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.
March 3, 2009
HBS professor Michael E. Porter applies his strategy expertise to the HIV/AIDS crisis in a new working paper available for download [PDF]. In "Applying the Care Delivery Value Chain: HIV/AIDS Care in Resource Poor Settings," Porter and coauthors develop a framework to assist in the design of care delivery in places such as Sub-Saharan Africa. As they write, "By delineating the activities involved in this care cycle and describing how they interrelate, we can evaluate how the sequence of activities should be aligned with value for patients. We can also address such issues as how to improve coordination across activities, how appropriate human resources should be deployed across the care cycle, how facilities should best be designed to enhance value, and how information should be shared among activities."
This week sees a wealth of new faculty publications and a number of cases specifically addressing the economic woes and how some organizations have coped: "Milliway Capital: Battening Down the Hatches," "Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis," "The Federal Reserve and the Banking Crisis of 1931," and "The World Food Programme during the Global Food Crisis."
Adding Bricks to Clicks: The Contingencies Driving Cannibalization and Complementarity in Multichannel Retailing (revised)
|Authors:||Jill Avery, Thomas J. Steenburgh, John Deighton, and Mary Caravella|
This paper empirically explores the contingencies that drive cannibalizing and complementary effects across channels to provide sales forecasting, promotion planning, and customer relationship management guidance to multichannel managers. We investigate three contingencies in a sales analysis of a leading U.S. retailer who adds a new retail store channel to existing catalog and online channels. We show that the emergence and strength of cannibalizing and complementary effects vary over time, across type of channel, and by type of customer and provides insight into when and where managers can expect these effects to dominate and how to counter cannibalization and promote complementarity across channels. We find that opening retail stores cannibalizes sales in the catalog and online channels in the short term but produces complementary effects in both channels in the long term; cannibalization is magnified in the catalog channel, while complementarity is magnified in the online channel. Customer analysis suggests that opening retail stores paves the way for higher rates of customer acquisition and higher rates of repeat purchasing among existing customers in the direct channels in the long term.
Download the paper: http://www.hbs.edu/research/pdf/07-043.pdf
Strategic Interactions in Two-Sided Market Oligopolies (revised)
|Authors:||Emmanuel Farhi and Andrei Hagiu|
Strategic interactions between two-sided platforms depend not only on whether their decision variables are strategic complements or substitutes as for one-sided firms, but also—and crucially so—on whether or not the platforms subsidize one side of the market in equilibrium. For example, with prices being strategic complements across platforms, we show that a cost-reducing investment by one firm may have a positive effect on its rival's profits and a negative effect on its own profits when one side is subsidized in equilibrium. By contrast, if platforms make positive margins on both sides, the same investment has the regular, expected effects. Our analysis implies that the strategy space and the logic of competitive advantage are fundamentally different in two-sided markets relative to one-sided markets.
Download the paper: http://www.hbs.edu/research/pdf/08-011.pdf
Why Do Intermediaries Divert Search? (revised)
|Authors:||Andrei Hagiu and Bruno Jullien|
We analyze the incentives to divert search for an information intermediary who enables buyers (consumers) to search affiliated sellers (stores). There are three motives for diverting search (i.e., inducing consumers to search more than they would like): 1) trading off higher total consumer traffic for higher revenues per consumer visit, 2) reducing the variance of store profits when store affiliation decisions are endogenous, and 3) influencing stores' choices of strategic variables (e.g., pricing) once they have decided to affiliate. We show that search diversion remains a necessary strategic instrument for the intermediary even when the contracting space is significantly enriched. This allows the intermediary to charge consumers fixed fees, to offer them screening contracts, and to subsidize search allowing stores' strategic decisions to be contractible or controlled by the intermediary.
Download the paper: http://www.hbs.edu/research/pdf/08-010.pdf
Why Do Intermediaries Divert Search? – Companion Paper
|Authors:||Andrei Hagiu and Bruno Jullien|
This is a companion paper to paper No. 08-010.
