First Look

First Look summarizes new working papers, case studies, and publications produced by Harvard Business School faculty. Readers receive early knowledge of cutting-edge ideas before they enter the mainstream of business practice. For complete details on faculty research, see our Working Papers section.

April 8, 2008

"How people spend their money may be at least as important as how much money they earn," according to new research by HBS professor Michael I. Norton and colleagues Elizabeth W. Dunn and Lara B. Aknin. Writing in the current issue of Science, the researchers found that people felt happier when they spent money on others than when they spent it on themselves. The happiness factor held true in both a national survey and in a particular study of windfall spending.

Also up this week, a Harvard Business Review article on a new role for directors in the boardroom as a result of Sarbanes-Oxley; and cases on how an offshore wind project felt the tidal wave of Not in My Backyard Syndrome; the negotiations over stellar Japanese pitcher Daisuke (Dice-K) Matsuzaka and the Boston Red Sox; and the branding crossroads of a Chinese watch company.

 

Working Papers

None this week

 

Cases & Course Materials

AT&T v. Microsoft (A): IP Litigation Strategy

Harvard Business School Case 608-080

This case examines a hard fought litigation over a patent that originated at Bell Labs. It illustrates the challenges that technology companies face today innovating in a complex intellectual property environment in fields where there is a high amount of cumulativeness. The case highlights the leverage that good strategic thinking can bring to influencing the outcome.

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=608080

Bidding on Martha's Vineyard (A)

Harvard Business School Case 908-044

To buy a desirable Martha's Vineyard property, Robert and Sally Franklin must craft a bidding strategy informed by their assessment of their competitor. The (A) case sets up the situation and bidding history to date, describes how they assessed their valuations and probabilistic views, and leaves them with a key decision. The (B) case describes their choice as well as the twists and turns leading to the conclusion.

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=908044

Cape Wind: Offshore Wind Energy in the USA

Harvard Business School Case 708-022

Cape Wind is an extreme example of NIMBY—not in my backyard syndrome. This is the first offshore wind project planned for the United States, in Nantucket Sound, just south of Cape Cod, Massachusetts. Initially proposed six years ago, in 2001, the wind farm would be visible from Hyannis Port and Osterville, two affluent communities. The coastal residents of those towns have led a campaign in Massachusetts and in Congress to thwart the efforts of Cape Wind. This case introduces the global wind industry, the rationale for wind, and then carefully reviews the various issues associated with the project.

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=708022

Comcast New England: A Journey of Organizational Transformation

Harvard Business School Case 908405

This case describes how Kevin Casey, Comcast's New England Region general manager, transformed a low commitment and performance organization. When he took charge of this Comcast region he inherited an organization that was bureaucratic, had low customer satisfaction, and was performing poorly. The case describes the transformation journey from 2003 to 2006. The case describes the changes in the senior team, structure and processes of the organization. It follows two illustrations of a powerful employee engagement process for honest conversations between the senior team and the organization which Casey and his top team believe was an essential ingredient in the success of the transformation. The case ends with a review of changes in financial performance, employee attitudes and customer satisfaction. The case describes the important role that the human resources function played in facilitating the change process, and it describes the transformation of its role from transactional to strategic.

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=908405

Dice-K: The Hundred (Plus) Million Dollar Man

Harvard Business School Case 208-043

Describes the efforts made by the Boston Red Sox to sign superstar Japanese pitcher Daisuke (Dice-K) Matsuzaka within the context of the team's attempts to keep pace with longtime rival, the New York Yankees. In late 2006, Dice-K is viewed as the prize of the free agent pitching market. However, negotiations between the Red Sox and Dice-K's camp have broken down with the signing deadline less than 24 hours away (if Dice-K is not signed by the deadline, he must return to Japan for a year). How high should the Red Sox be willing to go with their offer? What are the alternatives if they fail to sign Dice-K? What kind of performance should they expect from Dice-K in the 2007 season? And finally, how does the signing fit into the greater strategic context of competing with the much-better funded Yankees?

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=208043

Esquel Group: Integrating Business Strategy with Society to Create Competitive Advantage

Harvard Business School Case 307-076

Focuses on the experience of China's largest shirt manufacturer in managing various aspects of government relations in China. Identifies a wide variety of social initiatives it has undertaken.

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=307076

Financing American Housing Construction in the Aftermath of War

Harvard Business School Case 708-032

At the start of WWI, the United States faced a significant housing shortage. Public officials feared the spread of disease—and even communism—in the nation's cramped urban centers where vacancy rates held near zero and families often "doubled up" in single-housing units. Hoping to spark a burst of new construction, New York Senator William Calder called for the creation of eleven regional Federal Building Loan Banks that would serve as a new source of funds for mortgage lenders. The proposal was controversial, however. Opponents disliked the fact that the Federal Building Loan Banks would have the authority to issue tax-free, mortgage-backed bonds, and many claimed that the private market would solve the housing shortage on its own. Proponents of the bill, meanwhile, believed that it was necessary to stave off a potentially disastrous and protracted housing shortage, and they cited the long-successful mortgage bond markets in France and Germany as evidence that their plan could succeed. Federal lawmakers had to assess the arguments on both sides and render a decision.

