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.

August 3

Given the high stakes of patient safety, how can hospital staff be encouraged to speak up to report problems and offer suggestions for process improvement? In a working paper available for download [PDF], professor Michael W. Toffel and coauthors describe management practices to aid exactly that. "Efforts at the organizational level can compensate for managers who cannot or do not create an environment that inspires front-line workers to speak up," the researchers write in "Speaking Up Constructively: Managerial Practices that Elicit Solutions from Front-Line Employees."

Among cases this week, "Roche's Acquisition of Genentech" considers aspects of strategy, culture, and valuation related to a hostile tender offer. Professor Lakshmi Iyer and research associate Jonathan Schlefer outline the choices that have faced India's Congress party this year against a backdrop of regional instability, fiscal constraints, and a global economic slowdown ("India: The Road to Inclusive Growth"). And explaining a new approach to venture capital term-sheet negotiations, a teaching note by professor Noam Wasserman and coauthors highlights how distinct terms should be weighed by different types of founders ("A 'Rich-vs.-King' Approach to Term Sheet Negotiations").



Lords of the Harvest: Symbolic Signaling and Regulatory Approval of Genetically Modified Organisms


Firms in regulated environments often face a number of challenges in bringing their products to market, yet we know very little about the kinds of strategies they can employ to influence regulatory actor decision making. In this paper, we highlight a firm's strategic use of symbolic signaling in generating positive regulatory outcomes. Specifically, we examine how social cues from reputation stakeholders and from prominent third-party bureaucratic actors can serve as symbolic signals that can affect the decision making of regulatory agencies. Our findings suggest that while social cues from reputation stakeholders and bureaucratic agencies do not provide any substantial information about GMO products, they positively affect approval rates of GMOs by threatening the reputation of the regulatory agency. Our study further shows that firm and product uncertainty increases the impact of the social cues.

The Underdog Effect: The Marketing of Disadvantage and Determination Through Brand Biography


We introduce the concept of an underdog brand biography (UBB) to describe an emerging trend in branding in which firms author an historical account of their humble origins, lack of resources, and determined struggle against the odds. We identify two essential dimensions of an underdog biography: external disadvantage, and passion and determination. We demonstrate that a UBB can increase purchase intentions, real choice, and brand loyalty. We argue that UBBs are effective because consumers react positively when they see the underdog aspects of their own lives being reflected in branded products. Four studies demonstrate that the UBB effect is driven by identity mechanisms: we show that the effect is 1) mediated by consumers' identification with the brand, 2) greater for consumers who strongly self-identify as underdogs, 3) stronger when consumers are purchasing for themselves vs. others, and 4) stronger in cultures in which underdog narratives are part of the national identity.

The Shape of Things to Come: Institutions, Entrepreneurs, and the Case of Hedge Funds


Foundational work on institutional theory as a framework for studying organizations underscored its relevance to analyses of entrepreneurship, but entrepreneurship research has often ignored the insights provided by this theoretic approach. In this chapter, we illustrate the utility of institutional theory as a central framework for explaining entrepreneurial phenomena by discussing three primary questions for entrepreneurship researchers: Under what conditions are individuals likely to found new organizations? What are key influences on the kinds of organizations they found? And what factors determine the likelihood of the survival of new organizations? We describe the kinds of answers that an institutional perspective provides to these questions; illustrate some of our arguments by drawing on a recent field of entrepreneurial endeavor; hedge funds; and discuss the implications of our analysis for further work by entrepreneurship researchers.


