Featured faculty: Ying Chao
Written by Sally Ho

Capital markets have been on a tear this year, driven by a massive bet on AI investments. For instance, Chinese chipmaker CXMT’s recent debut raised US$8.6 billion to deliver China’s largest listing since 2010, while a month earlier, SpaceX made history with a record-breaking US$75 billion IPO.

On top of that, two rival AI pioneers, OpenAI and Anthropic, have announced their plans to go public in the near future, each aiming to become a trillion-dollar company. Older giants like Alphabet, Amazon, and Microsoft have also seen their stocks soar following their AI ventures.

Ironically, the labour market has taken the opposite path, marked by layoffs and hiring freezes across big tech. While overall market adjustments later often bring the job market back on track, a clear pattern emerges: waves of innovation bring short-term crises for workers despite market optimism.

“There is a glaring disconnect between financial markets and the real economy. For example, stock prices sometimes surge when hiring is weak, and stock returns often move in the opposite direction of physical investment,” says Ying Chao, Assistant Professor of the Department of Finance at the Chinese University of Hong Kong (CUHK) Business School.

“When a technological breakthrough happens, markets immediately price in the expectation of future productivity, but the real-world gears, like hiring, production, and physical investment, take much longer to catch up,” he adds.

Professor Ying’s new paper, Innovation‑driven contractions: A missing link for asset pricing puzzles, co-authored with Li Zhonghao of Nanjing University and Gill Segal of the University of North Carolina at Chapel Hill, examines why technology investment is often accompanied by short‑run contractions in the real economy.

Good news for tech, bad news for workers?

Having examined financial data on US companies in Compustat from 1953 to 2019 and measured their patent values, Professor Ying and the team find that, despite boosting productivity and efficiency, technological advances shrink the workforce with a negligible impact on capital expenditure on physical assets.

This is not simply creative destruction or technological unemployment, as it doesn’t fit the typical notion that when superior businesses overtake traditional ones, both jobs and physical investments dwindle simultaneously. “Nowadays, new technology initially reduces labour input while moving the needle only slightly on capital growth,” he says.

Professor Ying and the team then grouped companies by earnings, asset values, and investment levels. After observing how often companies adjust their product prices and tracking stock returns across the entire economy, they find that when companies rarely change their product prices, higher hiring activity and capital expenditures are associated with lower stock returns.

Companies often keep prices steady for extended periods for many reasons, such as staying competitive, retaining loyal customers, and so on, even as economic conditions shift. The more rigid or “sticky” product prices are, the more likely the stock market is to react in the opposite direction of real economic activity.

This price stickiness acts as a hidden force that explains why financial markets disconnect from the real economy and why it sometimes intensifies.

“When a technological breakthrough happens, markets immediately price in the expectation of future productivity, but the real-world gears, like hiring, production, and physical investment, take much longer to catch up.”

Professor Ying Chao

“The negative contemporaneous relationship between stock returns and investment growth or labour-market surprises becomes stronger when prices are stickier,” says Professor Ying. “Stock prices are forward-looking, reflecting expected future profits from innovation. Real economic activity, like capital expenditure or labour usage, can temporarily contract or lag behind.”

“Therefore, when a company’s valuation skyrockets before a corresponding surge in real economic activity, it doesn’t necessarily indicate an irrational market bubble. Instead, it often reflects the market rationally pricing the long-term benefits of innovation, while the real economy is still undergoing short-term adjustments.”

How sticky prices drive higher stock prices

To better understand the dynamics of technological breakthroughs affecting the real economy, the team built an economic model comprising two sectors: one producing consumption goods, and the other producing machinery and equipment for other firms. Firms in both sectors have some control over their product prices, but these prices are rigid even when costs fluctuate.

After a technology shock, firms can produce more with the same level of labour and materials. But since their prices are sticky, firms charge the same price even as production costs fall, allowing them to make larger profits on each sale. “Because product prices adjust more slowly than marginal costs after a positive technology shock, markups temporarily rise. These higher markups increase valuations while restraining short-run hiring,” says Professor Ying.

A technological breakthrough also tends to lower the price of new machinery with more efficiency. Although companies want to buy more of these advanced tools and hire more workers, it takes time for product prices and wages to catch up. This stickiness across the broader economy temporarily reduces demand in real economy activities.

Put together, workers might feel the pinch of fewer jobs in the short term, while investors see the potential for higher profits and stock returns. If product prices could change easily, the stock markets and hires would move in the same direction.

“Keep in mind that whether a specific company can sustain high stock prices depends on longer-term fundamentals, including market demand, how fast they expand capacity, and how well they fend off competitors,” Professor Ying adds.

A technology-based signal for future returns

For shareholders, the disconnect between the stock market and the real economy can make it harder to predict how a stock will perform in the short term. Therefore, based on the above model, the team develops a mathematical formula called the investment-based dividend yield to track how technological innovations, rather than stock market data, influence economic dynamics.

This investment-based dividend yield is a broad economic indicator derived from the above model, rather than a measure of the cash-flow potential of an individual company’s investments. “This tool is a macro indicator that helps predict the overall stock market’s future risk, not a tool for short-term trading on individual stocks. This indicator strongly and negatively predicts future aggregate stock returns,” says Professor Ying.

Looking ahead, Professor Ying hopes to determine whether this tool can be applied with more specific information, such as data from individual industries, and with more precise ways to track innovation, especially those related to AI. “With AI specifically, the biggest challenge now is untangling genuine productivity shocks from other noise, like government subsidies, hype-driven demand, financing conditions, or geopolitical shifts,” he adds.

“Going forward, we also need to look more closely at cross‑sectional differences: how these tech shocks impact different types of workers, the role of intangible capital, and how the ultimate gains and losses of technological change are distributed across the broader economy.”

The post Why the AI boom spells short-term labour gloom first appeared on China Business Knowledge.

Featured faculty: Kim Keongtae and Michael Zhang
Written by Pan Jingyi

AI-powered coding assistants are changing how software is built. These tools can be highly effective in helping programmers and software developers, even those with less experience, to write code in a programming language. Almost everyone can now make an app or software from scratch by simply asking an AI chatbot, a practice known as vibe coding.

OpenAI’s release of Codex in 2021 was the first AI model powerful enough to build entire programmes from simple text prompts. The company then partnered with GitHub, a platform where developers worldwide can store and collaborate on their software code, to launch GitHub Copilot as an autocomplete tool. In early 2023, Copilot was transformed into Copilot X, a full AI coding assistant.

Nowadays, Copilot X is not the only tool in the market. Other major AI companies, such as Anthropic and DeepSeek, as well as big tech like Google, Amazon, and Meta, have also launched their AI-assisted software development tools. As millions of developers start relying on AI, burning questions loom: have these tools changed how developers code, and can they actually boost productivity?

“AI technology may increase the developers’ productivity and push the limits of what developers feel able to attempt, but these gains come with trade-offs for code quality and originality.”