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=708032

Fiyta—The Case of a Chinese Watch Company

Harvard Business School Case 308-025

Fiyta had long been one of China's foremost watch brands. However, as China's economy began to improve and the livelihood of many Chinese rose with it, their tastes began to change. Exposed to more luxurious foreign brands, many Chinese strived to purchase a Swiss or Japanese watch. How could Fiyta build up its brand image to a more sophisticated Chinese consumer? What marketing activities should it undertake to reinvigorate its brand? Is it meeting the needs of all segments of Chinese consumers? Should it?

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=308025

Marketing the "$100 Laptop" (C)

Harvard Business School Supplement 508-065

Supplements the (A) case.

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=508065

Mid-Missouri Energy

Harvard Business School Case 708-021

Mid-Missouri Energy (MME) is a farmer-owned cooperative created to take advantage of the growing interest in ethanol as an automotive fuel. Its business largely consists of buying corn and turning it into ethanol. MME's 40-million-gallon-per-year plant began production in February 2005 and, since that time, has exceeded all performance projections. Much of this success was due to favorable corn and ethanol prices, both of which were beyond the control of MME. MME was aided by record gasoline prices and ethanol usage mandates in the 2005 energy bill. U.S. ethanol demand is projected to increase; however, corn and ethanol price swings could reduce the profitability of the business. MME must decide whether to double plant capacity, sell the plant to outside investors, or perhaps make no major changes.

Purchase this case:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=708021

The Turnaround of Chris-Craft

Harvard Business School Case 806-071

Describes a set of issues confronting the owners of Chris-Craft, a manufacturer of high-end boats. The company can invest in new monobrand stores, new boat designs, and brand extensions (e.g., apparel). The owners have also recently purchased Indian Head Motorcycle out of liquidation and must determine what to do with the asset.

Purchase this case:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=806071

 

Publications

Merchants to Multinationals

Abstract

Merchants to Multinationals examines the evolution of multinational trading companies from the eighteenth century to the present day. During the Industrial Revolution, British merchants established overseas branches which became major trade intermediaries and subsequently engaged in foreign direct investment. Complex multinational business groups emerged controlling large investments in natural resources, processing, and services in Asia, Latin America, and Africa. This edition has been specially revised for the Greek market, reflecting the historical importance of merchants within the Greek business system.

Spending Money on Others Promotes Happiness

Abstract

Although much research has examined the effect of income on happiness, we suggest that how people spend their money may be at least as important as how much money they earn. Specifically, we hypothesized that spending money on other people may have a more positive impact on happiness than spending money on oneself. Providing converging evidence for this hypothesis, we found that spending more of one's income on others predicted greater happiness both cross-sectionally (in a nationally representative survey study) and longitudinally (in a field study of windfall spending). Finally, participants who were randomly assigned to spend money on others experienced greater happiness than those assigned to spend money on themselves.

Leading from the Boardroom

Abstract

These days, boards are working overtime to comply with Sarbanes-Oxley and other governance requirements meant to protect shareholders from executive wrongdoing. But as directors have become more hands-on with compliance, they've become more hands-off with long-range planning. That exposes corporations and their shareholders to another—perhaps even greater—risk, say professors Lorsch, of Harvard Business School, and Clark, of Harvard Law School. Boards are giving the long term short shrift for a number of reasons. Despite much heavier workloads, directors haven't rethought their patterns of operating—their meetings, committees, and other interactions. Compliance has changed their relationship with executives, however, turning directors into micromanagers who closely probe executives' actions instead of providing high-level guidance. Meanwhile, the pressure to meet quarterly expectations intensifies. Directors need to do a better job of balancing compliance with forward thinking. Boardroom effectiveness hinges most on the quality of directors and their interactions, the authors' research shows. Directors must apply their wisdom broadly, handling compliance work more efficiently and staying out of the weeds on strategic issues. Using their power with management to evangelize for long-term planning, they must take the lead on discussions about financial infrastructure, talent development, and strategy. Reserving sacrosanct time for such discussions, as Philips Electronics' board does at annual retreats, is an effective practice: After one recent retreat, Philips decided to exit the semiconductor business, where it was losing ground. Individual directors also must not shy away from asking tough questions and acting as catalysts on critical issues, such as grooming a successor to the CEO. In short, directors must learn to lead from the boardroom.