Lehigh Business Magazine Fall 2023

ISSUE NO. 9, FALL 2023 Government and Business Exploring Interdependency See page 2.

Lehigh Business EDITOR Rob Gerth DESIGNERS Jacqui Baldridge Barbara Barnett CONTRIBUTING WRITERS Eric Butterman, Jack Croft‚ Rachel Curry, Jim Dearden, Rob Gerth‚ Steve Holt‚ Suzi Morales‚ Steve Neumann‚ Margie Peterson, Layla Warshaw COVER ILLUSTRATION Mirko Cresta ILLUSTRATORS Mirko Cresta‚ Joel Kimmel PHOTOGRAPHERS Sarah Barnett Christa Neu ADMINISTRATION Georgette Chapman Phillips Dean of the College of Business Lehigh Business is published annually by the Lehigh University College of Business. LEHIGH UNIVERSITY COLLEGE OF BUSINESS Rauch Business Center 621 Taylor St. Bethlehem‚ PA 18015 business.lehigh.edu READER FEEDBACK Please send comments to: lehighbusiness@lehigh.edu © Lehigh University CONTENTS COURTESY ROHULLAH BALKHI WHAT’S THIS? In this issue, you’ll see these QR codes throughout. Aim your smartphone’s camera at them and you’ll be able to access videos, podcasts or webpages specific to that article. Scan this one and take our reader survey. BIZ QUIZ Test your business knowledge with our Biz Quiz. You can win bragging rights—and Lehigh Business swag. See page 32. Dean Phillips set to retire at year’s end. A leadership style worth considering. B-ball player taking his shot. Goodbye Ambivalence Cocktails 07 18 30 25 Entrepreneur Getting his MBA during Taliban takeover. 02Mirko Cresta’s illustration celebrates the sometimes rocky hand-in-hand relationship between business (on the left) and government. ON THE COVER

FALL 2023 1 DEAN’S LETTER BUSINESS.LEHIGH.EDU CHRISTA NEU Scan the QR code to listen to Dean Chapman Phillips talk more about the Year of Learning. We devoted our cover story in this issue to this idea (starting on page 3). Faculty from each of our six departments shared their opinions while raising the conversations above the politics inherent in the topic. They talk passionately about government-business relations regarding regulations, infrastructure, supply chain, health care, energy and (of course) taxes. They point out how responsibilities for these areas have had a healthy ebb and flow through history, and how, because of this relationship, innovations are often shared for the benefit of the whole. The same fervent conversations are taking place in our classrooms, where our faculty is successfully teaching our students to pursue ideas with tolerance and critical discourse. This is how we grow the marketplace of ideas. JOIN THE DISCUSSION In spring 2024, the Year of Learning lecturer will be Richard Revesz. Currently on leave as the AnBryce Professor of Law at NYU School of Law, Revesz is the administrator of the Office of Information and Regulatory Affairs, and oversees the implementation of government-wide policies and review of draft regulations for the White House. Please join us Thursday, March 28, 2024, 4:30 p.m. Stay tuned for the location. Georgette Chapman Phillips The Kevin L. and Lisa A. Clayton Dean of the College of Business Editor’s Note: Dean Phillips is retiring after 10 years as Dean of the College of Business at the end of this academic year. Read her reflections on her time here on page 7. Building a Marketplace of Ideas One of the strongest aspects about being at Lehigh is that we are teaching our students critical thinking skills and the pursuit of ideas. We must not shy away from our responsibility to be a marketplace of ideas, enabling the exchange of thoughts, and providing a safe platform where different sides of the same discussion can be presented in a neutral manner. One of the ways we do this is through the Year of Learning. Every school year at the College of Business, we take one theme and we weave it throughout the entire curriculum, at both the undergraduate and graduate levels. The idea is that in each class the students take, they are consistently exposed to and engage in discussions with this theme embedded throughout. This year’s theme is interdependency between government and business. “Discourse and critical thinking are essential tools when it comes to securing progress in a democratic society. But in the end, unity and engaged participation are what make it happen.” —ABERJHANI, AMERICAN HISTORIAN

