Tag: Management

A new study from the Coller School of Management at Tel Aviv University sheds light for the first time on an important issue in the business world: employees withholding their inventions from the companies they work for. Although the law and/or employment contracts typically grant organizations the rights to their employees’ inventions, invention withholding is quite common. It carries serious implications for businesses, especially in knowledge-intensive industries. The study reveals alarming data: one out of every four employees in commercial organizations has withheld an invention from their employer at least once. In many cases, this withholding is done deliberately, with the intent to use the invention after leaving the organization. The research was led by Dr. Sarit Erez, in collaboration with Prof. Yaniv Shani and Prof. Abraham Carmeli from the Coller School of Management at Tel Aviv University. The study was published in the prominent journal Academy of Management Perspectives.

Dr. Erez explains: “Commercial organizations, particularly those in knowledge-intensive industries, encourage innovation among their employees, and their success largely depends on those employees coming up with groundbreaking inventions. To protect companies’ rights to these inventions, legal systems and standard employment contracts typically grant the employer ownership of inventions made by their employees, while requiring employees to disclose any invention they have come up with at work. This allows the employer to obtain patents and protect the invention. To increase employees’ motivation to disclose their inventions, many companies implement incentive systems, offering financial grants and/or recognition, such as badges of honor, to inventors. But at the end of the day, when an employee comes up with a new invention, they are faced with a behavioral dilemma: should they fulfill their legal obligation and disclose the invention to their employer, knowing they will lose ownership, or violate their obligation and hold on to the possibility of capitalizing on their invention outside the company? Indeed, it is a common scenario to see people leave one organization and either join another in the same field or even start their own company — often to develop an invention conceived in their previous workplace”.

Video Credit: Dr. Sarit Erez.

Who Really Owns the Work You Create?

Dr. Erez continues: “These types of cases often end up in court, where an employer sues a former employee — or their new employer — alleging that they are using an invention that the employee conceived while working for them and that the patent rightfully belongs to the original employer. Having practiced law in the private sector for about 20 years, I often represented employees, employers, or employee organizations in disputes of this type. It became evident that the legal tools currently used to address this issue are not the most effective approach. I used to believe that management tools were designed to increase employees’ willingness to disclose their inventions and reduce their tendency to withhold them could be far more effective. But when I looked for academic research on this subject, I found only a handful, and even those focused mainly on the withholding of inventions in academia rather than in commercial organizations. It became clear to me that the issue of withholding inventions, which is so vital to the growth of knowledge-driven companies, had not yet been thoroughly explored in management strategy. With this study, we aimed to shed light on this important phenomenon and begin to address it from a business perspective”.

For the study, the researchers distributed an anonymous online questionnaire, asking inventors to report whether they had ever withheld one or more inventions from their employers. Participants were also requested to describe the event, including its reasons and circumstances. A total of 199 valid responses were collected. Dr. Erez details the findings: “54 participants, or 27 percent of the respondents, reported withholding at least one invention from the organization in which they worked. Of these, 28 percent explicitly stated that they did so to develop the invention themselves after leaving the organization or bringing it as a sort of ‘dowry’ to their next employer. The others cited a variety of reasons, some psychological and some financial. These included an emotional attachment and sense of ownership over the invention as a personal creation; fear that someone else would take credit; conflict with their employer; lack of trust in management; dissatisfaction with pay; and the belief that they would not be adequately compensated for an invention that would profit the organization”.

Changing the Work Culture

In the next phase, the researchers developed a unique and validated measurement scale, the first of its kind, to assess employees’ tendencies to either disclose or withhold inventions from their employers. The findings revealed that withholding or disclosing inventions are not simply opposite sides of the same behavior, but rather two fundamentally different behaviors: an employee might refrain from disclosing a certain invention for a variety of reasons (such as a heavy workload or the belief that the invention still requires development and is not ready to be disclosed). However, a deliberate and active decision to withhold an invention in order to prevent the transfer of ownership to the organization is a distinct behavior that may be influenced by completely different factors (for example, the employee’s feeling that they are poorly treated by the company regardless of the invention itself). Dr. Erez explains: “This distinction is extremely important for organizations seeking to address the problem. Actions taken by companies today, such as offering financial incentives or recognition to inventors, may encourage more disclosures to the organization. However, such measures may be less effective for employees who deliberately withhold a promising invention with the intention of using it further down the road, outside the organization”.

According to the researchers, this newly developed scale can serve as a foundation for further studies on the subject. Additionally, it can help employers build an effective innovation management strategy that minimizes the withholding of inventions within the organization.

Dr. Erez concludes: “In this study, we conducted an in-depth exploration of a widespread phenomenon that has long concerned legal professionals around the world, but so far has hardly been examined from a managerial perspective: employees in the business sector who withhold their inventions from the company that employs them. We urge researchers in academia to continue investigating this important topic, and call on employers to take notice: these behaviors exist, and it is crucial to address them. For our follow-up studies, we are developing management tools to help employers tackle the issue in all its complexity. We believe that with the right management strategies, it is possible to encourage disclosure and significantly reduce the withholding of inventions — preventing the need for legal battles down the line”.

Researchers from Tel Aviv University found that there may be a cost to the zero-price effect: statistically identical homes that were published in free service ads on the Israeli “Yad2” online classified service received fewer clicks, sold more slowly, and at a lower price than identical homes that were published in paid service ads – adding up to an average net loss of about 3.5%–3.8% of the average transaction price. This is equivalent to about $12K–$13K when the price of the paid service amounted to a total of about $70.

The surprising results were part of a study that was conducted by Prof. Danny Ben-Shahar, Director of the Alrov Institute for Real Estate Research at Tel Aviv University’s Coller School of Management and Dr. David Ash, a research associate at the institute. Its article reporting the results was recently accepted for publication in the journal Real Estate Economicsof the American Real Estate and Urban Economics Association.