Download the paper: http://www.hbs.edu/research/pdf/09-092.pdf
Exclusivity and Control (revised)
|Authors:||Andrei Hagiu and Robin S. Lee|
We analyze platform competition for content in the presence of strategic interactions between content distributors and content providers. We provide a model of bargaining and price competition within these industries and show that whether or not a piece of content ends up exclusive to one platform depends crucially on whether or not the content provider maintains control over the pricing of its own good. If the content provider sells its content outright and relinquishes control over its price, the content will tend to be exclusive unless there are sufficient market expansion effects. On the other hand, if the content provider maintains control of its pricing, the strategic interaction between prices set by the content provider and by the platforms leads to a non-monotonic relationship between exclusivity and content quality: both high- and low-quality content will multihome and join both platforms, but there will be a range of quality for which content will be exclusive despite foreclosing itself from selling to a portion of the market. In addition, we show that contrary to standard results on double marginalization and pricing of complementary goods, a platform that already has exclusive access to content may prefer to relinquish control over pricing and associated revenues from the content to the content provider in order to reduce price competition at the platform level.
Download the paper: http://www.hbs.edu/research/pdf/08-009.pdf
Applying the Care Delivery Value Chain: HIV/AIDS Care in Resource Poor Settings
|Authors:||Joseph Rhatigan, Sachin H. Jain, Joia S. Mukherjee, and Michael E. Porter|
The care delivery value chain is a framework that can help conceptualize the organization and structure of care delivery for medical conditions. We apply this framework to HIV/AIDS care in resource-limited settings. Several conclusions arise than can help inform the design of care delivery platforms for HIV/AIDS.
Download the paper: http://www.hbs.edu/research/pdf/09-093.pdf
Cases & Course Materials
Accenture's War for Talent in India
Harvard Business School Case 408-095
No abstract is available at this time.
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Big Spaceship: Ready to Go Big?
Harvard Business School Case 409-047
Big Spaceship, a digital marketing agency, faced a rather big challenge: How to scale the distinctive culture that was essential to its competitive strategy? Renowned for the cutting-edge websites that it developed to market major Hollywood movies and leading consumer brands, the firm had won numerous awards and garnered considerable attention within the advertising industry. In mid-2008, Big Spaceship remained small (it had fewer than 50 employees) but was poised for significant growth. For founder and CEO Michael Lebowitz, the central challenge was to figure out whether and how the agency could retain its boutique culture while transcending its boutique size. The case begins by briefly outlining Lebowitz's background, along with the history of Big Spaceship since its founding in 2000. Then the case shifts to a discussion of external dynamics: the firm's value proposition, which focused on providing start-to-finish, strategy-driven digital marketing solutions; its interaction with clients; and its relationship with established players in the advertising industry. Next, the case examines the firm's internal dynamics. Here, in addition to describing the culture of Big Spaceship, the case puts special emphasis on the firm's recent shift from a functional structure to a team-based structure. Finally, the case provides an overview of key issues that Lebowitz and his team must consider as they plan for the firm's growth—how to raise capital, how to gauge the optimal size for the company, and how to manage an expanding staff. A major highlight of the case is the inclusion of more than a dozen graphically compelling exhibits, which help to illustrate the firm's value proposition, its innovation-oriented culture, and its evolving organizational design.
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The Canada Pension Plan Investment Board
Harvard Business School Case 809-073
The Canada Pension Plan Investment Board is one of the largest and fastest-growing pools of investment capital in the world and follows an unusually active program of investment management. In the market turmoil of late 2008, Mark Wiseman, Senior Vice President of the Private Investments Department, must decide if this approach is still the best way to fulfill his organization's goal of protecting and increasing the pension assets of 17 million Canadians.
