pitching ideas to audiences, researchers found that pitches promoting radical ideas are better received when framed in concrete and explanatory ‘how’ terms, while progressive ideas do better with abstract ‘why’ style of pitches.

Previous research found that professional audiences, like investors, prefer concrete pitches with how-style explanations, while lay audiences such as students and crowdfunders respond better to ‘why’ style pitches for abstract ideas.

Professor Simone Ferriani, Professor of Entrepreneurship at Bayes Business School (formerly Cass), City, University of London, said: “We wanted to identify the best way for entrepreneurs to pitch their ideas to get audiences’ attention and investment. Could the way they pitch affect their success? What if they had great ideas but were pitching them in the wrong way? We wanted to explore which styles of pitching work best with differing types of ideas.”

To test this, academics conducted two experiments using an online survey with business students evaluating pitch decks, to see when new ideas were more likely to be viewed positively. The study used entrepreneurial pitches and varied the ideas’ originality and the style of abstract ‘why’ the idea works versus concrete ‘how’ the idea works. They looked at how these factors influenced people’s reception of the idea and their willingness to support it.

The results indicate that the pitching strategy should match the idea’s novelty to make it more appealing and likely to attract investment.

Professor Ferriani added: “Imagine a tech startup introducing a groundbreaking new virtual reality (VR) gaming platform that revolutionises the gaming experience. Our findings suggest that in their pitch to potential users, they should emphasise concrete usability details such as the advanced feedback technology, the immersive 360-degree visuals and the seamless integration with existing gaming consoles. When ideas have the potential to disrupt the status quo, this explanatory approach is key to offset the puzzlement that novel ideas can cause. Conversely, when ideas are less of a leap and more of a step forward, such as with incremental innovations, abstract language that paints the ‘why’ can be more effective.”

Denise Falchetti, Assistant Professor of Management at George Washington University School of Business (GWSB), added: “This strategy taps into the audience’s existing knowledge and expectations, connecting the new idea to familiar concepts and emphasizing its place within a broader vision or goal.”

Gino Cattani, Professor of Management and Organizations at New York University Stern School, concluded: “The research advises a tailored approach: for groundbreaking innovations, detail the practicalities; for incremental improvements, focus on the overarching vision. As the language of entrepreneurship continues to evolve, this study offers a compass for navigating the intricate dance of persuasion and influence, providing a linguistic toolkit for turning novel concepts into embraced innovations.”

The paper, ‘Radically concrete or incrementally abstract? The contingent role of abstract and concrete framing in pitching novel ideas’ is published in Innovation: Organization & Management.

Shoppers browsing through blouses and blenders at Target know they can also quaff a cappuccino at one of more than 1,700 Starbucks cafes housed within Targets. The strategic alliance benefits both corporations by helping them reach new markets, boost their brands, and add incremental sales.

Collaborative partnerships such as this have grown at a pace of 3,600 per year, according to the SDC Platinum database. That’s partly because companies in alliances can gain access to new technologies and customers while keeping their autonomy.

New research from Texas McCombs highlights another advantage of alliances: They also make borrowing money easier.

Urooj Khan, associate professor of accounting, finds that companies entering strategic alliances can get both better access to financing and better terms through the financial networks of their partners. Banks that have already lent to one partner offer lower interest rates to a company entering the alliance.

The reason is that having a relationship with one partner helps them get insight into the other company, beyond what’s found in financial statements and alliance agreements, such as the strength of its commitment to the alliance and its ability to execute the alliance effectively. Such inputs are critical for assessing the credit risk of a borrower.

“It’s really hard to see whether a company will live up to its strategic alliance commitments, even if they put it on paper,” says Khan. “But these alliances have significant consequences for the companies’ financial futures, cash flows, and revenues.”

Knowing that an alliance can improve a company’s bottom line, banks can lend with less uncertainty, he adds. They can spend less on screening and monitoring, making it possible to extend a lower-interest loan to the new partner.

With Vincent Yongzhao Lin of Washington University in St. Louis, Zhiming Ma of Peking University, and Derrald Stice of Hong Kong University, Khan analyzed 5,343 U.S. bank loans issued to 1,254 borrowers in strategic alliances from 1991 to 2016.

The average company got loans from banks that had existing relationships with an alliance partner, as well as other loans from banks that did not. That allowed the researchers to compare lending outcomes. They found that in the four years after an alliance commenced:

• Borrowers in alliances were 6% more likely to get financing from alliance-related banks than from non-alliance-related banks.
• Interest rates on loans from alliance-related banks were 0.13 percentage points lower, on average, than loans from banks with no alliance connection. These cost savings represented a 7% decrease in the average cost of borrowing.

