Are tougher rules on disclosure required in management science?

In January 2010, the American Economic Association (AEA) agreed to establish a committee “to consider the Association’s existing disclosure and other ethical standards and potential extensions to those standards.”  The move was sparked by two things.  Firstly a study by Jerry Epstein and Jessica Carrick-Hagenberth had shown that economists who speak on financial regulatory matters do not always reveal their ties to financial companies; and the authors had sent a petition, signed by over 300 economists, to the President of the AEA urging the establishment of such a review.  In addition, Charles Ferguson’s new film Inside Job had brought to more public attention the issue of economists taking public positions on regulatory matters while failing to disclose relevant commercial relationships.

The introspection currently taking place within economics on conflicts of interest and appropriate disclosure raises the question whether management science – an intellectual offspring of the dismal science – should also be seeking improve its transparency.  Specifically that in journals such as the Harvard Business Review (HBR) authors should be required to disclose any commercial relationships they have with any of the case study companies they mention.

The idea that they should first struck me when I read a 2007 HBR article called The Four Principles of Enduring Success.  The article used long term stock market performance to identify both good and bad industry comparators then sought to explain the difference between the two.  And the author drew attention to his research having been reviewed by a panel of ‘seasoned advisers’.   I felt the article was flawed in a number of ways, both in terms of how the good and bad were identified (it suffered from the fallacy of false periodicy) and in the validity of the conclusions for the differences in performance, so I did a little digging.  This revealed that two of the five-man panel had worked for one of the exemplar comparator companies – something which the author did not disclose.  Any chance of an unbiased perspective had been eliminated by the choice of panel members.

This review panel bias prompted me to think about more direct author bias in articles where selected case studies are frequently the basis for the conclusions drawn.  Business school professors often supplement their academic salaries with paid consultancy work – what better source of information for any articles they write than the companies they consult with?  Similarly employees of consultancies are also a fertile source of such pieces.  And in both cases, even if there is no relationship prior to publication, citing the company as ‘best practice’ may lead to one subsequently – flattery tends to bring its own rewards.

Of course we should recognise that such conflicts of interest are minor in comparison to economists seeking to shape the regulatory environment in ways that will improve the return on capital for industry participants (or at least minimise the negative impact of new regulations on profitability).  For the most part, positive coverage in management journals will have very limited societal impact.   There are some cases, such as Enron, where the impact was possibly very significant with repeated eulogising in articles and books on management adding to an aura that deflected deeper analysis of the true financial situation.   However these tend to be isolated incidents.

But scientific integrity is also at stake.  As Ben Goldacre, author or the Bad Science blog wrote in a recent piece: “If science has any authority, it derives from transparency.”  Can we really trust the conclusions of someone who has been paid by one of the companies he describes as providing lessons that others should learn from?  Is such a person likely to be immune from the tendency to overstate their client’s merits – a form of self-praise?  At the very least we should know such a relationship exists.  Management research has a tendency to veer towards pseudo-science for a host of reasons (which I will describe in later blog posts).  But shouldn’t we seek to eliminate the most egregious?

Personally I see there as being a distinction between articles in which consultants highlight their capabilities through examples of projects they have supported and those which purport to draw conclusions from research.  In the case of the former, claimed linkages between the approach taken and improved performance should obviously be treated with a large doses of scepticism – the cocktail of self-interest and confirmation bias being typically too heady for the authors to retain sober detachment.  In the case of the latter, scepticism is also merited, but the senses are often diverted by a description of the research undertaken and confidently asserted conclusions presaged by statements implying independence such as “my research shows”.

Ideally all business schools would demand that their professors and research staff reveal all the companies that they are working for or have worked for during the past five years.  But that is not going to happen.  A simpler route would be for journals to add a disclosure piece to every article published – whether written by consultant or academic – stating whether there has been a commercial relationship with any company cited, ideally providing some idea of both length and financial scale of that relationship.

Any such move would need to be led by HBR where citations of corporate excellence are widespread.  (Interestingly the editorial policy of Strategy, the journal of the Strategic Planning Society, is for no case studies to be included in published articles.)  Since becoming editor a little over a year ago, Adi Ignatius has instituted a number of changes.  Increasing transparency was probably not one he was looking to add to that list.  However the debate at the AEA has rendered a head-in-the-sand approach impossible – no longer can it be described and defended as an unconscious error of omission.  A decision has to be made, be it to consciously continue with the current approach or to increase transparency.

In truth it may not be an issue that vexes the majority of HBR readers.  If asked about increased transparency, many would say that of course they would like it, but many others would be indifferent, even though greater intellectual integrity is, by definition, in their interests.  The question will be whether Ignatius has the courage to prioritize these interests (even if they remain unstated) and demand disclosure or prioritize those of his contributors who, for the most part, will not be advocates of such a change.

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About Jack Springman

I am a consultant with experience in business strategy and customer strategy development, customer management and customer service transformation.