High Status Firms and Corporate Illegality

I and Rekha recently published an article in the Academy of Management Journal (Krishnan and Kozhikode, 2015). This article was mentioned in today's Globe and Mail. Here is an excerpt from it.

"The research posits that the sense of security enjoyed by elite organizations has been greatly overestimated. Many are so eager to maintain their reputations that they will engage in deviant behaviours – even acts of illegality – out of fear that they may not be able to meet the expectations of associates and shareholders."

The Globe and Mail piece can be found here...

http://www.theglobeandmail.com/report-on-business/careers/business-education/why-some-elite-companies-cheat-to-stay-ahead/article28457505/

Is it about time to reinterpret the Big Mac Index?

I feel that the usual interpretation of the Big Mac index is a bit misleading... it is better to interpret it as how much the US dollar is overvalued against the focal currency rather than how much a focal currency is undervalued against the US dollar... A Big Mac is more like a rich man's food in India. A poor man's breakfast – let’s say a plate of 2 Idlis and a Vada – in a true Indian city fast food outlet would cost only about Rs 30 - i.e., about 50 US cents... A Big Mac on the other hand costs three to four times that... So it certainly is not a poor man's food, as it is in the US. Yet, a Big Mac in India costs less than 50% of what it costs in the US. To me, it says that a poor man in the US has to pay twice as much as a rich Indian does to get a meal. So I would say the US dollar is overvalued... an American can buy a lot more (two burgers from India - i.e., two portions of a rich man's food) with one US dollar in the international market than he or she would in the domestic market. Perhaps it is time to revalue the US currency. It might reduce wastage in the US substantially given that most US good are imported. I have seen good quality plastic cutlery (imported, let me add) thrown into trash cans after one use or many times even unused. I often see that a lot of food (with a lot of imported raw materials) wasted in US restaurants… people order a lot more than what they can eat and fast food chains tempt people into buying food that they don’t need. The same goes with toys and clothing… most of which is also imported. When one of my friends from China visited Philadelphia he wanted to buy a souvenir to take home and he decided on a miniature replica of the liberty bell that he saw at a souvenir shop. Though he liked it, he found it pricey. Nonetheless, he picked one up and got into a long queue in the souvenir shop to pay for it. Just then he noticed that it was “Made in China”. He got out of the que right away and said, ‘I can go home and buy one of these for a tenth of that price’. If the US dollar were to the rightly revalued, there wouldn’t be as much wastage and as much consumption of unwanted stuff… I even think that the US economy may truly recover.