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One of the potential advantages that successful privately-held companies have over their public competitors is their ability to make long-term strategic decisions based, in part, on what has been called "patient capital." It means not having to answer to securities analysts and outside investors who tend to favor short-term results and short-sighted strategy. But firms can find this advantage only if they have a unified shareholder group. That, in turn, depends on the risk profile of individual family shareholders. It's one of the topics that Timothy Habbershon, director of Wharton's Family-Controlled Corporation Program, covers in a new research paper titled, "Improving the Long-run Survival of Family Firms."

Despite a tough year for online retailers, many observers still believe that online sites are an economically efficient medium because of their ability to draw millions of customers to browse through thousands of products. But just how and when do online visitors become online purchasers? A new Wharton research paper entitled, "Which Visits Lead to Purchases?: Dynamic Conversion Behavior at E-Commerce Sites," analyzes conversion rates based on visit and purchase data at Amazon.com and offers a conversion model to better understand the buying process.

ABSTRACT: A sizeable literature has argued that the growth effects of changes in flat rate taxes are small. In this paper, we investigate the relatively unexplored area of the growth effect of changes in the tax structure, in particular, in the progressivity of taxes. Considering such a tax reform seems empirically more relevant than considering changes in flat tax rates. We construct a general equilibrium model of endogenous growth in which there is heterogeneity in income and in the tax rates. We limit heterogeneity to two types, skilled and unskilled, and posit that the probability of staying or becoming skilled in the subsequent period depends positively on expenses on "teacher" time. In the production sector, we consider two sources of growth. In the first, growth arises as a purely external effect on account of production activities of skilled workers. In the second, a portion of the skilled workforce is used to work in research and other productivity enhancing activities and is compensated for it. Our analysis shows that changes in the progressivity of tax rates can have positive growth effects even in situations where changes in flat rate taxes have no effect. Experiments on a calibrated model indicate that the quantitative effects of moving to a flat rate system are economically significant. The assumption made about the engine of growth has an important effect on the impact of a change in progressivity. Quantitatively, welfare is unambiguously higher in a flat rate system when comparisons are made across balanced growth equlibria; however, when the costs of transition to the higher growth equilibrium is taken into account only the currently rich slightly prefer the flat rate system.

Given the ease and availability of online trading over the past several years, just how has the behavior of average investors changed? Are these individuals trading online more, and more frequently, or does their natural conservatism distance them from the lure of trading on the web? Finance professor Andrew Metrick and two colleagues from Harvard University find some answers in a recent research paper titled, "Does the Internet Increase Trading? Evidence from Investor Behavior in 401(K) Plans."

"In an environment where past results are no longer a reliable indicator of future performance, the annual report letter is viewed as a unique statement of vision and personal accountability.

In four years of surveying shareholder letters, we've seen the good, the bad and the quickly forgotten -- unfortunately, most of them in the latter two categories...Our yearly research of the letters of 100 top-rated companies has determined that only about one-third of companies are writing distinguished letters that educate and engage readers."

While change management depends on leadership to be enacted, to date there has been little integration of these two bodies of literature. The key role leaders play in the change process has been noted by change theorists, yet there is no conclusive research that focuses on this relationship between leadership and change. Recent theoretical research has attempted to integrate change as a contextual variable influencing transformational leadership. Such research focuses on determining when organizations will be more receptive to transformational leadership and the match between receptivity level and the actual transformational leadership process. However, this research does not address the issue of the capabilities of transformational leaders required to carry out the pertinent change process. Thus, the purpose of this article is to draw parallels between the change literature and the leadership literature; specifically, the transformational leadership literature that is primarily concerned with the capabilities required to enact change successfully. First, we will describe the latest literature relating to change management. Next, we will review theories of change oriented leadership. Finally, we will integrate these literatures and link them to the articles that comprise this special issue.

Magnitude of organizational change ranges from minimal change or maintaining status quo to revolutionary enterprise-wide re-engineering. This magnitude of change is a function of the vehicle used to drive the change. It is important to understand the capabilities of various vehicles and use the most appropriate one for the desired level of change. Our research indicates that maintaining status quo or seeking revolutionary enterprise-wide re-engineering are not healthy options for an organization. We find that organizations that embrace evolutionary change through process improvement and process (re)design achieve sustainable change. The most common vehicles for driving this sustainable change in ascending order of magnitude of change are Data Analysis, Process analysis, System Assessment and Customer Feedback.