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CityCenter (A): Vision and Design
Harvard Business School Case 209-052
CityCenter is a $9 billion project for MGM MIRAGE. The project's star architects have a major disagreement about a critical design issue. Bill Smith, head of the MGM MIRAGE Design Group, must resolve this issue to the satisfaction of all the project's stakeholders. This case explores many issues in the construction of large-scale buildings: how to envision such a project, how to manage the architects, how different designs add value, and what criteria matter in resolving a dispute between designers. The case also explores the construction costs and revenue benefits of having two buildings built with significant leaning away from vertical.
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Creating The Partnership Solutions Group at Lehman Brothers
Harvard Business School Case 409-042
Explores how two senior Wall St. executives created a successful commercial opportunity for Lehman Brothers that focused on building relationships with minority- and women-owned financial services firms. Illustrates how Patricia Miller Zollar and Nadja Fidelia aligned the Partnership Solutions Groups' activities with Lehman Brothers' "one-firm" strategy in ways that created economic value for the firm. Delves into the challenges of developing this business in an industry that tends to view "diversity" initiatives as activities that seek only to benefit society and not as opportunities to create economic gain.
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The Dojima Rice Market and the Origins of Futures Trading
Harvard Business School Case 709-044
In 1730, Japanese merchants petitioned shogun Tokugawa Yoshimune to officially authorize trade in rice futures at the Dojima Exchange, the world's first organized (but unsanctioned) futures market. For many years, the Japanese government had prohibited the trade of futures bills because it was widely regarded as a form of gambling that caused rice prices to rise. However, when the price of rice fell to record lows in the late 1720s, the samurai (whose income was tied to the value of rice) saw their economic position fall relative to the merchant class, whose growing economic power worried the nation's elites. The shogun responded by easing restrictions on futures trading, but without officially sanctioning a futures market at Dojima. The question now was whether he should heed the merchants' petition and take the next step.
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The Fall of Enron
Harvard Business School Case 109-039
The case traces the rise of Enron, covering the company's business innovations, personnel management, and risk management processes. It then examines the company's dramatic fall including the extension of its trading model into questionable new businesses, the financial reporting problems, and governance breakdowns inside and outside the firm. The case offers students an opportunity to explore why Enron failed and to understand the systemic problems in governance that affected its board of directors, the audit committee, the external auditors, and financial analysts.
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The Federal Reserve and the Banking Crisis of 1931
Harvard Business School Case 709-040
In early October 1931, in the midst of a global economic depression, the U.S. banking system was in crisis—with bank suspensions running at near record levels. At the same time, the broader economy was sputtering, and U.S. gold reserves had come under severe pressure after Britain abandoned its gold standard in mid-September. As pressure continued to mount, the leaders of the Federal Reserve faced several critical decisions. Should they adjust interest rates? Was abandoning the gold standard an acceptable option? Should they lend more freely to the nation's commercial banks? Or would this only ensure the sorts of financial excess that had gotten the country into trouble in the first place? Was it time to give in to the mounting pressure, or to hold firm?
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F-Secure Corporation: Software as a Service (SaaS) in the Security Solutions Market
Harvard Business School Case 809-099
Describes the development of a business model based on "software as a service" (SaaS) for security solution distributed through Internet Service Providers (ISPs). F-Secure disruptively entered a mature business with dominant players by executing an innovative new service model. The case describes the challenges involved in developing and executing the new service model and offers students opportunities to discuss the evolving challenges the company faces looking forward.
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Milliway Capital: Battening Down the Hatches
Harvard Business School Case 809-072
Facing the downturn in late 2008, the partners in a West-Coast venture capital firm are trying to decide how to manage their portfolio companies and whether to make new investments. Not only must they consider the particulars of each company individually, but they must also think about how to manage the entire firm's portfolio.
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Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis
Harvard Business School Case Case 709-041
This case describes the efforts of Ben Bernanke, Chairman of the Federal Reserve, to improve liquidity in money markets during the subprime crisis. The case explains the four main new tools for monetary policy (or quantitative easing) the Federal Reserve has used between 2007 and 2009: the Term Auction Facility (TAF), the Primary Dealer Credit Facility (PDCF), the Term Securities Lending Facility (TSLF), and the Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF).
