- 30 Mar 2011
- Working Paper Summaries
Temptation at Work
Among the many distractions that keep office employees from their work, surfing the web is arguably the most irresistible time-waster of all. In order to deal with that problem, many companies either prohibit Internet use during working hours, or closely monitor employees' web activity. This means workers must wait until they get home to get their daily YouTube fix. But does forbidding this distraction actually increase productivity? In this paper, researchers find that the answer is no—and that delaying gratification actually has a negative impact on employee performance. Research was conducted by Alessandro Bucciol of the University of Verona and the University of Amsterdam, Daniel Houser of George Mason University, and Marco Piovesan, a research fellow at Harvard Business School. Key concepts include: Experimental research finds that subjects who were told to resist the temptation of watching a funny video made significantly more mistakes on a subsequent task than subjects who were allowed to watch the video right away. The findings suggest that employers should not tell employees not to surf the web in situations where the web is technically available to them. Rather, these companies should either remove web access entirely or, when this is not practical, allow a certain amount of time for personal Internet activity. Employers might also consider allowing regular Internet breaks, in the same way that they offer coffee and cigarette breaks. Closed for comment; 0 Comments.
- 29 Mar 2011
- Working Paper Summaries
Risky Trust: How Multi-entity Teams Develop Trust in a High Risk Endeavor
Work that comes with high risk requires a great deal of trust among the individuals involved, whether it's the financial risk of producing a high-budget film or the personal safety risk of working in a war zone. In this paper, reporting on case study research on a high-risk, multimillion-dollar construction project, HBS doctoral candidate Faaiza Rashid and professor Amy C. Edmondson explore the concept of "risky trust," and examine how colleagues can learn to trust each other in the midst of high-risk work situations. Key concepts include: Trusting the intentions and competence of other team members always matters, but in risky situations it's especially vital that workers can also trust the procedures of a team project. Teams can repair damaged trust not only through process innovations, but also by overcoming social barriers to trust. Leadership is a vital activity that can come from multiple individuals in a high-risk project, to facilitate and build understanding. This requires a focus on initial discourse among the team, as well as communicating the importance of trust to the project. Trust at an interpersonal level does not automatically translate to trust at the interorganizational level. Closed for comment; 0 Comments.
- 29 Mar 2011
- First Look
First Look: March 29
Accounting for iPhones … A light on the future … Opening the black box of innovation. Closed for comment; 0 Comments.
- 28 Mar 2011
- Research & Ideas
Why Manufacturing Matters
After decades of outsourcing, America's ability to innovate and create high-tech products essential for future prosperity is on the decline, argue professors Gary Pisano and Willy Shih. Is it too late to get it back? From HBS Alumni Bulletin. Closed for comment; 0 Comments.
- 25 Mar 2011
- Working Paper Summaries
How Do Incumbents Fare in the Face of Increased Service Competition?
Companies that compete by offering a high level of service are particularly vulnerable to lose customers—even longtime customers—when competitive entrants offer increased service levels, according to new research in the retail banking industry by Ryan W. Buell, Dennis Campbell, and Frances X. Frei, all of Harvard Business School. The good news for providers of high-touch service is that if they can sustain the service advantage over time, they could be rewarded with higher value customers. Key concepts include: Incumbents offering high quality service attract and retain customers who are disproportionately service sensitive and systematically vulnerable to competitors offering superior service. It is the high quality incumbent's most valuable customers—those with the longest tenure, most products, and highest balances—who are the most vulnerable to superior service alternatives. Conversely, when the incumbent fails to maintain a high service position within the market, its customers are vulnerable to competitors offering inferior service but lower prices. Firms that make the strategic decision not to compete on service may not need to be concerned about the entry or expansion of competitors offering superior service. A long-run implication is that incumbents that can sustain a high level of service relative to local competitors will be able to attract and retain higher value customers over time. Closed for comment; 0 Comments.
- 24 Mar 2011
- Working Paper Summaries
Individual Rationality and Participation in Large Scale, Multi-Hospital Kidney Exchanges
As kidney exchange moves from local networks to a national level, a new set of problems arises. One central issue, for example, is how individual hospitals can be motivated to participate. This paper by Itai Ashlagi (Sloan School of Management, MIT) and Alvin E. Roth (Harvard Business School) provides a theoretical framework to study and overcome the kinds of problems that can be anticipated. Key concepts include: The paper addresses the growing problem of providing hospitals with incentives to participate fully in a national kidney exchange, in order to achieve the gains that exchange on a large scale makes possible. Hospitals might be reluctant to enter a national exchange if it means they would have to give up kidneys to other institutions that could be used in their own patients. In large markets it is possible to redesign the matching mechanisms to guarantee individually rational allocations to hospitals at very modest cost in terms of "lost transplants." If care is taken in how kidney exchange mechanisms are organized, the problems of participation may be less troubling in large exchange programs than they are starting to be in multi-hospital exchanges as presently organized. Closed for comment; 0 Comments.