FALL 2023 3 “In general, I think people have this assumption that government and business are relatively independent,” says Chad Meyerhoefer, who holds the Arthur F. Searing Professorship and is chair of the department of economics at Lehigh Business. “But they’re more intertwined than is widely known.” Alberto Lamadrid, an associate professor who holds the James T. Kane Faculty Fellowship in the economics department at Lehigh Business, agrees. Lamadrid co-teaches a “Government and Society” course in the MBA program and starts the course by asking students to think of a typical day. “From the moment you wake up in the morning, until you go to work, there is so much regulation embedded in your life that you don’t realize,” Lamadrid says. “If you use an alarm clock, it no longer contains noxious metals, as was the case with previous electronics,” he says. “The language you hear on the radio is regulated by the Federal Communications Commission. The nutrition facts label on the coffee you brew and food you eat for breakfast are required by the federal Food and Drug Administration.” Lamadrid continues, “If you drive to work, the roads and bridges you travel on were funded by governments, as were the traffic lights that keep chaos at bay and govern which vehicles have the right to cross an intersection and when. The car you drive must meet certain federal safety standards. Once you arrive at work, health and safety standards that have been set by the Occupational Safety and Health Administration must be adhered to, so the workplace is safe for employees.” As ubiquitous as these moments of intertwining government and business appear in the United States, there are often complaints that government regulation stifles innovation. “In business, everybody has this initial reaction that intervention by the government is bad, because it slows business operations down,” says Steven Savino, a professor of practice in marketing at Lehigh Business. Savino worked in senior leadership positions for multiple, multinational firms during his 25 years as a professional marketer. “There’s some truth to that,” he says. “But at the same time, business and government are interdependent because businesses need government action for a number of things that complement the organization’s go-to-market plans.” Infrastructure, for one, Savino says. Also, business needs the government, “to make sure there are fair practices across whatever industry we’re competing in. That way, companies within our industry don’t cheat.” Government also has the responsibility to set regulations that protect health and safety, he adds. On the other side, the govern- ment needs business, “for job creation and to stimulate economic activity,” says Savino. “The more economic activity you stimulate, you create greater wealth, and the more wealth you create, the more you solidify a viable, robust middle class.” Here are just a few areas and approaches that help illustrate the countless ways that government and business can forge successful partnerships that are not only mutually beneficial, but also contribute to the greater good of society. Government Regulation As a former deputy chief economist at the Securities and Exchange Commission (SEC) and, prior to that, senior economist at the Board of Governors of the Federal Reserve System, Kathleen Hanley has a deep understanding of government regulation. “I don’t think that every government regulator is an expert in the business that they’re trying to regulate, so information needs to flow in both Illustrations by MIRKO CRESTA Story by JACK CROFT Interdependency Between Government and Business Whether it’s trains, planes and automobiles; telecommunications; banks and the stock market; health care; clean air; education; energy, water and wastewater; beauty parlors and barbershops; or restaurants—it’s hard to think of a business that is not somehow linked to federal, state and/or local government through oversight, regulation, taxation or public-private partnerships.

4 LEHIGH BUSINESS MAGAZINE directions,” says Hanley, who holds the Bolton-Perella Endowed Chair in finance and serves as director of the college’s Center for Financial Services. “The government should not have unilateral ability to impose potentially costly and burdensome regulations on firms without firms having input into the impact it may have on their businesses.” That input comes through the legally mandated comment period for all regulations, during which all interested parties can make their views known. “By law, regulators must respond to comments that are material in the final rule. Businesses spend a lot of money for attorneys and lobbyists to write comment letters highlighting things about the regulation they approve of or think are deficient.” The comment process might continue for months or even years for large rulemakings, Hanley says. “At the end of the day, if firms disagree enough with the provisions of the rule, they may seek relief through the court system.” Sometimes the SEC wins. Hanley recalls, “I worked on a rule in which my cost benefit analysis bulletproofed the SEC and they won. But, I’ve seen it the other way, too, where rules have been contested in court and the SEC has lost in a big way.” The complex issues surrounding artificial intelligence illustrate the need for government and technology companies to work together on developing regulations, says Andrew Ward, professor who holds the Charlot and Dennis E. Singleton ’66 Chair and is chair of the management department at Lehigh Business. “You can’t really expect members of Congress to have this deep understanding of AI and what it can do,” Ward says. “How should they even go about regulating AI?” Leading companies in the development of AI, including OpenAI, Microsoft and Google, agree that regulation is necessary because of the potential dangers AI poses. AI can be used for harmful and nefarious purposes. “Regarding AI, there needs to be much more cooperation between government and business to help define that regulation,” Ward says. “Even allowing companies to influence the regulation that could affect their business. “With self-regulation, companies can help the political arena better understand the issues, challenges and dangers of AI.” Infrastructure & Supply Chain When an elevated section of I-95 in Philadelphia collapsed on June 11, 2023, after a fiery crash involving a tractor-trailer hauling gasoline, it temporarily severed a main artery in the nation’s supply chain. Nine million trucks, carrying $195 billion in freight, travel on I-95 (the country’s busiest interstate) each year. In only 12 days, the interstate was repaired and reopened, thanks to an extraordinary public-private effort that involved federal and state governments, a local private company that developed an innovative foamed glass aggregate used as backfill, other private contractors and skilled union labor. “Neither the government nor private industry could have done this alone. They had to work together,” says Georgette Chapman Phillips, the Kevin L. and Lisa A. Clayton Dean of College of Business at Lehigh. It was estimated that the detour around the collapsed section added at least 45 minutes to an hour—and often even longer delays—for trucks hauling goods, reports Zach Zacharia, an associate professor of supply chain management, interim chair of the decision and technology analytics department and director of the Center for Supply Chain Research at Lehigh.

