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.

Dec. 6

Improving leadership development for women

When women began entering the professional and managerial ranks at roughly the same rate as men 25 years ago, it seemed only a matter of time before they would be rising to fill senior positions in their companies. It hasn't happened, and it's time to rethink women's leadership development programs as a result, according to researchers Robin Ely, Herminia Ibarra, and Deborah Kolb. Their paper, "Taking Gender into Account: Theory and Design for Women's Leadership Development Programs," published in the September edition of Academy of Management Learning & Education, proposes changes to traditional approaches toward leadership development based on experiences of women over this period.

Jumping into Brazil

While most world economies are in difficulty, Brazil keeps humming right along. A new case study explores the dynamics behind the private equity firm Silver Lake's decision as to whether it should open an office in that country. Considerations faced by partner Dave Roux include determining if the market is too saturated, whether Brazil's boom is really a bubble, and if indeed it is already too late to make a move. Read "Silver Lake and Private Equity in Brazil: Carnaval or Calamity?" by Aldo Musacchio and Stephen J. Goldstein.

A global Chinese company's next steps

Another case around the subject of globalization looks at China's leading appliance manufacturer, Haier, which in three decades became the leading maker of refrigerators worldwide. The question facing CEO Zhang Ruimin is how to execute its next growth phase involving product diversification and additional market penetration in both established and new markets. The case, "Haier: Taking a Chinese Company Global in 2011," allows students to discuss a wide range of global topics including brand management, international operations, and localization, according to authors Tarun Khanna, Krishna G. Palepu, and Phillip Andrews.

 

Publications

Flying Without a Net: Turn Fear of Change into Fuel for Success

Abstract

Confronted by omnipresent threats of job loss and change, even the brightest among us are anxious. In response, we're hunkering down, blocking ourselves from new challenges. This response hurts us and our organizations, but we fear making ourselves even more vulnerable by committing mistakes while learning something new. In Flying Without a Net, Thomas DeLong explains how to draw strength from vulnerability. First, understand the forces that escalate anxiety in high achievers and the unproductive behaviors you turn to for relief. Then adopt practices that give you the courage to "do the right things poorly" before "doing the right things well." Drawing on his extensive research and consulting work, DeLong lays out (1) Roots of high achievers' anxiety: fear of being wrong, lack of a sense of purpose, and a craving for human connection; (2) Destructive behaviors we adopt to relieve our anxiety: busyness, comparing ourselves to others, and blaming others for our frustrations; (3) Behaviors we must adopt to gain strength from vulnerability: putting the past behind us and seeking honest feedback. Packed with practical advice and inspiring stories, Flying Without a Net is an invaluable resource for all leaders seeking to thrive in this age of anxiety.

Publisher's Link: http://hbr.org/product/flying-without-a-net-turn-fear-of-change-into-fuel/an/10297-HBK-ENG

The Real Consequences of Market Segmentation

Abstract

We study the real effects of market segmentation due to credit ratings using a matched sample of firms just above and just below the investment-grade cutoff. These firms have similar observables, including average investment rates. However, flows into high-yield mutual funds have an economically significant effect on the issuance and investment of the speculative-grade firms relative to their matches, especially for firms likely to be financially constrained. The effect is associated with the discrete change in label from investment-grade to speculative-grade, not with changes in continuous measures of credit quality. We do not find similar effects at other rating boundaries.

Read the paper: http://www.people.hbs.edu/asunderam/market_segmentation.pdf

The Ordinary Heroes of the Taj

An abstract is unavailable at this time.

Read the article: http://hbr.org/2011/12/the-ordinary-heroes-of-the-taj/ar/1

Taking Gender into Account: Theory and Design for Women's Leadership Development Programs

Abstract

We conceptualize leadership development as identity work and show how subtle forms of gender bias in the culture and in organizations interfere with the identity work of women leaders. Based on this insight, we revisit traditional approaches to standard leadership topics, such as negotiations and leading change, as well as currently popular developmental tools, such as 360-degree feedback and networking; reinterpret them through the lens of women's experiences in organizations; and revise them in order to meet the particular challenges women face when transitioning into senior leadership. By framing leadership development as identity work, we reveal the gender dynamics involved in becoming a leader, offer a theoretical rationale for teaching leadership in women-only groups, and suggest design and delivery principles to increase the likelihood that women's leadership programs will help women advance into more senior leadership roles.

Courage in the C-Suite

An abstract is unavailable at this time.

