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Even positive third-party ratings can have negative effects

Restaurants that received a Michelin star were more likely to close in subsequent years. This helps explain how third-party evaluators’ reviews, ratings, and rankings can help or hurt the creation and capture of value.

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There’s history, glitz, and glamor surrounding the awarding of Michelin stars to restaurants, but new research shows there can be a downside to achieving even the highest industry rankings.

In a study published in Strategic Management Journal, Daniel B. Sands of University College London found that restaurants that received a Michelin star were more likely to close in subsequent years. The study helps to explain how third-party evaluators’ reviews, ratings, and rankings can help or hurt the creation and capture of value, and underscores the importance of solidifying key relationships and resources.

Michelin stars have been awarded for almost 100 years, and the first Michelin guide to America — covering only New York City — was published in 2005. With that exciting entrance into the U.S. market, it would be reasonable to assume that a Michelin star would lead to greater customer interest and opportunity. But Sands wondered: Does getting such an accolade actually lead to a greater ability for firms to capture value, or is that ability limited?

To explore the question, Sands gathered data on which restaurants in New York were “at risk” of receiving a Michelin star. To develop a baseline sample of such restaurants, Sands compiled a list of all newly opened restaurants from 2000 to 2014 that received a New York Times starred review, which provided a set of subjects that received a favorable professional critic evaluation during their first year of operation. He then tracked which restaurants received a Michelin star and which restaurants remained open through 2019.

Sands also met with restaurant owners — including some whose spots had closed — who described what it was like to get a star: the effects on their restaurants, and how they thought about approaching the business before and after. The challenges they described after receiving a star stemmed from intensified bargaining problems with landlords, suppliers, and employees, in addition to greater consumer expectations.

As far as post-star customer challenges, in turn, many restaurants described getting new types of diners coming in: People who were interested in seeing something special, who had a desire to be wowed by a Michelin-starred restaurant, as well as tourist-diners coming from out of town who weren’t their typical guest prior to the Michelin accolades. Sometimes their pre-star regular customers — a crucial segment for restaurants — came in less frequently. The restaurant owners would occasionally see these new customers coming with different tastes and preferences: One interviewee said they responded to changing customer expectations by reorganizing their seating schedules and adding new, bigger tables — even though the restaurant wouldn’t gain any additional revenue from these changes.

In terms of landlords, suppliers, and employees, such individuals or firms may see an opportunity to negotiate higher prices or salaries. An employee could use the Michelin star as an opportunity to find new work or open their own restaurant, increasing competition in the market. Sometimes these stressors are too much for a restaurant to withstand, leading to Sands’s finding that Michelin restaurants are more likely to close down than comparable restaurants that don’t receive a Michelin star.

“Not all the effects of Michelin stars are bad,” Sands says. “There’s variance in outcomes: Some firms perform fine and are successful post-Michelin star. The effect is driven by some restaurants being more susceptible to disruptions to their value chain, and are more susceptible to employees leaving, landlord bargaining problems, and supplier hold-ups.

Certain restaurants may just be more vulnerable, Sands says. As such, he identified three managerial takeaways from his findings: First, understand that prestigious third-party rankings can cause disruptions to your value chain. Second, protect against instability by knowing and protecting your firm’s key personnel and resources. Lastly, Sands emphasizes the importance of both upstream and downstream relationships.

“Even when something good happens, the extent to which that erodes these relationships or has the potential to disrupt these relationships, is going to be a challenge to manage,” he says. “And figuring out how to focus on that is a particular kind of recipe for success.”

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Modern slavery is a business decision – not an accident

Many organisations focus on compliance, reporting and audits, yet fail to build the relationships and trust needed to identify and tackle exploitation. In some cases, competitive pressures and mistrust between firms actively prevent collaboration that could reduce risks. 

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Modern slavery persists because the way global supply chains are designed allows it to remain hidden, according to new research led by Professor Glenn Parry from the University of Surrey and Dr Mike Rogerson at the University of Sussex.  The findings argue that exploitation often stems from business decisions that cut costs by pushing work further down the supply chain, leaving companies with little direct contact with workers and less visibility over how they are treated. 

Around 27 million people worldwide are estimated to be living in conditions of modern slavery, embedded within the production of everyday goods and services. While governments have introduced laws to force companies to report on risks, the research suggests that disclosure alone is not changing behaviour in a meaningful way. 

Instead, firms often maintain distance from the most vulnerable parts of their supply chains. This distance can be geographical, organisational or even digital, such as the use of algorithms that control workers without direct oversight. As a result, companies rely on indirect signals rather than engaging directly with workers, leaving serious gaps in knowledge and accountability. 

The special issue on “Modern Slavery and Supply Chain Management”, published in Supply Chain Management, brings together insights from multiple international studies across sectors including construction, social care, logistics and global manufacturing. Drawing on interviews with practitioners, workers and experts, as well as analysis of corporate reports and policy frameworks, the work examines how governance, partnerships and digital systems shape labour conditions across complex supply networks. 

Glenn Parry, co-editor of the issue and Professor of Digital Transformation at the University of Surrey, said: “Modern slavery is a problem buried in supply chain structures and it is often the result of how those chains are built and managed. When companies prioritise cost and efficiency above all else, they create the conditions where exploitation can thrive.”