BUSINESS.LEHIGH.EDU FALL 2023 5 “The more time you take to get somewhere, the more someone’s going to have to pay because there’s more fuel utilized (and wasted) while you’re just sitting there,” Zacharia says. “These additional costs eventually are paid for by the consumer.” In the Lehigh Business Supply Chain Risk Management Index—a quarterly report compiled by the Center for Supply Chain Research and the Council of Supply Chain Management Professionals—one of the 10 risk factors measured is “Government Intervention.” Among the main factors supply chain professionals are concerned about, since the index was launched in 2020, are new regulations, tariffs, trade wars, government restrictions on source materials, source technologies, and Russia’s war on Ukraine, among others. “Actually, government intervention risk over almost three years has been relatively low,” Zacharia says. “That metric has been in the low 70s, while some of our highest risks went all the way up to 90.” Health Care If you want to know why government and business are so interdependent in the health care field, follow the money. “If we examine funding for health care, it has come increasingly from the public sector, but the provision of health care and insurance plans themselves are increasingly from the private sector,” Meyerhoefer says. “The reason why health care has become so intertwined with the government is just because the funds that pay for health care have shifted more toward public sources.” Between Medicaid, the Affordable Care Act (ACA) and Medicare, greater numbers of children, adults and older Americans depend on some form of government funding for their health care. Medicaid expansion programs are covering more poor children than in the past. “Depending on the state, on average, these programs are covering kids up to 300% of the poverty line,” Meyerhoefer says. “That’s quite a few children. In the past, those children were either uninsured or they were insured through their parents—private sector plans that were limited in scope.” The health exchanges established under the ACA for people who are independently employed, or who can’t get health coverage through their employer, offer a different example of the intertwining of government and business in health care. “In this instance, a private company provides the insurance plan, but the insurance coverage is managed through a government exchange,” Meyerhoefer says. “The government establishes the health insurance marketplace, regulates the market and manages how those plans are offered to consumers. The private companies actually sell the insurance plans to consumers. It’s a public-private partnership.” Medicare Part C is known as a Medicare Advantage Plan. The plans are offered by private companies that have been approved by Medicare and, according to the U.S. Department of Health and Human Services

6 LEHIGH BUSINESS MAGAZINE (HHS), “may offer extra coverage, such as vision, hearing, dental, and/ or health and wellness programs. Most include Medicare prescription drug coverage (Part D). So, Medicare Part C and D involve buying plans from private companies.” Meyerhoefer further explains, “One of the main advantages of having private insurance companies design and administer multiple plans is choice. Instead of there being one government plan, where everybody is under the same plan, with the same amount of coverage for the same drugs at the same level, private insurance companies can offer multiple plans to consumers, by segmenting the market and giving different sectors of consumers plans that are more attractive to them.” However, older Americans, “have a hard time comparing the plans and digesting all the information,” Meyerhoefer explains. “Sometimes, choice can be bad if you need a consultant to explain all these different options to you. So that choice does have a cost, but theoretically, choice is the benefit.” Meyerhoefer says the bottom line is, “everything is connected in health care; it’s not an unfettered private market. The government’s actions have a ripple effect in the private insurance market and vice versa.” Energy Throughout the Great Depression and leading into World War II, building electricity generation plants to power U.S. growth and production on a large scale was primarily the province of the federal government. During this period of American industry, two marvels, the Hoover Dam and the Grand Coulee Dam, were built. “Nowadays, a lot of our country’s infrastructure is actually managed by businesses,” Lamadrid says, “not by the government, like it was initially. Over the last 60 years, we’ve seen a lot of restructuring, so generation plants, for example, are now managed by private entities. However, the government still plays a role in regulating them.” Just as the government invested huge sums in hydroelectricity in the 1930s, it continues to be a key early investor in alternative energy sources, Lamadrid says. “In certain cases, past subsidies can actually bear fruit much later in the process,” he says. Lamadrid cites two examples. The first involves the U.S. Department of Energy’s investment in efforts to figure out how to extract natural gas from shale rock formations starting in 1978. “For a long time, we knew that there was gas in the shale formations,” he says, “but we didn’t know how to start extracting it in an economical manner. For around 15 years, the federal government was subsidizing the investigation into natural gas extraction.” By the early 1990s, Lamadrid says, the government abandoned these efforts. Private entrepreneurs, however, stepped in and eventually found economical ways to extract natural gas. “Eventually, the effect the shale gas revolution had in decarbonizing the electricity system, can’t be overstated,” he said. “Right now, natural gas produces approximately one quarter of the emissions as coal. Because of that shift, we have made our electricity system much cleaner.” The same thing is happening with renewable energy, Lamadrid says. “There have been a number of subsidies for many years now that help to develop technologies—wind turbine technology, photovoltaic technology. During the last decade, we have seen the cost of solar panels dramatically reduced, almost 20-fold in certain cases. Because of that, companies are going solar, not because they have the subsidies, but because it’s the cheapest thing to do.” Capstone Steven Savino teaches a capstone course in the masters in management program that involves students working on projects with leading iconic companies. One of those companies is Pratt & Whitney, an aerospace manufacturer with extensive government defense contracts that make up their global operations. “There are plenty of examples of the amount of time, money and effort toward innovations that benefit the government— with Pratt & Whitney our Army, Navy and Air Force. These technological innovations, in this case with stateof-the-art jet engines, often translate to the consumer sector,” Savino says. “The partnership between government and industry eventually finds its way, whatever the innovation is, into consumer markets, benefiting everyday consumers with breakthrough new products.” YOUR FAIR SHARE OF TAXES? Bob Duquette, a teaching full professor in accounting at Lehigh Business, who previously worked as a director of mergers and acquisitions, understands why most people will never agree on what their “fair share of taxes” is. “Either with respect to what you as an individual pay the federal government or what a business pays the federal government or what you or a business pays the state or local government, there is some overlap in tax paying, but there are also different levels of service for individuals and businesses. The laws and rates frequently change. “You have this confusing world where the government requests you pay what they call your fair share of taxes that you owe. And there’s little explanation as to how the government came up with the “fair share” amounts. Duquette adds that few taxpayers understand what their tax dollars are actually paying for. Public schools, public safety (police, fire, emergency services), public health (protecting and improving the health of people and their communities) and health care (Medicare and Medicaid), infrastructure, public transportation, national defense, air safety, disaster relief—the list goes on and on. “I don’t think most Americans fully understand or appreciate all of the services we have come to expect,” he says.