Professor Kim Keongtae

Kim Keongtae, Professor in the Department of Decisions, Operations and Technology at the Chinese University of Hong Kong (CUHK) Business School, collaborates with Michael Zhang, the Wei Lun Professor of Business AI in the same department, their PhD student Li Xinyu, and Francis Joseph Costello of Nova School of Business and Economics, to seek answers. In the study titled Exploring altered open source software development patterns in a time of generative AI, they examine 1,350 open-source software developers on GitHub before and after Copilot X was released.

The analysis finds that CopilotX significantly helps occasional contributors who were previously less active on GitHub. These casual developers participated in 48 per cent more open-source projects and became far more likely to experiment with new programming languages after using the AI tool.

Meanwhile, highly active or more seasoned developers who used Copilot X updated their code 12 per cent more often and contributed to six per cent more projects compared to those who didn’t use the tool. AI not only helps developers work faster but also spreads their effort across a larger set of projects and switches between different projects more easily.

Contributing to open-source projects sometimes requires developers to learn an unfamiliar codebase and figure out how the software is structured before making a small update. For occasional contributors, these barriers can be enough to stop them from participating at all.

“AI coding assistants can lower these barriers and make the first step easier,” says Professor Kim. “After conversational AI coding assistance became available, developers became more willing to explore new programming languages and projects.”

The hidden costs of easy coding

While productivity rose, a noticeable increase in copy-pasted code appeared. Although more projects are being started, they are not necessarily leading to more original work. “AI technology may increase the developers’ productivity and push the limits of what developers feel able to attempt, but these gains come with trade-offs for code quality and originality,” Professor Kim adds.

“Copied code is not always harmful, as some reuse is normal in software development. The concern is that if developers insert larger blocks of code without fully understanding how they interact with the rest of the project, the project may accumulate technical debt or a shaky foundation.”

The build-up of hidden problems could make software harder to maintain, debug, or improve later. It can also lead to compatibility issues, inconsistent coding styles, and more rework down the line. For project managers, this finding calls for treating AI-generated code as a draft, not as final output.

AI can boost careers

Open-source software development relies on voluntary effort, so developers have to contribute their personal time. While some programmers and software developers participate for their own interests, GitHub functions much like a public portfolio to showcase recent work and collaborations. Employers also often look at GitHub profiles to assess software developers’ skills and experience.

Therefore, to further examine whether changes in how developers worked with AI affected their careers, the researchers matched developers’ GitHub histories with their LinkedIn profiles and found encouraging signs. Developers with access to Copilot X were more likely to experience internal transitions and promotions in the following six to 12 months.

It appears that increases in open-source contributions and proficiency with new technologies are associated with positive career outcomes. “Visible output on GitHub can also signal employers that a developer is adapting to new tools and can leverage them to deliver more work,” Professor Kim says.

“However, the benefits of AI coding tools for career improvement are temporary. When only a few developers know how to use these tools really well, they’ll be noticeably more productive than others. As these tools become widely used, simply using AI won’t make a developer stand out as much anymore.”

How can developers stand out in the AI age?

Given the short-term benefits and the increasingly prevalent copied code, Professor Kim warns developers that AI should only be used as a learning partner and assistant. Although AI may accelerate software development, it cannot replace the developer’s responsibility to understand and evaluate the system. “Take the AI tool as a tutor rather than a shortcut. The human developer should remain responsible for the final judgement.”

This advice is especially crucial for beginners, as less experienced software developers are more likely to use code suggested by AI tools, even if the code is not very good or has mistakes.

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As technologies evolve rapidly, AI tools can play a vital role in ensuring software quality and in helping spot critical issues during development, including reviewing updates that might introduce risks and identifying areas that need more testing. Highly skilled developers can leverage these tools to validate code outputs, establish clear coding rules, and integrate code into complex systems.

Ultimately, Professor Kim anticipates that the more sustainable career advantage will likely come from higher-level capabilities, such as understanding software’s underlying problems, evaluating AI output, designing maintainable systems, and coordinating human-AI workflows.

“The career advantage from knowing how to use AI coding tools will not vanish but shift towards those who can use it in more advanced, strategic, and complex ways.”

The post Is AI creating more productive but dull programmers? first appeared on China Business Knowledge.

Featured faculty: Choi Sungwoo
Written by Pan Jingyi

Derek Mobley had applied to more than 100 jobs over several years and had admittedly received rejection notices within minutes or hours. Confused and furious, the US citizen sued Workday, a human resources software firm that handled most of his applications, alleging that its artificial intelligence (AI) screened out his applications based on his age, race, and disabilities.

While Workday has argued that it’s not liable for hiring decisions, a court conditionally certified the age discrimination claims last year. This highly anticipated lawsuit will set a new precedent for AI-driven hiring practices and serves as a reminder that handing over employment decisions to algorithms can lead to backlash.

AI has inevitably reshaped human resource management, as also seen across industries today. A 2025 survey from Resume Builder shows that a majority of US managers have relied on AI for high-stakes decisions, such as promotions, rises and even layoffs. Akin to a dystopian Black Mirror episode, bosses are turning to machines to decide who’s in and who’s out.

Although more and more companies embed automation into their human resource operations, little is known about the impact on employee morale when their career is in the hands of a non-human actor. This is the puzzle that Choi Sungwoo, Assistant Professor of the School of Hotel and Tourism Management at the Chinese University of Hong Kong (CUHK) Business School, seeks to answer.

Professor Choi uncovers a latent repercussion of advanced technology in human resource management: organisational dehumanisation. “Organisational dehumanisation is the feeling of being reduced to a mere functional component of an organisation, much like a single bolt in a large machine, where your unique qualities, emotions and individuality are largely disregarded.”

Why AI can feel dehumanising

In a study titled AI in human resource management: A driver of organisational dehumanisation and negative employee reactions, Professor Choi works with Shin Hyejo of the Hong Kong Polytechnic University and Kim Hyunsu of the University of Macau on three scenario-based online experiments. They recruited nearly 700 participants through Prolific, an online platform widely used in academic research.

“When AI performs human resources operations, employee characteristics are seen as numbers. Therefore, employees would feel like they are not treated as humans.”

Professor Choi Sungwoo

Across all three experiments, participants were asked to imagine that decisions about their promotion or performance review were being made either by an AI system or by a human manager. The results were consistent: people reacted more negatively when the decision-maker was AI.

Those reactions were not trivial. Participants reported lower commitment, stronger turnover intentions, and even greater retaliatory feelings when seeing AI deciding their livelihood. In practice, they are more likely to search for another job and warn others to avoid working for the company.

A couple of factors drive such dehumanising feelings, Professor Choi notes. AI lacks the ability to understand social norms, personal issues and ethical concerns as a human manager can. AI also works in incomprehensible ways to laypeople, and employees may fail to understand how AI reaches its conclusions. As a result, they feel powerless and excluded from the decision-making process.

“Putting it all together, loss of empathy, transparency, and control can leave people feeling objectified,” Professor Choi says. “When AI performs human resources operations, employee characteristics are seen as numbers. Therefore, employees would feel like they are not treated as humans.”

