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.

January 15

How Chapter 11 saved the economy

At its darkest hour during the recession, some $3.5 trillion of corporate debt in the US was distressed or in default and $1.8 trillion of public company assets in Chapter 11 bankruptcy protection. "And yet, in a relatively short time, much of the corporate debt that defaulted during the crisis has since been managed down, 'mass liquidations' have been averted, and corporate profits, balance sheets, and values have all rebounded with remarkable speed," writes Professor Stuart Gilson in the Journal of Applied Corporate Finance. The reason? The power of restructuring. Read his paper, "Coming Through in a Crisis: How Chapter 11 and the Debt Restructuring Industry Are Helping to Revive the US Economy."

Obama, Romney, and the cost of the environment

Rawi Abdelal and Kaitlyn Tuthill review American energy policy on the eve of the recent presidential election. On issues ranging from fracking to the acceptance of climate change, solutions seem to be matters of deep partisan divide. "The results of the election would shape the country's energy policy for at least the next four years and potentially create enough momentum to set energy policy of the United States for many years to come," they write. Read their case study, "Romney vs. Obama and US Energy Policy."

Corporate governance in emerging economies

Emerging economies, where oftentimes social and political institutions are still forming, are fertile areas for economists to review. In a new working paper, researchers Andrea Hugill and Jordan Siegel study the development of corporate governance in emerging economies, where corruption can be prevalent and regulatory enforcement nascent. Read their paper, "Which Does More to Determine the Quality of Corporate Governance in Emerging Economies, Firms or Countries?"

 

Publications

The Future of Organization Design

Abstract

The modern corporation has long been the central focus of the field of organization design. Such firms can be likened to nation-states: they have boundaries that circumscribe citizen-employees, and they engage in production and trade. But individual corporations are no longer adequate to serve as the primary unit of analysis. Over the years, systems of distributed innovation-so-called business ecosystems-have become increasingly prevalent in many industries (Adner & Kapoor, 2010; Iansiti & Levien, 2004; von Hippel, 1988). Ecosystems generally encompass numerous corporations, individuals, and communities that might be individually autonomous but related through their connection with an underlying, evolving technical system. In the future, I believe the key problem for organization design will be the management of distributed innovation in such dynamic ecosystems. Specifically, how should diverse entities be integrated into a coherent network that generates goods in the present and new designs for the future? To answer that question, organization designers must think about how to distribute property rights, people, and activities across numerous self-governing enterprises in ways that are advantageous for the group (ecosystem) as well as for the designer's own firm or community.

Paper: http://www.jorgdesign.net/article/view/6334

Liability Structure in Small-Scale Finance

Abstract

Microfinance, the provision of small individual and business loans, has experienced dramatic growth, reaching over 150 million borrowers worldwide. Much of the success of microfinance has been attributed to attempts to overcome the challenges of information asymmetries in uncollateralized lending. However, very little is known about the optimal contract structure of these loans, and there is substantial variation across lenders, even within a particular setting. This paper exploits a plausibly exogenous change in the liability structure offered by a microfinance program in India, which shifted from individual to group liability lending. We find evidence that the lending model matters: for the same borrower, the required monthly loan installments are 11 percent less likely to be missed under the group liability setting in comparison with individual liability. In addition, compulsory savings deposits are 20 percent less likely to be missed under group liability contracts.

Paper: http://wber.oxfordjournals.org/content/early/2012/12/09/wber.lhs031.short?rss=1

Do Analysts Add Value When They Most Can? Evidence from Corporate Spinoffs

Abstract

This paper investigates how securities analysts help investors understand the value of diversification. By studying the research that analysts produce about companies that have announced corporate spinoffs, we gain unique insights into how analysts portray diversified firms to the investment community. We find that while analysts' research about these companies is associated with improved forecast accuracy, the value of their research about the spun-off subsidiaries is more limited. For both diversified firms and their spun-off subsidiaries, analysts' research is more valuable when information asymmetry between the management of these entities and investors is higher. These findings contribute to the corporate strategy literature by shedding light on the roots of the diversification discount and by showing how analysts' research enables investors to overcome asymmetric information.

Paper: http://www.hbs.edu/faculty/Publication%20Files/Do%20Analysts%20Add%20Value%20When%20They%20Most%20Can_d87e063a-a7e0-44e2-83fe-a1999565b7f0.pdf

Coming Through in a Crisis: How Chapter 11 and the Debt Restructuring Industry Are Helping to Revive the U.S. Economy

Abstract

Abstract is unavailable at this time.

