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.

March 13

The Chilean mining rescue

Great tragedies often make for great lessons in management. In the new case "The 2010 Chilean Mining Rescue," authors Amy C. Edmondson, Faaiza Rashid, and Herman B. "Dutch" Leonard chart the complex and pressure-packed management challenges facing the would-be rescuers of 33 miners trapped 2,000 feet below ground. "Never had a recovery been attempted at such depths, let alone in the face of challenges like those posed by the San Josť mine: unstable terrain, rock so hard it defied ordinary drill bits, severely limited time, and the potentially immobilizing fear that plagued the buried miners."

The competitive threat from Chinese IT

A new article in the March edition of MIS Quarterly Executive estimates that the Chinese management software and IT services industry is about the size of the Indian industry a decade ago—and we know the competitive march Indian firms went on after that. Should industry combatants now have China on their radar? Authors F. Warren McFarlan, Ning Jia, and Justin Wong say there is still time, but not much time, to prepare. "Our main prediction is that the challenges of serving the domestic market will mean that Chinese management software and IT service firms will likely have an inward focus over the next five years and will, therefore, only slowly emerge onto the global market." Read China's Growing IT Services and Software Industry: Challenges and Implications.

Next act for Sundance Institute

Robert Redford started Sundance Institute as a place where independent filmmakers could sharpen their craft and polish their movies. But after 30 years, Sundance has become a powerful promotion and distribution platform for all independent filmmakers. Should this also be Sundance's future? A new case by Mukti Khaire and Eleanor Kenyon arrive at Sundance just as its top managers are considering a mission change that could include a consumer education program. See "The Kid Grows Up: Decisions at the Sundance Institute."

 

Publications

Regulation and UK Retailing Productivity: Evidence from Microdata

Abstract

We explore the effects of planning regulation on the UK retail sector between 1997 and 2003 using micro-data from the UK census. We document a shift to smaller shops following a 1996 regulatory change that increased the costs of opening large stores. Our analysis suggests that total factor productivity (TFP) of multi-store retail chains fell after the introduction of the reform due to the reduction in store size. Overall, the reduction in store size was associated with TFP of retail chains falling by 0.4% per annum, or 40% of the post-1995 slowdown in UK retail TFP growth.

China's Growing IT Services and Software Industry: Challenges and Implications

Abstract

The Chinese management software and IT services industry has grown dramatically over the past two decades and today is about the size of the Indian industry a decade ago. The objective of this article is to help CIOs in firms outside of China better understand the current and future potential of this industry. Based on recent in-depth case findings of two large and fast-growing suppliers-UFIDA and Kingdee-as well as other vendors and client firms in China, we share what we see as the challenges facing the firms in the Chinese management software and IT services industry as players seek to develop their capabilities for their growing domestic market. We describe the implications of our findings for CIOs in developed countries. Our main prediction is that the challenges of serving the domestic market will mean that Chinese management software and IT service firms will likely have an inward focus over the next five years and will, therefore, only slowly emerge onto the global market.

 

Working Papers

The Role of Organizational Scope and Governance in Strengthening Private Monitoring

Abstract

Governments and other organizations often outsource activities to achieve cost savings from market competition. Yet such benefits are often accompanied by poor quality resulting from moral hazard, which can be particularly onerous when outsourcing the monitoring and enforcement of government regulation. In this paper, we argue that the considerable moral hazard associated with private regulatory monitoring can be mitigated by understanding conflicts of interest in the monitoring organizations' product/service portfolios and by the effects of their private governance mechanisms. These organizational characteristics affect the stringency of monitoring through reputation, customer loyalty, differential impacts of government sanctions, and the 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 these inspections to the private sector. Analyzing millions of emissions tests, we find empirical support for our hypotheses that particular product portfolios and forms of governance can mitigate moral hazard. Our results have broad implications for regulation, financial auditing, and private credit- and quality-rating agencies in financial markets.