- 23 Mar 2011
- Working Paper Summaries
Do US Market Interactions Affect CEO Pay? Evidence from UK Companies
CEOs of UK firms receive higher total compensation if their companies have interactions with US product, capital, and labor markets. Moreover, the compensation package is often adopted from American-style arrangements, such as the use of incentive-based pay. Researchers Joseph J. Gerakos (University of Chicago), Joseph D. Piotroski (Stanford), and Suraj Srinivasan (Harvard Business School) analyzed data on the compensation practices of 416 publicly traded UK firms over the period 2002 to 2007. Key concepts include: The reason to compare similarity with the level and style of US pay is because CEOs of US companies typically are among the highest paid in the world. The UK firms' interactions with US markets were measured on four variables: the relative importance of US sales to the firm, the level of prior US acquisition activity, the presence of a US exchange listing, and the US board experience of the firm's directors. All four US market interaction variables correlated with greater pay, but only US operational activities (sales and acquisitions) were associated with pay similar to US-style contracts. The increased compensation alleviates internal and external pay disparities arising from the presence of US operations and businesses, and compensates CEOs for bearing the additional risk and responsibility associated with exposure to foreign securities laws and legal environments. Closed for comment; 0 Comments.
- 23 Mar 2011
- Research & Ideas
China’s 60-Year Road from Revolution to World Power
In a new book, The People's Republic of China at 60: An International Assessment, HBS professor William C. Kirby discusses common assumptions about pre-revolutionary China and its development into an economic power. Key concepts include: Essays in the book address four main themes: politics; social transformations; wealth and well-being; and culture, belief, and practice. Kirby refers to the first three decades of the PRC as "a regime of wasted, and wasteful—not to mention criminal—youth." However, he says, many of the essays in the book show how the country has taken good advantage of the last three decades. Mid-century revolutionaries and scholars cited the economy as a major reason that China needed a revolution. However, the country actually sustained decent financial growth, fueled by private enterprise, from the 1910s until the onset of the global depression of the 1930s and the Sino-Japanese war in 1937. While China's central government was weak in the first half of the twentieth century, the country during that time developed strong methods of institution-building at the national, provincial, municipal, and local levels. Closed for comment; 0 Comments.
- 22 Mar 2011
- First Look
First Look: March 22
Each week First Look summarizes new working papers, case studies, and publications produced by Harvard Business School faculty. Closed for comment; 0 Comments.
- 22 Mar 2011
- Working Paper Summaries
Platform Competition under Asymmetric Information
Research by Hanna Halaburda (Harvard Business School) and Yaron Yehezkel (Tel Aviv University) shows how pricing, profits, and market efficiency are affected in two-sided markets, such as with smartphone and video game platforms, when users and developers do not know the utility or costs associated with the platform until they join. Key concepts include: Under competition, asymmetric information-where one party has more or better information than the other-may lead to a downward distortion of trade, even market failure, while under monopoly full efficiency is achieved. The combination of the informational problem and the presence of competition creates the market inefficiency. A third main result concerns multi-homing, the ability for a developer to create applications for multiple platforms. The incumbent platform earns higher profit under multi-homing, and multi-homing eliminates the incumbent's need to distort the quantity downward. The model underscores why it is usually entrants, not incumbents, that bring major technological innovations to the market. Entrants are more likely to adopt a new, highly risky technology given the information problem. Closed for comment; 0 Comments.
- 21 Mar 2011
- Research & Ideas
Are We Thinking Too Little, or Too Much?
In the course of making a decision, managers often err in one of two directions—either overanalyzing a situation or forgoing all the relevant information and simply going with their gut. HBS marketing professor Michael I. Norton discusses the potential pitfalls of thinking too much or thinking too little. Closed for comment; 0 Comments.
- 18 Mar 2011
- Working Paper Summaries
Schumpeterian Competition and Diseconomies of Scope: Illustrations from the Histories of Microsoft and IBM
Firms dominant in one era are often less successful in new technological eras, despite being able to exploit economies of scope and other incumbent advantages. What leads to this Schumpeterian creative destruction? Researchers Timothy Bresnahan (Stanford), Shane Greenstein (Northwestern), and Rebecca Henderson (Harvard Business School) look to IBM and Microsoft for an answer. Key concepts include: Traditional explanations for creative destruction include the view that an incumbent, fearing cannibalization of its own business, under-invests in new technology. Another explanation has an incumbent, blinded by its own biases, slow to see new opportunities. Looking at the introduction of the PC and web browser, the researchers propose a third explanation: that initial successes by both IBM and Microsoft in their respective new areas was stalled by corporate resistance after they requested more resources to grow. In IBM and Microsoft's case this conflict eventually led to control of the new business being given to the old and, in both cases, effectively crippled the new business. Closed for comment; 0 Comments.
- 17 Mar 2011
- Research & Ideas
Harvard Business School Faculty Comment on Crisis in Japan
Harvard Business School faculty share their views and insights about the challenges that lie ahead for Japan's business leaders and for global companies operating there. Closed for comment; 0 Comments.