Paper: http://www.hbs.edu/faculty/Publication%20Files/Coming%20Through%20in%20a%20Crisis_1ffcaae3-d616-47f1-875b-de4b09d97b65.pdf

When the Crowd Fights Corruption

Abstract

Abstract is unavailable at this time.

Paper: http://hbr.org/2013/01/when-the-crowd-fights-corruption/ar/1

Negotiating with Emotion

Abstract

Abstract is unavailable at this time

Paper: http://hbr.org/2013/01/negotiating-with-emotion/ar/1

The Architecture of Transaction Networks: A Comparative Analysis of Hierarchy in Two Sectors

Abstract

Many products are manufactured in networks of firms linked by transactions, but comparatively little is known about how or why such transaction networks differ. This article investigates the transaction networks of two large sectors in Japan at a single point in time. In characterizing these networks, our primary measure is "hierarchy," defined as the degree to which transactions flow in one direction, from "upstream" to "downstream." Our empirical results show that the electronics sector exhibits a much lower degree of hierarchy than the automotive sector because of the presence of numerous inter-firm transaction cycles. These cycles, in turn, reveal that a significant group of firms have two-way "vertically permeable boundaries": (i) they participate in multiple stages of an industry's value chain, hence are vertically integrated, but also (ii) they allow both downstream units to purchase intermediate inputs from and upstream units to sell intermediate goods to other sector firms. We demonstrate that the 10 largest electronics firms had two-way vertically permeable boundaries while almost no firms in the automotive sector had adopted that practice.

Paper: http://icc.oxfordjournals.org/content/21/6/1307.abstract

Organizing for Society: A Typology of Social Entrepreneuring Models

Abstract

In this article, we use content and cluster analysis on a global sample of 200 social entrepreneurial organizations to develop a typology of social entrepreneuring models. This typology is based on four possible forms of capital that can be leveraged: social, economic, human, and political. Furthermore, our findings reveal that these four social entrepreneuring models are associated with distinct logics of justification that may explain different ways of organizing across organizations. This study contributes to understanding social entrepreneurship as a field of practice and it describes avenues for theorizing about the different organizational approaches adopted by social entrepreneurs.

Investment Cycles and Startup Innovation

Abstract

We find that VC-backed firms receiving their initial investment in hot markets are more likely to go bankrupt, but conditional on going public are valued higher on the day of their IPO, have more patents, and have more citations to their patents. Our results suggest that VCs invest in riskier and more innovative startups in hot markets (rather than just worse firms). This is true even for the most experienced VCs. Furthermore, our results suggest that the flood of capital in hot markets also plays a causal role in shifting investments to more novel startups-by lowering the cost of experimentation for early stage investors and allowing them to make riskier, and more novel, investments.

Paper: http://people.hbs.edu/rnanda/Nanda_RhodesKropf_JFE.pdf

A Field Study on the Acceptance and Use of a New Accounting System

Abstract

This study examines the attitudes, use, and acceptance of a new accounting system in a pharmaceutical corporation that switched from an Activity Based Costing System to the Theory of Constraints System (TOC). Using structuration theory as a framework, we posit that user responses and attitudes towards TOC are influenced not only by the technical features of the system and the potential economic benefits, but also by the fit between TOC and the existing structures of the users' environment. When users' interact with TOC on an ongoing basis they form interpretations of the new system, and based on such interpretations, they exhibit actions with respect to the use of TOC ranging from championship to rejection of the system. We explore cross sectional variations in the use of the system and link such variations to the practical features of the new system as well as the social structures of the users' environments.

 

Working Papers

Deregulation, Misallocation, and Size: Evidence from India

Abstract

This paper examines the impact of the deregulation of compulsory industrial licensing in India on firm-size dynamics and the reallocation of resources within industries over time. Following deregulation, we find that the extent of resource misallocation declines and a considerable thickening of the left-hand tail of the firm-size distribution suggesting a significant increase in the number of small firms. However, the dominance and growth of large incumbents remains unchallenged. Quantile regressions reveal that the distributional effects of deregulation on firm size are significantly non-linear. The size distribution we observe-namely, a large number of small firms and a small number of large firms-can be characterized as the "missing middle" in Indian manufacturing and suggests that small firms may continue to face constraints in their attempts to grow.

