Social Lens
When considering imitation and collectivism, one must examine both ideologies from a social perspective. Specifically, examining how individuals react using behavioral economics. Behavioral economics is the interdisciplinary combination of economic theory and psychology. It allows the measuring of social, emotional, and psychological factors in decision making and its biases. A team of MIT researchers analyzed content regarding published research by MIT professor Alex Pentland who is a Toshiba Professor of Media Arts and Sciences and the director of the Human Dynamics Laboratory in MIT’s Technology Review. They presented and elaborated on the work of esteemed MIT Professor Alex Pentland regarding behavioral economics. Alex Pentland has pursued multiple social physics experiments with how ideas spread. One of his most prominent is examining the outcome of imitation in investing. He was given access to data from eToro, a stock-trading platform where users can have access to viewing other people’s portfolios if members choose so. Every time someone copies your portfolio you receive a financial benefit, but no one knows whose portfolio is copied. Professor Pentland examined a distribution of users ranging from “loners”, who did not copy any other members’ portfolios, or people caught in ‘echo chambers’ where they copied portfolios already imitated several times over. The outcome that the MIT researchers found was that users with portfolios with a large variance in strategies performed at a 30% better return on investment than “loners’ or individuals in “echo chambers” (MIT Technology Review). Alex Pentland used examples from leading research projects such as the MIT research study of social physics on eToro’s trading platform to determine the outcomes of individualism vs collectivism in investing. This analysis connects ideals of synchrony and innovation from the perspective of eToro investors. In order to maximize performance individuals must consider the views of others and combine them with their own evaluations. These results can be applied to performance in work environments.
The comparison of individualism and collectivism is important to determining employee organizational strategies and how companies create individual or group cultures. Organizational individualism is a business practice where individuals, who thrive in making their own decisions and have individual responsibilities, are recognized for unique skills rather than group work. On the other hand, collectivism occurs when groups/teams are rewarded and given recognition for work. This culture practices equality of opportunities and incentivizes collective decision making (Picincu). While individualism promoted creativity it led to resistance to cooperation. Work environments cultivated by collectivist ideals generate a variety of ideas and practice selflessness to better productivity. To develop group cultures, companies can use team-based performance management systems where recognition, awards, monetary incentives, and bonuses are based on team performance rather than individual performance (Alikhani). This creates a sense of unity because collaboration and group thinking are rewarded. Additionally, more ideas are shared and teams practice analyzing colleagues’ strategies and suggestions. From a team, there are more ideas that are developed through cooperation, and as a result, better decisions are made. Team environments increase productivity, revenue, and innovation of products.
Works Cited
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Gelfand, Michele J., et al. “The Cultural Evolutionary Trade-off of Ritualistic Synchrony.” Philosophical Transactions of the Royal Society B: Biological Sciences, vol. 375, no. 1805, June 2020, p. 20190432, https://doi.org/10.1098/rstb.2019.0432.
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Ivaldi, Marc, et al. The Economics of Tacit Collusion. 2003, ec.europa.eu/competition-policy/system/files/2021-04/the_economics_of_tacit_collusion_2003.pdf.
Lieber, Chavie. “Fashion’s Copycat Problem: Why Brands like Zara Get Away with Rip-Offs.” Vox, Vox, 27 Apr. 2018, www.vox.com/2018/4/27/17281022/fashion-brands-knockoffs-copyright-stolen-designs-old-navy-zara-h-and-m.
Lieberman, Marvin B., and Shigeru Asaba. “Why Do Firms Imitate Each Other?” Academy of Management Review, vol. 31, no. 2, Apr. 2006, pp. 366–85, https://doi.org/10.5465/amr.2006.20208686.
MIT Technology Review. “Social Physics.” MIT Technology Review, 2014, www.technologyreview.com/2014/03/04/173783/social-physics/.
Monroe, Rachel. “Ultra-Fast Fashion Is Eating the World.” The Atlantic, 6 Feb. 2021, www.theatlantic.com/magazine/archive/2021/03/ultra-fast-fashion-is-eating-the-world/617794/.
Peterson, Barbara S. “Airline Collusion: It’s Nothing New and Will Be Difficult to Prove, Analysts Say.” The Guardian, 3 July 2015, www.theguardian.com/business/2015/jul/03/us-airline-collusion-investigation-prices-seat-capacity.
Picincu, Andra. “Collectivism vs. Individualism in the Workplace.” Bizfluent, 2018, bizfluent.com/info-8192993-collectivism-vs-individualism-workplace.html.
Raustiala, Kal, and Christopher Sprigman. “The Copycat Economy.” The Pennsylvania Gazette, 1 Mar. 2013, thepenngazette.com/the-copycat-economy/.
Waldman, Susan. “Copying Your Competition Is a Popular Brand Strategy — but It Can Backfire.” Washington Post, 19 Apr. 2012, www.washingtonpost.com/business/on-small-business/copying-your-competition-is-a-popular-brand-strategy–but-it-can-backfire/2012/04/19/gIQAEjnXTT_story.html.