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Sydney IVF: Stem Cell Research
Harvard Business School Case 109-017
This case examines the strategy implementation and risk management decisions at Sydney IVF, a research-based in vitro fertilization and stem cell company based in Australia. Drs. Robert Jansen and Jock Anderson, who co-founded Sydney IVF in 1986, developed novel technologies which they leveraged to carve a leadership role in the inherently risky artificial fertilization business. As the company grew, its executives grappled with managing the political, ethical, and business risks associated with the contentious lab-based fertility field, instituting sophisticated safeguards such as an independent ethics committee and a "whistle blower" system for employees concerned with the company's practices. In less than two decades, Sydney IVF grew from just four employees to over 200, expanded internationally, and broadened its services to include prenatal screening for genetic diseases and DNA tests to determine lineage and paternity. In addition, the company launched a wholly-owned subsidiary, the Stem Cell Company. CEO Robert Jansen hoped to grow the Stem Cell Company but faced many challenges, including the significant ethical risks, challenging regulatory environment, and uncertain future of the stem cell field. The case describes how Jansen safeguards against risk without stifling the innovative spirit necessary to commercialize stem cells.
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TripIt: The Traveler's Agent
Harvard Business School Case 809-059
In July 2008, the co-founders of TripIt, a free online travel organizer that aggregated travelers' bookings from many top travel websites, had recently secured $5.1 million in new financing. While the co-founders believed that their company offered travelers a unique service, they felt growing pressure from investors to show that the company could grow revenues and achieve profitability. To be profitable, TripIt needed not only to grow its user base but also generate more traveler itineraries, which was critical to obtaining advertising revenue from travel suppliers and intermediaries. The online travel industry was a hyperactive industry, and while TripIt was breaking new ground, the threat of competitors was very real.
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When Supply Is of Public Interest: Roche & Tamiflu
Harvard Business School Case 609-061
The case focuses on the challenges of Roche maintaining a supply network for a global influenza pandemic response initiative based on its antiviral drug Tamiflu. The Roche group is a 40 billion CHF company consisting of a pharmaceutical division and a diagnostic division. The company's antiviral drug Tamiflu dominates the market for prevention and treatment of seasonal influenza (flu). Tamiflu, however, could also play an important role in responding to the first wave of a pandemic caused by a particularly harmful strain of the influenza virus A. Tamiflu was designed to be effective against any strain of Type A or B influenza. Thus, there was the potential to establish a preparedness plan based on creating a stockpile of the drug in conjunction with an appropriate plan for distribution to the affected population. The use of Tamiflu in such a crisis would allow the world to respond immediately, rather than having to wait for development of a vaccine which had limitations in its effectiveness, and the drug had been endorsed by the WHO as a first line of defense. The case focuses on the challenges of Roche maintaining a supply network for a global pandemic response initiative. Managing supply is particularly challenging for three reasons. First, demand for stockpile quantities is spiky and uncertain, and governments placing orders expect lead times to be short. Second, lead times for increasing capacity are long, as are lead times for drug production and encapsulation. Last, media coverage and press releases made by governments and other stakeholders increase the stakes, as negative media coverage may damage Roche's reputation with consumers, leading to lower sales levels for its products.
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The World Food Programme during the Global Food Crisis (A)
Harvard Business School Case 709-024
Rising food prices threatened an unprecedented number of people around the world with malnutrition or starvation in 2008. The new Executive Director of the United Nations' World Food Programme (WFP)—the world's largest food relief agency—must not only address this challenge but also must rethink the WFP's strategy in the rapidly changing world of humanitarian assistance.
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Harvard Business School Case 809-090
Yieldex Founder, Doug Cosman, is faced with the decision to sell his young software start-up for $4 million or to hire a CEO (Tom Shields) and pursue Series A venture capital financing. His angel investors and CEO candidate Tom Shields believe he should reject the offer and focus on building the company into a bigger enterprise. Cosman is attracted to the financial rewards offered by the potential acquirer.
