A numbers person who models behaviour

Stephan Leitner realized at an early stage that he is a numbers person among the business and economics specialists, someone who feels more comfortable with the quantitative subjects than with the “softer” subjects. Today, following his recent habilitation, the newly minted associate professor pursues his research at the Department of Management Control and Strategic Management, where he is working on models that calculate the decision-making behaviour in companies as well as the effects of decisions, taking into account the behavioural sciences.

Joining us for the interview, Stephan Leitner, who offers his explanations calmly, modestly and after careful consideration, tells us that conventional research in the sphere of business sciences is characterised by a crucial gap: “Much of it is focused purely on the micro-level, by which I mean the individual behaviour of a manager or a purchaser, or it merely considers the macro-level, i.e. the overall or corporate result.” It is Leitner’s hope that his research will contribute to throwing a more powerful light on the link between the micro level and the macro level. This, he goes on to say, requires a stronger connection between differing scientific disciplines, which have an eye on both the micro and the macro level.

Providing an example, he refers to so-called investment decisions. “The classic approach would assume that all the actors involved in a company act rationally, that each individual has all the necessary information, and that everyone knows what the future holds.” This “ideal” case is clearly pure fiction. Any scientific undertaking that produces these kinds of calculations must – quite rightly, as Leitner believes – accept criticism about being very far removed from the real practical setting. Personal vanity, decisions reached in the past with their respective associated experiences, exaggerated optimism etc. must also be incorporated into the models, in order to be able to generate scenario simulations that are closer to reality. Consequently, Leitner and his colleagues are working to strengthen the psychological perspective by combining it with classic research methods: “One of the approaches we took was to relax certain restrictive assumptions in the models, such as rationality, and then we examined the results using simulations. For some of the mechanisms in the realm of classic business studies we already know which framework conditions produce good results, and which produce poor results. We can also define how framework conditions should be designed – for example in the context of investment activities – in order to ensure that the mechanisms work smoothly.” The aim of the ongoing research is to define processes that take into account the “human aspect” in the business sphere, while still leading to a sound decision. “This could be promising for the micro as well as the macro level: A good decision taken by the individual could result in an optimised result at the company level.”

Somewhat doubtful whether it is possible to model and simulate something as complicated as a human being and human behaviour, we ask how close to reality we can get with this method. Stephan Leitner explains: “A model is always an abstraction of an actual fact. It is impossible to model every single aspect, but we are attempting to approximate reality by designing restrictive assumptions more realistically.  The individuals we use in our models are modelled so that they learn over the course of time. As a rule, we learn from experience, yet nonetheless, in a real-life setting, it is exceedingly rare that anyone reaches an ideal decision in the mathematical sense.”

Stephan Leitner completed his cumulative habilitation earlier this year, and has been associate professor at the Department of Management Control and Strategic Management since the beginning of March. His current research interests lie in general aspects of relationships involving delegation: “My aim is to model at the meta-level, ultimately making it possible to closely examine the relationship between doctor and patient, or between owner and manager.” By completing his habilitation, Leitner has fulfilled the qualification agreement and, should he wish to, he can remain in the scientific sphere at the AAU. “I feel no pressure at the moment, but on a fundamental level I would like to continue my development, and I am prepared to go elsewhere in order to do that.” We delve deeper: “So you would continue as a scientist, even though you could earn a higher salary in a practical setting? Isn’t that an ‘irrational’ decision?”, only to be told: “The question of what is irrational is always a question of how the target is defined. In my case, it would appear that income is not a dominant factor.” Science permits the necessary freedom to work on whatever currently fascinates him most. That is also how he entered the career path he is following today: After completing his school leaving examination at a higher vocational college and a brief period in the corporate world, Stephan Leitner studied Applied Business Administration in Klagenfurt, and felt drawn to Management Accounting from the start: “Most of us can be divided into those who prefer the “softer” subjects, and those of us who are numbers people. I seem to belong to the second group.” Stephan Leitner has always endeavoured to understand what is behind the numbers in real life, and he has discovered that Management Accounting research serves very well as a place both to pose these questions and to find the answers.

A few words with … Stephan Leitner

What would you be doing now, if you had not become a scientist?

Once I was sure that I wanted to study, I made a choice between Applied Business Administration and Medicine. Had my choice been different, I would probably have become a doctor.

Do your parents understand what it is you are working on?

They understand the basics. Some of the models we study are very specific, but they can be transferred reasonably well to general situations.

What is the first thing you do when you arrive at the office in the morning?

I check the results of the simulation experiments that usually run during the night-time hours.

Do you have proper holidays? Without thinking about your work?

Yes and no. Having a “clear” head during my vacation means that I sometimes come up with new ideas for my research.

What makes you furious?

Discourtesy and injustice.

What calms you down?

Spending time in nature.

Who do you regard as the greatest scientist in history, and why?

That is tricky to answer. In the realm of business studies and economics I greatly admire scholars who have contributed to the ongoing development of contract theory, such as Bengt Holmström or Oliver Hart. But at the same time, I also appreciate the remarkable contributions by scientists who have integrated psychological aspects into their research in the business sciences. These include contributions by Daniel Kahneman or Amos Tversky. Moving beyond the scope of business studies, names such as Robert Koch or Wilhelm Röntgen also come to mind.

What are you looking forward to?

New challenges, both in the private and in the professional sphere. And right now, I’m also looking forward to the summer.