Alliance-related banks gave even more favorable rates when:

• An alliance was economically important, as measured by its closeness to the company’s core businesses, similar markets for the partners’ products, or the equity markets’ reactions upon the alliance’s announcement.
• The borrower’s transparency and accounting quality were low, making inside information from its partner even more critical to assessing its risk.

The findings have implications for banks and for companies considering entering a strategic alliance, Khan says.

Banks can look at new alliance partners of their existing clients as avenues for potential business growth.

For companies — especially those that anticipate needing a loan — the findings can help them decide whether to pursue an alliance in the first place.

“Companies typically consider access to new markets and technology or cost savings as the main benefits of forging strategic alliances,” he says. “Our research shows that partners can also benefit from each other’s financial networks through alliances.

“Thus, the quality and extensiveness of a firm’s banking relationships is an important factor in choosing an alliance partner.”

“Strategic Alliances and Lending Relationships” is published online in The Accounting Review.

Online fashion retailers clinging to the received wisdom that photos of thin models are the most effective way of selling clothes may want to think again, according to a new study examining the impact of size-inclusive model photos.

New research from the University of Bath, University of Groningen and Vrije Universiteit Amsterdam­­ shows a three-fold benefit to online retailers using size-inclusive model photos to showcase their ranges, which would allow customers to better assess the fit and style of the garments for their particular body types.

The researchers found retailers’ sales and costs would improve, customers would feel greater satisfaction and inclusivity, and the environment – as well as companies’ bottom lines – would benefit as expensive and wasteful clothing returns could diminish. And they challenged the long-held notion that thin models drive sales.

“We have seen some progress in portraying diverse body types – but that is largely restricted to advertising, rather than what the customer sees online when ordering clothes. There are a few honourable exceptions but models online are still very, very thin, as a rule,” said Dr Iina Ikonen, of the University of Bath School of Management and University of Groningen.

“The sector has this misguided notion that aspiration is key, and that any other approach than thin-size photos could damage their business. In fact, not one of our studies shows that own-size model photography negatively affects purchase decisions in comparison with thin-size photos, despite this being a key concern of the fashion companies we interviewed,” Dr Ikonen said.

The researchers found that thin-size models actually hindered online purchase decisions, through increasing the difficulty of assessing a product’s fit for customers with different clothing sizes. Thin-size models caused them to disengage as the retailer was not serving their needs.

“Our research showed that retailers employing greater body-size diversity fostered more inclusive and welcoming environments, and especially employing own-size models promotes equal treatment for diverse customers – all of which creates higher consumer well-being. Whereas the current online markplace stigmatizes consumers who feel their bodies are not represented by thin models,” said co-researcher Yerong Zhang of the School of Business and Economics, Vrije Universiteit Amsterdam.

The research suggested the ideal approach for online retailers would be to show every item of clothing on models of various sizes, but the researchers recognized this could be costly, particularly for high-volume, fast-fashion outlets.

“A middle ground might be to use differently-sized models presenting different clothing items. This mixed strategy might help consumers of various sizes feel like their own size is being represented in online shopping environments,” Yerong Zhang said.

The costs incurred by using size-inclusive model photos could be offset by improved customer satisfaction and reduced product returns, which international regulators are scrutinizing with a view to cutting environmental harm.

“We know that poor fit is the most important reason for product returns – targeting customers with model photography featuring models of their own size would be key to addressing this issue,” she added.

Dr Ikonen welcomed retailers’ moves towards diversity in some areas but warned they should be wary of inadvertently creating the potentially alienating ‘plus-sizing effect’ and should ideally offer, and display, all of their clothes in all sizes, from extra small to extra large.

“We observed an issue with retailers showing off some of their clothes on thin models and simultaneously proudly pointing to their plus-sized ranges as part of their commitment to diversity and inclusion. The problem was that, often, the clothes showed on thin-size models were not available for plus-sizes. Essentially, these were two different ranges and that is unhelpful for customer inclusivity and positive sentiment – and that will ultimately harm their business,” she said.

The study – ‘One size does not fit all: Optimizing size-inclusive model photography mitigates fit risk in online fashion retailing’ can be read in full here. Dr Ikonen’s co-researchers are Yerong Zhang, Jiska Eelen and Francesca Sotgiu, all from the School of Business and Economics, Vrije Universiteit Amsterdam. Dr Ikonen represents both the University of Bath School of Management and the Faculty of Economics and Business at the University of Groningen in the Netherlands.