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Yoshiko Shinohara and Tempstaff
Harvard Business School Case 409-049
The case presents a biographical portrait of Yoshiko Shinohara who founded Tempstaff in 1973, one of the largest temporary staffing agencies in Japan. In addition to chronicling Shinohara's entrepreneurial activities, the case provides contextual background about the role of women in business in Japan in the last few decades of the 20th century.
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Finding Your True North: A Personal Guide
|Authors:||Bill George, Andrew McLean, and Nick Craig|
|Publication:||San Francisco: Jossey-Bass, 2008|
Based on Bill George's bestselling book True North, this personal guide offers leaders a comprehensive method for identifying their unique "True North." The book offers methods for personal reflection and includes targeted exercises that help leaders hone in on the purpose of their leadership and develop their authentic leadership skills.
Cost Accounting: A Managerial Emphasis
|Authors:||Charles T. Horngren, George Foster, Srikant M. Datar, Madhav Rajan, and Chris Ittner|
|Publication:||13th ed. Prentice Hall, 2009|
Emphasizing the "different costs for different purposes," this text focuses on strategy and the decision-making process. With a tradition of being the market leading text and professional standard, the new edition has deepened its strategic focus and emphasis and invested in market-breaking MyAccountingLab tutorial support.
Perspectives on the Productivity Dilemma
|Authors:||Paul S. Adler, Mary Benner, David James Brunner, John Paul MacDuffie, Emi Osono, Bradley R. Staats, Hirotaka Takeuchi, Michael Tushman, and Sidney G. Winter|
|Periodical:||Journal of Operations Management (in press)|
For more than a century, operations researchers have recognized that organizations can increase efficiency by adhering strictly to proven process templates, thereby rendering operations more stable and predictable. For several decades, researchers have also recognized that these efficiency gains can impose heavy costs. The capabilities that enable consistent execution can also hinder learning and innovation, leaving organizations rigid and inflexible. By optimizing their processes for efficiency in the short term, organizations become brittle. In the "Productivity Dilemma", Abernathy conjectured that short-term efficiency and long-term adaptability are inherently incompatible. Organization theorists have conceptualized Abernathy's dilemma as the challenge of balancing exploitation and exploration. Exploitation leverages existing knowledge and capabilities, resulting in stable and efficient performance. Exploration creates new knowledge, enabling organizations to innovate and adapt to changing conditions. Enduring organizational performance requires ambidexterity, the ability to sustain both exploration and exploitation. Various techniques have been proposed for achieving ambidexterity, such as differentiated exploratory subunits and meta-routines that modify underlying processes. Ambidexterity requires operational processes that combine high levels of efficiency with the flexibility to evolve and improve over time. Thus, the perspectives of operations management are essential to understanding the mechanics of ambidexterity. Moreover, theories of ambidexterity raise important questions for operations management. This article synthesizes several recent perspectives on the dynamics of ambidexterity and the productivity dilemma.
Applicant and Examiner Citations in U.S. Patents: An Overview and Analysis
|Authors:||Juan Alcácer, Michelle Gittelman, and Bhaven Sampat|
|Periodical:||Research Policy 38, no. 2 (March 2009): 415-427|
Prior art patent citations have become a popular measure of patent quality and knowledge flow between firms. Interpreting these measurements is complicated, in some cases, because prior art citations are added by patent examiners as well as by patent applicants. The U.S. Patent and Trademark Office (USPTO) adopted new reporting procedures in 2001, making it possible to measure examiner and applicant citations separately for the first time. We analyzed prior art citations listed in all U.S. patents granted in 2001-2003 and found that examiners played a significant role in identifying prior art, adding 63% of citations on the average patent, and all citations on 40% of patents granted. An analysis of variance found that firm-specific variables explain most of the variation in examiner-citation shares. Using multivariate regression, we found that foreign applicants to the USPTO had the highest proportion of citations added by examiners. High-volume patent applicants had a greater proportion of examiner citations, and a substantial number of firms won patents without listing a single applicant citation. In terms of technology, we found higher examiner shares among patents in electronics, communications, and computer-related fields. Taken together, our findings suggest that firm-level patenting practices, particularly among high-volume applicants, have a strong influence on citation data and merit additional research.
