All Articles By Date
There are 1302 articles published.
November 2009
Management and the Financial Crisis (We Have Met the Enemy and He is Us …)
| Author: | William A. Sahlman |
|---|---|
| Published: | November 19, 2009 |
| Paper Release Date: | October 2009 |
| Feature: | Working Papers |
We have spent the past year mired in a global financial crisis that few saw coming and that will plague us for years to come. Such crises are gut-wrenching. Collectively and individually, we search for causes and solutions. Too often, we look for quick fixes that do long‐term damage, or we put the equivalent of duct tape on obvious problems, missing the true root causes. HBS professor William A. Sahlman argues that the macroeconomic problems were the result of terrible microeconomic decisions. The root cause of bad decision‐making resides in the nexus of culture, incentives, control and measurement, accounting, and human capital. We now have a unique opportunity to force a review of all the players in the financial system, from individual consumers to politicians and regulators to management teams at financial services firms.
India Transformed? Insights from the Firm Level 1988-2005
| Authors: | Laura Alfaro and Anusha Chari |
|---|---|
| Published: | November 18, 2009 |
| Paper Release Date: | October 2009 |
| Feature: | Working Papers |
Between 1986 and 2005, Indian growth put to rest the concern that there was something about the "nature of India" that made rapid growth difficult. Following broad-ranging reforms in the mid-1980s and early 1990s, the state deregulated entry, both domestic and foreign, in many industries, and also hugely reduced barriers to trade. Laura Alfaro of Harvard Business School and Anusha Chari of the University of North Carolina at Chapel Hill analyze the evolution of India's industrial structure at the firm level following the reforms. Despite the substantial increase in the number of private and foreign firms, the overall pattern that emerges is one of continued incumbent dominance in terms of assets, sales, and profits in both state-owned and traditional private firms.
HBS Cases: Customer Feedback Not on elBulli's Menu
| Published: | November 18, 2009 |
|---|---|
| Feature: | Lessons from the Classroom |
The world is beating a path to Chef Ferran Adriŕ's door at elBulli, but why? In professor Michael Norton's course, students learn about marketing from a business owner who says he doesn't care whether or not customers like his product.
The Times Captures History of American Business
| Q&A with: | Nancy F. Koehn |
|---|---|
| Published: | November 16, 2009 |
| Feature: | Research & Ideas |
"We are not the first to face what seem like overwhelming challenges," says HBS professor and business historian Nancy F. Koehn. A new volume edited and narrated by Koehn, The Story of American Business: From the Pages of The New York Times, presents more than a hundred timely articles from the 1850s to today. Q&A and book excerpt.
Walking Through Jelly: Language Proficiency, Emotions, and Disrupted Collaboration in Global Work
| Authors: | Tsedal Neeley, Pamela J. Hinds, and Catherine Durnell Cramton |
|---|---|
| Published: | November 12, 2009 |
| Paper Release Date: | June 2009 |
| Feature: | Working Papers |
As organizations increasingly globalize, individuals are required to collaborate with coworkers across international borders. Many organizations are mandating English as the lingua franca, or common language, regardless of the location of their headquarters, to facilitate collaboration across national and linguistic boundaries. What is the emotional impact of lingua franca adoption on native and nonnative speakers who work closely together and often across national boundaries? This study examines the communication experience for native and nonnative English speakers in an organization that mandates English as the lingua franca for everyday use, and the impact of the lingua franca on collaboration among globally distributed coworkers. HBS professor Tsedal Neeley and coauthors describe in detail how emotions and actions were intertwined and evolved recursively as coworkers attempted to release themselves from unwanted negative emotions and inadvertently acted in ways that transferred negative experiences to their distant coworkers. Their findings have implications for managers who are charged with overseeing internationally distributed projects.
Endowments, Fiscal Federalism, and the Cost of Capital for States: Evidence from Brazil, 1891-1930
| Authors: | André C. Martínez Fritscher and Aldo Musacchio |
|---|---|
| Published: | November 10, 2009 |
| Paper Release Date: | October 2009 |
| Feature: | Working Papers |
Do endowments matter in determining the cost of capital for a country or state? Endowments, according to Banco de México's André C. Martínez Fritscher and HBS professor Aldo Musacchio, are the conditions that determine what kind of commodities can be produced and exported in a determined geographical region. Studying the determinants of the risk premium of the bonds issued by Brazilian states between 1891 and 1930—a period of extreme decentralization of fiscal revenues and expenditures in Brazil—the researchers find that risk premia are highly correlated with state public revenue per capita. Because these revenues came, to a large extent, from the taxes states levied on commodity exports, the researchers argue that endowments mattered to determine the cost of capital for states.
Come Fly with Me: A History of Airline Leadership
| Q&A with: | Anthony J. Mayo |
|---|---|
| Published: | November 9, 2009 |
| Feature: | Research & Ideas |
A new book looks at the history of the U.S. aviation industry through the eyes of its entrepreneurs, managers, and leaders—men like Pan Am's Juan Trippe and Southwest Airlines' Herb Kelleher—each emerging at different stages of the industry's evolution from start-up to rebirth. Who comes next? An interview with coauthor Anthony J. Mayo.
