Explore the faculty research, thought leadership, and groundbreaking philosophies that established Michigan Ross as one of the world’s top business schools.
In 1984, former faculty member Birger Wernerfelt introduced a paradigm shift in business strategy with his paper "A Resource-Based View of the Firm." Prior to this transformative work, the discourse on business strategy was predominantly centered around external market factors and competitive forces.
Wernerfelt challenged this conventional wisdom by presenting the argument that a firm's internal resources, ranging from tangible assets like machinery to intangible assets like reputation, could be the key to creating a competitive advantage. This theory, known as the Resource-Based View, asserts that for resources to offer a firm sustained competitive advantage, they must be valuable, rare, and difficult to substitute or imitate.
The RBV has had profound implications and has changed how firms undertake strategic planning by emphasizing the importance of leveraging internal assets for competitive advantage. Wernerfelt's paper has been cited in thousands of academic publications and is now a staple in business school curricula worldwide.
Professor Karl Weick was an iconic founder of the field of organizational behavior. Starting with his seminal book, The Social Psychology of Organizing, which was published in 1969, Weick's ideas had enormous influence, shaping organizational scholarship over the next decades and to this day. He focused on the processes of organizing rather than on organizations per se, suggesting that the insights into those processes give us important leverage to both understand and affect life in organizations. In his book, he introduced the seminal concept of "sense-making," which he defined as "the ongoing retrospective development of plausible images that rationalize what people are doing." Weick's ongoing research focused on how individuals engaged in making meaning and how that meaning-making affected important outcomes in organizations. His book has been cited more than 35,000 times, and his other work on the topic has been cited more than 13,000 times. His pioneering work has instilled a highly influential perspective on the people attempting the organizing work that goes into organizations.
Launched in 2014 by Michigan Ross and the Zell Lurie Institute for Entrepreneurial Studies, the Desai Accelerator is dedicated to advancing U-M alumni entrepreneurial ventures. The Accelerator provides the physical infrastructure, financial resources, and mentorship to support alumni startups as they reach the critical phase between early-stage development and the point at which they seek external investors.
At Desai Accelerator, startups can access a wide network of experienced advisors, including entrepreneurial mentors, industry experts, venture capitalists, angel investors, and other business leaders. To engage students, Desai offers internships for undergraduates and graduates from all U-M schools and colleges. The Desai Accelerator program runs an annual cohort that supports passionate entrepreneurs as they advance their early-stage ventures. Startups accepted into the program receive funding, tailored mentorship opportunities, national visibility, and other resources to support their success.
The Desai Accelerator has invested more than $1 million in 44 startup ventures on behalf of the University of Michigan and has engaged 75+ student interns. Funding and support for the Accelerator are provided by the Desai Sethi Family Foundation, the William Davidson Foundation, and the Wadhams Family Foundation.
The 1996 book Competing for the Future by the late Professor C.K. Prahalad and his colleague, Gary Hamel from the London Business School, was unique in that it tied together several of Hamel and Prahalad's leading ideas into book format. The book introduces the concept of "core competencies," which emphasizes that organizations should focus on leveraging their inherent strengths and unique capabilities, and "strategic intent," which focuses on setting an ambitious, long-run vision for a firm's future. This emphasis on future thinking was a particularly notable aspect of the book. In general, the book advocated for a proactive approach to strategy where businesses actively envision and shape the trajectory of their respective industries instead of merely reacting to existing competitors and market dynamics in the short run. This emphasis on dynamics -- in particular, envisioning the future and then mobilizing strategy to compete in shaping it -- had important managerial implications for business thinking in the 1990s. It suggested that companies needed to transition from a short-term, reactive mindset to a more forward-thinking, visionary stance; this would allow companies not just to survive but dominate in future market landscapes. Overall, this book had a notable impact on business practice; Time Magazine named it one of "The 25 Most Influential Business Management Books."
The Dare to Dream grant program is an initiative by the Zell Lurie Institute for Entrepreneurial Studies. It provides funding to U-M students interested in exploring and pursuing entrepreneurial ventures.
The student grant program offers three different tracks targeted toward early-stage students looking to develop a business concept to integrate entrepreneurship into their academic studies, students who have already developed a business concept and are seeking to validate and assess the feasibility of their idea, and students who are ready to launch their ventures.
In 2002, Professor Ravi Anupindi and his co-authors published the influential paper "Coordination and Flexibility in Supply Contracts with Options" in Manufacturing & Service Operations Management. This work introduced an innovative model that integrated options into supply contracts, offering enhanced management of demand uncertainties in supply chains. The research highlighted the important potential role of options in attaining contractual flexibility to coordinate supply chain participants and improve overall efficiency. The paper influenced subsequent research on supply contract design and demand management, one of the major areas of supply chain management research in the past two decades.