Open vs. Closed Innovation: A Model of Discovery and Divergence
|Authors:||Esteve Almirall and Ramon Casadesus-Masanell|
|Periodical:||The Academy of Management Review (forthcoming)|
When is open innovation superior to closed innovation? Through a formal simulation model, we show that an open approach to innovation allows the firm to discover combinations of product features that would be hard to envision under integration. However, when partners have divergent goals, open innovation restricts the firm's ability to establish the product's technological trajectory. The resolution of the trade-off between the benefits of discovery and the costs of divergence determines the best approach to innovation.
Can the Virtuous Mouse and the Wealthy Elephant Live Happily Ever After?
|Authors:||James E. Austin, and Herman B. "Dutch" Leonard|
|Periodical:||California Management Review 51, no. 1 (fall 2008): 77-102|
What happens when small iconic socially oriented businesses are acquired by large corporations? Such mergers create significant opportunities for creating both business value and substantially expanded social value, but they also pose unusually difficult challenges because the merging entities are often strikingly different in philosophy and operating styles as well as in scale. This article examines three examples—Ben and Jerry's acquisition by Unilever, Stonyfield Farm by Groupe Danone, and Tom's of Maine by Colgate—to ascertain what is distinctive about the merger process and to analyze the elements critical to success. The article offers suggestions on how other companies considering similar arrangements might best manage the process of courtship, developing agreements, and executing effectively within the newly merged entities.
Weighing the Benefits and Costs of Making Software: Toward a Contingency Theory of the Determinants of Development Process Design
|Authors:||Robert D. Austin and Lee Devin|
|Periodical:||Information Systems Research (forthcoming)|
In recent years, flexibility has emerged as a divisive issue in discussions about the appropriate design of processes for making software. Partisans in both research and practice argue for and against plan-based (allegedly inflexible) and agile (allegedly too flexible) approaches. The stakes in this debate are high; questions raised about plan-based approaches undermine longstanding claims that those approaches, when realized, represent maturity of practice. In this commentary, we call for research programs that will move beyond partisan disagreement to a more nuanced discussion, one that takes into account both benefits and costs of flexibility. Key to such programs will be the development of a robust contingency framework for deciding when (in what conditions) plan-based and agile methods should be used. We develop a basic contingency framework in this paper, one that models the benefit/cost economics described in narratives about the transition from craft to industrial production of physical products. We use this framework to demonstrate the power of even a simple model to help us accomplish three objectives: 1) to refocus discussions about the appropriate design of the software development process, concentrating on when to use particular approaches, and how they might be usefully combined; 2) to suggest and guide a trajectory of research that can support and enrich this discussion; and 3) to suggest a technology-based explanation for the emergence of agile development at this point in history. Although we are not the first to argue in favor of a contingency perspective, we show that there remains much opportunity for information systems research to have a major impact on practice in this area.
Platform Rules: Multi-Sided Platforms as Regulators
|Authors:||Kevin J. Boudreau and Andrei Hagiu|
|Publication:||In Platforms, Markets and Innovation. Cheltenham, UK and Northampton, Mass.: Edward Elgar Publishing, forthcoming|
This chapter provides a basic conceptual framework for interpreting non-price instruments used by multi-sided platforms (MSPs) by analogizing MSPs as "private regulators" who regulate access to and interactions around the platform. We present evidence on Facebook, TopCoder, Roppongi Hills, and Harvard Business School to document the "regulatory" role played by MSPs. We find MSPs use nuanced combinations of legal, technological, informational, and other instruments (including price-setting) to implement desired outcomes. Non-price instruments were very much at the core of MSP strategies.