A Market for Human Cadavers in All but Name?
| Published: | November 5, 2009 |
|---|---|
| Feature: | Research & Ideas |
A shortage of cadavers has hampered medical education and training, a market that entrepreneurs are stepping forward to address. HBS professor Michel Anteby argues that scholars must learn more about the market dynamics of this uncomfortable subject in order to inform political debate.
Medium Term Business Cycles in Developing Countries
| Authors: | Diego Comin, Norman Loayza, Farooq Pasha, and Luis Serven |
|---|---|
| Published: | November 5, 2009 |
| Paper Release Date: | October 2009 |
| Feature: | Working Papers |
At the end of 2007, the U.S. economy entered a recession that, by the first quarter of 2009, had reduced U.S. GDP by 2.2 percent. The Mexican economy was showing no sign of distress until the U.S. recession began. Despite that, Mexican GDP declined by 7.8 percent during the same period. This and similar episodes from other developing countries motivate several questions: Why do shocks to developed economies affect developing countries to such an extent? Does the response of developing economies to shocks that originate in their developed neighbors account for the larger volatility of developing economies? More broadly, what ingredients do macroeconomic models need to incorporate in order to account for the unique features of economic fluctuations in developing economies? To investigate these questions, the researchers developed a two-country asymmetric model to study the business cycle in developing countries. The mechanisms introduced in the model should provide an accurate account of business cycles in other developing countries.
What is the Role of Government Vis-ŕ-Vis Capitalism?
| Published: | November 4, 2009 |
|---|---|
| Feature: | What Do YOU Think? |
| Forum: | open for comment; 55 Comments posted |
Online forum OPEN through November 24. A new monograph by HBS professor emeritus Bruce R. Scott describes the role that government plays in preserving both capitalism and democracy. Professor Jim Heskett asks: How should a government best support or constrain markets? What do you think?
Shareholders Need a Say on Pay
| Published: | November 2, 2009 |
|---|---|
| Feature: | Research & Ideas |
"Say on pay" legislation now under debate Washington D.C. can be a useful tool for shareholders to strengthen the link between CEO pay and performance when it comes to golden parachutes, says Harvard Business School professor Fabrizio Ferri. Here's a look at how the collective involvement of multiple stakeholders could shape the future of executive compensation.
October 2009
Estimating the Effects of Large Shareholders Using a Geographic Instrument
| Authors: | Bo Becker, Henrik Cronqvist, and Rüdiger Fahlenbrach |
|---|---|
| Published: | October 29, 2009 |
| Paper Release Date: | October 2009 |
| Feature: | Working Papers |
Are large shareholders good monitors of management? A public firm's shareholders have extensive legal control rights in the corporation, but in practice much of this control is delegated to managers. In companies with small, dispersed shareholders, owners may find it costly to coordinate and exercise monitoring and control, leaving management with considerable discretion. Large shareholders, however—by concentrating a block of shares in the hands of a single decision-maker—may play a beneficial role in facilitating effective owner control. Yet large shareholders are not without their costs. HBS professor Bo Becker and coauthors develop and test a framework to quantify the impact of large owners (individual non-managerial blockholders, not mutual funds or other institutions) on several key aspects of firm behavior. They show that such shareholders play an important role for corporate governance in sizable U.S. public firms, and can affect several firm policies.
HBS Begins Teaching Consumer Finance
| Q&A with: | Peter Tufano |
|---|---|
| Published: | October 28, 2009 |
| Feature: | Lessons from the Classroom |
Last spring HBS became the first top-ranked U.S. business school to offer a course in consumer finance. Professor Peter Tufano talks about the course and his determination to make consumer finance a broadly accepted academic pursuit. From the HBS Alumni Bulletin.
Stock Price Fragility
| Authors: | Robin Greenwood and David Thesmar |
|---|---|
| Published: | October 27, 2009 |
| Paper Release Date: | October 2009 |
| Feature: | Working Papers |
Does the composition of ownership of a financial asset influence future returns and risk? Previous economic research has documented significant price effects of investor demand in numerous settings, including retail demand for options, investor demand for bonds, and mutual funds' flow-driven demand for stocks. This paper provides a methodology to identify assets that are vulnerable to such investor demand shocks. The central idea is that assets are risky if the current owners of the asset face correlated liquidity shocks—i.e., they buy and sell at the same time. We call assets with a high concentration of owners who trade in the same direction "fragile." A related concept is "co-fragility." Two assets are "co-fragile" if their owners have correlated trading needs, even if the holdings of these owners do not directly overlap. The authors build measures of fragility for U.S. stocks between 1990 and 2007. Consistent with their predictions, more fragile stocks are more volatile, and two co-fragile stocks exhibit high correlations among their stock returns.