Working Papers

Speaking Up Constructively: Managerial Practices That Elicit Solutions from Front-line Employees


Ideas that could enable organizations to improve their operating processes often come from front-line workers who voice concerns and share ideas about how to solve problems. Our study is among the first to develop and empirically test theory about how specific management practices can encourage employees to speak up about problems and to offer suggestions for solving them. We hypothesize that employees are more likely to speak up and offer solutions when organizations launch information campaigns to promote process improvement and when managers engage in process-improvement activities themselves. We test our hypotheses in the health care context, in which problems are frequent and many organizations use incident-reporting systems to encourage employees to communicate about the operational problems they witness. Using data on nearly 7,500 reported incidents, we find that information campaigns encouraging process improvement promote both speaking up and offering solutions, while managerial engagement in process improvement promotes the latter. Our findings suggest that particular management practices can influence front-line workers' decisions about whether to speak up and that direct managerial engagement can result in their doing so constructively.

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The Influence of Prior Industry Affiliation on Framing in Nascent Industries: The Evolution of Digital Cameras


New industries sparked by technological change are characterized by high technological, market, and competitive uncertainty. In this paper we explore how a firm's conceptualization of products in this context, reflected in its introduction of product features, is influenced by prior industry affiliation. We hypothesize first, that prior industry experience shapes a set of shared beliefs resulting in similar and concurrent firm behavior; second, that firms will notice and imitate the behaviors of firms from the same prior industry; and third, that as firms gain experience with particular features, the influence of prior industry will decrease. Our hypotheses are supported by findings from a quantitative, large-sample study of digital cameras introduced from 1991 to 2006 by firms from three prior industries: photography, consumer electronics, and computers. By 2004, several features had emerged as a dominant design; however, the timing and rate of adoption varied by prior industry. This study extends previous research on firm entry into new domains by examining heterogeneity in firms' feature-level entry choices. In addition, we contribute to work on dominant designs, going beyond characterizing a dominant design as a set of technological choices, to understand cognitive convergence on a standard set of demand-side product features.

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A New Paradigm of Individual, Group and Organizational Performance


"The committee is therefore unable to draw conclusions, based on scientific evidence, on what does or does not work to enhance organizational performance." Committee on Techniques for the Enhancement of Human Performance of the U.S. National Research Council Commission on Behavioral and Social Sciences and Education (Druckman et al., 1997). The current model of performance, while having produced many improvements in performance during its 100-year reign, has been essentially exhausted, leaving in its wake little more than a labyrinth of explanations for human performance. Given that models are constrained and shaped by the paradigm from within which they are generated, a truly new model of performance would require a new paradigm of performance. Our new model of performance (a part of our new paradigm of performance), rather than adding more explanations for why people do what they do and why they don't do what they don't do, provides actionable access to the source of performance. This actionable access to the source of performance opens up a new realm of opportunity for study and research and for new and more effective interventions, applications, and practices for improving individual, group, and organizational performance.

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Leniency in Private Regulatory Enforcement: The Role of Organizational Scope and Governance


Profit-seeking firms can present efficiency improvements when performing functions traditionally relegated to government. Yet these potential cost efficiencies from market competition are often offset by poor enforcement quality resulting from moral hazard, which can be particularly onerous when outsourcing enforcement of government regulation. In this paper, we argue that the considerable moral hazard of private regulatory enforcement can be mitigated by the scope of organizations' product/service portfolios and by private governance mechanisms. These organizational characteristics affect the stringency of enforcement through reputation and customer loyalty, differential impacts of government sanctions, and standardization and internal monitoring of operations. We test our theory in the context of vehicle emissions testing in a state in which the government has outsourced inspection and enforcement to private sector establishments. Analyzing millions of emissions tests, we find empirical support for our hypotheses that particular forms of firm governance and product portfolios can mitigate moral hazard.

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Cases & Course Materials

Roche's Acquisition of Genentech

Carliss Y. Baldwin, Bo Becker, and Vincent Dessain
Harvard Business School Case 210-040

Franz Humer, CEO of the Roche Group, must decide whether to mount a hostile tender offer for the publicly owned shares of Roche's biotechnology subsidiary, Genentech. The case provides opportunities to analyze Roche's strategy with respect to Genentech, the pros and cons of merging the two companies with different cultures, the value of Genentech, and the tactics of a hostile tender offer.

