Why Are Web Sites So Confusing?
| Published: | October 19, 2009 |
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| 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 |
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| 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.
Breakthrough Inventions and Migrating Clusters of Innovation
| Author: | William R. Kerr |
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| Published: | September 30, 2009 |
| Paper Release Date: | September 2009 |
| Feature: | Working Papers |
In just a short period of time the spatial location of invention can shift substantially. The San Francisco Bay Area grew from 5 percent of U.S. domestic patents in 1975-1984 to over 12 percent in 1995-2004, for example, while the share for New York City declined from 12 percent to 7 percent. Smaller cities like Austin, Texas, and Boise, Idaho, seem to have become clusters of innovation overnight. Despite the prevalence of these movements, we know very little about what drives spatial adjustments in U.S. invention, the speed at which these reallocations occur, and their economic consequences. In this paper, HBS professor William R. Kerr investigates whether breakthrough inventions draw subsequent research efforts for a technology to a local area. Evidence strongly supports the conclusion that centers of breakthrough innovations experience subsequent growth in innovation relative to their peer locations.
Informed and Interconnected: A Manifesto for Smarter Cities
| Authors: | Rosabeth Moss Kanter and Stanley S. Litow |
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| Published: | July 23, 2009 |
| Paper Release Date: | June 2009 |
| Feature: | Working Papers |
To make our cities and communities smarter, we must become a little smarter ourselves, seeking information and an agenda to forge connections enabling collaboration, according to HBS professor Rosabeth Moss Kanter and IBM's Stanley S. Litow. Their vision is that someday soon, leaders will combine technological capabilities and social innovation to help produce a smarter world. That world will be seen on the ground in smarter cities composed of smarter communities that support the well-being of all citizens. This paper outlines eight challenges facing cities and the communities they encompass, based on experience in the United States. Kanter and Litow provide examples of practices and programs led by both government and nonprofit organizations, many technology-enabled, that point the way to solutions, and they conclude with a call for leaders to embrace an agenda for change.
Markets or Communities? The Best Ways to Manage Outside Innovation
| Q&A with: | Karim R. Lakhani |
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| Published: | July 20, 2009 |
| Feature: | Research & Ideas |
No one organization can monopolize knowledge in any given field. That's why modern companies must develop a new expertise: the ability to attract novel solutions to difficult or unanticipated problems from outside sources around the world. A conversation with Harvard Business School professor Karim R. Lakhani on the keys to managing distributed innovation.
Technology Innovation and Diffusion as Sources of Output and Asset Price Fluctuations
| Authors: | Diego A. Comin, Mark Gertler, and Ana Maria Santacreu |
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| Published: | July 2, 2009 |
| Paper Release Date: | May 2009 |
| Feature: | Working Papers |
A central challenge to modern business cycle analysis is that standard macro models are unable to generate fluctuations in the stock market with the amplitude, persistence, and lead-lag pattern observed in the data. At the same time, standard macro models predict that good news about future, such as those received during 1994-1995 on the arrival of IT, lead to recessions rather than expansions. HBS professor Diego Comin and coauthors develop a model that overcomes these two problems by explicitly incorporating an endogenous speed of diffusion of technologies that is increasing in the resources spent in adoption. Revisions in beliefs about future profits generate fluctuations in the stock market with the amplitude and lead over output observed in the data. The firms' investment decisions in adoption leads to a shift in labor demand that increases hours worked and output.
File-Sharing and Copyright
| Authors: | Felix Oberholzer-Gee and Koleman Strumpf |
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| Published: | July 1, 2009 |
| Paper Release Date: | May 2009 |
| Feature: | Working Papers |
The researchers argue that file-sharing technology has not undermined the incentives of artists and entertainment companies to create, market, and distribute new works. The advent of new technology has allowed consumers to copy music, books, video games, and other protected works on an unprecedented scale at minimal cost. Such technology has considerably weakened copyright protection, first of music and software and increasingly of movies, video games, and books. While policy discussion surrounding file-sharing has largely focused on the legality of the new technology and the question of whether declining sales in music are due to file-sharing, the debate has been overly narrow. Copyright protection exists to encourage innovation and the creation of new works—in other words, to promote social welfare. This essay analyzes the landscape and identifies areas for more research.
Do Friends Influence Purchases in a Social Network?
| Authors: | Raghuram Iyengar, Sangman Han, and Sunil Gupta |
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| Published: | May 21, 2009 |
| Paper Release Date: | April 2009 |
| Feature: | Working Papers |
In spite of the cultural and social revolution in the rise of social networking sites such as Facebook and MySpace (and in South Korea, Cyworld), the business viability of these sites remains in question. While many sites are attempting to follow Google and generate revenues from advertising, will advertising be effective? If friends influence the purchases of a user in a social network, it could potentially be a significant source of revenue for the sites and their corporate sponsors. Using a unique data set from Cyworld, this study empirically assesses if friends indeed influence purchases. The answer: It depends. Findings are relevant for social networking sites and large advertisers.
