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.

May 20, 2008

Women tend to earn less than men in the same positions. Can differing negotiation skills shed any light on this persistent "gender wage gap"? According to Hannah Riley Bowles and Harvard Business School's Kathleen McGinn, in a working paper available for download, the effects of gender on negotiation in work situations need to be better understood in tandem with the effects of gender on bargaining at home over household and child-care responsibilities.

As they write, the outcomes for candidates at a new job "are the product of negotiations with domestic partners as well as prospective employers."

Bowles and McGinn's paper, "Gender in Job Negotiations: A Two-Level Game," is adapted from a chapter in the forthcoming Academy of Management Annals.

Cases this week look at Mexico's Banco Compartamos, a microfinance institution contemplating life after a successful initial public offering; the quandary facing a top Verizon executive who wonders whether to reveal her sexual orientation in a work atmosphere of intolerance; and a portrait of Cambrian House, an Internet-based products and services enterprise that considers deploying a prediction market.

 

Working Papers

Gender in Job Negotiations: A Two-Level Game

Abstract

We propose a two-level-game (Putnam, 1988) perspective on gender in job negotiations. At Level 1, candidates negotiate with the employers. At Level 2, candidates negotiate with domestic partners. In order to illuminate the interplay between these two levels, we review literature from two separate bodies of literature. Research in psychology and organizational behavior on candidate-employer negotiations sheds light on the effects of gender on Level 1 negotiations. Research from economics and sociology on intra-household bargaining elucidates how negotiations over the allocation of domestic labor at Level 2 influence labor force participation at Level 1. In conclusion, we integrate practical implications from these two bodies of literature to propose a set of prescriptive suggestions for candidates to approach job negotiations as a two-level game and to minimize disadvantageous effects of gender on job negotiation outcomes.

Download the paper: http://www.hbs.edu/research/pdf/08-095.pdf

Optimal Life-Cycle Investing with Flexible Labor Supply: A Welfare Analysis of Life-Cycle Funds

Abstract

We investigate optimal consumption, asset accumulation and portfolio decisions in a realistically calibrated life-cycle model with flexible labor supply. Our framework allows for wage rate uncertainly, variable labor supply, social security benefits and portfolio choice over safe bonds and risky equities. Our analysis reinforces prior findings that equities are the preferred asset for young households, with the optimal share of equities generally declining prior to retirement. However, variable labor materially alters pre-retirement portfolio choice by significantly raising optimal equity holdings. Using this model, we also investigate the welfare costs of constraining portfolio allocations over the life-cycle to mimic popular default investment choices in defined-contribution pension plans, such as stable value funds, balanced funds, and life-cycle (or target date) funds. We find that life-cycle funds designed to match the risk tolerance and investment horizon of investors have small welfare costs. All other choices, including life-cycle funds which do not match investors' risk tolerance, can have substantial welfare costs.

Download the paper from SSRN ($5): http://papers.nber.org/papers/w13966

I'll Have the Ice Cream Soon and the Vegetables Later: A Study of Online Grocery Purchases and Order Lead Time (Revised)

Abstract

How do decisions made for tomorrow or two days in advance differ from decisions made for several days in the future? We use novel panel data from an online grocer to address this question. In general, we find that as the delay between order completion and delivery increases, grocery customers spend less, order a higher percentage of "should" items (e.g., vegetables), and order a lower percentage of "want" items (e.g., ice cream) controlling for customer fixed effects. However, orders placed by a customer for delivery tomorrow versus two days in the future do not show this want/should pattern, and we briefly discuss survey results suggesting a potential explanation for this.

Download the paper: http://www.hbs.edu/research/pdf/07-078.pdf

 

Cases & Course Materials

AEC Systems Business Plan

Harvard Business School Case 808-145

This business plan, which was prepared to accompany the CommonAngels case (No. 807-149), enables students to decide whether to invite an entrepreneur to present to potential angel investors.

Purchase this case:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=808145

Banco Compartamos: Life after the IPO

Harvard Business School Case 308-094

After an international IPO yielding extraordinary returns to original investors, Banco Compartamos, Mexico's leading microfinance institution, contemplates its future strategic and competing priorities: maintaining growth, defending industry, leadership, preserving social mission, and meeting the expectations of a demanding capital market. Additionally, Compartamos' Co-CEOs must decide how to face the highly polarized reactions in the microfinance industry to its IPO. In the process, the case examines the history of Compartamos, from its NGO origins to its license as a full-service bank; describes the competitive context of low-income sector of financing in Mexico; and reviews the decisions leading to the IPO in the Mexican Stock Exchange.

Purchase this case:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=308094

Cambrian House

Harvard Business School Case 608-016

Cambrian House builds Internet-based products and services by relying entirely on its user community for all aspects of its innovation and new product development process. Users suggest ideas for new products and services and also participate in a monthly voting process to select the best ideas. The company is now considering the deployment of a prediction market to deepen user involvement and commitment in its innovation; however, it is not sure if it is an appropriate strategy for its community.

Purchase this case:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=608016

China Resources Corporation (B): China Resources Microelectronics

Harvard Business School Supplement 107-015

Supplements the (A) case. Late in October 2006, China Resources (Holdings) Co., Ltd. (CRC) CEO Charlie Song Lin, CFO Jiang Wel, and Information Center GM Derek Cheng were traveling from Hong Kong to Wuxi, China to attend the first ever meeting of China Resources Microelectronic's (CRM) newly established Office of Strategy Management. The team had high hopes for this meeting as CRM was not only one of CRC's most strategically important profit centers, but also a potential model for the implementation of the CRC 6S management system in all of CRC's 19 profit centers.