Read the atricle: http://hbr.org/2011/12/courage-in-the-c-suite/ar/1

Values, Purpose, Meaning, and Expectations: Why Culture and Context Matter

Abstract

The "rational person" standard, based on assumptions of economic self-interest, has long prevailed in legal reasoning. But understanding of decision making, behavioral choices, and possibilities for action must be enlarged to include a variety of factors that give meaning to any circumstance and thus shape behavior: past experience, expectations about the future, group membership, and cultural values. This article opens with a series of thought experiments to explore the potential behavioral implications of a hypothetical $1,000 to introduce the idea that context, history, and values shape perceptions and expectations. These phenomena can propel behaviors that can lead to circumstances improving or deteriorating-upward or downward spirals, or winning and losing streaks. Empirical evidence is drawn from research on companies and teams that have sustained success or deteriorated in their performance, as well as research on the leadership and culture in organizations that endure over time. The focus is on complex interactions unfolding over time rather than the reasoning of particular individuals. But the article also shows how individuals behave in concert because of the self-fueling trajectory in which response provokes response, in either positive or negative directions, in what are more popularly termed winning streaks and losing streaks. Upward spirals produce confidence that motivates effort. Because the positive upward cycle is attributed to one's own actions, people begin to believe that it will never end: assertions are made that the laws of the universe have changed, that business cycles have disappeared, and that success is inevitable. Conversely, when things are going down, people start believing they will always go down. Success breeds success, and failure or loss breeds loss. The article argues for a broader explanation of behavior beyond economic instrumentality. It is time to turn again to psychology, sociology, and anthropology to explain and predict human behavior. Then we can understand that rationality also includes things that were once considered irrational, such as altruism or sacrifice in the interest of the greater good.

The Economics of Housing Finance Reform

An abstract is unavailable at this time.

Read the paper: http://www.people.hbs.edu/asunderam/Economics_of_Housing_Finance_Reform_Brookings.pdf

Negotiating with Iran: Cultural and Historical Insights

Abstract

In a vitally important relationship famously caricatured as the "Mad Mullahs" v. the "Great Satan," the fraught negotiating history and future of Iran and the United States demands historical, cultural, and psychological insight if there is to be any prospect of success, especially with respect to Iran's nuclear program. Taking John Limbert's book, Negotiating with Iran as a point of departure, this essay develops such a perspective, suggesting several means of influence.

Read the paper: http://www.people.hbs.edu/jsebenius/articles_scans/11_Limbert_Iran_Final_NegJOct2011.pdf

A Reexamination of Tunneling and Business Groups: New Data and New Methods

An abstract is unavailable at this time.

Read the paper: http://www.people.hbs.edu/jsiegel/SiegelChoudhury20111114.pdf

Naivete and Cynicism in Negotiations and Other Competitive Contexts

Abstract

A wealth of literature documents how the common failure to think about the self-interests of others contributes to suboptimal outcomes. Yet sometimes, an excess of cynicism appears to lead us to overthink the actions of others and make negative attributions about their motivations without sufficient cause. In the process, we may miss opportunities that greater trust might capture. We review the research on when people expect too little or too much self-interest in the intentions of others, as contrasted with rational behavior. We also discuss the antecedents and consequences of these naive and cynical errors, as well as some potential strategies to buffer against their effects and achieve better outcomes in competitive contexts.

 

Working Papers

Are There Too Many Safe Securities? Securitization and the Incentives for Information Production

Abstract

We present a model that helps explain several past collapses of securitization markets. Originators issue too many informationally insensitive securities in good times, blunting investor incentives to become informed. The resulting scarcity of informed investors exacerbates market collapses in bad times. Inefficiency arises because informed investors are a public good from the perspective of originators. All originators benefit from the presence of additional informed investors in bad times, but each originator minimizes his reliance on costly informed capital in good times by issuing safe securities. Our model suggests regulations that limit the issuance of safe securities in good times.

Download the paper: http://www.hbs.edu/research/pdf/12-037.pdf

What Impedes Oil and Gas Companies' Transparency?

Abstract

We examine determinants of oil and gas companies' transparency in reporting on business activities in host countries where they operate. We find that our index of transparency across host countries is lower the more corrupt the host country, the higher the number of nationalizations in that host country in the past, and the fewer the number of oil and gas companies operating in the host country. The results of additional tests are consistent with the risk of expropriation being a barrier to information disclosure about firm performance. In contrast, we find no evidence that disclosure of government payments is related to proprietary costs. Moreover, holding the host country constant, we find that firms coming from more corrupt home countries are less transparent about their government payment.

Download the paper: http://www.hbs.edu/research/pdf/12-038.pdf

A Reexamination of Tunneling and Business Groups: New Data and New Methods

Abstract

The corporate governance literature of the past decade has focused on identifying drivers of superior or deficient corporate governance. One of the most rigorous methodologies uses firms' reactions to industry shocks to characterize the quality of governance. We propose that this methodology can produce the wrong answer unless one takes into account the different ways in which firms compete (that is, their business strategy). Because macro-level shocks reverberate differently at the firm level depending on whether a firm has a cost structure that requires significant cost adjustment, the quality of governance can only be elucidated accurately by means of simultaneous analysis of firms' business strategy and their corporate governance. Only by acknowledging these differences in cost structure can one determine whether the fruits of a positive macro-level shock have been expropriated by insiders. Using the example of Indian firms, we show that an influential finding is reversed when we take these differences into account. We further argue that the conventional wisdom about tunneling and business groups will need to be reformulated in light of the data, methodology, and findings presented here.

