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- 08 Jan 2007
- Research & Ideas
Who Rises to Power in American Business?
Business leaders in the United States have usually been white men who were blessed with the right religion, family, or education. But "outsiders" have also created their own paths to leadership, a trend on the rise today. Paths to Power is the first book in fifty years to exhaustively analyze the demographics of leadership and access in business in the U.S., and how the face of American leadership might be changing. A Q&A with Anthony J. Mayo. Key concepts include: Paths to power in American business have followed two tracks: The inside track favors white males with the right connections. The outside path is forged by individuals who overcome significant odds to achieve success. Over the last seventy-five years, education has become more critical in creating a path to power; religion and family ties less so. Access to power appears to be widening. In the future, individuals who can operate and lead in a complex global world will be at an advantage in gaining leadership positions. Closed for comment; 0 Comments.
- 03 Jan 2007
- Working Paper Summaries
Banking Deregulation, Financing Constraints and Entrepreneurship
What effect does an increase in banking competition have on the entry of start-ups? In particular, does an increase in banking competition have a differential effect on the entry of start-ups relative to the opening of new establishments by existing firms? The U.S. branch banking deregulations provide a useful laboratory for studying how banking competition affects small businesses. Prior to 1970, all but twelve states had stringent restrictions on the ability of banks to open new branches or to acquire the branches of other banks within the state; beginning in the 1970s and until 1994, all but two states removed these restrictions. In this research, Kerr and Nanda studied the entry of newly incorporated businesses between 1976 and 1999 using detailed data collected by the U.S. Census Bureau. Their findings matter for understanding how reforms that affect the financing environment may improve the real economy through the reallocation of resources in the non-financial sectors. Key concepts include: Interstate branch banking deregulations had a positive effect on both the entry rates and entry sizes of start-ups relative to the facility expansions of existing firms. These beneficial effects were evident in multiple sectors of the economy and stronger in more financially dependent industries. While greater banking competition may hurt entrepreneurs through a decline in relationship banking or loan subsidization, the positive net effects point to substantial increases in credit provision to start-ups. The impact of financial market reforms on product market entry is an important micro-foundation for understanding and fostering economic growth. Closed for comment; 0 Comments.
- 29 Oct 2006
- Research & Ideas
The History and Influence of Andy Grove
Richard S. Tedlow discusses his research on Silicon Valley legend Andy Grove and how he altered much more than the chip industry. Closed for comment; 0 Comments.
- 03 Oct 2006
- Working Paper Summaries
Cartels and Competition: Neither Markets nor Hierarchies
Before 1945, many thinkers believed cartels brought widespread benefits. But following the spread of antitrust ideas after 1945, Adam Smith's verdict on cartels as "conspiracies against the public" prevailed. The cartel question highlights important issues about the benefits and risks of competition. This working paper maintains that, for better or worse, cartels have shaped economic and business history since the late nineteenth century. Big business must recognize how, up until the 1980s, the activities and influence of cartels affected technological development, corporate strategy, and organizational change. Key concepts include: Business historians need to broaden the discussion of cartels beyond conspiracy, or risk short-circuiting important theoretical questions. Cartel arrangements were not benign, yet they meshed more with the public interest than is recognized. If business historians take the perspective that joining cartels is a form of competitive strategy, or at least a cooperative way-station on the road toward future competition, they can explain why cartels have not damaged economic growth as much as some might expect. Studying cartels raises an intriguing question: When is competition essential to efficiency and innovation; when is cooperation? Closed for comment; 0 Comments.
- 21 Aug 2006
- Research & Ideas
How Europe Wrote the Rules of Global Finance
Following decades of liberalization, controls on cross-border capital movements are again being discussed by financial institutions, governments, and policymakers around the globe. Professor Rawi Abdelal discusses implications and the historical roles of Europe and the United States in promoting the flow of capital across national borders. Key concepts include: European policymakers, particularly the French, created regulations and enforcement that govern the majority of the world's capital flows. The U.S. has followed an ad hoc approach to capital liberalization, with no evidence it supported a liberal international financial regime. The trend toward liberalization and a lessening of capital controls on worldwide finance appears to be on the wane. Closed for comment; 0 Comments.