Download the paper: http://ssrn.com/abstract=2190963

Which Does More to Determine the Quality of Corporate Governance in Emerging Economies, Firms or Countries?

Abstract

Scholars of corporate governance have debated the relative importance of country characteristics and firm characteristics in understanding variations in the corporate governance practices of firms in emerging economies. Using panel data and a number of model specifications we shed new light on this debate. We find that firm characteristics are as important as and often meaningfully more important than country characteristics in explaining governance ratings variance. Our findings show that firms in emerging economies over recent years had more capability to rise above home-country peer firms in corporate governance ratings than has been previously suggested.

Download the paper: http://ssrn.com/abstract=2192460

Dollar Funding and the Lending Behavior of Global Banks

Abstract

A large share of dollar-denominated lending is done by non-U.S. banks, particularly European banks. We present a model in which such banks cut dollar lending more than euro lending in response to a shock to their credit quality. Because these banks rely on wholesale dollar funding, while raising more of their euro funding through insured retail deposits, the shock leads to a greater withdrawal of dollar funding. Banks can borrow in euros and swap into dollars to make up for the dollar shortfall, but this may lead to violations of covered interest parity (CIP) when there is limited capital to take the other side of the swap trade. In this case, synthetic dollar borrowing becomes expensive, which causes cuts in dollar lending. We test the model in the context of the Eurozone sovereign crisis, which escalated in the second half of 2011 and resulted in U.S. money-market funds sharply reducing the funding provided to European banks. Coincident with the contraction in dollar funding, there were significant violations of euro-dollar CIP. Moreover, dollar lending by Eurozone banks fell relative to their euro lending in both the U.S. and Europe; this was not the case for U.S. global banks. Finally, European banks that were more reliant on money funds experienced bigger declines in dollar lending.

Download the paper: http://ssrn.com/abstract=2171265

When Do Firms Greenwash? Corporate Visibility, Civil Society Scrutiny, and Environmental Disclosure

Abstract

Under increased pressure to report environmental impacts, some firms selectively disclose relatively benign impacts, creating an impression of transparency while masking their true performance. What deters selective disclosure and leads firms to instead make disclosures more representative of their environmental performance? We hypothesize that selective disclosure, a novel symbolic strategy firms use to manage stakeholder perceptions, is mitigated by two forms of organizational visibility. Firms with greater domain-specific visibility have specific characteristics that make them especially vulnerable to stakeholder criticism and as a result are less prone to selective disclosure. In contrast, more generically visible firms are deterred from selectively disclosing only when they are subjected to civil society scrutiny. We test our hypotheses using a novel panel dataset of 4,484 public companies in many industries, headquartered in 38 countries, during 2005-2008, when environmental disclosure increased among global corporations. We find that domain-specific visibility mitigates selective disclosure, that it mitigates selective disclosure more so than generic visibility, and that generic visibility mitigates selective disclosure only in the presence of civil society scrutiny. This research contributes to understanding how corporations manage the symbolic use of information and how corporate behavior is influenced by civil society scrutiny embedded in institutional processes.

Download the paper: http://ssrn.com/abstract=1836472

Colonial Institutions, Trade Shocks, and the Diffusion of Elementary Education in Brazil, 1889-1930

Abstract

In this paper, we examine the role of trade shocks in promoting the diffusion of elementary education in subnational units in Brazil during a period (1889-1930) in which they had relative financial autonomy to collect export taxes and spend on public goods. The argument is that trade shocks affect asymmetrically the tax revenues of state governments and, thus, their expenditures on elementary education per capita according to what crop mix they had. We then show that states with more egalitarian and democratic institutions use positive trade shocks to invest in education, while the opposite takes place in states with less democratic institutions (e.g., in states that had more slaves). We also show using OLS and instrumental variables that positive trade shocks increased expenditures on education per capita and led to higher literacy rates and to more schools per children. The resulting distribution of human capital across states persists until today.