The IT Leader's Hero Quest
| Q&A with: | Robert D. Austin, Richard L. Nolan, and Shannon O'Donnell |
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| Published: | May 11, 2009 |
| Feature: | Research & Ideas |
Think you could be CIO? Jim Barton is a savvy manager but an IT newbie when he's promoted into the hot seat as chief information officer in The Adventures of an IT Leader, a novel by HBS professors Robert D. Austin and Richard L. Nolan and coauthor Shannon O'Donnell. Can Barton navigate his strange new world quickly enough? Q&A with the authors, and book excerpt.
Catering to Characteristics
| Authors: | Robin Greenwood and Samuel Hanson |
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| Published: | March 20, 2009 |
| Paper Release Date: | March 2009 (revised June 2009) |
| Feature: | Working Papers |
Can patterns of corporate net stock issuance help identify times when particular characteristics, such as industry, size, or book-to-market ratio, are mispriced? The authors of this study argue that differences between the characteristics of issuers and repurchasers can shed light on characteristic related stock returns. Consider the case in which analysts were interested in forecasting the returns of Google. The standard approach would be to collect Google's characteristics (e.g., large, technology, non-dividend paying, etc) and associate these characteristics with an average return in the cross-section. The authors argue that if other stocks with these characteristics are issuing stock, this bodes poorly for Google's future returns, even if Google is itself not issuing. This research by HBS professor Robin Greenwood and Harvard doctoral student Samuel Hanson has implications for studying the stock market performance of seasoned equity offerings (SEOs), initial public offerings (IPOs), and recent acquirers.
Published in 2008
The Sciences of Design: Observations on an Emerging Field
| Authors: | Sandeep Purao, Carliss Y. Baldwin, Alan Hevner, Veda C. Storey, Jan Pries-Heje, Brian Smith, and Ying Zhu |
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| Published: | November 26, 2008 |
| Paper Release Date: | October 2008 |
| Feature: | Working Papers |
This paper examines the sciences of design as an emerging field of study that cuts across disciplinary boundaries. The paper summarizes and synthesizes the positions, reflections, opportunities, and challenges expressed at the first doctoral consortium to explore the topic, held in 2008. It thus provides a useful agenda for clarifying and articulating important strands of this nascent field.
Was the Wealth of Nations Determined in 1000 B.C.?
| Authors: | Diego A. Comin, William Easterly, and Erick Gong |
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| Published: | November 20, 2008 |
| Paper Release Date: | October 2008 |
| Feature: | Working Papers |
To the extent that history is discussed at all in economic development, it is usually either the divergence associated with the Industrial Revolution or the effects of colonial regimes. Is it possible that precolonial, preindustrial history also matters significantly for today's national economic development? The authors find that technology adoption circa 1500 A.D., prior to the era of colonization and extensive European contacts, predicts approximately 50 percent of cross-country differences in both current per capita income and technology in a large cross-section of countries. When exploring the causes of this extreme persistence in technology, they find evidence in favor of the importance of the effect of current adoption on subsequent adoption as the main driver. This leaves a limited role to country-specific factors such as institutions, geography, or genes to explain the persistence of technology.
Social Media Leads the Future of Technology
| Published: | November 10, 2008 |
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| Feature: | HBS Business Summit |
From Facebook to smartphones, advances in technology are changing the way we work and communicate. Professor David Yoffie led three experts in a recent panel discussion on "The Technology Revolution and its Implications for the Future" at the HBS Centennial Business Summit.
Technology, Identity, and Inertia through the Lens of 'The Digital Photography Company'
| Author: | Mary Tripsas |
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| Published: | October 31, 2008 |
| Paper Release Date: | September 2008 |
| Feature: | Working Papers |
Why do established firms find some technological change so challenging? While existing research has identified numerous sources of inertia in established firms exploring new technological domains, identity is a critical piece of the puzzle. As the core essence of an organization, identity directs and constrains action. The routines, procedures, capabilities, knowledge base, and beliefs of an organization all reflect its identity. So when a technology is identity-challenging to an organization—when pursuing it would violate the core beliefs of both insiders and outsides about what the firm represents—organizations face significant obstacles to adopting it. This study by Tripsas highlights the importance of recognizing and evaluating the tradeoffs associated with technological opportunity and organizational identity.