NEWS LEHIGH BUSINESS FALL 2023 7 CHRISTA NEU Looking Back Georgette Chapman Phillips Dean, College of Business This past summer, Georgette Chapman Phillips announced her retirement effective June 30, 2024, after serving 10 years as the Kevin L. and Lisa A. Clayton Dean of the College of Business. Phillips is a professor in both the Perella Department of Finance at Lehigh Business and in the Africana studies program in the College of Arts and Sciences. She holds a Juris Doctor degree from Harvard Law School. Previously, Phillips was a vice dean of The Wharton School of the University of Pennsylvania. The following are some of her reflections on her time at Lehigh Business. BUSINESS.LEHIGH.EDU

CHRISTA NEU 8 LEHIGH BUSINESS MAGAZINE LEHIGH BUSINESS NEWS I KNOW FIRSTHAND HOW EDUCATION CAN CHANGE YOUR LIFE. My grandparents had a high school education, my parents have college degrees. I am fortunate to have a graduate degree. Each generation in my family went further in their education than the previous. Education may put you on a trajectory you might not even be aware of. I decided I would have the biggest impact on the greatest number of people by going into administration. I LOVE BEING DEAN. The role gives me a discreet yet powerful set of variables to work with. Although I had a joint appointment in both law and business at Penn, I gravitated toward business as I’ve seen how impactful business education can be, at the undergraduate, masters and executive education levels in making a difference in your life and career. I HOPE THAT I’VE MADE A DIFFERENCE. Recently, a young woman walked up to me and said, “Thank you for being dean.” I said, “You’re welcome!” She continued, “It means a lot to me to see a woman in the position of dean of the business school. It sets an example.” You know the saying, “If you see it, you can be it.” LEHIGH WAS A PERFECT FIT FOR ME BECAUSE THE INSTITUTION HAD, AS WE SAY IN REAL ESTATE, “GOOD BONES.” There were many opportunities for me, but some places were just so big and so totally entrenched in their standard operations that you couldn’t move them; they didn’t have the wherewithal to affect change. I could see that there was capacity and appetite for change at Lehigh. The hiring team was very clear with me that the goal was to move Lehigh upward, into the next echelon of business schools. I was chosen to raise the stature, visibility and prestige of the College of Business. My work here at Lehigh has been an eventful, sometimes challenging, ride. Looking back, it’s clear we’ve made great strides towards achieving our goal. THE BIGGEST, MOST DAUNTING CHANGE IS MODALITY, assessing online versus on-campus graduate programs. There is room for both in-person and remote MBA and MS. The key is to determine the optimal balance. Prior to the massive market shift to online MBA, our FLEX MBA was modality agnostic— you could be in the classroom or live online. This was a point of distinction in the part-time MBA world. Now that online is ubiquitous for part-time programs, we need to successfully pivot and find a way to regain distinctiveness. WHEN WE TALK ABOUT SUCCESS, I LIKE TO TALK ABOUT PEOPLE, PROGRAMS AND PLACES. PEOPLE—our faculty and staff are amazing. Our research profile has exploded in both prestige and visibility. PROGRAMS—I am proud of the changes that we’ve made in the undergraduate, part-time MBA and our 1-MBA programs that are setting our students up for success 2014 | Official university photo from first year as dean.

FALL 2023 9 BUSINESS.LEHIGH.EDU HIGHLIGHTS DURING DEAN PHILLIPS’ TENURE Expanded Faculty • Grew full-time faculty from 79 to 97. Revised Undergraduate Curriculum • Added communications, leadership, data analytics and coding skills into the undergraduate core curriculum. Fostered Entrepreneurship Offerings • Began Startup Academy jointly with Lehigh@ NasdaqCenter, giving students fully funded internships with startups in Silicon Valley. With Baker Institute, created Lehigh Ventures Lab for student, faculty and alumni founders. Established Vistex Institute for Executive Education • Launched an executive education program with a transformational gift from Sanjay Shah ’89 MBA of Vistex, Inc. Prioritized Data Analytics • Created a DATA department, with a major in business analytics (both undergrad and MBA), certificates in data analytics and international business as well as a minor in fintech. Expanded Graduate Programs • Started the one-year MBA, masters in man- agement and business analytics programs, overhauled the FLEX MBA curriculum as well as initiated a joint MBA/MPH with the College of Health. Focused on Research • Founded the Center for Financial Services and the Center for Digital Marketing Strategy and Analytics. Reimagined and revived the Center for Supply Chain Research and launched the Lehigh Business Supply Chain Risk Management Index. Grew the Goodman Center for Real Estate. Engaged in Social Impact • Began summer programs to attract minority high school students to Lehigh. Won Inspiring Program in Business Award from Insight Into Diversity magazine. Added to Lehigh Business Footprint • The 74,000 sq.ft. Business Innovation Building with flexible classrooms and collaborative spaces was constructed. beyond their first post-degree jobs. PLACES—the Business Innovation Building is the capstone for all our hard work these last 10 years. LEHIGH BUSINESS IS A BUSINESS SCHOOL THAT IS COMMITTED TO RESEARCH AND ATTENTIVE TO TEACHING. There are some academic institutions where students are seen as distractions. At other institutions, research is not the driving force of faculty excellence. I am proud that Lehigh Business shatters both stereotypes. We combine world class research with care for the student experience. We are indeed special. I OFTEN SAY THAT CLIMBING MOUNT KILIMANJARO WAS THE HARDEST PHYSICAL ENDEAVOR I'VE EVER DONE. Building the Business Innovations Building was the hardest professional achievement I’ve had—and COVID didn't help. I BELIEVE THAT EVERY INSTITUTION NEEDS NEW BLOOD. I brought in fresh ideas for the first five years and spent the next five years implementing those ideas. It’s time for a new perspective, new eyes. I am proud to say I am leaving Lehigh Business in a better place than when I started. That’s what every leader hopes to achieve. AS TOLD TO ROB GERTH. 2014 | Founders Day with then Provost Pat Farrell and students. 2017 | Donuts with the Dean.

