Faculty Research Looks to Latin America
HBS faculty have long found Latin America a fertile landscape for in-depth study. In Buenos Aires, nine members of the faculty presented synopses of their latest research—the raw material for present and future case studies, journal articles, books and new management ideas.
With its abundance of complex management issues in a rapidly changing environment, Latin America offers a rich landscape for in-depth academic investigation.
Some of the research work currently underway by HBS faculty is already earmarked for case studies and course development. Other projects, though, may evolve into journal articles, books, or be used to feed broader research in which Latin American entities play a key role.
According to HBS Professor Herminia Ibarra, who moderated the series of presentations by HBS faculty on their latest work in Latin America, the range of research being conducted now is extremely broad. "There was a lot more than we had first realized," she reported.
Nine HBS professors described the research they are conducting on Latin America as well as work they plan to do in the future. Later, conference participants broke into smaller groups to discuss research possibilities in more depth.
Below are snapshot summaries of their presentations.
Globalization and FDI
A native of Costa Rica, Professor Laura Alfaro teaches the Business, Government and the International Economy required course. Alfaro conducts research on why governments make particular social welfare decisions. Current research: "Is Brazil on the Path of Sustainable Growth and Development?"
Alfaro: "I want to look at competition for foreign direct investment through the eyes on Brazil. Lately, globalization and the efforts of governments to attract FDI are raising concerns that there might be bidding wars: This means governments throwing a lot of money to foreign investors. This weakens corporate finances and can also start the reallocation of resources.
"Is Brazil as a country winning or losing from this? What are the challenges and threats that Brazil faces?"
Professor Diana Barrett teaches Entrepreneurial Management and the course on Leadership, Values and Decision Making. She conducts research on the relationship between culture and performance, and also on collaboration between for-profit and nonprofit organizations. Barrett discussed her new HBS working paper, published with Professor James Austin and Sheila McCarthy, on "Cross-Sector Collaboration: Lessons from the International Trachoma Initiative."
Barrett: "We looked at two organizations, very different in scope and age and mission: the Clark Foundation and Pfizer pharmaceuticals. These two organizations wanted to get rid of trachoma by the year 2020.
"They both had very specific and clear core capabilities. Pfizer had antibiotics that nobody else had. The Clark Foundation had the network, the contacts, the knowledge of tropical medicines and the knowledge of many countries where this disease was."
Terrorism and Crime
Professor Rafael Di Tella teaches the Business, Government and the International Economy required course, and researches corruption and the optimal welfare state. Current research, with Ernesto Schargrodsky: "Using a Terrorist Attack to Estimate the Effect of Police on Crime."
Di Tella: "We are writing a paper using Argentine data. One of key questions in criminology is: Does police presence reduce crime? It may seem obvious to you: more police equals less crime. But there has been no evidence to support that [in previous studies].
"In 1994 there was a terrible terrorist attack on the Jewish community in Buenos Aires. Afterwards, the government placed one police officer in front of each Jewish institution in the country." [We were then able to cross-check data for blocks which had Jewish institutions versus blocks that did not.]
"What is crucial is that we can obtain an estimate of by how much the police presence deters crime."
Private Enterprise and the State
Professor Alexander Dyck teaches the Business, Government and the International Economy required course as well as a course on Managing Regulation, Deregulation and Privatization. His research work focuses on privatization and on the interaction between private enterprise and the state. Current research: "National Approaches to Corporate Governance."
Dyck: "What I think is most interesting are countries that have weak legal protections that nonetheless pursue share-issue privatizations. And the question is: Is that effective? Why do people do that? To countries that pursue that route: Does it work? And for firms in countries that pursue that route: How do they make it work?
"My research questions include: Were Latin American countries right to avoid share privatizations? What accounts for the apparent success of companies like YPF? Do these large share privatizations produce benefits, particularly in light of what's going on now in terms of a number of these privatized firms being de-listed? What is the role of institutional reforms in improving information and accountability?"
Global Investor Portfolio Flows
Professor Kenneth Froot teaches courses in Capital Markets, International Finance, and Risk Management. His research is on a broad range of topics in finance and international economics. Current research: "Global Investor Portfolio Flows" using data from State Street Bank for 1994-99.
Froot: "My work is on international investments: on what investors are actually doing.
"The kind of information that had been available was very sparse. State Street Bank has an IT infrastructure which allows them, in a very organized way, to pull out information on a high-speed basis.
"It tells us that it's not individual countries that are driving these flows, but rather that the willingness has to be on the part of international investors to take risks. And emerging markets can't depend any longer on just international portfolios to allow for a tidal wave of foreign money."
Business Strategy in Emerging Economies
Professor Robert Kennedy's elective course is New Opportunities in Emerging Markets. Current research: "Business Strategy in Emerging Economies."
Kennedy: "My background is in Eastern and Central Europe where I lived for five years. In the last couple years I've begun to study Latin America.
"I've written a series of papers on how industry structure changes following liberalization. Going forward I'm doing a series of cases and starting some research on high-tech clusters in emerging markets. I've done some work on India, for example, and over next few months will be working on the Internet sector in Brazil.
"Just because the world is becoming more globalized doesn't mean that everything is going to look like Silicon Valley.
"I also have a background in venture capital and am looking at the venture capital industry in different markets."
The War for Talent
Professor Ashish Nanda teaches Professional Services as well as Leadership, Values and Decision Making. His research focuses on managing professional service firms. Current research, with HBS doctoral student Boris Groysberg: "When Stars Switch Allegiance."
Nanda: "How do firms compete with one another, not only in service offerings but also in the war for talent?
"Most of my work has been focused on the USA, and I am keen to look at Latin American investment banking and management consulting.
"Are people stars because of the firms they work in? Are they specific to the firms that have developed them; or are they stars because they have some intrinsically special qualities and abilities? We have looked at investment analysts in research departments of investment banks and collected data over nine years on stars and non-stars.
"In the second part of this study, we focus on the point of view of the firms. How do different firms recruit, attract, and retain stars?
Learning to Compete
Professor Rogelio Oliva teaches the Technology and Operations Management first-year course. His research is on the relationship between the service delivery process, human resources and marketing policy, and on how these factors interact to affect service quality. Current research, with Professor Fernando Suarez: "Learning to Compete: Stages in the Competitive Transformation of Latin American Business Firms."
Oliva: "We are doing a two year study; it is 40 percent on its way.
"A number of companies in Latin America have become world-class players. These were entities that were living on small, protected markets, and are suddenly developing and decisively removing those barriers.
"What are the strategies, structures and motivations behind the transformation processes undertaken by Latin American firms? [We want to] map the learning mechanisms of Latin American firms. We're almost certain that we're going to find something different from what the conventional strategy books say you need to be doing."
Professor Pankaj Ghemawat teaches the elective course Globalization and Strategy. Current research, with Professor Tarun Khanna: "Family Ties and the Management of Business Groups: Evidence from Argentina and Chile in the 1990s."
Ghemawat: "It turns out there was in a number of cases considerable dissonance between what the group thought the value of being a member of the group was, versus what the company thought In contrast, there was much more agreement about what kind of role the group played in helping facilitate dealing with foreign financial institutions.
"We also looked at some financial measures of performance ... By far the strongest influence turned out to be the influence of family involvement and the particular form that family involvement took.
"Our preliminary results: If a family confines itself to board involvement, allows autonomy and refrains from having a family member as CEO, the company tends to do relatively well."