Happy 2026! We’re ushering in the year with a larger-than-usual edition of INSEAD Insights.

From counterintuitive discoveries about the importance of perception in car ownership and why family firms under-diversify, to classroom dynamics for non-native English business students, join us in a deep dive into diverse topics in the world of business and society.

Why family businesses often don’t diversify

You would think that family firms prioritise risk diversification since controlling families concentrate their wealth in one company, yet these firms are often under-diversified in their product offerings. Why? As Massimo Massa and his collaborators* show in their paper, many family firms first pursue exploratory innovation, which means they develop radically new technologies, before diversifying products. 

Using data from 3,391 public firms in the United States, the authors show family firms produce more exploratory patents than non-family firms, especially when under-diversified. This innovative approach, which is stronger in larger, older firms and fast-evolving industries, helps them eventually diversify business risks. 

*Po-Hsuan Hsu, University of Hong Kong; Sterling Huang, NYU Shanghai; and Yaru Qian and Hong Zhang, Singapore Management University.

Read the full paper

How much is that display in the window?

Store window displays are important for attracting shoppers, but we don't fully understand how they affect price perception. Abhishek Borah and his co-authors* examined how people's natural tendency to scan displays (clockwise or counterclockwise) as well as product height placement influence attention and pricing judgments. 

Their experiments show that clockwise viewers focus on lower shelves while counterclockwise viewers look upwards. Products placed at different heights are perceived as having different prices, depending on where people look. What’s more, when shoppers move slowly, height differences affect price perception more strongly than when they move quickly. These findings reveal how display design and timing subtly shape shopping behaviour.

*Wagner Júnior Ladeira, Universidade do Vale do Rio dos Sinos; Weng Marc Lim, Sunway University; Fernando de Oliveira Santini, Universidade do Vale do Rio dos Sinos; Tareq Rasul, Gulf University for Science & Technology; and Syed Hasan Jafar, Woxsen University.

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Supercharging digital twins with AI

Digital twins are virtual copies of real-world systems made possible by large datasets. Enver Yücesan and his co-authors* examine how artificial intelligence can make digital twins more efficient at testing different scenarios and making predictions to support better decisions. The authors present two new methods, SAMPLE and TRAIN, that combine AI with simulation tools to solve complex problems faster and with less data.

These approaches transform complex problems into AI models, reducing the need for extensive observations while enabling efficient solutions for intricate manufacturing systems. They improve how constraints are handled by converting uncertain conditions into measurable risk limits. By using information from multiple sources, they also speed up finding optimal solutions while maintaining accuracy. 

*Yuan-Yuan Liu, National Tsing Hua University; Nurçin Çelik, University of Miami; Kuo-Hao Chang, National Tsing Hua University; and Chun-Hung Chen, George Mason University.

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How firms’ access to credit affects their workers

Firms constantly face shocks affecting how production is organised and the combinations of resource inputs, which impact productivity and wage inequality. Together with Edoardo Maria Acabbi from the University of Mannheim, Alessandro Sforza investigated how credit availability, crucial for firm functioning and growth, affects firms' labour organisation. 

Using data from Portuguese firms, Sforza and Acabbi found that firms investing in machinery are more sensitive to credit shortages, responding by reducing production and specialised workers associated with machine operations. These findings illuminate how credit dynamics shape labour decisions and reveal how financial constraints could transmit to the real economy. 

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When English is not your native language

English has long been the dominant language of the world, not least in the world of business. So it is that many non-Anglophone business schools offer courses taught in English. David Dubois and his co-authors* explore how non-native students of these courses interact with native English-speaking professors.

Across four experiments, the researchers found that students experienced a threat to their self-esteem when they anticipated attending the courses. Consequently, the students made less warm first impressions, and these defensive actions made their professors want to interact with them less – the very outcome students had feared. The study highlights an overlooked psychological dimension of such courses and proposes interventions to improve student-professor interaction dynamics.

*Carmit T. Tadmor and Shai Danziger, Tel Aviv University; Inbal Stockheim, College of Law and Business Israel; Adam D. Galinsky, Columbia University; and Hila Haba, Tel Aviv University.

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Weaning people off cars: perception over reality?

High car ownership poses substantial economic and environmental costs to society. Developed public transportation is believed to be the solution, but its effect is underexplored. Ziv Carmon and his co-authors* help address the gap by examining how the actual and perceived accessibility of public transport influence car ownership. 

The researchers conducted two studies in Singapore, which has an extensive public transport network and is also one of the most expensive places in the world to own a car. They found that perceived accessibility predicted people’s intention to give up their car while actual accessibility, in fact, didn’t. These findings underscore the importance of incorporating perceptual factors into transportation policy.

*Wei Lun Yuen and Leonard Lee, National University of Singapore; Wai Yan Leong, Land Transport Authority Singapore; Charlene Chen, Nanyang Technological University; and Kai Xuan Ng and Wen Wei Chong, independent researchers.

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