Purchase this supplement:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=107015

'Doer's Profile' Bill Gates (William H.) (1955 - )

Harvard Business School Compilation 808-083

Profile of Bill Gates designed to facilitate a discussion of the nature of enduring success. Includes both biographical data and excerpts from autobiographical records.

Purchase this compilation:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=808083

Lisa Sherman (A)

Harvard Business School Case 408-115

The case of Lisa Sherman (A) describes a highly successful executive at Verizon struggling with whether to reveal her sexual identity. Having attended a diversity training workshop in which participants expressed extremely negative views of gays and lesbians, Sherman must decide whether to leave the company, reveal her identity as a lesbian and work within the system, meet with the CEO to share what has happened, or continue to remain in the closet while working at Verizon.

Purchase this case:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=408115

Lisa Sherman (B)

Harvard Business School Supplement 408-116

Supplements the (A) case.

Purchase this supplement:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=408116

Opportunity Partners

Harvard Business School Case 208-097

Philip Goldstein, the principal in a growing hedge fund and prominent activist investor, has taken a position in a Mexico-based closed-end fund. Following a hard-fought proxy contest in which he advocated for management to eliminate the fund's substantial discount, Goldstein earns a seat on the board of directors. Now he and the board are faced with the decision of how best to "unlock value" in the fund by delivering Net Asset Value to shareholders. The case, which provides rich detail on the workings of closed-end funds, invites students to examine the trade-offs among liquidating the fund, converting it to an open-end fund, or carrying out a self-tender offer. It also raises topics of fund selection and investing in country-specific funds such as Mexico.

Purchase this case:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=208097

Patel Food and Chemicals Private Limited (A)

Harvard Business School Case 808-142

Alok Patel, the founder and chairman of a Gujarat-based, privately held edible oils processor, must decide whether to hire a CFO candidate. Previously, his company's book-keeping has been done by an uncle, who has mentioned that he may retire soon. Patel could hire his younger son, who is just finishing his MBA at UCLA; but accounting was not Aakash's strength, and Patel has read that a strong finance person can help position a company for success. The company has recently experienced significant growth due to a new program of branded oils, and Patel is worried that the financials are getting away from his uncle. The most qualified candidate, though, comes from a different region. Should Patel hire a non-family member for this sensitive position? If so, should he go so far as to hire someone who does not come from his home region?

Purchase this case:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=808142

Patel Food and Chemicals Private Limited (B)

Harvard Business School Supplement 808-143

Supplements the (A) case.

Purchase this supplement:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=808143

Patel Food and Chemicals Private Limited (C)

Harvard Business School Supplement 808-144

Supplements the (A) case.

Purchase this supplement:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=808144

Rubbish Boys

Harvard Business School Case 808-101

It looked like founder-CEO Brian Scudamore might not be able to pursue franchising as a growth option for his junk-removal business after all. Over the years, he had overcome many hurdles, including buying out his "too-fiery" co-founder, firing all of his employees so he could start all over again when he became disillusioned with the company's developing culture, and failing at experimenting with student franchising to increase the rate of growth. Now looking to expand within North America, he had turned to a professional franchising model and had developed a new brand to help grow the business. Paul Guy, his first franchisee who was beginning his operations in Toronto, had just called. "Brian, my wife's relative just told me that I'm crazy to open here because the city picks up things for free. It's crazy to charge $300 to pick something up when they can get the same service for free! We had never heard of that in Vancouver, but that's a big problem here!" Was Guy over-reacting, or had Scudamore made a major mistake in his growth strategy?

Purchase this case:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=808101

Shareholder Activists at Friendly Ice Cream (A)

Harvard Business School Case 108-024

Two activist investors, one a founder and one a hedge-fund manager, seek to improve board oversight at a chain restaurant company. Prestley Blake founded Friendly Ice Cream in 1935 with his brother, and the two created a chain of full-service restaurants. In 1979 they sold the business and retired. In 2000, Blake became concerned that Friendly's CEO, who owned approximately 10% of Friendly and also owned a larger percentage of another restaurant company, was shifting expenses between the businesses in a way detrimental to Friendly shareholders, but personally advantageous to the CEO. Further, Blake believed that Friendly's board of directors was not meeting their fiduciary obligations to shareholders by properly overseeing the activities of the CEO, and that the directors had conflicts of interest, because they were involved with the CEO's non-Friendly business activities. In 2003, Blake filed a lawsuit against the CEO and the company. In 2006, Sardar Biglari, a hedge-fund manager who had invested in Friendly, entered into negotiations with Friendly for him to join the board of directors to help improve the management of the business. When these negotiations failed, Biglari launched a proxy fight against Friendly in 2007. While these two activist investors shared similar objectives, they worked independently and chose different strategies.

Purchase this case:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=108024

Shareholder Activists at Friendly Ice Cream (B)

Harvard Business School Supplement 108-073

Supplements the (A) case.

Purchase this supplement:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=108073

ZenG Business Plan

Harvard Business School Case 808-146

This business plan, which was prepared to accompany the CommonAngels case (No. 807-149), enables students to decide whether to invite an entrepreneur to present to potential angel investors.

Purchase this case:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=808146

 

Publications

Learning in Environmental Policymaking and Implementation

Abstract

This paper explores how "learning" occurs in the context of environmental policy formulation and implementation. Rather than viewing policy learning as a rational and technocratic process, the emphasis here is on the political and institutional contexts within which opportunities for policy learning emerge. In particular, opportunities for policy learning are examined with respect to: a) agenda or priority-setting on environmental issues; b) stakeholder access and representation in policy formulation; and c) accountability in implementation. Examples are drawn from the experiences of South Africa and Brazil. Several preliminary factors are identified that may enhance policy learning, while acknowledging the constraints of bounded rationality and relationships of power.

Book link: http://publications.worldbank.org/ecommerce/catalog/product?item_id=5990301