10 LEHIGH BUSINESS MAGAZINE LEHIGH BUSINESS NEWS Celebrating Startup Academy This past summer Lehigh Business Startup Academy turned six years old. Startup Academy is a 10-week summer experiential learning opportunity during which students travel to the San Francisco Bay Area, are paired with startup companies in the Nasdaq Entrepreneurial Center Mile Makers Program and learn hands-on what it is to be an entrepreneur. “We believe that entrepreneurship is a pathway to success for all students, regardless of background, discipline or career path,” says Samantha Dewalt, managing director of Lehigh@ NasdaqCenter, “and we’ve had a blast doing this work in partnership with the Nasdaq Entrepreneurial Center.” “This partnership has always been about making action happen in a very short, succinct and incredible way, so students and founders move forward in building their businesses and careers,” says Nicola Corzine, executive director of the Nasdaq Entrepreneurial Center. Listen to the podcast now. SBDC Receives $375K Grant to Allow Equitable Access to Entrepreneurs The Lehigh University Small Business Development Center is launching a new program dedicated to shaping a more inclusive and vibrant entrepreneurial landscape. The Lehigh Valley Equitable Entrepreneurship Project (LVEEP) is an endeavor that aims to champion equitable futures, empower entrepreneurs and expand access to opportunities for all. This program is made possible by a $375,000 grant from the U.S. Economic Development Administration’s University Center initiative. “The LVEEP is a response to the unique challenges faced by historically underserved entrepreneurs,” says Brett Smith, director of Lehigh’s Small Business Development Center. “By promoting local sourcing, supplier diversity and equitable access to capital, LVEEP is redefining business norms to foster a diverse and resilient economy.” Through events, engagement and the leveraging of local resources, LVEEP seeks to uphold their mission to boost entrepreneurs from all backgrounds and ensure a level playing field, according to Smith. “As LVEEP takes its first steps,” says Smith, “we envision a future where entrepreneurship transcends barriers, empowers individuals from all backgrounds and drives the growth of the Lehigh Valley.” HGA / ANTON GRASSL

FALL 2023 11 BUSINESS.LEHIGH.EDU LEHIGH BUSINESS RANKINGS Undergraduate • # 27 Undergraduate Business Schools (2023 Poets&Quants) FLEX MBA • Top 15 Online MBA (2023 Poets&Quants) • Top 35 Best Online MBA (2023 U.S. News & World Report) • Top 50 Best Part-Time MBA Program (2023 U.S. News & World Report) 1-MBA • #5 Salary-to-Debt Ratio (2023 U.S. News & World Report) • Top 60 Global MBA Program for U.S. Schools (2023 QS World University Rankings) MS in Financial Engineering • Top 25 Best Master’s of Financial Engineering Programs (2023 TFE Times) 1-MBA RANKS IN TOP 5 NATIONALLY U.S. News & World Report has identified Lehigh University’s 1-MBA program as ranking 5th in the United States in salary- to-debt ratio. The publication recently evaluated MBA programs by the highest return on investment by examining starting salary-to-debt ratio from its 2023-2024 Best Business Schools (MBA) ranking. “We have fervently communicated the long-term value an MBA program has over one’s career, but for many prospective MBA students, the short-term return on investment is top of mind,” says Kevin Ezzell, senior director graduate recruitment and admissions. “This is an excellent example of how a top 100 MBA program like the Lehigh Business 1-MBA sees top five outcomes when examining post-MBA starting salary to incurred debt.” Behavioral Science Lab Opens 1,000+ students per semester expected to take part. The Business Innovation Building has a new state-of-the-art research laboratory dedicated to the scientific study of human decision-making, judgment and behavior. The Behavioral Science Lab will serve faculty from every department in the College of Business. When fully operational, 1,000+ students will participate in a diverse array of research studies each semester. These investigations will span many disciplines, from applying game theory in economics to examining psychology in consumer decision-making or organizational behavior. The lab has 25 individual stations, three private rooms for focus groups and interviews and an observation room with a one-way mirror where, for instance, a mock store aisle could be constructed. The lab will serve as a dynamic hub for cutting-edge, interdisciplinary research. Becoming Comfortable in the Uncomfortable Gruhn lecture series features CMO Lorraine Barber-Miller ’96. Lorraine Barber-Miller ‘96, executive vice president and chief marketing & e-commerce officer at Philips, shared her career journey at the 2023 Donald M. Gruhn '49 Distinguished Finance Speaker Series at Zoellner Arts Center this past October. Barber-Miller was interviewed on stage by Professor Andrew Ward, management department chair, about lessons she’s learned along the way and the impact of her Lehigh Business education in marketing. Barber-Miller spent 21 years at IBM before moving to ADP. She was hired at Philips in February of 2020 to change the focus of the organization and to make it more data driven. A task made more challenging in the face of a worldwide pandemic, she says. Early in her time at IBM Barber-Miller says she volunteered to go abroad. “It taught me to be comfortable in the uncomfortable,” she remembers. “Learning to do things I’d never done before. I developed a learning agility and curiosity.” When asked about the role of AI in marketing, Barber-Miller stresses being prepared to leverage it, but says, “it will not replace our work” of creating the deeper relationships marketers strive for. She gives credit for her successes to her education. “Lehigh taught me critical thinking, resilience, perseverance, determination and hard work,” Barber-Miller says. “It also taught me multidisciplinary collaboration.” Barber-Miller urges the students in the audience to look for career paths that give them exposure to learning opportunities and to seek out organizations that will invest in their development. “Your career is a marathon, not a sprint,” she explains. “You want to have longevity and you want to be marketable.” Watch the Gruhn lecture.