The root of the Great Financial Crisis of 2008-2009 lay in poor-quality residential mortgage loans made by financial institutions. A set of academic research papers established that lenders made poorer quality loans when they anticipated selling the loans to investors rather than continuing to own the loans until they matured. When loans were sold, a complex securitization process led to a large distance between the originator of a mortgage and the final investor in the loans. Amit Seru, PhD '07, and co-authors established in an important series of papers that focused on 1) keeping most characteristics of loans the same, loans that were only marginally easier to securitize had significantly higher default rates than those that were marginally more difficult to securitize, 2) (in work with Professor Uday Rajan) securitized loans, the interest rate (which represents the compensation to investors for bearing the risk of default by the borrower) became an increasingly worse predictor of default in the build-up to the GFC, and 3) information passed on to investors by mortgage securitizers was limited and sometimes outright fraudulent. In another crucial strand of work, Professor Amiyatosh Purnanandam demonstrated that 1) loans held by banks on their own balance sheets had lower default rates than otherwise identical loans sold by banks to investors and 2) (in work with Taylor Begley, PhD '14, and Kuncheng Zheng, PhD '15) even with securitized loans, default rates were lower when the riskiest tranche was held by the lender rather than sold to investors. Collectively, the work done by Ross faculty and PhD alums showed that the ability to securitize mortgage loans undermined the incentives of lenders to the point that low-quality mortgage loans were made, essentially providing the dry timber that fueled the GFC.
In 1999, former Michigan Ross finance faculty member Josh Coval co-authored a paper that is among the top 50 most-cited papers in finance. The paper shows one of the most intriguing patterns in individual behavior. The strong bias in favor of domestic securities is a well-documented characteristic of international investment portfolios, yet this paper shows that the preference for investing close to home also applies to portfolios of domestic stocks. Specifically, U.S. investment managers strongly prefer locally headquartered firms, particularly small, highly leveraged firms that produce nontraded goods. These results suggest that asymmetric information between local and non-local investors may drive the preference for geographically proximate investments, and the relation between investment proximity and firm size and leverage may shed light on several well-documented asset pricing anomalies.
Professor Gautam Kaul and two former PhD students, in their seminal 1994 study titled, "Transactions, Volume, and Volatility" convincingly argued and verified empirically that it is the occurrence of a trade in a certain direction rather than its dollar value (or volume) that has the greatest effect on prices, hence the greatest relevance when assessing the liquidity of the market where that trade took place. A trade sign is determined by the buyer or seller's information, while market conditions determine trade amount and price. This is a simple yet extremely powerful notion that was originally predicated in theory but had no empirical support before their 1994 study. The publication of this study opened the door to the accurate measurement and needed assessment of market liquidity. These days, the approach they recommended is widespread in its use.
If people don’t pay much attention to the ads when they watch TV, they can’t possibly think a lot about what the ads are saying. How, then, does advertising have the effects on consumer buying that it does? Showing that emotional responses evoked by the ad play an important role was a major research contribution by Rajeev Batra, Michigan Ross marketing professor. Batra came to U-M in 1989 from Columbia University, where he began this research stream. Over 10 years at MichiganRoss, he grew this research stream to show more clearly how these ad-evoked emotions interacted with the ads’ more rational content, what the different types of ad-evoked emotions were and how they could be measured accurately, and how they shaped consumers’ liking for and perceptions about brands. His co-authored papers on these topics have been cited more than 8,000 times, and he has twice been listed among the most influential scholars in the study of advertising. The methods he developed for measuring the types and effectiveness of emotional ads have also been incorporated into copy-testing systems at multiple ad agencies.
The research of Assistant Professor Eric Zou began with the observation that regulatory monitoring of pollution is often spatially sparse, temporally intermittent, or even nonexistent in developing-country settings. In a pair of papers titled "Unwatched Pollution: The Effect of Intermittent Monitoring on Air Quality" and "What's Missing in Environmental (Self-)Monitoring: Evidence from Strategic Shutdown of Pollution Monitors," Zou and his co-authors studied the strategic interaction between pollution monitoring and air quality.
These two papers demonstrate that intermittency in regulatory monitoring causally affects pollution outcomes and vice versa -- high pollution can induce selective monitoring. The evidence highlights a general principle-agent challenge of environmental federalism: local agencies are in charge of self-monitoring and enforcing federal environmental standards.
At the same time, these local agencies bear the regulatory penalties if their own data suggest that violations occurred. In a third paper titled "From Fog to Smog: The Value of Pollution Information," Zou and his co-authors found that pollution information disclosure triggered a dramatic change in public awareness of pollution issues, which in turn translated to increased avoidance behavior among members of the public and improved health.
This paper is among the first to document social, behavioral, and health changes when a highly polluted country without publicly available pollution information transitions to a new regime that makes it possible to openly discuss pollution issues and to find and use pollution information in real time.