Can human resources automation thrive?

Different companies have different sentiments towards AI. Professor Choi and his collaborators identify what they describe as a cultural paradox: companies with more collaborative and family-like cultures may experience greater resistance to AI in human resources management.

In these collaborative environments, employees believe that the management values cooperation, support and interpersonal relationships. If AI is then used to make major decisions, the technology can clash with such a principle.

“When a collegial workplace adopts AI for major human resource decisions, it can feel like a betrayal,” Professor Choi explains. “Employees experience a dissonance between the human-centred values the culture espouses and the perceived quantification of their worth that AI involvement implies.”

By contrast, the negative effects of AI appear to be less intense in companies with a more outcome-oriented system, where performance and results are already prioritised over interpersonal connections. But that does not mean AI is entirely harmless in such settings.

Even in outcome-focused organisations, AI-driven decisions on the workforce can still backfire and brew dehumanisation. Companies that deploy an AI system to select the most suitable candidates for promotion still see employees feel their aspirations or contributions are overlooked.

In short, whether focusing on outcomes or collaborations, the company needs to take the human aspect into account when adopting AI in human resources operations.

Keep “human” in human resources

Reputation is a valuable asset for a company. When job marketplaces like Glassdoor, Indeed, Seek, and even Google nowadays provide user-generated company reviews, the efficiency gains from AI might be quickly diminished by a wave of criticism from current and former employees.

For companies and business leaders, the message is not to abandon AI, but to use it wisely. One priority, Professor Choi says, is transparent communication. “Companies should clearly explain why AI adoption in human resources is necessary and reassure employees that it does not compromise the organisation’s core commitment to supportive and human-oriented growth.”

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Rather than allowing AI to make decisions on its own, Professor Choi suggests designing systems that enable humans and technology to coexist. “This hybrid approach helps preserve the sense that consequential decisions about people are ultimately made by people. If AI serves only in an assistive capacity with limited input into the final decision, the dehumanisation effect should be substantially mitigated.”

“Human resource practices are highly sensitive, and AI could be most valuable in managing less critical yet voluminous tasks, such as initial application screening, freeing human managers to focus on more complex and high-stakes decisions,” Professor Choi adds. “Despite that, companies should always be mindful of the risks of dehumanising feelings and act accordingly.”

The post Would you trust AI to decide your pay rise? first appeared on China Business Knowledge.

Featured faculty: Liao Huiyao
Written by Sally Ho

For decades, a common preconception about working mothers has been that having children may reduce women’s commitment to work. This perception has led to a phenomenon dubbed the “motherhood penalty,” which refers to the documented disadvantages women face after becoming mothers and discrimination in hiring because of their childbearing responsibilities.

Parenthood affects both mother and father. However, broader economic research has shown that child rearing has significantly contributed to the gender wage gap, with women experiencing a larger disadvantage.

“Managers often perceive women as having more work-life conflict, and thus, less committed to work when becoming mothers, even when data suggests otherwise, leading to less inclination to reward them with promotions and salary increases,” says Liao Huiyao, Assistant Professor in the Department of Management at the Chinese University of Hong Kong (CUHK) Business School.

However, Professor Liao and his co-authors challenged this assumption, observing that working parents, especially mothers, sometimes show greater work commitment. They suggest this stems from a sense of obligation to perform at their best, using their professional dedication as a positive symbolic influence on their families.

“Confucian philosophy places a strong emphasis on parental responsibility for a child’s character development and education, beyond just providing for material needs,” he adds. “This profound sense of parental obligation naturally extends into the workplace, shaping how working parents interpret the very meaning of their work.”

Professor Liao calls this concept “family-centred symbolic meaning of work,” in which employees view their jobs as a means to set a positive example for their children. His study, Uncovering a motherhood advantage: How parenthood impacts perceptions of the meaning of work and work outcomes, challenges prevalent stereotypes about working parents.

The interesting part is that mothers are more likely to view their work as a means to instil moral values in their kids, which, in turn, motivates them to go the extra mile at work. This finding breaks the stigma associated with working mothers that perpetuates the motherhood penalty.

Mothers view work beyond salary

To illustrate a working mother who embodies a family-centred symbolic meaning of work, Professor Liao points to former US First Lady Michelle Obama. She was a lawyer at a top-tier law firm, where she met and mentored the future US president, and then held senior leadership roles at the University of Chicago before moving to the White House.

“Michelle Obama sees her career as a way to teach her daughters about responsibility,” he says. “This view is a common, yet under-researched motivation.”

Along with Tammy Allen at the University of South Florida, Liu Zhaopeng Liu at Shandong University, Thomas Ptashnik at Providence College, and Wu I-Heng at the University of South Alabama, Professor Liao gathered responses from 867 Chinese and US employees and their supervisors through a series of studies on how employees view their work in relation to their families.

“It is precisely because of their commitment to shaping their children’s character that working parents, especially mothers, are motivated to work harder and engage in more ethical and organisational citizenship behaviours.”

Professor Liao Huiyao

The analyses find that having children reshapes parents’ identity and priorities. Work no longer feels like merely an individual pursuit but part of how someone cares for and nurtures their family through acting as a role model. Becoming a parent is linked to a stronger moral commitment to family.

These positive effects are particularly pronounced among mothers. Researchers call this a “motherhood advantage,” in which a heightened sense of symbolic meaning drives increased work effort and organisational citizenship behaviours.

“Work effort has long been considered a cornerstone of a strong work ethic, while organisational citizenship behaviours, such as being helpful, loyal, and going above and beyond, are seen as pro-social actions,” says Professor Liao. “Individuals with high family-centred symbolic meaning of work are more likely to engage in both to demonstrate the character they wish to instil in their children.”

Parenthood reshapes work purpose

While the study does not find that parenthood automatically improves job performance, it names psychological mechanisms that can explain how parenthood affects the family-centred symbolic meaning of work.

Professor Liao highlights that while parenthood reshapes work purposes for both genders, the effect is particularly pronounced for women for two reasons. First, the physical experience of pregnancy is a transformative life stage that often fosters a more interdependent self-concept in women, making them more likely to integrate their family extensively into their sense of identity, including their work identity.

Additionally, despite evolving social norms, women are still associated with caregiving responsibilities in many societies, reshaping their identity more profoundly. As a result, mothers may imbue their work with deeper personal significance to fulfil their maternal responsibilities.

“For fathers, it remains more socially acceptable to compartmentalise work and family, and view careers as personal pursuits rather than as a medium for teaching moral values for their children,” he says.

However, the key is not simply having children, but how parenthood reinterprets professionalism. This psychological process is not confined to a single society but reflects a broader pattern across cultures.

Moving beyond the motherhood penalty

The motherhood advantage does not deny the existence of structural barriers that women face in the workplace, but rather highlights a personal motivation that emerges with parenthood. Far from diminishing professional drive, motherhood may intensify the sense that work matters more than just for money.