LEHIGH BUSINESS NEWS 12 LEHIGH BUSINESS MAGAZINE CHRISTA NEU Senior Staff Updates Naomi B. Rothman is the new associate dean, undergraduate programs. Rothman, an associate professor of management, holds the Scott Hartz ’68 Term Professorship and is a leading expert in the study of ambivalence. She’s been at Lehigh Business since 2011. Xiaosong (David) Peng, is the new associate dean, graduate programs. Peng is a professor in the decision and technology analytics department and holds the Dean’s Chair Professorship. Much of Peng’s research examines how technology enables strategy and processes in manufacturing and service operations. Kofi Arhin assistant professor, DATA Mary Kate Dodgson associate professor, accounting Andrew Olenski assistant professor, economics Stephanie Prevost professor of practice of law, finance Laura Smarandescu teaching associate professor, marketing Yaqin Sun teaching assistant professor, DATA Natalya Vinokurova associate professor, management Katrina Zalatan teaching full professor, management Jacob Zureich assistant professor, accounting 9 NEW FACULTY JOIN THE COLLEGE OF BUSINESS Top 50 Business School Professor: Ludovica Cesareo Ludovica Cesareo, assistant professor of marketing, was named one of the Top 50 Best Undergraduate Business School Professors by Poets&Quants for 2022. “In 11th grade, my teacher asked me to learn the inverse functions of trigonometry and teach a class about it,” says Cesareo. “It was my first time standing in front of students. I remember the rush of adrenaline and excitement I felt. That set me on my teaching path.” Her latest research, accepted by the Journal of the Academy of Marketing Science, looks at why distinctively ugly luxury products are successfully being sold. Learn more about Ludovica Cesareo.

RESEARCH LEHIGH FACULTY The first rule of nudging is that you do not talk about nudging. Just kidding. Rule #1 is that the nudge has to be voluntary, not compulsory. And Rule #2 is that offering incentives to change behavior doesn’t count. “It’s not really a nudge when you are paying someone to change behavior,” says Saif Mir, assistant professor of decision and technology analytics, whose research focuses on behavioral supply chain management. “When we talk about nudging in the academic context, it basically means an initiative or a push to persuade an individual to change behavior, hopefully in our particular preferred direction,” Mir says. (Like when hotels try to get you to reuse your towels by telling you how it helps the environment.) Can Nudging Drivers Help Reduce Truck Idling? Like Fight Club, nudging has certain inviolable rules. BY JACK CROFT BUSINESS.LEHIGH.EDU FALL 2023 13 SHUTTERSTOCK / ARTIOM PHOTO DATA

14 LEHIGH BUSINESS MAGAZINE Mir worked with colleagues Stephanie Eckerd of the University of Tennessee, John Aloysius of the University of Arkansas, and Alex Scott of the University of Tennessee to test whether trucking companies can use message-based nudges to motivate their drivers to voluntarily reduce truck idling. “By studying nudges in an organizational setting, my hope was to see if these small messages employed by an organization or management could be powerful enough to change employee behavior,” Mir says. The trucking industry is a critical part of the supply chain and the economy in the United States. In 2022, the American Trucking Associations reported 72.6 percent of the nation’s freight was moved by trucks, and the industry employed more than 3.5 million truck drivers. Truck idling is currently a necessity for the well-being of most long-haul drivers, who sleep in their trucks, Mir says. That requires the trucks to be running—and burning fuel—for air conditioning in the summer and heat in the winter. Idling takes a social, environmental and economic toll, known as the Triple Bottom Line. (See graphic.) There are alternative ways to provide heating and cooling, including auxiliary power units (APUs) and battery-powered heating and air conditioning. But each of those alternatives cost up to $8,000 per truck. The researchers found a public company with more than 1,200 trucks that agreed to work with them. The 26-week study included 600 trucks: 100 served as the control group in which drivers did not receive any messages. The other 500 trucks were split into five groups of 100 each—each group receiving a different message. For the first 13 weeks, no messages were sent as data regarding truck idling was collected from each truck. For the next 13 weeks, drivers received messages aimed at different social and personal norms encouraging them to reduce idling for their benefit and the benefit to society. Data was collected weekly to see what kind of effect, if any, the messaging had on truck idling. At first glance, the messaging didn’t seem to have any impact. But when diving into the data, researchers found that messaging that targeted social norms relating to the environment, which Mir describes as “general beliefs about how somebody should behave in a group or society,” did have an effect for the first four weeks. But it didn’t last. “The truck drivers receiving the messaging about environmental benefits reduced idling compared to the control group, but then gradually they reverted back to their old behavior as they received the same message over and over again,” Mir says. “After the first few times, efficiency was lost. We learned organizations have to leverage messaging for short duration projects.” In those industries that employ temporary workers, like agriculture or warehousing, where it’s not necessarily the same workers seeing the messages repeatedly, “it’s more likely that nudging can be effective,” Mir says. FACULTY RESEARCH WHY IT MATTERS: “People are concerned about how they are perceived in a society,” Mir says. If you want to nudge your employees to change behavior, try tapping into that with your messaging by drawing on notions of what most people approve of or what most people actually do. ISTOCK / ANTTOHOHO IDLING IMPACTS TRIPLE BOTTOM LINE* * Elkington 1998, 2014 Environmental Protection Agency (EPA) report ECONOMIC ENVIRONMENTAL CO2 SOCIAL