Download the paper: http://ssrn.com/abstract=1566887

No Taxation without Information: Deterrence and Self-Enforcement in the Value Added Tax

Abstract

Tax evasion generates billions of dollars of losses in government revenue and creates large distortions, especially in developing countries. A growing, mostly theoretical literature argues that information flows are central to understanding effective taxation. This paper analyzes the role of information for tax enforcement in the case of the Value Added Tax (VAT) through two randomized field experiments with over 400,000 Chilean firms. Claims that the VAT facilitates tax enforcement by generating a paper trail on transactions between firms have led to widespread VAT adoption worldwide, but there is surprisingly little evidence. I find that the paper trail acts as a substitute to a firm's own audit risk. A message announcing increased tax enforcement has a much smaller effect on reporting of transactions that are already covered by a paper trail. A second experiment shows that the paper trail leads to spillovers that create important multiplier effects in tax enforcement. The impact of a random audit announcement is transmitted up the VAT chain, increasing compliance by firms' suppliers. These findings confirm that when evasion is taken into account, significant differences emerge between taxes that are equivalent in standard models but generate different information on taxable transactions.

Download the paper: http://www.hbs.edu/faculty/product/43830

When Supply-Chain Disruptions Matter

Abstract

Supply-chain disruptions can have a material effect on company value, but this impact varies considerably and countermeasures can be costly. Thus, it is important for managers and investors to recognize the types of disruptions and the organizational factors that lead to the worst outcomes. Prior research remains unsettled as to whether improvements to firm operational efficiency aggravate or alleviate the impact of disruptions. Improved operational efficiency may leave firms more exposed when a disruption occurs, or it may improve firms' agility and allow them to respond more effectively to a disruption. We hypothesize that the impact of improved operational efficiency depends on whether the disruption is due to factors that are internal versus external to the firm and its supply chain. Examining more than 500 disruptions, we find that a higher rate of improvement in operating performance aggravates the impact of internal disruptions but not external disruptions. This supports the theory that firms which improve operation performance may do so at the cost of increased operational fragility, and this fragility is revealed to investors by the occurrence of an internal disruption.

Download the paper: http://www.hbs.edu/faculty/product/43906

 

Cases & Course Materials

Romney vs. Obama and U.S. Energy Policy

Abdelal, Rawi, and Kaitlyn Tuthill
Harvard Business School Case 713-050

In 2012, the energy sector in the United States was demanding major reform. Prices of oil and gas had continued to cripple the middle and lower class as the U.S. economy slowly recovered. At the same time, the U.S. lagged behind developed economies in production of renewable energy. The acceptance of climate change remained a partisan issue. The development of hydraulic fracturing (fracking) promised an abundance of accessible, cheap, domestically produced natural gas, but the cost to the environment remained a point of debate. As incumbent Democratic President Barack Obama faced Republican opponent Mitt Romney in the 2012 election, their (and their parties') stances on energy policy and the environment differed in several major areas. The results of the election would shape the country's energy policy for at least the next four years and potentially create enough momentum to set energy policy of the United States for many years to come.

Purchase this case:
http://hbr.org/search/713050-PDF-ENG

Brazil's Enigma: Sustaining Long-Term Growth

Alfaro, Laura, and Hilary White
Harvard Business School Case 713-040

Over the past decade, Brazil's future as a leading world economic power appeared certain. An expanding middle class and commodity boom had fueled economic growth, with GDP growth hitting a peak of 7.5% in 2010. However, the high cost of conducting business in Brazil, known as "Custo Brasil," was hurting domestic manufacturing, while incoming foreign investments threatened to overwhelm Brazilian markets. Under President Dilma Rousseff, economic growth stagnated, and the Rousseff administration struggled to find the best balance between reducing inflation, maintaining a flexible exchange rate, and improving the competitiveness of Brazilian exports.

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http://hbr.org/search/713040-PDF-ENG

Designing a Culture of Collaboration at Lake Nona Medical City

Edmondson, Amy C., Sydney Ribot, and Tiona Zuzul
Harvard Business School Case 613-022

Describes Lake Nona, a 7,000-acre residential and research cluster in central Florida, and its process and innovation culture, and Lake Nona Institute, the organization behind the planning and governance of this new eco-friendly community. Emphasis is placed on the institutional collaboration and governance decisions behind Lake Nona's "Medical City" component. Five years after development began, the site boasts a research cluster that has succeeded in attracting scientific talent and residential interest, and has put in place a collaborative governance structure intended to encourage innovation, trust-building, and communication. When the Institute's president is asked to decide who the next tenant in Medical City should be, he considers what kind of process would allow them to best grow going forward. Focuses on 1) the nature of collaboration in the development of new ventures, 2) the managerial challenges of mediation between hierarchical organization processes and consensus-driven structure, and 3) the product development process of a developer in a nascent industry.