Platform Rules: Multi-Sided Platforms as Regulators
| Authors: | Kevin J. Boudreau and Andrei Hagiu |
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| Published: | October 24, 2008 |
| Paper Release Date: | October 2008 |
| Feature: | Working Papers |
Using case studies of Facebook, Tokyo's Roppongi Hills "mini-city," Harvard Business School, and TopCoder, a vendor of outsourced software products, Boudreau and Hagiu explore how multi-sided platforms (MSPs) regulate an industry ecosystem. An MSP is a platform that enables interactions between multiple groups of surrounding consumers and complementors. As the authors demonstrate, the regulatory role played in these cases by MSPs was pervasive and at the core of their business models. That regulatory role goes beyond price-setting and includes imposing rules and constraints, creating inducements, and generally shaping behaviors. These various non-price instruments essentially solve problems that could otherwise lead to market failure. The authors' analytical framework suggests a two-step approach for a platform owner: (1) maximize value created for the entire ecosystem, and (2) maximize the value extracted. "Platform Rules" is a chapter in the forthcoming book Platforms, Markets and Innovation, Gawer, A. (ed) (2009), Cheltenham, UK and Northampton, MA, U.S.: Edward Elgar.
The Agglomeration of U.S. Ethnic Inventors
| Author: | William R. Kerr |
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| Published: | August 14, 2008 |
| Paper Release Date: | July 2008 |
| Feature: | Working Papers |
The higher concentration of immigrants in certain cities and occupations has long been noted. There has been very little theoretical or empirical work to date, however, on the particular agglomeration of U.S. immigrant scientists and engineers. This scarcity is disappointing given the scale of these ethnic contributions and the importance of innovation to regional economic growth. William R. Kerr's study contributes to our empirical understanding of agglomeration and innovation by documenting patterns in the city-level agglomeration of ethnic inventors (e.g., Chinese, Indian) within the United States from 1975 through 2007. It is hoped that the empirical platform developed in this study provides a foothold for furthering such analyses.
Diffusing Management Practices within the Firm: The Role of Information Provision
| Authors: | Michael J. Lenox and Michael W. Toffel |
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| Published: | April 17, 2008 |
| Paper Release Date: | March 2008 |
| Feature: | Working Papers |
Managers face a range of options to diffuse innovative practices within their organizations. This paper focuses on one such technique: providing practice-specific information through mechanisms such as internal seminars, demonstrations, knowledge management systems, and promotional brochures. In contrast to corporate mandates, this "information provision" approach empowers facility managers to decide which practices to actually implement. The authors examine how corporate managers diffused advanced environmental management practices within technology manufacturing firms in the United States. The study identifies several factors that encourage corporate managers to employ information provision, including subsidiaries' related expertise, the extent to which the subsidiaries were diversified or concentrated in similar businesses, and the geographic dispersion of their employees.
On Best-Response Bidding in GSP Auctions
| Authors: | Matthew Cary, Aparna Das, Benjamin G. Edelman, Ioannis Giotis, Kurtis Heimerl, Anna R. Karlin, Claire Mathieu, and Michael Schwarz |
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| Published: | February 6, 2008 |
| Paper Release Date: | January 2008 |
| Feature: | Working Papers |
Keyword auctions have become a critical source of revenue for Google and Yahoo!, among others. This new form of advertising has provided a new way for advertisers to reach customers. But advertisers also face the complex task of optimizing bids to increase their exposure while avoiding unnecessary costs. HBS professor Benjamin Edelman and colleagues analyzed a class of bidding strategies that attempt to increase advertiser utility under limited assumptions about other players' behavior. Under a strategy they call Balanced Bidding (BB), advertisers converge to the advertiser-preferred equilibrium—achieving stability of bids and reducing advertisers' costs relative to other possible outcomes.
Published in 2007
The Changing Face of American Innovation
| Q&A with: | William R. Kerr |
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| Published: | November 5, 2007 |
| Feature: | Research & Ideas |
Chinese and Indian scientists and engineers have made an unexpectedly large contribution to U.S. technology formation over the last 30 years, according to new research by HBS professor William R. Kerr. But that trend may be ebbing, with potentially harmful effects on future growth in American innovation.
HBS Cases: The Evolution of Apple
| Published: | July 25, 2007 |
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| Feature: | Lessons from the Classroom |
Apple's continuing development from computer maker to consumer electronics pioneer is rich material in a number of Harvard Business School classrooms. Professor David Yoffie discusses his latest case study of Apple, the 5th update in 14 years, which challenges students to think strategically about Apple's successes and failures in the past, and opportunities and challenges in the future.