“It is precisely because of their commitment to shaping their children’s character that working parents, especially mothers, are motivated to work harder and engage in more ethical and organisational citizenship behaviours,” says Professor Liao.

Supporting parents rather than sidelining them may therefore allow organisations to reap from stronger sense of purpose. “These insights hopefully lead managers to re-evaluate their assumptions during hiring and promotion decisions, and to stop penalising working mothers based on unfounded biases,” he adds.

“Companies should move away from the outdated idea that the best employees are those who work long hours without family responsibilities. Instead, they should recognise and value that working parents, particularly mothers, can be highly committed and productive because their family inspires them to be role models.”

The post How motherhood boosts work effort and initiatives first appeared on China Business Knowledge.

Featured faculty: Jessica Kwong
Written by Joanne Madrid

Lots of praise has been given to persistence, highlighting the eventual rewards of never giving up. Walking away is often harder than doubling down when eyes are on a target, especially considering the time and effort spent. After all, failure is a success in progress, as the famous saying goes.

Any resources are considered gone when they’re spent in personal and business endeavours, no matter the outcome. Economists call this unrecoverable spending sunk costs. A rational mind should not account for sunk costs when facing setbacks and know when to stop, but many real-world cases have shown otherwise.

For example, Kodak invested heavily in marketing its film business for years and refused to embrace the digital camera it once invented before filing for bankruptcy. The British and French governments kept operating Concorde jet despite the skyrocketing costs, and it took decades for them to finally decommission it.

Most people have, at some point, stuck with a bad decision longer than they should have, either holding a losing investment or continuing with a plan even as results disappoint. Behavioural scientists name such stubbornness as escalation of commitment and attribute it to irrational decision-making tendencies or escalation bias.

However, Jessica Kwong, Professor of Marketing at the Chinese University of Hong Kong (CUHK) Business School, has another perspective. “Rather than reflecting stubbornness on poor judgment or irrational decision making, the escalation of commitment can arise even as people become better at planning and coordinating choices.”

In collaboration with Wong Kin-fai of the Hong Kong University of Science and Technology, Professor Kong’s latest study, The development of escalation bias across the life span: A multi-level adaptive learning approach, finds that escalation of commitment is formed as a strategy to execute a series of plans with some room to tolerate failures.

“Rather than reflecting stubbornness on poor judgment or irrational decision making, the escalation of commitment can arise even as people become better at planning and coordinating choices.”

Professor Jessica Kwong

Is escalation of commitment irrational or tactical?

People normally continue a behaviour after positive reinforcement, but quit after negative feedback. However, the researchers highlight that people also escalate their efforts when encountering obstacles instead of giving up quickly, especially when the expected results are rewarding.

Professor Kwong finds that, from a natural learning experience, people build decision strategies or game plans to achieve their goals by conducting a series of actions with different methods, and then evaluating whether the strategies succeed or fail after a certain number of attempts. The strategies that deliver more positive outcomes are more likely to be deployed again.

Therefore, what appears to be irrational persistence may instead reflect a deliberate choice to tolerate short-term failures in pursuing longer-term goals, or, as Professor Kwong calls it, an escalation strategy.

“Once an individual adopts an escalation strategy, they allow themselves the space or possibility to absorb some short-term setbacks,” she adds. “It’s akin to long-term investing. After carefully choosing a stock, reacting to every short-term price swing can undermine the original rationale for the investment.”

Professor Kwong further discovers that such tolerance grows as our metacognitive capacity, or the ability to plan, monitor and coordinate multiple decisions, evolves across the lifespan.

How tolerance to failures changes as people age

Existing literature shows that escalation bias tends to increase as children grow into teenagers, then decreases from young adulthood into old age. To understand more about it, Professor Kwong and her collaborator use three computer simulations to examine escalations in different settings.

A virtual experiment is chosen because testing the metacognitive ability of multiple individuals over long periods not only requires extensive time but could also be unethical. Each simulation consisted of 15,000 virtual participants or programmes designed to act and learn over time like humans, with each participant going through 1,000 decision-making moments.

The results confirm that increasing metacognitive capacity from infancy to adolescence leads to greater tolerance for short-term failures, but this tolerance weakens as people age with shrinking metacognitive capacity. This pattern creates an inverted U-shaped tendency of escalation commitment, which starts low in youth, peaks during employment years, and then declines as people retire.

Increased metacognitive capacity allows people to engage in more complex decision planning and fuel escalation bias. This study offers new insights into how natural learning experiences can progress into persistence to invest in failing projects.

Drawing the fine line between grit and stubbornness

This finding may explain why simply telling an employee in their productive age to stop pursuing a failing project may not be enough to change their minds. Their desired final goals are laid out in their master plan involving an escalation strategy, rather than a lack of awareness.

At the top strategic level, on the contrary, escalation of commitment bias can be fatal or disastrous when it is not backed by a higher-level decision strategy. Acknowledging it and pivoting would save the company’s life, just as Mark Zuckerberg did when rebranding Facebook to Meta in 2021 to develop metaverse-based social media, only to move on to AI a couple of years later, after realising his idea was a flop.

Companies can proactively set up systems that encourage critical re-evaluation of projects, especially when signs of counterproductive escalation appear. This might involve having independent teams review struggling initiatives or establishing clear stop points based on objective, helping employees overcome their natural tendency to keep pushing a losing hand.

Google’s Moonshot Factory is particularly adept with this. The factory is created to invent new technologies and cultivates a culture that celebrates killing promising ideas early, ensuring that the hardest parts of a project are tested first, rather than delaying potential failure. For companies that rely on research and development, perhaps a system to address escalation bias is no longer an option.

The post Why do we like to cling to failing plans? first appeared on China Business Knowledge.

Featured faculty: Li Wendong
Written by Gigi Wong

Those who have worked long enough may still recall the feelings of receiving their first paycheques. After years passed, many would have realised how far they had come, and more importantly, how their personalities or the people they know had evolved over the years. At some quiet hour, a random thought may pop up: Do we shape our income, or does our income shape who we are?

A new study suggests our personalities and our paycheques may be more intertwined than we realise, each influencing the other over time in a reciprocal dance. “When income increases, it signals that the current career progress is significant and the status in society is improving,” says Li Wendong, Associate Professor in the Department of Management at the Chinese University of Hong Kong (CUHK) Business School.

Professor Li’s latest study challenges the assumption that our personalities are relatively fixed and set in stone, that a person is always either an introvert or an extrovert, agreeable or argumentative, cautious or reckless. Furthermore, his paper titled A continuous time meta-analyses of reciprocal relationships between personality traits and income suggests that some personality traits can also predict future income changes.

His study also found an overlooked drawback of pay rises. Positive reinforcement that comes with income increases may lead employees to stick to routines and conventional ways of doing work, eventually limiting them from exploring new approaches to improve their performance.

“Such a positive reinforcement likely prompts employees to exploit the current effective work methods and strategies further. Over time, changes in such behaviours, thoughts and feelings likely foster personality change.”