Download the paper: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1640638

Signaling to Partially Informed Investors in the Newsvendor Model

Abstract

We investigate a puzzling phenomenon in which firms make investment decisions that purposefully do not maximize expected profits. Using an extension to the newsvendor model, we focus on a relatively common scenario in which the firm's investor has imperfect information concerning the quality of the firm's investment opportunities. We apply Perfect Bayesian equilibrium solution concepts and confirm that over a range of reasonable model parameters the firm's investment decision does not maximize expected profits. Surprisingly, this includes instances in which a firm with a higher quality investment opportunity finds it attractive to underinvest, thereby behaving as if the investor faces a lower quality investment opportunity. This is particularly interesting, as prior research in finance literature has shown that firms will overinvest in high quality projects when investors have imperfect information about the quality of the firm's opportunities. While we conduct our analysis in the context of an inventory stocking decision, our model is generalizable to other types of capacity investment decisions.

Download the paper: http://www.hbs.edu/research/pdf/11-105.pdf

 

Cases & Course Materials

Fonterra

David E. Bell and Mary Shelman
Harvard Business School Case 512-003

In 2011, Fonterra, the world's largest processor and exporter of dairy products, needed to reposition its business to take advantage of rising demand in emerging markets in Asia.

Purchase this case:
http://cb.hbsp.harvard.edu/cb/product/512003-PDF-ENG

Allied Electronics Corporation Ltd.: Linking Compensation to Sustainability Metrics

Robert G. Eccles, George Serafeim, Shelley Xin Li, and Alan Knight
Harvard Business School Case 412-075

An abstract is unavailable at this time.

Purchase this case:
http://cb.hbsp.harvard.edu/cb/product/412075-PDF-ENG

The 2010 Chilean Mining Rescue (A)

Amy C. Edmondson, Faaiza Rashid, and Herman B. "Dutch" Leonard
Harvard Business School Case 612-046

On August 5, 2010, 700,000 tons of some of the hardest rock in the world caved in Chile's century-old San Josť mine. The collapse buried 33 miners at a depth almost twice the height of the Empire State Building-over 600 meters (2,000 feet) below ground. Never had a recovery been attempted at such depths, let alone in the face of challenges like those posed by the San Josť mine: unstable terrain, rock so hard it defied ordinary drill bits, severely limited time, and the potentially immobilizing fear that plagued the buried miners. Could the trapped miners and rescue workers mobilize before air and resources were depleted? The case describes the ensuing efforts that draw the resources of countless people and multiple organizations in Chile and around the world.

Purchase this case:
http://cb.hbsp.harvard.edu/cb/product/612046-PDF-ENG

Purchase this supplement:
http://cb.hbsp.harvard.edu/cb/product/612047-PDF-ENG

Location Choice for New Ventures: Cities

William R. Kerr and Ramana Nanda
Harvard Business School Note 811-106

Location choice is a critical decision for entrepreneurs. This note explores how entrepreneurs should think about different city options through a systematic framework that encompasses professional and personal issues. We use the intellectual frameworks of the cluster and industry agglomeration literatures to organize these factors. We then provide some tactical advice and worksheets for entrepreneurs to consider when selecting the location for their new venture.

Purchase this note:
http://cb.hbsp.harvard.edu/cb/product/811106-PDF-ENG

The Kid Grows Up: Decisions at the Sundance Institute

Mukti Khaire and Eleanor Kenyon
Harvard Business School Case 812-051

The Sundance case raises the question of how markets for innovative cultural products can be created and what the role of intermediaries in creative industries ought to be. The case describes the history of the Sundance Institute, which was founded by actor/director Robert Redford to promote independent filmmaking. Started as a "Lab" where independent filmmakers could work on their film projects, the Institute soon expanded to organize the Sundance Film Festival in order to facilitate the exhibition and distribution of independent films, including those not supported by the Sundance Labs. Thirty years after Sundance was founded, its top management team wonders whether the mission of Sundance would be best served by increasing and improving the supply of independent films in the market or by educating consumers to create an audience for independent cinema.

Purchase this case:
http://cb.hbsp.harvard.edu/cb/product/812051-PDF-ENG

Enterprise Risk Management at Hydro One (B): How Risky Are Smart Meters?

Anette Mikes and Dominique Hamel
Harvard Business School Supplement 112-073

This case enables students to simulate a risk management workshop based on the description of an innovative capital project in the energy sector. Students will discuss, assess, and vote on the riskiness of the Smart Meters project and experience the dynamics of a risk workshop.

Purchase this supplement:
http://cb.hbsp.harvard.edu/cb/product/112073-PDF-ENG