Download the paper: http://www.hbs.edu/research/pdf/10-072.pdf

 

Cases & Course Materials

Haier: Taking a Chinese Company Global in 2011

Tarun Khanna, Krishna G. Palepu, and Phillip Andrews
Harvard Business School Case 712-408

In 2011, Haier, China's leading appliance manufacturer, had over $20 billion in worldwide sales and had just been named the leading refrigerator manufacturer worldwide. Describes Haier's rise over three decades from a defunct refrigerator factory in China's Qingdao province to an international player with $5.5 billion in overseas sales. Haier had followed a nontraditional expansion strategy of entering the developed markets of Europe and the United States as a niche player before venturing into Middle Eastern and neighboring Asian markets. Looking ahead to the next decade, Haier CEO Zhang Ruimin saw opportunities for Haier to grow through product diversification and additional market penetration in both developed and emerging markets. He and his colleagues would depend on their experience of acquiring numerous companies, entering and retaining new markets, restructuring the organization, and managing hundreds of subsidiaries around the world. They would need to determine which of the lessons learned from Haier's international operations should be implemented in China and which skills learned at home could best be applied abroad.

Purchase this case:
http://cb.hbsp.harvard.edu/cb/product/712408-PDF-ENG

Silver Lake and Private Equity in Brazil: Carnaval or Calamity?

Aldo Musacchio and Stephen J. Goldstein
Harvard Business School Case 712-004

This case describes the recent boom in Brazil and recent developments in the private equity industry in that country. At the center of the case is Dave Roux, partner of the technology-focused, private equity firm Silver Lake, who is examining whether to open an office in Brazil. His decision will depend on the state of the Brazilian economy, of the private equity industry, and, ultimately, on the value proposition of Silver Lake. Is the current boom in Brazil a sign of a structural change or is it a bubble? Is it too late for a private equity firm to go to Brazil? Is the Brazilian market too saturated? How do private equity firms add value in Brazil? What's the right entry strategy for a private equity firm in Brazil? Should Silver Lake open an office in Brazil?

Purchase this case:
http://cb.hbsp.harvard.edu/cb/product/712004-PDF-ENG

The Pepsi Refresh Project: A Thirst for Change

Michael I. Norton and Jill Avery
Harvard Business School Case 512-018

In 2010, for the first time in 23 years, PepsiCo did not invest in Super Bowl advertising for its iconic brand. Instead, the company diverted this $20 million to the social media-fueled Pepsi Refresh Project: PepsiCo's innovative cause-marketing program in which consumers submitted ideas for grants for health, environmental, social, educational, and cultural causes. Consumers voted for their favorite ideas, and PepsiCo funded the winners in grants ranging from $5,000 to $250,000. The case highlights the benefits and risks of traditional branding and social media branding, including a discussion of how the Pepsi Refresh Project fits with Pepsi's previous brand positioning. The case discussion focuses on how the brand team should evaluate the initiative's return on investment (from sales to social media engagement), whether they should continue the initiative for 2011, and whether Pepsi is the right brand for this kind of initiative.

Purchase this case:
http://cb.hbsp.harvard.edu/cb/product/512018-PDF-ENG

Verengo Solar Plus!

William A. Sahlman, Joseph B. Lassiter, and Liz Kind
Harvard Business School Case 812-049

In the three years since Bishop and Button purchased Verengo in a leveraged buyout (LBO), the company had gone through dramatic changes. Initially a residential windows and insulation firm, after the economic recession of 2008, the company switched gears and began offering solar installations to local residential customers. Aided by favorable regulatory changes and a consumer financing partnership, Verengo's solar business took off and became the company's primary focus. By the end of 2010, Verengo had grown to $27 million in revenue and was the largest solar integrator in southern California. In December 2010, Verengo raised $9.7 million in growth equity funding and was considering its options for future growth. Eager to expand to markets outside of southern California, Bishop and Button knew that they had to carefully assess the firm's many opportunities and tightly manage its growth.

Purchase this case:
http://cb.hbsp.harvard.edu/cb/product/812049-PDF-ENG

Trucost: Valuing Corporate Environmental Impacts

Michael W. Toffel and Stephanie van Sice
Harvard Business School Case 612-025

Trucost provided corporate environmental performance data and analysis to institutional investors and corporate managers but after operating for a decade had yet to achieve profitability. Trucost was struggling to effectively differentiate its high quality products from its lower-cost competitors and needed to develop a strategy to educate the marketplace and pursue new distribution channels. Increased investor interest in environmental issues-and an ever growing number of corporate environmental rankings-led to a proliferation of competitors to Trucost, and an industry shakeout was predicted. How should Trucost compete?

Purchase this case:
http://cb.hbsp.harvard.edu/cb/product/612025-PDF-ENG