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athenahealth: Innovating in Response to a Crisis in Healthcare

Bhaskar Chakravorti and Laura Winig
Harvard Business School Case 810-079

When Jonathan Bush and his partner, Todd Park, realized that their revolutionary approach to delivering clinical care was being stymied by the inefficiencies in the healthcare system and insurance red tape, they turned their proprietary technology, athenaNet, to a new business, athenaHealth, that would help physicians manage their practice, billing, and revenue cycles and maintain electronic patient records more efficiently and cost effectively using the service delivered via the Internet. Despite the success of his innovative venture, Bush faced several challenges: the company's brand awareness among physicians was still low; the company had launched a new product, athenaClinicals, while its core flagship product, athenaCollector, was still growing; and they were planning a pricing innovation, athenaCommunity, over and above that. The HITECH Act passed by the Obama administration was giving a boost to the entire industry, including athenaHealth's much larger competitors, which heightened Bush's strategic dilemma: should he focus on the core and capture greater share and enhance brand awareness, or should he branch out into new innovative directions?

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School of One: Reimagining How Students Learn

Stacey Childress, James Weber, and Matthew Haldeman
Harvard Business School Case 310-053

School of One was a start-up with a new approach to learning. Instead of one teacher delivering the entire math curriculum to a class of 20-25 students, School of One utilized a technology platform that allowed several teachers to collectively oversee the learning of a larger group of students. Each student followed a personalized pathway to mastery of a set of math concepts through a mix of teacher-led instruction, live and virtual tutoring, and online lessons and games. Teachers could specialize in the concepts and instructional approaches they were best at and work with students who were ready to learn new material. The case explores the model and questions about growth and scalability.

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Note: Disclosure, Regulation, and Taxation of Hedge Funds versus Mutual Funds in the U.S.

Lena G. Goldberg, Robert C. Pozen, and Melissa Hammerle
Harvard Business School Note 310-131

This note provides students with an explanation of the regulatory and tax framework for hedge funds vs. mutual funds in the U.S.

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India: The Road to Inclusive Growth

Lakshmi Iyer and Jonathan Schlefer
Harvard Business School Case 710-046

In 2010, India faced the challenge of achieving the twin goals of double-digit GOP growth and inclusive development. Would the Congress party, which won a strong electoral mandate in 2009, be able to achieve these goals in a context of rising internal conflict, fiscal constraints, regional instability, and a global economic slowdown?

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The Precautionary Principle

Michael W. Toffel and Nazli Z. Uludere Aragon
Harvard Business School Note 610-043

This note describes the precautionary principle and its key tenets, highlights challenges associated with its use, and includes many examples of its application, primarily within the realm of regulating activities based on the risk of harm to human health and the environment. Appendices provide detailed examples of how the precautionary principle has been applied to regulations in three key industries: agriculture, chemicals, and pharmaceuticals. Describes various forms of the precautionary principle, its widespread adoption in international agreements, its distinction from cost-benefit analysis, its shift of the burden of proving that activities are safe from regulators to industry, and the importance of considering Type I and Type II errors and status quo bias when contemplating whether to evoke the precautionary principle.

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A 'Rich-vs.-King' Approach to Term Sheet Negotiations

Noam Wasserman, Furqan Nazeeri, and Kyle Anderson
Harvard Business School Note 810-119

This note offers a new approach to venture capital term-sheet negotiations, with actionable steps based on insights from Professor Wasserman's "Rich-vs.-King" approach to founder decisions. A core thesis of this note is that trying to negotiate all terms in a term sheet will be less effective than focusing on the terms that are most important to the specific entrepreneur in question, taking into account the entrepreneur's goals and motivations in founding the venture. In particular, terms that are higher priority to a control-motivated "King" founder are often lower priority to a wealth-motivated "Rich" founder and vice versa. Thus, this note identifies the most common terms that differ in their importance to different types of founders and provides a framework for weighing the relative importance of each potential term-sheet outcome for their specific type.

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