The New Deal: Negotiauctions
| Q&A with: | Guhan Subramanian |
|---|---|
| Published: | October 26, 2009 |
| Feature: | Executive Education |
Whether negotiating to purchase a company or a house, dealmaking is becoming more complex. Harvard Business School professor Guhan Subramanian sees a new form arising, part negotiation, part auction. Call it the negotiauction. Here's how to play the game.
Strategies to Fight Ad-sponsored Rivals
| Authors: | Ramon Casadesus-Masanell and Feng Zhu |
|---|---|
| Published: | October 22, 2009 |
| Paper Release Date: | September 2009 |
| Feature: | Working Papers |
Many companies choose to finance themselves using ad revenues and offer their products or services—from newspapers to software applications, television programs, and online search—free to consumers. Yet the emergence of ad-sponsored entrants in various industries poses significant threats to the incumbents in these markets whose business models are often based on subscriptions or fees charged to their customers. Faced with the threat from ad-sponsored entrants, incumbents must choose strategies to respond. HBS professor Ramon Casadesus-Masanell and University of Southern California professor Feng Zhu create an analytical framework to establish guidelines for incumbent firms facing these issues. The researchers consider four alternative business models: pure-subscription-based; pure-ad-sponsored; mixed-single-product; and mixed-product-line-extension. Analysis shows that the optimal strategic and tactical choices change dramatically in the presence of an ad-sponsored rival. This is the first study to provide a comprehensive analysis of the competition between a free ad-sponsored entrant and an incumbent that has the option of choosing different business models.
Transforming Giants
| Published: | October 21, 2009 |
|---|---|
| Feature: | HBS Business Summit |
A new type of 21st century company is emerging that is transforming how business is conducted. These are values-driven companies that define a core set of values and rely on these values in making all strategic decisions.
Why Are Web Sites So Confusing?
| Published: | October 19, 2009 |
|---|---|
| Feature: | Research & Ideas |
Just as bread and milk are often found at far-away ends of the supermarket, Web sites that match consumers with certain products have an incentive to steer users to products that yield the highest margins. The result: a compromise between what users want and what produces the most revenues, say HBS professor Andrei Hagiu and Toulouse School of Economics researcher Bruno Jullien. A look inside the world of search.
Mixed Source
| Authors: | Ramon Casadesus-Masanell and Gastón Llanes |
|---|---|
| Published: | October 15, 2009 |
| Paper Release Date: | September 2009 |
| Feature: | Working Papers |
As most managers know, commercial firms may benefit from participating in open source software development by selling complementary goods or services. Open source has the potential to improve value creation because it benefits from the efforts of a large community of developers. Proprietary software, on the other hand, results in superior value capture because the intellectual property remains under the control of the original developer. While the straightforward rationale for "mixed source" (a combination of the two) is appealing, what does it mean for a business model? Under what circumstances should a profit-maximizing firm adopt a mixed source business model? How should firms respond to competitors' adoption of mixed source business models? And what are the right pricing structures under mixed source compared with the proprietary business model? In this paper the researchers analyze a model where firms with modular software must decide which modules to open and which to keep proprietary. Findings can be directly applied to the design of optimal business strategies.
7 Lessons for Navigating the Storm
| Q&A with: | William W. George |
|---|---|
| Published: | October 13, 2009 |
| Feature: | Research & Ideas |
Leading in crisis requires a combination of skills and behaviors—personal and professional—that can be mastered, says HBS professor Bill George. A crisis, difficult as it is, also presents an opportunity to develop and grow. Q&A and excerpt from 7 Lessons for Leading in Crisis.
Clusters of Entrepreneurship
| Authors: | Edward L. Glaeser, William R. Kerr, and Giacomo A. M. Ponzetto |
|---|---|
| Published: | October 8, 2009 |
| Paper Release Date: | September 2009 |
| Feature: | Working Papers |
Economic growth is highly correlated with an abundance of small, entrepreneurial firms. This relationship is even stronger looking across industries within cities, and has been taken as evidence for competition spurring technological progress, product cycles where growth is faster at earlier stages, and the importance of entrepreneurship for area success. Any of these interpretations is possible, however, and the only thing that we can be sure of is that entrepreneurial clusters exist in some areas but not in others. This paper first documents systematically some basic facts about average establishment size and new employment growth through entrepreneurship, then analyzes entry and industrial structures at the region and the city levels using the Longitudinal Business Database.
Specific Knowledge and Divisional Performance Measurement
| Authors: | Michael C. Jensen and William H. Meckling |
|---|---|
| Published: | October 7, 2009 |
| Paper Release Date: | September 2009 |
| Feature: | Working Papers |
Performance measurement is one of the critical factors that determine how individuals in an organization behave. It includes subjective as well as objective assessments of the performance of both individuals and subunits of an organization such as divisions or departments. Besides the choice of the performance measures themselves, performance evaluation involves the process of attaching value weights to the different measures to represent the importance of achievement on each dimension. This paper examines five common divisional performance measurement methods: cost centers, revenue centers, profit centers, investment centers, and expense centers. The authors furnish the outlines of a theory that attempts to explain when each of these five methods is likely to be the most efficient.
