Sunshine can be a boost to company fortunes

Deakin Business School’s Dr Edward Podolski has been exploring corporate innovation and finance, with a particular focus on whether the amount of sunshine that employees or executives are exposed to influences a firm’s fortunes.

“Perhaps somewhat surprisingly, sunshine does have an impact on company performance,” Dr Podolski said.

“For example, patent inventors are considerably more productive in years with greater than usual sunshine exposure around their residential location. Sunshine exposure also makes inventors concentrate their efforts on more specialised inventions. The underlying reason for this finding is that sunshine exposure makes inventors more optimistic, risk-taking, and creative.”

When it comes to corporate innovation, Dr Podolski said that executives are somewhat limited in influencing the innovation process because they have no control over the external environment, such as the weather.

“While the role of the corporate leader is undoubtedly important, corporate innovation stems from rank-and-file employees. Their mood, preferences, and emotions can therefore be just as important to corporate innovative success as the strategic decisions made by executives, such as the CEO,” he said

“Indeed, my research confirms that weather-induced mood is an important factor which stimulates inventors/research staff to take greater risks, work harder, and work in a more focused field, and as a result produce a greater volume of more valuable patents. As a consequence, the same R&D budget generates higher innovative output in sunnier years, compared with gloomier years.” 

While exposure to sunshine can bring out the best in executives and employees, the same qualities that nice weather inspires - optimism, risk-taking, creativity – can also have a dark side.

“Exposure to sunshine also influences the accounting practices of top executives, especially with respect to their likelihood of manipulating the corporate earnings that they report to their shareholders,” Dr Podolski explained.

“This is because sunshine induces managers into a positive mood which alters their subjective assessments of the benefits and risks associated with earnings manipulation.”

Mood is therefore a double edged sword, with the outcomes of weather-induced good mood depending on who is affected by it.

“My research suggests that corporate executives should strive to create a working environment which is as conducive as possible to ensuring that employees, especially the highly skilled corporate inventors, are in as good a mood as possible,” Dr Podolski said

“At the same time, boards of directors responsible for overseeing corporate executives’ behaviour, should monitor executives closely to ensure that their mood and behavioural traits do not put the firm’s fortunes in jeopardy.”