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http://hbr.org/search/613022-PDF-ENG

Intellectual Ventures (B)

Hagiu, Andrei, and Noah Fisher
Harvard Business School Case 713-435

No abstract available

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http://hbr.org/search/713435-PDF-ENG

Amylin Pharmaceuticals (B)

Hamermesh, Richard G., and Carin-Isabel Knoop
Harvard Business School Case 813-091

Amylin Pharmaceuticals brought two first-in-class diabetes drugs to market, Byetta and Symlin, in 2005, which were sold in over 80 countries with $650.7 million in sales by 2011. However, the company remained unprofitable as sales plateaued. The small pharmaceutical company was hurt by long delays in bringing Bydureon, a once-a-week version of Byetta, to market, which allowed a competitor time to establish itself in the once-a-week market. Amylin also failed to develop a marketable anti-obesity drug after the purchase of the promising leptin molecule from Amgen, Inc. In 2012, Amylin was acquired by Bristol-Myers Squibb for $5.3 billion.

Purchase this case:
http://hbr.org/search/813091-PDF-ENG

Rock Health

Higgins, Robert F., and Ian McKowan Cornell
Harvard Business School Case 813-035

Rock Health was a San Francisco-based nonprofit organization offering accelerator services to spur innovation at the intersection of healthcare and technology. The company was the creation of Halle Tecco (HBS '11) and her HBS classmate Nate Gross (HBS '11), who met early in their first year at the HBS Healthcare Club meeting and decided to undertake a year-long field study that married their shared interests in healthcare, technology, and entrepreneurship. Rock Health supported health-tech entrepreneurs with a startup grant of $20,000, office space, and a wide variety of professional support services. Entrepreneurial teams that participated in Rock Health's programs promoted services ranging from data-driven technologies that helped manage stress to mobile tools that attempted to diagnosis medical conditions as diverse as Alzheimer's disease and foot ulcers. The case is set in August 2011 as Rock Health is wrapping up its third group of entrepreneurs in a Boston program and planning for its fourth class at the home office. The case should enable students to identify emerging challenges, evaluate Rock Health's funding model, debate the effectiveness of its incubation service, and assess its long-term viability.

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http://hbr.org/search/813035-PDF-ENG

Boston Children's Hospital: Measuring Patient Costs

Kaplan, Robert S., Mary L. Witkowski, and Jessica A. Hohman
Harvard Business School Case 112-086

The case describes two pilot projects on applying activity-based costing to measuring the cost of treating patients. It presents process maps and financial data relating to the processes used during (1) an office visit to a plastic surgeon for three different diagnoses and (2) application and removal of three different casts in the orthopedic cast room. Students calculate and compare the costs and margins of the three procedures at the two different sites using the hospital's existing cost system and a proposed new system based on time-driven activity-based costing.

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http://hbr.org/search/112086-PDF-ENG

The Atavist: Reinventing the Book

Khaire, Mukti, and Mary Tripsas
Harvard Business School Case 812-177

Atavist, a start-up founded by journalists, publishes enhanced ebook singles as well as the software to create enhanced ebooks. The company is currently engaged in both publishing and software development, but as they raise funding and grow, must decide whether to focus on one or the other.

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http://hbr.org/search/812177-PDF-ENG

Altoona State Investment Board: July 2012

Lerner, Josh, and Nathaniel Burbank
Harvard Business School Case 813-100

Considers the decision faced by state pension fund manager Rod Calhoun as he decides whether to invest $200 million in Bain Capital's eleventh global buyout fund: Bain Capital Fund XI. For the fund, Bain was offering its limited partners a choice between three different fee structures: first, a "conventional" fee structure of a 1.5% management fee with 20% carried interest and a 7% preferred rate of return; second, a 1% management fee with 30% carried interest and a 7% preferred rate of return; or third, a 0.5% management fee, 30% carried interest, and a 0% preferred rate of return. Should Calhoun invest in Bain? If he should, which fee structure should Calhoun choose?

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http://hbr.org/search/813100-PDF-ENG

Nippon Steel Corporation (B): Significance of the Usiminas Project

McFarlan, F. Warren, and Akiko Kanno
Harvard Business School Case 113-049

Supplements the (A) case, 109-038.