- 17 Mar 2011
- Working Paper Summaries
Marketplace Institutions Related to the Timing of Transactions
Certain markets face the problem of "unraveling," in which competition for good talent leads a firm to make job offers earlier and earlier, without sufficient knowledge about any given applicant—and in which applicants are forced to decide whether to accept a job before they really know much about working for that firm. Harvard Business School professor Alvin E. Roth discusses how this issue affects the labor markets for new lawyers and gastroenterology fellows, as well as the market for postseason college football bowls. Key concepts include: The market for postseason college bowls is one in which the negative effects of unraveling can be easily quantified: If two teams are matched to play a postseason game before they have finished the regular season, it's possible that one or both will lose some of their remaining regular season games, making the postseason bowl game less attractive to potential TV viewers than it would have been if it had featured more successful teams. Efforts to stop the problem of unraveling in the market for law graduates have generally been unsuccessful, as have attempts to establish uniform dates for recruiting and hiring. This proves that unraveling is a problem even in markets such as law, where salaries are easily adjustable. On the other hand, the market for new medical residents has faced little unraveling ever since that market introduced a stable resident matching system. This negates the idea that rigid pricing is the cause of unraveling, because the medical field generally pays its new residents uniformly across the board. Closed for comment; 0 Comments.
- 16 Mar 2011
- Working Paper Summaries
Driven by Social Comparisons: How Feedback about Coworkers’ Effort Influences Individual Productivity
Francesca Gino and Bradley R. Staats explore how the valence (positive versus negative), type (direct versus indirect), and timing (one-shot versus persistent) of performance feedback affects an employee's job productivity. Specifically, through field experiments at a Japanese bank, they investigate the extent to which job performance is affected when employees learn where they stand relative to their coworkers. Key concepts include: Telling an employee that her job performance falls in the bottom of her group will lead that employee to better her performance. But telling her that she is at the top of the group will not significantly affect performance. An indirect approach yields different results. An employee who simply learns that he doesn't fall in the bottom of his group is likely to worsen his productivity, while an employee who simply learns that he isn't in the top of his group is not likely to change his work habits at all. Persistence is effective. Employees who receive persistent feedback from employers are likely to perform better at work than those who don't, and that goes for both positive and negative feedback. Closed for comment; 0 Comments.
- 15 Mar 2011
- First Look
First Look: March 15
The downside of preventing personal Internet use at work … From technical experts to game changers … The IKEA effect. Closed for comment; 0 Comments.
- 14 Mar 2011
- Research & Ideas
Water, Electricity, and Transportation: Preparing for the Population Boom
By 2050, the world's cities will have to support 3 billion more inhabitants, mostly in developing countries, with crucial investments needed in three areas: water, energy, and transportation. Several of the planet's top city planning and environmental business experts gathered at Harvard Business School earlier this month to discuss available options. Closed for comment; 0 Comments.
- 14 Mar 2011
- Research & Ideas
Keeping Credit Flowing to Consumers in Need
Regulators and policymakers are debating the best ways to revamp our damaged system of consumer and housing finance. The problem: turning the regulatory spigot too tightly could shut off the flow of needed credit to millions of lower-income Americans. A discussion with professor Nicolas P. Retsinas. Key concepts include: The economy will continue to depend on large numbers of low-wage workers. If lenders tighten credit too stringently, millions of Americans will be barred from borrowing. The challenge is to recalibrate the country's access to credit so that more responsibility for making good loans lies with lenders, and so that the burden is not almost entirely on borrowers. Open for comment; 0 Comments.
- 10 Mar 2011
- What Do You Think?
To What Degree Does the Job Make the Person?
Summing Up: Jobs shape us as much as we shape our jobs, Jim Heskett's readers suggest. Closed for comment; 0 Comments.
What Do CEOs Do?
If time is money, as the old adage goes, then a CEO's schedule is especially important to a firm's financial success. This raises a fair question: What do CEOs do all day? To that end, researchers followed the activities of 94 CEOs in Italy over the course of a pre-specified week, enlisting the CEOs' personal assistants to track their bosses' activities with time-use diaries. Research was conducted by Raffaella Sadun of Harvard Business School, Luigi Guiso of the European University Institute, and Oriana Bandiera and Andrea Prat of the London School of Economics. Key concepts include: Compared with CEOs who work shorter hours overall, CEOs with longer workdays tend to devote more time meeting with other employees within the company and less time meeting with outsiders. The better the firm's governance structure, the more likely it is that a CEO will spend more time meeting with insiders than outsiders. The findings show a strong correlation between hours worked and productivity—a 2.14 percentage point increase in productivity for every one percentage point increase in hours worked. That positive correlation is driven entirely by the time a CEO spends with company insiders. Time spent with insiders is correlated with profits; time spent with outsiders is not. A possible interpretation is that spending time with outsiders might be more beneficial to the CEO than to the firm. Closed for comment; 0 Comments.