“Thus, after a pay rise, organisations may also consider using incentives to motivate employees to come up with novel strategies to complete their work responsibilities and think out of the box to spur creativity and innovation,” he adds.

Which came first: pay rise or personality change?

Along with his PhD students, as well as Zhang Zhen of Southern Methodist University, Zhang Xin of Shanghai University of Finance and Economics, and Christian Dormann of Johannes Gutenberg University Mainz, Professor Li analysed data from 11 large national and regional longitudinal studies in the world involving 134,551 participants in total.

Studies were included if they measured at least one of the Big Five personality traits and individual income at three or more time points. These personality traits refer to five broad dimensions of personality that make each person unique, including emotional stability, conscientiousness (e.g., being dependable and hardworking), agreeableness (e.g., friendliness), extraversion (e.g., being outgoing), and openness (e.g., being curious and open to new experiences).

The team integrated findings across all the studies, which followed participants over periods ranging from four to nineteen years. The researchers also examined patterns of personality change and income shifts within the same individuals over time, painting a much richer picture than a simple snapshot study.

They found that conscientiousness and emotional stability tended to increase following a boost in income. The results also demonstrated significant effects of income changes on subsequent changes in both traits.

“While an income increase can make employees more stable and reliable, it may also reduce their tendency to seek novel strategies and goals — that is, their exploratory, creative and risk-taking behaviours may decline.”

Professor Li Wendong

In other words, a fatter paycheque seems to make employees more disciplined, dependable, poised, and unflappable over time. On the other side, as expected, people who became more conscientious and emotionally stable went on to see larger income increases over the next several years.

On the contrary, there was a negative reciprocal relationship between extraversion and income: being more extroverted seems to make people less likely to earn more money later on and earning more salary appears to make people more introverted at a later point in time. The effects of conscientiousness, emotional stability, and extraversion on income fluctuate over time, with the strongest impact occurring around one year after personality traits were assessed and tend to weaken afterwards.

Other personality traits have a negative relationship with the pay rise. The effect of income on changes in agreeableness is negative and the relationship between agreeableness and change in income is unclear.

“Increases in conscientiousness and emotional stability are positively related to subsequent increases in the employee’s income over time,” says Professor Li. “Our analyses also revealed that the reciprocal effect between extraversion and income was negative and significant across different time points.”

Success rewires our inner traits

Income-personality link cuts both ways, but what explains these intriguing connections between who we are and what ends up in our bank accounts? The researchers propose a few rationales, drawing on the cybernetic Big Five theory.

As mentioned above, pay rises reinforce our current strategies and behaviours at work, and in turn, motivate us to hone and further exploit those strategies. This results in deepening the motivational stability or conscientiousness quality, as well as emotional stability and social stability.

However, the cybernetic Big Five theory suggests that income increases are less likely to provide incentives for employees’ exploration and risk-taking behaviours, which may further enhance extraversion and openness traits. Based on empirical findings, the researchers posit that all five traits above correspond to one of the two broad dimensions of the Big Five that are associated with career strategies: stability and plasticity traits.

Extraversion and openness are included in plasticity traits, which encourage exploration by generating novel strategies when old plans prove insufficient, or when environmental changes occur, allowing for adaptation in uncertain environments. Stability traits comprise conscientiousness, emotional stability, and agreeableness, which primarily serve to maintain stability and prevent disruption to ongoing strategies for achieving long-term goals.

When experiencing a career setback, employees are likely to adjust their strategies and explore novel approaches or acquire new strategies to advance their careers —a characteristic of openness. They may also become more extroverted and enhance their social capital for career development or for exploring other alternatives. These changes over time may get habitualised across various life domains.

“The idea that income increases confidence and exploration remains a theoretical possibility, but our empirical evidence suggests that, over time, higher income may instead lead to more stability and less exploratory behaviour or lower extraversion, likely because employees settle into effective, established work strategies rather than seeking novelty,” Professor Li says.

Career development and pay incentives

The upshot is that our personalities are not entirely fixed to our job descriptions. As we progress through our careers, our personality inevitably gets imprinted by our professional successes and stumbles, but those experiences also get funnelled back into further shaping our future fortunes, for better or worse.

According to Professor Li, the findings have important practical implications for employees and organisations. Earning a higher income may make us more conscientious and emotionally stable over time, but also diminish our extroverted and explorative tendencies to find novel strategies.

Employees should be mindful of these potential shifts, he advises, to better navigate their career development. Organisations, too, should take note that the common workplace practice of using pay rises to motivate staff may have some unintended consequences on employees’ personality development.

“Given that many organisations tend to employ pay rises as an important incentive scheme to motivate their employees, the findings suggest that organisations should also be aware of positive and perhaps, unintended consequences of pay rises,” he adds.

“While an income increase can make employees more stable and reliable, it may also reduce their tendency to seek novel strategies and goals — that is, their exploratory, creative and risk-taking behaviours may decline. This may lead to adverse consequences for organisations in adapting to new and uncertain environments.”

To mitigate the adverse effects of pay rises, Professor Li emphasises the importance of acknowledging the benefits and risks, and find a way to balance stability and creativity. Companies need to adopt practices that encourage employees to explore new ideas, such as supportive management and more job autonomy, to foster intrinsic motivation and creativity.

The post Your paycheque may change your personality, and vice versa first appeared on China Business Knowledge.

Featured faculty: Wu Fan
Written by Pan Jingyi

When Elon Musk declared that Tesla aims to have “hundreds of thousands, if not a million” self-driving taxis on US roads by the end of 2026 in a CNBC interview, it was another example of a CEO setting a bold target publicly. Leaders like Musk often position themselves as visionaries, unafraid to shoot for the moon and literally, Mars.

Not all CEOs share the same appetite. Since their compensation is often tied to company performance, many have chosen to set more realistic and sometimes conservative targets to minimise the risk of missing goals while maximising the likelihood of securing bonuses. So, what factors make a CEO set high goals or play it safe?

“CEOs typically have their own vision and expectations, and sometimes possess unique information that others don’t have, which means they can meaningfully influence how targets are shaped in ways that reflect their preferences, priorities and insights,” says Wu Fan, Assistant Professor of Accounting at the Chinese University of Hong Kong (CUHK) Business School.

While company performance targets are formally approved by the board of directors, they are often the outcome of negotiations with the CEOs. Professor Wu’s recent research identifies two types of CEO power, structural and prestige, which influence how the executives set and negotiate these targets.

Structural power arises from formal authority within the company, such as when a CEO also chairs the board or holds a dominant position that protects him or her from being ousted by shareholders. Prestige power, on the other hand, stems from external force, such as the CEO’s social standing, reputation and elite networks. The study found that CEOs with high structural power tend to negotiate for easier targets while those with high prestige power are more willing to go the extra mile.

How past performance affects future goals

Professor Wu and his collaborators, Aishwarrya Deore of Georgetown University and Matthias Mahlendorf of Frankfurt School of Finance and Management, analysed CEO annual performance targets from various firms on the S&P index. The US Securities and Exchange Commission requires all US-listed companies to report the performance measures on which CEOs’ bonus payments are based.