Inter-organisational alliances, flatter organisational structures and globalisation are all forcing businesses to adapt to manage activities that span geographical and organisational boundaries. It's the age of a new kind of 'virtual' knowledge worker. The authors of this article ask what factors contribute to effective leadership in virtual team environments. They assembled thirteen culturally diverse global teams from locations in Europe, Mexico and the US, assigning each one a project leader and task to complete. Their findings suggest that effective team leaders demonstrate the capability to deal with paradox and contradiction by being able to perform multiple leadership roles simultaneously (behavioural complexity). Specifically, the authors discovered that the most effective virtual team leaders act in a mentoring role, exhibiting a high degree of understanding and empathy towards other team members. At the same time, effective leaders are also able to assert their authority without being perceived as overbearing or inflexible. Finally, they found the effective leaders extremely good at providing regular, detailed and prompt communication with their virtual teams and articulating role relationships (responsibilities) among the virtual team members. This study provides useful insights for managers interested in developing global virtual teams as well as for academics interested in pursuing virtual team research.

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The problem with focus groups? They take consumers out of their natural habitat. So welcome the idea of ethnographic market research, which uses the anthropologist's tool kit of methods and theories.

"Especially in environmental matters, the link between socially responsible practices and shareholder returns is becoming evident. That's because a company's ability to deal successfully with environmental issues can be a credible measure of management quality, which is notoriously tricky to gauge, contends Frank Dixon, managing director with Innovest Strategic Value Advisors, New York. Management teams that excel in handling environmental issues, which come with a morass of technical, market, and regulatory problems, are likely to do a good job overall, says Dixon. In fact, Innovest's research has shown that stocks of companies with above-average environmental performance outperform their competitors by three to 25 percentage points annually. Dixon explains, 'The concept of fiduciary responsibility is beginning to change, to consider that environmental and social factors are relevant to the bottom line.'"

Ever since the Internet emerged as a sales channel in the 1990s, it has been thought that one of the chief advantages of e-commerce would be its ability to facilitate the customization of goods and services for consumers. That promise, however, is not yet close to being realized, according to experts at Wharton and an e-commerce research firm.

Graduate Management Admission Council conducted its first survey of graduating MBAs during March and April of 2000-the GLOBAL MBA SURVEYSM. Survey respondents were asked to provide permanent email addresses if interested in participating in follow-up research. Seventy-seven percent of them did so. On September 1, 2001, GMAC launched its first survey of this group-MBA Perspectives: Career Decisions.

They answered questions on the following topics:
- Satisfaction with the MBA in light of at least one -year of post-MBA experience
- How much they are using skills & abilities learned in their MBA programs on their current jobs
- The areas in which they wish they had had more education and training
- How they stay current on business practices
- Work experience
- How they weighed various job-selection factors-and which they now think they weighed "too much" or "too little"
- How satisfied they are with the jobs they chose
- Industries in which they work
- General and specific job functions
- Job characteristics and budgetary responsibility
- Salaries and additional compensation
- How their companies support career development

Peter Cappelli, director of Wharton's Center for Human Resources, began his research into employer-paid tuition programs with some skepticism. Why, he wondered, would employers pay for workers to develop a credential (education degree) that is useful to other employers and will raise the workers' marketability? Furthermore, if the employer's goal is to give workers skills for their current job, why not just offer training in-house? After several months of research, Cappelli has found some surprising answers, which he summarizes in a new paper entitled, "Why Do Employers Pay for College?"

Find a wide selection of interviews with business luminaries in our Interviews Section

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Downsizing may not be getting as much media attention as the recent corporate scandals, but Wayne Cascio hasn't forgotten about it. A management professor at the University of Colorado at Denver, Cascio has been studying the effects of downsizing on both individuals and corporations since 1993. While Cascio is sympathetic to the victims of job cuts, he is just as concerned about the companies. His research shows that layoffs rarely lead to increased profitability-and sometimes result in just the opposite. ATB spoke to Cascio about the myths, the hidden costs, and the aftermath of downsizing.

Critics say Microsoft's incredible two-decade run at the top of the computer industry has less to do with innovation than it does with bully tactics. But new research from Harvard Business School professors Marco Iansiti and Alan MacCormack suggest a different reason: the company's ability to spot technological trends and exploit key software technologies.

What makes some companies so much better at managing customer relationships than their competitors? Put a different way, how are companies like Enterprise Rent-A-Car, Pioneer Hi-bred Seeds, Fidelity Investments, Lexus, Intuit, and Cap