Under the leadership of Marian Krzyzowski, Michigan Ross launched the Domestic Corps in 1992 with financial support from the United States Department of Education Fund for the Improvement of Post-Secondary Education. The Domestic Corps provided leadership development and action-based learning opportunities for Ross students while providing critical business assistance to the non-profit community in the United States. For 15 years, the Domestic Corps placed hundreds of students in more than 100 non-profit organizations nationwide, where they worked on projects in economically distressed and culturally diverse communities. That included Native American communities, inner city community-based organizations, and rural non-profits. The Domestic Corps also partnered with the University of Michigan's Neighborhood AmeriCorps Program to place MBA interns in 20 more than Detroit community-based organizations. The Domestic Corps projects helped raise millions of dollars, won national awards for community and economic development, and transformed numerous organizations while simultaneously providing students with management experience in challenging contexts and instilling a sense of corporate responsibility and social justice.
Building on his experience as an attorney at the Federal Reserve, the 2020-22 research of Assistant Professor Jeremy Kress has identified critical weaknesses in bank merger oversight and proposed strategies to reinvigorate bank merger enforcement. Kress' work has shown that lax bank merger oversight has harmed consumers, businesses, and the broader financial system. His research has demonstrated that the prevailing approach to bank merger regulation has increased the cost and reduced the availability of consumer credit, inflated the fees that banks charge for basic financial services, limited small business credit availability, and threatened financial stability. Kress' research has pushed bank merger reform onto the policy agenda in Washington, D.C. by serving as a blueprint for legislation introduced by Senator Elizabeth Warren and inspiring an executive order on bank mergers by President Joe Biden. The Department of Justice also invited Kress to lead a joint initiative with the federal banking agencies to rewrite their bank merger policies.
With generous support from the Mitsui Life Insurance Company, Professor E. Han Kim helped to establish the Mitsui Life Financial Research Center in 1990. The center supports research in finance in a myriad of ways and functions as an active community of faculty, students, and visiting research scholars. Since its inception, the center has rapidly expanded its influence and reputation in supporting and disseminating academic research in financial economics. In 1994, a gift from Nippon Telegraph and Telephone allowed the center to offer even greater research support to Michigan Ross faculty. The center holds annual symposiums in Ann Arbor, Michigan, as well as in Tokyo, Japan, and provides research support for faculty and doctoral students through sponsoring weekly Mitsui Finance Seminars, NTT Fellowships, the Mitsui Distinguished Visiting Scholar program, weekly finance reading groups, and data acquisitions.
In the early 1990s, Professor Garry Brewer became dean of the U-M School of Natural Resources and the Environment. He approached Dean Joe White of the Michigan Business School with the concept of a dual-degree program to prepare future business leaders with an integrated education in both earth and management sciences. The concept took shape first in 1993 in the form of a graduate dual-degree program (originally called the Corporate Environmental Management Program) under the leadership of Professor Stuart Hart and then the Erb Institute after a generous grant from Fred and Barbara Erb in 1996 and a series of additional donations from other visionary donors. The dual-degree program was then incorporated into the Erb Institute and bolstered by the scholarly research of three newly endowed professorships. Nearly 30 years later, the Erb Institute has expanded dramatically to become a full-fledged, endowed institute with three chaired professors, an undergraduate Erb Fellows Program, more than 200 graduate and undergraduate students, and more than 750 alumni across 17 countries. In addition, the institute has an active agenda of scholarly and applied research and works to facilitate business engagement through business roundtables and global conference partnerships. Today, the Erb Institute is generally recognized as the leading business sustainability institute for research, teaching, and business engagement.
Following the decision of Dobbs v. Jackson Women's Health Organization by the U.S. Supreme Court, abortion restrictions within the United States have proliferated, and it is reasonable to expect that access to abortion services will be even further reduced in the future. The work of Associate Professor Sarah Miller investigates the impact of abortion denial using new linkages between data from the Turnaway Study and administrative records in credit reports. The Turnaway Study was a path-breaking study from the University of California San Francisco that recruited women seeking abortions, some of whom had pregnancies that just exceeded the gestational age limit of the clinic they attended and were denied abortions, others who fell just below this limit and were able to receive the abortion they sought. Miller and her co-authors found that women denied an abortion and those who received an abortion were on similar trajectories before the denial, but those denied an abortion experienced a large spike in financial problems such as unpaid bills and public records (such as bankruptcies and liens). This spike in financial problems persisted for the full six-year follow-up period that the authors had access to. The results provide evidence counter to the narrative that abortion is exclusively harmful to women who receive one (because of, for example, the regret they may feel after receiving an abortion). Instead, it suggests that giving women control over the timing of their reproduction allows them greater financial stability and self-sufficiency.