In their study titled CEOs’ structural power, prestige power, and target ratcheting, the researchers examined how CEO’s past performance and their type of power affect their target settings in different ways. Companies normally use previous performance as a benchmark for establishing future goals, commonly known as target ratcheting.

The researchers observed an asymmetric target ratcheting trend in their overall sample, where the degree of target adjustments was noticeably unfair, as good performance brings tougher goals but bad performance doesn’t lead to much relief. “If the CEOs do better than the expected target, the future target tends to go up a lot. But if the CEOs underperform, the future target doesn’t fall by nearly as much, or might not go down at all,” Professor Wu says.

CEOs with low power experience the most asymmetric ratcheting, making targets harder to achieve over time after satisfactory performance. The study found that having high structural and prestige powers helps shield CEOs from such demands and enables them to negotiate more effectively. However, there are fundamental discrepancies between the two types of power.

To bargain or to impress?

High structural power gives CEOs more favourable ratcheting as they can negotiate smaller target increases after achieving goals or larger decreases if they miss targets. “The position of CEO with high structural power in the organisational hierarchy grants them greater negotiation power in target adjustment decisions,” Professor Wu says.

CEOs with high prestige power can also settle for a more achievable target, but they tend to choose the opposite for several reasons. Pursuing ambitious goals signals their capability and confidence to their external network, including investors, analysts and potential future employers. “Accepting a more challenging target signals a CEO’s value to the market, which is essential to their career prospects,” Professor Wu adds.

“Accepting a more challenging target signals a CEO’s value to the market, which is essential to their career prospects.”

Professor Wu Fan

Moreover, prestigious CEOs often have greater privilege to explore other options at different companies and are less affected by performance concerns. “CEOs with prestige power likely have elite ties with other influential institutional players, such as executives at other firms, media and regulators,” he explains, adding that these connections can hinder the board’s oversight of CEOs and lessen the adverse consequences if CEOs miss their goals.

After controlling other variables, the results indicate that CEOs with structural power saw their target adjustments eight per cent lower compared to their counterparts with prestige power.  CEOs may possess both types of power simultaneously, but they may exhibit different target adjustment behaviours than those with only one dominant power. When CEOs possess both high prestige and structural power, the two effects do not simply add up to weaken ratcheting further. Instead, prestige power tends to moderate structural power by accepting higher targets than CEOs with only structural power.

Credible targets vs. unrealistic pledges

Target adjustment not only affects the CEO’s earnings, but also broader implications on the corporate culture. Setting relatively easier targets may risk weakening the CEO’s motivations to push for operational or strategic improvements if lower goals persist. “This could lead to a culture of complacency at the top, where performance plateaus and innovation slows,” Professor Wu says.

However, setting higher performance targets is not without its flaws. “While prestige-powered CEOs could foster a more aspirational performance culture within the firm, this could also come with increased risk-taking or pressure on subordinates to meet lofty goals,” he adds.

Pursuing higher goals demands greater effort, and Professor Wu notes that many CEOs with prestige power are aware of the trade-offs. “Ambitious targets can attract market attention, bolster a CEO’s reputation and unlocks benefits like prospective board appointments. So, even if there is a risk of missing targets and losing compensation, some see ambitious target-setting as a net gain in other ways, like elevating their profile as bold leaders or enhancing public visibility.”

Given that structural power may lead to stability and stagnation, whereas prestige power can result in growth and volatility, Professor Wu suggests that boards should also refer to external benchmarks, such as analyst forecasts and target adjustment trends among peer firms, to assess whether a proposed target is reasonable. “These comparisons can help distinguish between credible ambition rooted in performance potential and excessive promises that may not be grounded in reality.”

Industry and culture factors

Finally, while the study offers valuable insights on the influence of different types of CEOs in setting their target performances, Professor Wu expects the effects would be more pronounced in innovative industries, including artificial intelligence, technology, electronics, robotics and such, where leadership vision plays a larger role in shaping firm direction and investor expectations.

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Individualism-oriented markets like the US may also create stronger incentives for CEOs to demonstrate ambition, as opposed to more hierarchical or risk-averse cultures like those in many parts of Asia, where the CEOs may be less inclined to overpromise.

However, he notes that CEOs are a highly self-selected group, and “individuals who reach these roles often share certain traits like confidence, risk tolerance and a desire for recognition, which may transcend national or industry boundaries.”

The post Play big or play safe: a CEO can’t have it all first appeared on China Business Knowledge.

Featured faculty: Li Wendong
Written by Pan Jingyi

As the saying goes, “There is only a fine line between genius and madness.” From the legendary painter Vincent van Gogh to the enigmatic billionaire Elon Musk, their creativity is celebrated yet occasionally viewed as eccentric.

While creativity is often regarded as a hallmark of humanity, mixed perspectives exist on how creativity intertwines with well-being and career success. How does creativity influence mental health and overall well-being? Can it be both a blessing and a burden in one’s professional journey? What role do genes and genetic factors play in this intricate interplay?

Li Wendong, Associate Professor of the Department of Management at the Chinese University of Hong Kong (CUHK) Business School, sought to address these questions in his recent study titled A genome-wide association study of occupational creativity and its relations with well-being and career success.

“Our findings suggest that genetic variants associated with creativity might simultaneously enhance the likelihood of experiencing both low and high levels of well-being.”

Professor Li Wendong

Given that creativity is a multifaceted concept that proves to be quite challenging to measure, Professor Li and his collaborators categorised occupational creativity into three domains: artistic, scientific and managerial. “We examine the genetic architecture of occupational creativity in a large-scale study and probe the genetic correlations between occupational creativity with well-being and career success,” he says.

Professor Li and his PhD student Yu Kaili conducted the study in collaboration with Zhang Xin of the Shanghai University of Finance and Economics, Song Zhaoli of the National University of Singapore along with his PhD students Zhu Yimo and Du Nianyao, as well as Fan Qiao of Duke-NUS Medical School.

The team conducted a large-scale genome-wide association study using data from the UK and the US, and the main analyses were based on around 500,000 participants who were 40 years old or older in the UK. Their analysis revealed intriguing—and sometimes contradictory—relationships between creativity, mental health, happiness, and career outcomes.

Complex relationship between creativity and well-being

One of the key findings is the intricate genetic connection between creativity and well-being. “There are genetic overlaps between creativity with both positive and negative well-being indicators,” says Professor Li.

On the one hand, creativity is positively associated with indicators of good health and happiness, including longevity and subjective well-being—a self-assessed measure of life satisfaction and happiness.

On the other hand, the researchers identified positive genetic links between creativity and indicators of diminished well-being, such as bipolar disorder, schizophrenia, and autism, suggesting that the same genes that foster creative brilliance may also harbour risks for mental health disorders.

The study also unveils varying genetic connections between different forms of creativity and well-being indicators. For instance, artistic creativity showed a stronger association with schizophrenia, while managerial creativity exhibited a closer link with subjective well-being, and scientific creativity demonstrated a heightened correlation with autism compared to managerial creativity.