- 17 Aug 2006
- Working Paper Summaries
Corporate Governance and Networks: Bankers in the Corporate Networks of Brazil, Mexico, and the United States circa 1910
Brazil today looks like a typical case in which business groups and close relations between companies and banks play an important role to overcome information and monitoring problems. This was not always the case. To study how the development of financial markets can change the interaction between banks and corporations, Musacchio compared the importance of interlocking boards of directors between corporations and banks in Brazil, Mexico, and the United States at the turn of the twentieth century. This paper and previous research support Musacchio's hypothesis that financial markets in Brazil were sustained by an institutional framework that protected investors, enforced credit contracts, and promoted regular financial disclosure of company accounts. The development of bond and stock markets, and the relatively good corporate governance practices in Brazil before 1930, made connections with bankers less necessary. Key concepts include: Even though Brazil, Mexico, and the United States had very different network structures, all three achieved rapid industrial growth before 1910. Connections with bankers might be good in an environment where access to credit is limited or where close relations help to reduce asymmetries of information. But once financial markets develop, these connections to lenders are less necessary. The development of good disclosure and corporate governance practices in Brazil circa 1910 allowed companies to depend less on connections with banks in the form of corporate bond interlocks. In Brazil, bankers were less central in the network of corporate board interlocks than in Mexico and the United States. In Mexico, foreign companies had access to financial markets abroad and fewer connections with banks. This strong, dense network in Mexico substituted for some of the institutions that promoted financial development and growth in Brazil. While most people see networks and financial markets as substitutes, networks in the United States functioned as complements to financial markets. Networks may successfully substitute for some institutions and generate the credible commitments that are necessary for the expansion of markets. Closed for comment; 0 Comments.
- 08 Aug 2006
- Working Paper Summaries
Managing Governments: Unilever in India and Turkey, 1950–1980
During the postwar decades, consumer-products giant Unilever survived and even thrived in developing countries such as India and Turkey even as business conditions discouraged or drove away peer companies. Why? At least five factors explain Unilever's ability and willingness to persist in such developing countries. These factors may also explain why foreign direct investment shrank to low levels in these countries, and has remained low. Key concepts include: Most important of all, Unilever became embedded in local business and political systems, functioning as a quasi-insider. Unilever held first-mover advantage. Unilever took a long-term investment horizon, believing that sooner or later as incomes rose people would want to consume its products. A decentralized management structure gave Unilever flexibility in adjusting to the different environments of developing countries. Localization of management provided a key competitive advantage. Unilever's policy of staying outside party politics meant that it had few enemies. Closed for comment; 0 Comments.
- 08 Aug 2006
- Working Paper Summaries
Entrepreneurship and Business History: Renewing the Research Agenda
This paper identifies major opportunities to raise entrepreneurship as a central research issue in business history and to build on the strong roots that are already in place in that discipline. Historical research on entrepreneurship began in the 1940s and 1950s, much of it at Harvard Business School, but then lost momentum. Nevertheless the paper shows the major achievements in exploring how context shaped the structure of entrepreneurship, and identifying the wide variation in organizational form and entrepreneurial behavior. It concludes with the main contributions of business history to the study of entrepreneurship, and proposes a renewed research agenda. Key concepts include: Business historians are uniquely situated to integrate social science research with studies of the special character of entrepreneurship. It is important to research the historical effect of culture and values on entrepreneurial behavior, using more careful methodologies than in the past. There are major opportunities to establish the precise relationship between institutions and entrepreneurial performance. Historical research may help management researchers to understand how entrepreneurship needs to be understood within the context of time and place. Context may matter as much as the characteristics and behavior of the entrepreneurs themselves. Closed for comment; 0 Comments.
- 19 Jul 2006
- Research & Ideas
Political Turmoil and Mexico’s Economy
Professor Noel Maurer's historical research into Mexico and other countries with unstable governments shows that their economies perform better than might be expected. Why? Key concepts include: A country's political instability does not necessarily take down the economy—rules matter. The final outcome of Mexico's disputed recent presidential election will tell how far the country has moved toward democracy. U.S. attempts to reform domestic institutions of other countries have sometimes been sidetracked in favor of economic expediency. Closed for comment; 0 Comments.
- 11 Jul 2006
- Working Paper Summaries
Globalizing the Beauty Business Before 1980
Even six-month-old infants may understand what makes faces "attractive," regardless of ethnicity, but adults vary considerably in how they present themselves through clothes, hairstyles, and physical appearance. Studying the period from 1945 to 1980, this paper examines the drivers of the globalization of beauty; the strategies that firms employed to overcome challenges to globalization; and the outcomes, including the level to which globalization has brought about a homogenization of beauty ideals and practices. Key concepts include: Barriers were surprisingly strong between the U.S. and European consumer markets in the beauty industry. Large corporations struggled to succeed in the fashion-conscious hair care and cosmetics markets. By 1980, the globalization of beauty products was much more extensive in toiletries than in cosmetics. Globalization did not result in a pervading Americanization of global beauty. Closed for comment; 0 Comments.