Prof. Danny Ben-Shahar

“We study behavioral economics in the real estate market and, in particular, the effects of biases in decision-making,” explains Prof. Ben-Shahar. “We know for quite some time that people do not always make rational decisions, and one of the more interesting questions is whether there is a price paid for those irrational decisions. Here we examined a bias called the ‘zero-price effect’. This effect makes people overvalue products or services offered at zero price. For example, if we lower the price of a product from $2 to $1, demand may increase slightly, but if we lower its price by $1 to zero – demand will increase dramatically, which cannot be explained by a rational cost-benefit approach. We wanted to test this effect not in an experimental setting of the laboratory, but through real data of choices made in the ‘real world’ – and more importantly, to test whether there is an economic cost to this bias towards a zero price”.

Zero Price Bias: The Hidden Costs of Free in Real Estate Ads

In the first part of the study, the researchers examined commercial properties that were offered for rent on the “Yad2” online platform. In July 2019, the platform canceled the option to post ads for renting out commercial properties, and at the same time to charge more for the premium service – which both highlights the ad and displays it at the top of the search.

“This update allowed us to conduct a quasi-natural experiment, with the participation of real people who have to spend real money to rent out real properties,” says Prof. Ben-Shahar. “When the free service became fee-based and the premium service became even more expensive, we saw that a significant mass of owner, seeking to rent out their property, opted for the premium ad service – even though it became considerably more expensive. The cheaper option had lost appeal as soon as it stopped being completely free”.

Then Prof. Ben-Shahar and Dr. Ash demonstrated, for the very first time, the heavy price consumers pay for their zero-price bias. They did this by sampling over 15,000 ads of properties that private homeowners offered for sale on the “Yad2” platform, all of which are without brokerage, over the three years between 2014 and 2016.

“It’s important to realize that selling a home is the largest and most important deal in most people’s lifetime, averaging at $350K to $500K for the sellers in our sample,” says Prof. Ben-Shahar.

“’Yad2’ offers these private sellers to publish their ads in a free basic service, or in a premium service at a negligible total cost of about $70. However, about 95% of the sellers preferred the free ad service. Controlling for the difference in the characteristics of the assets, we found that the premium service increased the chance of selling the property by 10% to 18% daily, increased the number of clicks on the ad by 117% to 130%, and the clicks on the sellers’ phone number by 108% to 122%. In other words, those who paid for the premium service attained a higher demand and a faster sale. Most importantly: they sold their properties at higher prices. Statistically identical homes offered in the paid-premium service were sold for 3.5% to 3.8% higher price than homes provided in the free service, a difference of about $12K–$13K per sale”.

A new study by Tel Aviv and Ben-Gurion Universities reveals a phenomenon of “chivalrous sexism” towards women in need. According to the study, about 2 out of 3 men (62%) would be willing to help a woman in distress whose house burned down – but fewer men (45%) would donate money to a woman whose business burned down. On the other hand, when the researchers examined the willingness of men to donate to other men, the trend that emerged was the opposite – according to which most men preferred to donate to men whose business was burned thus maintaining the male hegemony.

The researchers explain the differences by the fact that men tend to help women out of ‘chivalrous sexism’: helping a ‘damsel in distress’ is part of a men’s gender role, which is why a man will open the door for a woman or pull over to help her change a flat tire. But this help depends on the context: men help women if it does not challenge the male hegemony, in other words, if their help will empower women, then men will be less willing to help them.

The new study was conducted by Prof. Danit Ein-Gar from the Coller School of Management at Tel-Aviv University in collaboration with Dr. Orli Barkat, a post-doctoral student at Princeton University, and Prof. Tahila Kogot from Ben-Gurion University. The results of the study were published in the prestigious journal Group Processes & Intergroup Relations.

“When men were asked to donate, some of them found it easier to donate to a woman in her domestic, needy, and weak place than to a woman raising funds to rebuild her business.” Prof. Danit Ein-Gar 

The Limitation of Male ’Chivalry’

According to Prof. Ein-Gar, 566 men and women from the USA participated in an online experiment. A cash prize of 10 dollars was drawn among the participants in the experiment, and the participants were asked to answer whether they would like to donate this amount to a man whose house burned down, to a woman whose house burned down, to a man whose business burned down, or to a woman whose business burned down.

Beyond the disparity in willingness to help women whose business burned down, compared to those whose house burned down, the findings also show that men donated an average amount of $4 (almost half of the winning amount) to a woman whose house burned down, compared to only $2.48 to a woman whose business house burned down.

The findings were replicated in another experiment conducted among management students at Tel Aviv University.

Prof. Danit Ein-Gar from the Coller School of Management at Tel-Aviv University

“We presented the participants with two identical requests for help from two individuals in need, a man and a woman, whose home or business caught fire,” explains Prof. Ein-Gar. “We found that the biggest differences, both in the actual willingness to donate and the donation amount, were when male subjects had to choose between helping a woman’s home and helping a woman’s business.”

“It should be noted that we did not present the fund request as a financial investment but rather as a donation: a fire raged in the area and consumed houses and shops, and now those in need are asking for help to rebuild their lives. When men were asked to donate, some of them found it easier to donate to a woman in her domestic, needy, and weak place than to a woman raising funds to rebuild her business”.

Prof. Ein-Gar explains that the new research reveals the boundaries of male ’chivalry’ – and these boundaries are set by men’s hegemony in the business world. That is, gentlemanliness reaches up to the point where it does not threaten their dominant status. A similar effect was not found when men were asked to donate to another man whose business burned down, compared to a man whose house burned down. This means that men do not donate less to businesses due to some business threat, but only donate less to women’s businesses.