“Our findings suggest that genetic variants associated with creativity might simultaneously enhance the likelihood of experiencing both low and high levels of well-being,” Professor Li adds. “However, various forms of creativity exhibit distinct genetic influences on mental health and well-being.”

Are artists destined to earn less?

There is a stereotypical view that individuals in creative fields often face unique challenges, as careers in areas like the arts are perceived to earn less compared to professionals in many other industries. However, Professor Li and his collaborators paint a more nuanced picture.

“We found significant and positive genetic correlations between creativity and indicators of high levels of career success, including income and occupational status,” Professor Li says. This means that the same genes positively linked to occupational creativity may enhance the chance for employees to earn high levels of income and have prestigious occupations.

Notably, the researchers observed that managerial and scientific creativities exhibited stronger positive genetic correlations with income compared to artistic creativity. This suggests that while artists possess the genetic potential for financial success, individuals in managerial and scientific roles may have a natural advantage in achieving higher earnings.

However, creative individuals often report higher levels of job satisfaction, which is considered an indicator of career success. “The different genetic correlations of the different types of occupational creativity with other variables point to the importance of differentiating creativity into different domains,” Professor Li adds.

Fostering an inclusive work environment

The study also uncovers the genetic intricacies underlying various forms of creativity. The researchers observed higher heritability in artistic and scientific creativities compared to managerial creativity. In other words, genes may play a more important role in shaping artists and scientists.

Nevertheless, Professor Li cautions that establishing a clear causal link between creativity, mental health, and career success remains a challenge. He calls for a deeper exploration of these correlations and their genetic underpinnings in future research because the definition and measurement of creativity at work can sway results.

Genes associated with creativity are intricate and multifaceted, capable of sparking bright, creative ideas while also potentially presenting risks and challenges to mental health. By revealing the complicated genetic associations, Professor Li underlines that the recent study offers valuable insights into leveraging creativity for enhanced well-being and career success.

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In the workplace, creative individuals who struggle with interpersonal communication could benefit from tailored support, such as adequate space and resources provided by companies. “Managers should understand the importance of how environment can help release individual potential and create a positive, healthy and inclusive work environment to maximise the positive role of the creativity gene,” he suggests.

From an individual perspective, Professor Li highlights the dual nature of creativity. “While everyone aspires to be creative, individuals should also focus on self-adjustment and stress management to ensure sustained and healthy creativity,” he advises, encouraging individuals not to hesitate in seeking assistance when needed.

The post The science of creativity, genetics and careers first appeared on China Business Knowledge.

By Pan Jingyi, Principal Writer, China Business Knowledge @ CUHK

Conflicts frequently arise in workplaces and are often viewed in a negative light. Nonetheless, different types of conflict can lead to various outcomes, with some instances even fostering improved job performance.

Scholars have long been captivated by the connection between team conflict and creativity. Disputes over resource allocation or problem-solving strategies are proven to stimulate diverse ideas. Meanwhile, others argue that conflicts stemming from personal disputes and emotions can constrain creative output.

“Conflicts are so prevalent in teams that managers might not have enough energy and resources to handle all the conflicts that happen,” says Liao Huiyao, Assistant Professor in the Department of Management at the Chinese University of Hong Kong (CUHK) Business School. “They have to direct their attention to handling conflicts that are most critical for team success.”

Against this backdrop, Professor Liao conducted a study to find out what kind of conflicts are more crucial for a team to function and the underlying reasons. The study titled Team conflict at the core: Exploring the influence of critical team member conflict on team creative functioning was conducted in collaboration with Brad Harris of École des Hautes Études Commerciales de Paris, Li Ning of Tsinghua University, and Han Yuqing of Shanghai Jiao Tong University.

The influences of critical members

Professor Liao compares task conflict, which refers to disagreement on viewpoints, ideas, and opinions related to the team’s tasks, and relationship conflict, when friction becomes personal and emotional. He notes that many assume that both task and relationship conflicts impact all team members equally and that different members’ involvement in conflict has the same influence on team functioning, but it’s actually inaccurate. “Conflicts typically occur uniquely and asymmetrically between team members rather than being dispersed evenly across teams.”

“Conflicts are so prevalent in teams that managers might not have enough energy and resources to handle all of them, they have to direct their attention to handling conflicts that are most critical for team success.”

Professor Liao Huiyao

The researchers argue that the effects of conflicts on team function and outcomes depend on where such conflicts reside. “If team conflicts occur between a critical team member and other members, such conflicts are of greater impact on team performance, compared to conflicts that occur among less critical members,” Professor Liao adds.

Critical members in this study are defined as individuals who hold pivotal positions within the team’s operational network. To test their hypotheses, the researchers conducted surveys among 70 new product development teams from a wide range of Chinese high-tech enterprises by paper and email.

Different conflicts lead to various outcomes

In their theoretical model, the researchers posited that task conflict involving critical members positively correlates with creativity through team reflexivity, where members retrospectively analyse their performance and adjust their strategies for better performance in the future.

“Team reflexivity facilitates divergent thinking because it involves intensive information exchange, exploration of dissenting opinions, and scrutinising the status quo,” Professor Liao says, adding that divergent thinking enhances creativity by generating a greater variety of ideas.

However, the researchers initially didn’t discover significant evidence supporting the positive correlation between task conflicts and creativity, as the main analysis showed that task conflicts did not bring about team reflexivity. However, they found a twist in a supplementary analysis.

“The difference between our main and the supplementary analyses was that we identified critical members differently,” Professor Liao explains. In the main analysis, critical members are those occupying central positions within the team, meaning others need to go through them to complete tasks, but critical members in the supplementary analysis are those seen as having great influence by others.

“Our results may suggest that a member’s criticality is determined not only by how central this member is in the team workflow but also by other factors yet to be identified.”

Regarding relationship conflicts, the researchers found they are negatively associated with creativity via diminishing team cohesion. Team cohesion reflects the closeness and connection felt among members, which provides a supportive and safe environment that encourages the open-mindedness and perseverance required for collaborative problem-solving.

“When a team has high cohesion, they stick together and are more likely to support each other and work well as a unit,” says Professor Liao. However, the results indicated that relationship conflicts involving critical members are significantly and negatively related to team cohesion, adversely impacting team creativity.

Shared goals and emotional intelligence matter

Professor Liao and his collaborators also note that the influence of conflicts involving critical members probably depends on other factors. Firstly, they believe that when the team has shared goals, members are more likely to work together to resolve discords and be more creative via team reflexivity. “Shared goals emphasise team members’ mutual interests and, by extension, increase their willingness to consider opposing views and approach task-related disagreements constructively,” says Professor Liao.

Secondly, they argue that the emotional intelligence of critical team members, which involves understanding and managing emotions, can help resolve conflicts within the team, reducing the negative impact on creativity by promoting unity.