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http://hbr.org/search/113049-PDF-ENG

The LEGO Group: Envisioning Risks in Asia

Mikes, Anette, and Dominique Hamel
Harvard Business School Case 113-054

On January 1, 2012, the LEGO Group announced a major new initiative to enhance its market penetration in Asia. Later in the year, a cross-functional group of senior managers gathered at company headquarters to discuss the status of the Asian initiative and the risks associated with it. The aim of the meeting was to outline four scenarios for the future that could help managers assess what key success factors and actions were required for coping with the challenges presented by each scenario and to prioritize them. Students will have an opportunity to enact the scenario exercise themselves, devising their own scenarios, and deciding whether the LEGO Group should build a factory in an Asian location in the next five to seven years. In order to facilitate a discussion about the challenges of designing a "winning organization," the case also presents difficult choices that executives had to make about the LEGO Group's strategy, choice of primary customers, core capabilities, and organizational structure.

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http://hbr.org/search/113054-PDF-ENG

Nalli Silk Sarees (A)

Narayanan, V.G., Namrata Arora, and Vidhya Muthuram
Harvard Business School Case 113-004

Nalli Silk Sarees Private Limited was a family owned and operated business that retailed Indian ethnic wear. This 83-year-old company had enjoyed impressive growth with a $95 million turnover, a 22-store retail footprint, and had outdone its competitors by being the only player in its segment to have a national presence. Headquartered in Chennai, India, the company built its unique national brand by emphasizing innovation, customer centric practices, quality, and honesty across the store's retail operations. In 2011, with changing dynamics in the Indian apparel market, the company started to face intense competition from small and large Indian and foreign retailers. The company's chairman, Dr. Nalli Kuppusamy Chetty, announced a $25 million expansion plan and proposed the opening of 12 new stores over a period of two years. This case focuses on the company's pricing strategy, merchandising process, and product assortments to support its own competitiveness and overall customer experience.

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http://hbr.org/search/113004-PDF-ENG

Nalli Silk Sarees (B)

Narayanan, V.G., Namrata Arora, and Vidhya Muthuram
Harvard Business School Case 113-048

Presents the company's perspective using an interview format. Ramnath K.Nalli, vice chairman of Nalli Silk Sarees Private Limited, and his daughter, Lavanya Nalli (HBS MBA 2011), the fifth generation entrepreneur to be involved in the family business, discuss customer preferences, buying behavior, and price sensitivity for cotton and silk sarees.

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http://hbr.org/search/113048-PDF-ENG

Global Unichip Corporation (A)

Shih, Willy, and Chen-Fu Chien
Harvard Business School Case 613-048

Global Unichip Corporation (GUC) is a design services company that acts as a front-end to TSMC, the world's largest semiconductor foundry. In so doing, it masked the complexity of the latest process technologies and reduced the entry barriers for small firms to utilize the latest technology. In acting as an aggregator, it was also able to capture scale benefits. But it saw a change in the market coming as a major systems house customer came to GUC directly. Did this mean that it was enabling competition with TSMC's most important customers? Was it fostering disintermediation, and what did this portend for the future shape of the industry?

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http://hbr.org/search/613048-PDF-ENG

Global Unichip Corporation (B)

Shih, Willy, and Chen-Fu Chien
Harvard Business School Case 613-049

Jim Lai, President of Global Unichip Corporation (GUC), mapped out the changes he saw coming to the global semiconductor industry. The big question was how many system developers would start coming directly to GUC.

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http://hbr.org/search/613049-PDF-ENG

CSIRO: The Light Metals Flagship Decision

Shih, Willy, Margaret P. Pierson, and Dawn Lau
Harvard Business School Case 613-029

This case explores the challenge of investing in basic research as a public good. CSIRO was Australia's leading science and research agency, and it was chartered to enhance national prosperity through R&D. Its Flagships program was designed to align research interests with national priorities, with a strong focus on the adoption of research outputs. The Light Metals Flagship (LMF) was one of six flagships established in 2003, and its goal was to help the nation capture more of the added value of its resources by developing and commercializing downstream technologies in the processing and fabrication of products made from aluminum, magnesium, and titanium. While the LMF met with technical successes, Australian industry was reticent to co-invest. This lack of industry enthusiasm was in many ways unsurprising, as governments often found it important to fund long-term basic research that was outside of the horizon of firms. But what kind of a signal would stopping the program send? Was CSIRO prepared to let short-term thinking in light metals firms drive its agenda? The case examines the technical decision-making process.

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http://hbr.org/search/613029-PDF-ENG