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What lessons can managers learn about corporate strategy from the growing controversy about phone-hacking at the now defunct News of the World newspaper, part of Rupert Murdoch’s News Corp.?

Daniel Raff, associate professor of management at the Wharton school at the University of Pennsylvania, says that the Murdoch strategy for creating a twenty-first century media empire was scuppered by the traditional newspaper business. “It’s conceivable that this very 21st century media plan will be upset by the shady practices of the legacy parts of the media empire.”

In an article in Knowledge@Wharton, Prof Raff points out that News Corp. had pinned much of its UK strategy on acquiring the 61 per cent of BSkyB it did not already own, so that it could create profitable bundles of products, including ordinary television, premier sporting events and newspapers. The newspaper business is far less profitable, he adds.

The Wharton professor also notes that many actions by News Corp. and its subsidiaries “might raise eyebrows in corporate governance circles”.

Meanwhile statisticians at Wharton and the Kellogg school at Northwestern University are taking on an equally controversial subject: global warming.

Blakeley McShane, assistant professor of marketing at the Kellogg School, and Abraham Wyner of the Wharton School, warn that the models used to predict temperature changes often lack statistical validity. In particular, they highlight natural proxies, such as tree rings and ice cores, which, they argue, have been weak predictors of global annual temperatures over the last 1,000 years.

Proxy-based temperature reconstructions such as the renowned “hockey stick” graph have arguably become the most iconic illustration of global warming - this temperature reconstruction which features a long flat “handle” indicating relatively consistent temperatures for 900 years, followed by a sharp upward “blade”, which indicated that temperatures had increased dramatically over the past 100 years.

“We conclude unequivocally that the evidence for a ‘long-handled’ hockey stick is lacking in the data,” the authors wrote in the study. “Natural climate variability is not well understood and is probably quite large,” the authors wrote. “It is not clear that the proxies currently used to predict temperature are even predictive of it at the annual or decadal scale over several centuries.”

In their study, published in The Annals of Applied Statistics, the two statisticians assessed the reliability of temperature reconstructions and their statistical significance against various models.

www.wharton.upenn.edu

www.kellogg.northwestern.edu

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