- 10 Jul 2006
- Working Paper Summaries
Nationality and Multinationals in Historical Perspective
Many people believe that globalization has caused companies to lose their national identity. This study traces the history of corporations and nationality and finds that multinational companies have always had ambiguities, particularly before World War I. National subsidiaries became stronger in the twentieth century, and companies like Ford, for example, would feel very American in the United States, but have a more local identity in another part of the world. In the twenty-first century, globalization has caused a reemergence of issues concerning corporate nationality. However, this research shows that in many ways corporate affiliation with a country may matter more than ever. Key concepts include: The twentieth century brought an increase in international businesses with strong national ties. Today, corporate strategy, executive leadership, government relations, and brands rely heavily on location and geography. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
What Roosevelt Took: The Economic Impact of the Panama Canal, 1903-29
The Panama Canal was expected to bring great economic benefits to the people of Panama. Instead, the United States received most of the benefits. This was a deliberate act on the part of the U.S. The U.S. didn't allow Panamanian businesses to sell goods or services in the Canal Zone, it avoided the employment of Panamanian workers, and it used its military leverage to force Panama into accepting a low payment for the Canal territory. Key concepts include: The Panama Canal's greatest benefit was its effect on transportation between the east and west coasts of the U.S. The main benefit for Panama of canal construction was the introduction of new healthcare technologies. Developing countries should be wary of large infrastructure projects such as today's pipeline and land bridge projects. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Bringing History into International Business
International Business scholars often talk about history, but rarely take it seriously. The first generation of International Business scholars placed a high priority on evolutionary and historical perspectives and methodology, but little work these days grapples with the history of International Business or uses historical data to explore an issue. Jones and Khanna discuss new avenues for researching business groups in history and in contemporary emerging markets, resource-based and path-dependent theories of the firm, and foreign direct investment and development over time. Key concepts include: Move beyond assertions that "history matters" and explore how it matters. Longitudinal analysis is important. History can be treated as rigorously as conventional statistical analysis, and should be. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Bankers, Industrialists, and Their Cliques: Elite Networks in Mexico and Brazil During Early Industrialization
Mexico and Brazil had different institutional structures in the early 20th century. Did entrepreneurs in these two countries organize their business networks differently to deal with the different institutional settings? And, how can we compare the impact of the institutional structure of Mexico and Brazil on the networks of entrepreneurial finance and entrepreneurship in general? In this research, Musacchio and Read look at the networks of interlocking boards of directors of major joint stock companies in two large Latin American societies in 1909. Key concepts include: Business networks were more important for entrepreneurs, bankers, and politicians in Mexico, supplanting formal institutions to the great benefit of connected Mexican elite. In Mexico, informal monitoring and enforcement provided by the network compensated for the relatively weak rule of law. The Mexican network successfully substituted for formal institutions because it included many politicians. In Brazil, politicians were uncommon in the network because of the stronger formal institutions. At low levels of development, there is no significant difference in how a country grows, either through strong formal institutions or by substituting networks for some of those institutions. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Schumpeter’s Plea: Rediscovering History and Relevance in the Study of Entrepreneurship
Academic studies of entrepreneurship have focused on people and firms but ignored the context of history. The result is an over-reliance in the experiences of high-tech start-ups in the U.S., leading to generalizations using empirical evidence from an exceptional and atypical industry and location. Economist Joseph Schumpeter believed the study of entrepreneurial behavior made little sense without the equal study of the broader industrial, social, and economic setting in which they operated. An exchange between historical and social scientific approaches will yield far richer understanding. Key concepts include: The lessons we are learning from studies of entrepreneurship are incomplete, lacking the perspective of historical context. Closed for comment; 0 Comments.
- 16 Jan 2006
- Research & Ideas
Adam Smith, Behavioral Economist?
Adam Smith is best known for The Wealth of Nations, but professor Nava Ashraf believes another of his works, The Theory of Moral Sentiments, presaged contemporary behavioral economics. Closed for comment; 0 Comments.
- 28 Nov 2005
- Research & Ideas
Unilever: Transformation and Tradition
In a new book, professor Geoffrey Jones looks at Unilever's decades-old transformation from fragmented underperformer to focused consumer products giant. This epilogue summarizes the years 1960 to 1990. Closed for comment; 0 Comments.
- 03 Oct 2005
- Research & Ideas
The Truck Driver Who Reinvented Shipping
Malcolm P. McLean (1914-2001) hit on an idea to dramatically reduce labor and dock servicing time. An excerpt from In Their Time: The Greatest Business Leaders of the Twentieth Century by Harvard Business School's Anthony J. Mayo and Nitin Nohria. Closed for comment; 0 Comments.
- 22 Aug 2005
- Research & Ideas
Restoring a Global Economy, 1950–1980
In his recent book Multinationals and Global Capitalism, professor Geoffrey Jones dissects the influence of multinationals on the world economy. This excerpt recalls the rebuilding of the global economy following World War II. Closed for comment; 0 Comments.
Dividends from Schumpeter’s Noble Failure
Before influential Harvard economist Joseph Schumpeter wrote the seminal Capitalism, Socialism and Democracy, there came the difficult-to-digest Business Cycles. Although the book was a failure, professor Thomas K. McCraw, who has written a forthcoming Schumpeter biography, believes Business Cycles developed Schumpeter's thinking on capitalism and ultimately changed the practice of business history. Excerpted from Business History Review. Closed for comment; 0 Comments.