The Economics of Structured Finance
|Authors:||Joshua D. Coval, Jakub W. Jurek, and Erik Stafford|
|Periodical:||Journal of Economic Perspectives (forthcoming)|
This paper investigates the spectacular rise and fall of structured finance. The essence of structured finance activities is the pooling of economic assets like loans, bonds, and mortgages, and the subsequent issuance of a prioritized capital structure of claims, known as tranches, against these collateral pools. As a result of the prioritization scheme used in structuring claims, many of the manufactured tranches are far safer than the average asset in the underlying pool. This ability of structured finance to repackage risks and to create "safe" assets from otherwise risky collateral led to a dramatic expansion in the issuance of structured securities, most of which were viewed by investors to be virtually risk-free and certified as such by the rating agencies. At the core of the recent financial market crisis has been the discovery that these securities are actually far riskier than originally advertised. We examine how the process of securitization allowed trillions of dollars of risky assets to be transformed into securities that were widely considered to be safe. We highlight two features of structured finance products—the extreme fragility of their ratings to modest imprecision in evaluating underlying risks, and their exposure to systematic risks—that go a long way in explaining the spectacular rise and fall of structured finance. We conclude with an assessment of what went wrong and the relative importance of rating agency errors, investor credulity, and perverse incentives and suspect behavior on the part of issuers, rating agencies, and borrowers.
Cross-cultural Research in Organizational Behavior
|Authors:||Heidi K. Gardner and P. Christopher Earley|
|Periodical:||In The SAGE Handbook of Organizational Behavior. 2 vols. Edited by C.L. Cooper, J. Barling, and S. Clegg. Sage Publications, 2008|
Globalization and regionalization of business have increasingly compelled researchers to integrate the concept of cultural variation into business research and practice. This chapter addresses how culture links to organizational phenomena at the individual, group, and firm levels. We argue for a need to shift from proximal, intra-individual influences (i.e., cultural values) to distal influences in order to determine how culture shapes behavior and cognition. The chapter reviews key classic frameworks that underlie cross-cultural theory and outlines more recent research that elucidates specific mechanisms for how culture affects the actors' behaviors. Finally, we highlight recent advances in cross-cultural research, suggesting how new directions can shape future research.
Suspended in Self-Spun Webs of Significance: A Rhetorical Model of Institutionalization and Institutionally Embedded Agency
|Authors:||Sandy Edward Green, Yuan Li, and Nitin Nohria|
|Periodical:||Academy of Management Journal 52, no. 1 (February 2009): 11-36|
This article employs rhetorical theory to reconceptualize institutionalization as change in argument structure. As a state, institutionalization is embodied in the structure of argument used to justify a practice at a given point in time. As a process, institutionalization is modeled as changes in the structure of arguments used to justify a practice over time. We use rhetoric surrounding the institutionalization of total quality management (TQM) practices within the American business community as a case study to illustrate how conceptualizing institutionalization as changes in argument structure can help show how institutions simultaneously constrain and enable social action.
Two-Sided Platforms: Product Variety and Pricing Structures
|Periodical:||Journal of Economics and Management Strategy 18, no. 4 (2009)|
This paper provides a new modeling framework to analyze two-sided platforms connecting producers and consumers. In contrast to the existing literature, indirect network effects are determined endogenously, through consumers' taste for variety and producer competition. Three new aspects of platform pricing structures are derived. First, the optimal platform pricing structure shifts towards extracting more rents from producers relative to consumers when consumers have stronger demand for variety, since producers become less substitutable. With platform competition, consumer preferences for variety, producer market power, and producer economies of scale in multihoming also make platforms' price-cutting strategies on the consumer side less effective. This second effect on equilibrium pricing structures goes in the opposite direction relative to the first one. Third, variable fees charged to producers can serve to trade off producer innovation incentives against the need to reduce a platform holdup problem.