ISTOCK / MUSHAKESA FALL 2023 15 BUSINESS.LEHIGH.EDU Environmental, social and corporate governance make up a set of factors that socially conscious investors use to select investments. Proponents of ESG believe it helps a company serve all stakeholders—workers, communities, customers, shareholders and the environment. ESG is a big part of Assistant Professor Bright AsanteAppiah’s research at Lehigh, and he and Professor Tamara Lambert, both from the accounting department, have compiled new research on the “S” component of ESG that is currently in peer review. “The focus is shifting from environmental issues to the social issues of ESG,” Asante-Appiah says, “and this is, in part, driven by the ongoing debate in America about wage stagnation despite sustained economic growth.” The researchers hope their work will help close this gap between economic growth and stagnating employee wages by focusing on company value. A company’s value directly affects the company’s attractiveness to investors, lending banks and potential acquirers. The professors’ latest research report, “Pay Fairness, Firm Value, and the Role of Managerial Shorttermism,” shows a positive association between employee pay fairness and a company’s long-term value. Previous studies have investigated this link by examining the closeness of CEO pay to average worker pay as a proxy. But Asante-Appiah notes that surveys have shown that most employees don’t even know what their CEO makes, and a majority of those who do, don’t care. The researchers used a different theory called “Efficiency Wage Theory,” which is the idea that employers who pay higher wages are more likely to retain skilled workers, increase productivity and ensure loyalty—all of which is supposed to lead to increased company value. “Our main contribution is that we develop a measure of pay fairness that is based on equity-based justice as opposed to parity-based measures—for example, comparing employee pay to CEO pay,” Asante-Appiah explains. “Based on our theory, we demonstrate a link between paying employees more fairly and long-term value of the firm,” AsanteAppiah adds. Under current accounting standards, employee compensation is recorded as an expense. When companies are under pressure to meet earnings targets that increase shareholder value in the short-term, employee compensation is one of the first expenses to get slashed. In the research literature, this is called “managerial short- termism”—sacrificing future value for short-term profits. The researchers show a negative association between paying employees more fairly and three factors related to managerial short-termism. One is transient institutional ownership, which is when institutional investors wait for a company’s stock price to go up a little bit and then sell their holding. Another factor is industry homogeneity—it’s easy to replace one CEO with another. Finally, the researchers show a positive association between paying employees more fairly and the CEO having a contractual protection from being fired at will, which should reduce managerial short-termism. They found that the majority of CEOs in America do not have written explicit employment contracts, which means that they can be fired at the will of the board of directors. For those who did have explicit contracts, however, they found that the CEOs paid their employees more fairly. “But these contracts are entirely at the discretion of the board of directors, because they have been empowered by Congress, through the Sarbanes-Oxley Act, to be the ones responsible for determining the contractual relationship with the CEO,” AsanteAppiah explains. “We’re convinced that less pay fairness in America is driven by this managerial short-termism because we found evidence based on all three measures we used to test for it,” Asante-Appiah says. WHY IT MATTERS: The researchers acknowledge that closing the gap between employee pay and economic growth is an uphill battle. “We hope lawmakers, policymakers and other practitioners look at our research and make equitable policies out of it,” AsanteAppiah says. How Pay Fairness Affects Company Value Bright Asante-Appiah is using a new metric that shows positive associations. BY STEVE NEUMANN Scan the QR code to explore more Lehigh Business faculty research published in top-tier journals. ACCOUNTING