The research findings indicate that shared goals accentuate the indirect positive link between task conflicts involving critical members and creativity through reflexivity. Moreover, a team with strong bonds and a sense of unity may be better equipped to handle conflicts involving critical members, thereby lessening the detrimental impact on the creative output.

Choose your team members wisely

Helping critical team members and their colleagues handle conflicts well is essential for managerial insights. Leaders should also ensure that key members don’t take on tasks others can do to prevent unnecessary overlap and potential disputes. “Training programmes aimed at helping individuals regulate emotions and have open-minded discussions may also be useful,” Professor Liao adds.

It’s not uncommon to see task and relationship conflicts coexist. If task conflict is not handled properly, it could lead to relationship conflict. Thus, Professor Liao highlights that it is important to resolve task conflicts constructively, such that members do not take them personally, leading to relationship conflicts.

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Given that shared goals and emotional intelligence are imperative for critical member conflicts for creativity, Professor Liao suggests team leaders can foster shared goals by clearly communicating them to team members. In addition, the leaders should not only design teams based on the functional heterogeneity needed for problem-solving but also work to select emotionally intelligent members.

Finally, Professor Liao notes that this study was conducted in China and that cultural differences may play a role in their findings. “Evidence shows that Chinese, compared to Westerners, often rely more on conflict avoidance approaches in handling task conflict because they prioritise allowing others to ‘save face’. We encourage future tests of our hypotheses in different cultures.”

The post What kind of conflict can spark creativity? first appeared on China Business Knowledge.

By Ella Chen

When hiring new staff, managers often look for candidates who show a great deal of passion for their work. But even if a new hire starts off with a bang, how long does that initial passion last? As literary giant Victor Hugo once lamented “passion does not endure” in a love letter, the same caveat can be applied in the context of work.

Much research has been conducted on the subject of passion at work, but it presented a static and one-directional view – one that assumes an employee either has the passion or doesn’t at all. Presumed to be simply a character trait, passion then leads to positive outcomes in the workplace and enhances employee satisfaction, job performance and career development.

A group of researchers believe that this view of work passion is too limited in scope and does not match the changing reality in the workplace. While previous research did find that even when an employee possesses passion, it fluctuates over time. The question remains: “How do you sustain it?”

Professor Li Wendong, Associate Professor in the Department of Management at The Chinese University of Hong Kong (CUHK) Business School, and his collaborators were one of the first to tackle this question in their study named Sustainability of passion for work? Change-related reciprocal relationships between passion and job crafting.

His team included a doctoral student at the same department, Yu Kaili, as well as Professor Zhang Xin of the Shanghai University of Finance and Economics, and Professor Hannes Zacher of Leipzig University.

New findings about passion and work behaviours

Professor Li and his team asked more than 3,500 participants at a German company over the course of 15 months to respond to questions about their work experiences and behaviours in the preceding three months.

The study demonstrates that passion for work not only can be developed on the job but also sustained over time despite its ebbs and flows. According to the study, an important factor that helps keep employees’ passion for the job alive is proactive “job crafting.”

“Job crafting is a type of goal-directed proactive behaviour that helps to align employees’ work more closely with their interests and values,” says Professor Li. “When we found out how influential job crafting is in fueling an employee’s passion for work, we realised how important personal agency is in keeping someone’s work passion alive.”

“An employee doesn’t necessarily start out with a ton of passion,” he adds. “By strategically directing and shaping the tasks, goals and connections at work, the employee can gradually grow their passion and sustain it in the long run.”

“By strategically directing and shaping the tasks, goals and connections at work, the employee can gradually grow their passion and sustain it in the long run.”

Professor Li Wendong

As a breakthrough from previous research, the study discovers a positive reinforcement loop between job crafting and sustained passion for work. This means one helps enhance the other and vice versa. So instead of a one-directional relationship, as previous research had shown, these two have a dynamic, reciprocal relationship.

Shaping the job to fuel passion

Based on existing research, there are two types of employees who exhibit passion for their work. One has “harmonious passion” while the other has “obsessive passion.”

“Those who have a high level of harmonious passion are driven by their intrinsic interests and values,” says Professor Li. “They are more likely to express their authentic selves at work and pursue goals that align with their genuine interests, talents and enduring values. They naturally devote more time and effort to job crafting. They would calibrate and recalibrate their work strategies over time to achieve their self-directed goals.”

While these employees incorporate work as part of their identity, work becomes well-integrated into their sense of self and does not take over their entire lives in an overpowering way. Their work is in harmony with other aspects of themselves, hence the term “harmonious passion.”

These employees would devote time and energy to tasks that are most meaningful to them. They also like to seek out new and stimulating tasks, and build connections with people at work who appreciate their values and support their efforts. In addition, they have a strong desire to grow their creative work capacities over time.

The close fit between their job and their internal values as a result of job crafting in turn gives these employees a greater sense of satisfaction, meaning, purpose, growth and enjoyment through their work. This further motivates them to put in even more effort to promote a higher level of alignment — thus positively reinforcing their passion for work.

The researchers conclude that a major key to sustaining passion at work is harmonious passion, and that engaging in job crafting itself can contribute to the development and enhancement of harmonious passion over time. These two forces positively reinforce each other.

When passion becomes an obsession

On the other hand, the researchers believe that this kind of positive reinforcement is less likely to occur among employees who exhibit “obsessive passion” in their work. These employees have mixed motivations in their passion for the job.

While they carry intrinsic motivations like those driven by harmonious passion, they also engage in work out of a sense of obligation, or with the goal of gaining social acceptance, meeting others’ expectations or achieving their own personal standards of excellence.

Although these employees love and value their work, they feel an intense pressure and an uncontrollable urge to work all the time. Their self-esteem may be dependent on other people’s recognition of their work contributions. They may feel compelled to work intensely to repeatedly experience the thrill of rewards from their job.

Because these employees hinge their sense of self-worth primarily on their achievements and recognitions, they are also more vulnerable to comments and events that threaten their ego. As a result, they tend to experience more negative feelings, such as anxiety and rumination.

Although less likely to engage in job crafting, when these employees do engage in it, their passion is still sustained, and the sustained obsessive passion in turn motivates them to engage in more job crafting. A caveat: the types of job crafting involved in this dynamic are more limited than the types that those with harmonious passion engage in.

Practical applications for managers and employees

The study findings shed light on how employees can cultivate and sustain their passion for work through their own efforts. So, instead of suggesting people to go find their passion and then get a job that matches it, the study demonstrates that a dynamic growth mindset can allow employees to grow their passion on the job over a period of time. This can be achieved through job crafting.

At the same time, managers can take active measures to cultivate harmonious passion in employees by providing some flexibility in their work environment.

“If managers allow some degree of customisation in their employees’ work based on their strengths and values, employees will be more likely to engage wholeheartedly with their job,” says Professor Li. “Autonomy and support go a long way in making them more passionate about their work and motivating them to further craft their job on their own initiative. This is how we can fuel the fire of their passion and keep it going.”

The post Can passion at work last? first appeared on China Business Knowledge.