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.

Feb. 17

Why do some consumers fail to take advantage of mail-in rebates? Turns out the rebate might be less important physically than it is psychologically, according to research by HBS marketing professor John T. Gourville and University of Toronto professor Dilip Soman, writing in a forthcoming issue of the Journal of Product & Brand Management. In a sense, the offer of a rebate might function as a hinge for consumers who are on the fence, not sure whether they want to buy a product or not.

"A consumer that is motivated to purchase the product will anchor on scenarios of successful redemption, while a consumer that is motivated to avoid purchasing will anchor on scenarios of failed redemption," the authors write. "In other words, rebates offer consumers a means to justify a preferred course of action. Across a series of three studies, we show this to be the case."

This week's faculty publications also look at the delicate task of hiring and retaining stars ("Star Power: Colleague Quality and Turnover" and "What It Takes to Make 'Star' Hires Pay Off"), among a wide variety of other topics.

 

Working Papers

The Evolution of Science-Based Business: Innovating How We Innovate

An abstract in unavailable at this time.

Download the paper: http://www.hbs.edu/research/pdf/10-062.pdf

 

Publications

Targeted Advertising as a Signal

Abstract

This study presents a signaling model of advertising for horizontally differentiated products. The central ingredients of the model are two important characteristics of advertising—targeting and noisy information content. The theory yields interesting results about the informational role of targeted advertising and its consequences. First, targeting can itself serve as a signal on product attributes. Second, the effectiveness of targeting depends not only on firms knowing consumer preferences, but also on consumers knowing that firms know this. This creates a distinction between strategies of targeting and personalization. Third, the effectiveness of targeting in equilibrium may (far) exceed the information contained directly in the targeted message. Fourth, information content is not, however, superfluous. Specifically, when ads contain no information, a targeting equilibrium does not exist. Together, these results reveal how advertising conveys information both through the content of the message and the firm's choice of advertising medium. Furthermore, the model is robust to the various critiques of prior work on ads as signals; namely, that ad content is irrelevant, ad exposure is unnecessary, and the choice of ads as signals is inherently arbitrary.

The Consumer Psychology of Mail-in Rebates

Abstract

Consumers who buy a product intending to use an accompanying mail-in rebate often do not redeem the rebate. To explain this behavior, we argue that consumers use an anchoring and adjustment approach to predicting the likelihood of redeeming a rebate. In keeping with previous research on anchoring and adjustment, for instance, we show that when presented with a desirable product, consumers anchor on scenarios of successful redemption and adjust insufficiently for things that could go wrong in the redemption process. However, we also propose this anchoring and adjustment process is impacted by a consumer's motivation to purchase the rebated product. In particular, we propose the anchor employed will be driven by the valence of a consumer's underlying motivation. Specifically, a consumer that is motivated to purchase the product will anchor on scenarios of successful redemption, while a consumer that is motivated to avoid purchasing will anchor on scenarios of failed redemption. We also propose that the degree of adjustment consumers employ will be driven by their strength of motivation—i.e., the stronger the motivation, the less the adjustment to the motivational anchor. Consequently, mail-in rebates either can serve to enhance or to dampen purchase intention depending on a consumer's underlying motivation. In other words, rebates offer consumers a means to justify a preferred course of action. Across a series of three studies, we show this to be the case.

Star Power: Colleague Quality and Turnover

An abstract in unavailable at this time.

What It Takes to Make 'Star' Hires Pay Off

An abstract in unavailable at this time.

Read the preview: http://sloanreview.mit.edu/the-magazine/articles/2010/winter/51220/what-it-takes-to-make-star-hires-pay-off/

Acting in Time Against Disasters: A Comprehensive Risk Management Framework

An abstract in unavailable at this time.

Book: http://www.whartonsp.com/store/product.aspx?isbn=0137044852

Institutions and Inequality in Single Party Regimes: A Comparative Analysis of Vietnam and China

Abstract

Despite the fact that China and Vietnam have been the world's two fastest growing economies over the past two decades, their income inequality patterns are very different. In this paper, we take a deep look at political institutions in the two countries, demonstrating that profound differences in these polities influence distributional choices. In particular, we find that elite institutions in Vietnam encourage the construction of broader policy-making coalitions, have more competitive selection processes, and place more constraints on executive decision making than exists by way of elite institutions in China. As a result, there are stronger political motivations for Vietnamese leaders to provide equalizing transfers that limit inequality growth among provinces.

 

Cases & Course Materials

Background on the Technology of Molecular Diagnostics

Regina E. Herzlinger and Jason Sanders
Harvard Business School Note 309-050

To be used as background reading for the "EXACT Sciences Corp.: Commercializing a Diagnostic Test" and "Diagnostic Genomics" cases, HBS nos. 308-090 and 309-040.

Purchase this note:
http://cb.hbsp.harvard.edu/cb/product/309050-PDF-ENG

Fortis Healthcare (B)

Regina E. Herzlinger and Pushwaz Virk
Harvard Business School Supplement 308-080

Denouement of the issues discussed in "Fortis Healthcare (A)."

Purchase this supplement:
http://cb.hbsp.harvard.edu/cb/product/308080-PDF-ENG

Hindustan Unilever Limited

Thomas J. DeLong and Mona Srivastava
Harvard Business School Case 410-002

This case illustrates Hindustan Unilever Limited's conflict resolution and people development policies using a "leading from the middle" example. The story centers on the challenges faced by an HR manager at a factory who must meet organizational objectives while handling multiple trade unions that are resisting change as well as having conflicts amongst themselves.

Purchase this case:
http://cb.hbsp.harvard.edu/cb/product/410002-PDF-ENG

Savage Beast (A1)

Noam Wasserman and Louis-Philippe Maurice
Harvard Business School Case 810-051

For several months, things had been spiraling downwards at Savage Beast, the music-recommendation company started three years before by Tim Westergren. The company's founder-CEO recently left due to pressures both at home and within the venture. Dozens of investors turned thumbs-down on the venture; salaries had been cut, and tensions had risen within the founding team. Now Westergren, the founder who has taken over as CEO, is facing even deeper pressures as he finds out about a lawsuit filed by former employees, and he is wondering if it is time to give up on ever achieving his vision. Note: The content of this version is the same as the content in the Savage Beast (A) case (809-069) but includes two directives in the text to students. At the end of page 8, the student is asked to pause and complete a one-question poll. The "page-8" poll asks, "At this point, should Tim persist in trying to build Savage Beast?" Yes or No, and why. At the end of the case, the student is asked to complete a second poll. The "end-of-case" poll asks, "Should Tim persist in trying to build Savage Beast?" Yes or No, and why. If you do not have polling capabilities, you should use the Savage Beast (A) case.

Purchase this case:
http://cb.hbsp.harvard.edu/cb/product/810051-PDF-ENG