16 LEHIGH BUSINESS MAGAZINE Inflation is not a distance, it’s a speed,” according to Fabio Gómez-Rodríguez, assistant professor of economics at Lehigh Business. “Prices are rising; the problem is when they do ‘too fast.’ And consequently, when we anticipate inflation going up, it’s motivating us to spend our money right away before it loses value.” “Don’t get me wrong,” Gómez-Rodríguez says, “inflation is not inherently bad. Businesses expand when people spend their money, generating jobs and higher wages. A little inflation is necessary for a healthy economy.” The trick is keeping inflation steady, according to Gómez-Rodríguez. The key, he adds, is to manage inflation expectations, which is essentially what people expect inflation to be next week, next year or even the next five to ten years. Inflation expectations are measured from surveys of consumers and professional forecasters, as well as the interpretation of investment decisions made throughout the market. “The amazing thing is, whatever this collective thinks is going to happen ends up happening,” says Gómez-Rodríguez. “If we expect high inflation, inflation will rise. If we anticipate low inflation, inflation will decrease.” Inflation expectations are crucial for guiding policy decisions, shaping the economy, and maintaining macroeconomic stability, according to Gómez-Rodríguez. Accurate and well-anchored expectations help foster economic growth, investment and stable prices. “That’s why the Federal Reserve, or any central bank, will pay more attention to what’s happening with inflation ex- pectations, trying to keep it not too high, not too low,” says Gómez-Rodríguez. (The Fed’s inflation target has held at 2% since 2012.) “As long as inflation expectations are controlled, we can control inflation,” he says. “Inflation expectation is the focus of my research,” says Gómez-Rodríguez. “It turns out people tend to disagree on inflation expectations.” Gómez-Rodríguez’s research proposes studying inflation expectations from diverse perspectives instead of merely averaging everyone’s expectations. He says inflation expectations are heterogeneous. Using statistics, econometrics, extensive survey data, machine learning, and computer codes to analyze the multiple inflation expectations of people, GómezRodríguez says he has begun to answer how decisions by the Federal Reserve or the government affect the diversity of inflation expectations. “For instance,” says GómezRodríguez, “we’ve learned that low or negative inflation expectations become more common, and moderate inflation expectations become less common due to an unexpected increase in interest rates.” He also discovered that a personal income tax hike doesn’t affect inflation expectations for the following twelve months, but rather affects inflation expectations for five to ten years ahead. Moreover, the government’s decision to increase expenditure causes inflation expectations that are higher than 10% to grow. “It’s pretty revealing that non-monetary policy affects inflation expectations all because of the federal funds rate,” says Gómez-Rodríguez. Gómez-Rodríguez has also studied another scenario: What happens when the price of gasoline increases? Unsur- prisingly, both one-year and medium- run inflation expectations rise. It’s interesting, he says, because there’s increasing disagreement on how this affects inflation in the medium term— five to ten years. FACULTY RESEARCH What’s the Inflation Expectation? Fabio Gómez-Rodríguez explains that believing is seeing. BY ROB GERTH WHY IT MATTERS: Future research could allow us to accurately predict inflation using inflation expectations and better understand the relationship between different inflation expectations and the economy. “ ECONOMICS ISTOCK / VECTORMINE

When mutual fund managers are picking stocks for investment portfolios, they typically look at company fundamentals to predict a stock’s trajectory. But does factoring in corporate events—such as earnings announcements and mergers and acquisitions—aid in choosing stocks to improve a fund’s performance? That was the question a team of researchers, including Ke Shen, Lehigh assistant professor of finance, sought to answer when looking at the value of mutual fund investments in information-intense stocks—those in which earnings announcements or other corporate events will cause the stock price to jump. Entitled “Information Intensity and Mutual Fund Performance,” the study was a collaboration between Shen and researchers from Washington State University, University of Maryland and University of Iowa. “Mutual fund managers will monitor corporate events and they will place their position before those events are likely to happen,” Shen said. “So, they are the ones betting on those information- intense stocks.” He cited reports about electric vehicles as an example of how managers mine news sources for nuggets on information-intense stocks. “Lately, electric vehicles are a hot topic,” Shen said. “The last couple of days I read news reports about how a lot of EV manufacturers started leveraging Tesla’s Supercharger network. Then, people started saying there would be extra revenue—profit—from the Tesla Supercharger network. Right there, you have a boost to Tesla’s share price. “Our study basically found that mutual funds that invest in a lot of information-intense stocks tend to perform better in the future, especially after controlling for their past performance,” Shen said. “This information-intensity is basically an additional predictor for mutual fund investors to keep those mutual funds that possibly will perform better in the future.” Skill matters when mutual fund managers invest in information-intense stocks, Shen said. Using additional information on corporate events can contribute to higher returns but not for unskilled fund managers, the study found. Some investment managers use “channel checking” to help predict stock prices. For example, the Taiwanese company FoxConn is a major assembler of Apple products sold in the U.S. Fund managers will look at FoxConn’s activities to predict Apple sales. “They can get a sense of how many iPhones FoxConn will assemble for Apple and then they can predict how many iPhones Apple will sell,” Shen said. “Channel checking can be costly, though, if you have to hire people to do it.” Shen pointed to Warren Buffett and other value investors who dig into a company’s fundamentals, such as their quarterly or annual filings, to identify stocks that are priced low compared to their intrinsic worth. “So, that’s one way to identify investment opportunities,” says Shen. Those methods have merit, but Shen and his research team hope their findings help people pick skilled mutual fund managers who know how to use information-intensity to find stocks that are underpriced compared to their earnings. “We basically want to pitch this information-intensity measure as an additional predictor for investors to choose a mutual fund,” he said. “So, in addition to looking at past performance, you can also review the information-intensity of the mutual fund portfolio and use this additional signal to choose mutual funds to invest in.” SHUTTERSTOCK / EAMESBOT Information-Intensity and Mutual Fund Performance Ke Shen has another measure when you’re evaluating funds. BY MARGIE PETERSON WHY IT MATTERS: Investors should consider their fund manager’s interest in and ability to correctly interpret information-intense stocks to get a larger return on their investments. FALL 2023 17 BUSINESS.LEHIGH.EDU FINANCE