Agree to Disagree: Frank Discussion, Attention to Cultural Fit Can Help Avoid Recruiting Errors
|Author:||Sachin H. Jain|
|Publication:||Modern Healthcare (February 23, 2009)|
Almost everyone in health care has heard this story: With great fanfare a hospital recruits an outside star to lead a clinical program, academic department, or division. Within months it is clear to almost everyone that the marriage is a failure. To better understand the question of why newly recruited leaders fail, I interviewed executives at several medical centers. Several key themes emerged and are discussed in this article. Many of the reasons for failure point to specific process changes that can be used to improve recruitment and prevent failure.
Business Archives and Overcoming Survivor Bias
|Publication:||In Business Archives. Reflections and Speculations, edited by M. Anson. London: The Business Archives Council, 2008|
Among the most longstanding criticisms of business history as an academic discipline is the bias caused towards studying successful firms rather than failures, and the related use of longevity as a major criterion for success. The grand narratives of business history have been focused on the firms that got their strategies and organizations "right," rather than those that got them wrong, and towards the winners rather than the losers. This paper explores how corporate archives can be used to correct this bias, as they often contain the archives of firms.
Young and No Money? Never Mind: The Material Impact of Social Resources on New Venture Growth
|Periodical:||Organization Science (forthcoming)|
Although growth is a desirable outcome for new ventures due to the many advantages of large size, most new firms fail to grow, largely due to their limited resources and adaptability. This paper addresses the question of how new ventures grow despite their limited financial resources. I explore the effect of two specific non-financial, social resources—legitimacy and status—on new venture growth. I propose that new firms can acquire legitimacy by mimicking the structures and ceremonial activities of established firms in their industry and status by affiliating with high-status entities. Using a unique panel dataset on a cohort of advertising agencies founded in New York and Chicago between 1977 and 1985, I show that legitimacy and status have a favorable impact on the growth of new firms' revenues and number of employees. The paper makes important contributions to social embeddedness and institutional research by examining the strategic impact of firm-level social resources, and to the literature on entrepreneurship in general, and new venture growth in particular.
A Blueprint for Pharmacy Benefits Managers to Increase Value
|Authors:||William Shrank, Michael E. Porter, Sachin H. Jain, and Niteesh K. Choudhary|
|Periodical:||American Journal of Managed Care (February 2009)|
Pharmacy benefits managers (PBMs) have a unique opportunity to promote public health and generate value in the healthcare system. However, PBMs are largely evaluated on their ability to control costs rather than improve health. PBMs should be evaluated along three dimensions in which they can increase value: 1) the use of cost-effective medications, 2) the timely initiation of appropriate medications, and 3) adherence to those medications. Value promotion requires the development of integrated data systems, stronger partnerships with patients and physicians, and improved measurement and reporting of results. Incentives for PBMs to promote value should drive innovation and improve health outcomes.
The Reality and Myth of Sacred Issues in Negotiations
|Authors:||A.E. Tenbrunsel, K.A. Wade-Benzoni, V.H. Medvec, L. Thompson, and M.H. Bazerman|
|Periodical:||Negotiation and Conflict Management Research (forthcoming)|
This paper investigates the role of sacred issues in a dyadic negotiation set in an environmental context. As predicted, when negotiators focus on sacred issues, this negatively impacts the negotiation, producing more impasses, lower joint outcomes, and more negative perceptions of one's opponent; however, this is only true when both parties perceive that they have a strong alternative to a negotiated agreement. When negotiation parties perceive that they have a weak alternative, sacred issues did not have any effect on negotiation outcomes or opponent perceptions. These results suggest that the negative effects of sacred issues is driven in part by whether negotiators have recourse, such that exercising one's principles and values may depend on whether people can afford to do so. We conclude by suggesting that the impact of certain sacred issues may be contextually dependent and that the term "pseudo sacred" may actually be a more accurate label.