The research found that many organisations focus on compliance, reporting and audits, yet fail to build the relationships and trust needed to identify and tackle exploitation. In some cases, competitive pressures and mistrust between firms actively prevent collaboration that could reduce risks. 

It also finds that partnerships between businesses, governments and NGOs can help, but only when they are built on genuine understanding and shared goals. Superficial collaboration risks becoming a tick-box exercise rather than a driver of real change. 

A major recommendation is to shift focus from reporting to knowledge. Companies need to invest in understanding their supply chains in depth, including listening directly to workers. Bringing “upstream voices” into decision making is seen as critical to designing effective anti-slavery measures. 

Professor Glenn Parry added: “If we are serious about tackling modern slavery, we need to stop treating supply chain complexity as an excuse. It is often a choice. That means it can be changed.” 

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Long-serving CEOs may weaken innovation, study finds

Companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

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A new study from the University of East London has found that companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

The research examined 215 FTSE 350 companies over an 11-year period between 2010 and 2021. It explored how CEO tenure and independent directors influence a company’s “R&D knowledge stock”, which is the research, expertise and technological capability built through investment in innovation.

The study published in the journal Corporate Governance found that CEOs who remain in office for many years often become more cautious and less willing to back risky research and development projects. These companies were more likely to reduce investment in innovation and long-term technological growth.

Firms with higher numbers of independent directors were more likely to continue building innovation capacity with experienced CEOs and independent directors forming an effective partnership, to combine deep company knowledge with outside challenge.

However, both experienced CEOs and independent directors become more cautious and less willing to back risky research and development projects when the company fails to meet performance aspirations, suggesting that independent directors do not have stable risk preferences.

The findings suggest that innovation is shaped not only by technology and finance, but also by leadership culture and corporate governance structures.

Author Dr Igbekele Sunday Osinubi, of the Royal Docks School of Business and Law, said: “Long-serving CEOs can bring valuable experience and stability, but there is also a risk that leaders become too cautious or too attached to existing ways of thinking. Our findings show that independent directors play an important role in encouraging companies to continue investing in innovation, especially during difficult periods when firms may otherwise retreat from long-term research and development.”

He added: “This matters beyond individual companies. Innovation drives productivity, competitiveness and economic growth. The study highlights how governance structures can influence whether firms continue building the knowledge and technologies that shape future industries.”

The paper argues that regulators and policymakers should consider governance reforms and incentives that encourage long-term innovation strategies, particularly in firms led by long-serving executives. The findings may also influence how boards think about CEO succession planning, oversight and the balance between short-term financial pressures and long-term investment.

Osinubi’s research, “Long CEO tenure, independent directors and R&D knowledge stock: the moderating effect of performance shortfalls”, was published in the Corporate Governance: The International Journal of Business in Society

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Office owners or managers, take note: Increased risk of bullying in open-plan offices

In traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

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Open-plan offices entail a clearly increased risk of workplace bullying compared with employees having their own office or sharing with just a few colleagues. This is shown in research from Linköping University, Sweden. 

“Increased bullying is a tangible negative consequence of how you choose to organise the workplace. It’s important to highlight this, as it hasn’t previously been examined,” says Michael Rosander, professor at the Division of Psychology at Linköping University.

Open-plan offices, where many employees share the same space, have become increasingly common. Employers often justify this development as a way to use premises more efficiently and to encourage creative interactions between employees. However, research has shown that open-plan offices do not promote health, job satisfaction or productivity.  

Until now, it has been unclear whether open-plan offices also affect the risk of bullying and employees’ motivation to look for another job. Through surveys of more than 3,300 randomly selected individuals in employment in Sweden, Michael Rosander has now provided an answer. The results are published in the journal Occupational Health Science. 

Thirty per cent of those with some form of office-based work reported that they worked in a traditional open-plan office with no access to private space. Thirteen per cent worked in so-called activity-based offices, where employees spend part of their time in an open-plan environment but also have access to designated rooms for tasks requiring peace and quiet. The remainder had their own office or shared one with only a few colleagues.

For traditional open-plan offices, the survey responses showed a clearly increased risk of bullying compared with those who had their own office or shared an office with only a few colleagues. The difference remained regardless of factors such as personality traits and the extent of remote working. This suggests that the problems are indeed caused by the work environment in the office.  

The researchers’ explanation is that in traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

Activity-based open-plan offices, by contrast, showed no increased risk of bullying, likely due to the availability of private spaces. However, in both types of open-plan office, employees were more likely to consider changing jobs. One possible explanation is that activity-based offices also involve more distractions, according to Michael Rosander.

For employers who have introduced, or are planning to introduce, open-plan offices, there are some lessons to be learned. One is to be prepared to deal with irritation and conflicts before they escalate. Another is the importance of providing rooms where employees can work undisturbed. Placing individuals with similar needs and tasks near one another may also reduce the risk of disruption.

“Traditional open-plan offices are in themselves negative for the individual, for productivity, and make people more likely to leave their job. Social interaction also suffers. So it’s worth considering how to handle it,” says Michael Rosander.

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