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.

April 2

Videogames in the cloud

In the summer of 2012, two events occurred that seemed to signal both a rosy future for so-called cloud gaming, and its demise. Sony announced a deal to acquire popular cloud gaming provider Gaikai for $380 million-the good news. But the following month, another popular online firm, OnLive, announced a major restructuring as it struggled to cover the costs of its increasingly complex cloud network. A new case by Andrei Hagiu and Kerry Herman, "Videogames: Clouds on the Horizon?," looks at the history of videogames since the 1970s and asks what the future may hold for this latest iteration.

Why the molecular medicine revolution isn't producing

In a paper published in the journal Nature Reviews, the authors look at the promise of molecular medicine and its failure to product substantial medical progress in many areas. "The problem is not due to a lack of resources or incentives, but a model of innovation that too often fragments efforts by treatment modality (drugs, devices, diagnostics, and clinical treatment). We may improve individual technologies of health care, but fail to provide integrated solutions." Read, "Beyond Magic Bullets: True Innovation in Health Care," by Vaibhav A. Narayan, Marco Mohwinckel, Gary Pisano, Michael Yang, and Husseini Manji.

Pierre Omidyar: From entrepreneur to funder

Pierre Omidyar famously started eBay in 1995 to auction off collectibles. Later, he and his wife, Pam, became noted philanthropists. With creation of Omidyar Network (ON), they turned to backing for-profit, "impact investing" firms. The case "Omidyar Network: Pioneering Impact Investment" looks at ON's deliberation about whether and how to fund Anudip, an Indian firm dedicated to rural employment. The case was written by Michael Chu and Lauren Barley.

 

Publications

  • 2006
  • Nature Reviews

Beyond Magic Bullets: True Innovation in Health Care

By: Narayan, Vaibhav A., Marco Mohwinckel, Gary Pisano, Michael Yang, and Husseini Manji

Abstract—The molecular medicine revolution-based on advances in fields such as genomics and network modeling in the decade since the human genome sequence was completed-has changed the way we think about, study, and approach the development of novel therapies. However, these advances in knowledge have so far not been reflected in substantial medical progress in many areas. The problem is not due to a lack of resources or incentives, but a model of innovation that too often fragments efforts by treatment modality (drugs, devices, diagnostics, and clinical treatment). We may improve individual technologies of health care, but fail to provide integrated solutions. In this paper, we argue that innovation in health care needs to go "beyond the pill" and systematically integrate combinations of treatments. We discuss the implications of this approach for organizational and business models in the pharmaceutical industry.

  • 2006
  • World Politics

China's 'New Regionalism': Subnational Analysis in Chinese Political Economy."

By: Rithmire, Meg

Abstract—The study of Chinese political economy has undergone a sea change since the late 1990s; instead of debating the origins and direction of national reform, scholars have turned to examining the origins of local economic variation. This essay reviews recent work in regional political economy of contemporary China. In keeping with a movement in comparative politics toward analyzing subnational politics, the "new regionalists" seek to identify and explain meaningful heterogeneity in the Chinese polity and economy. Yet they go further than simply using subnational cases to generate or test theories about Chinese politics; instead, they propose that subnational political economies in China are a function of endogenous change rather than a reaction to national priorities. After identifying differences between "new regionalism" and previous studies of decentralization in China, I discuss this work according to the theoretical approaches (institutional, ideational, and socio-historical) used to explain the origins of regional differences. I conclude by examining the limitations of the new regionalist agenda in comparative and historical context and suggesting that scholars move past unconditional acceptance of the causal power of "socialist legacies" and instead attend to the importance of changes in the post-Mao administrative hierarchy.

 

Working Papers

Expectations and Two-Sided Platform Profits

By: Hagiu, Andrei, and Hanna Hałaburda

Abstract—In markets with network effects, users must form expectations about the total number of users who join a given platform. In this paper, we distinguish two ways in which rational expectations can be formed, which correspond to two different types of users-sophisticated and unsophisticated. Only sophisticated users adjust their expectations in response to platforms' price changes. We study the effect of the fraction of sophisticated users on platform profits. A monopoly platform's profits are always increasing in the fraction of sophisticated users. The profits of competing platforms in a market of fixed size are decreasing in the fraction of sophisticated users. When market expansion is introduced, the fraction of sophisticated users that maximizes competing platforms' profits may be positive and is strictly lower than 1. We also investigate the possibility of platforms investing in "educating" unsophisticated users. In a competitive environment, such education is a public good among platforms and therefore the equilibrium level is lower than the one that would maximize joint industry profits.

Download working paper: http://www.hbs.edu/faculty/product/41870

Expected Returns Dynamics Implied by Firm Fundamentals

By: Lyle, Matthew R., and Charles C.Y. Wang

Abstract—We provide a tractable stock valuation model to study the dynamics of firm-level expected returns and their valuation impact using two firm fundamentals: book-to-market ratio and ROE. Applying the model to the cross-section of firms, we find that expected returns and expected profitability are highly persistent and time varying. Our fundamentals-implied estimates of expected returns across time horizons exhibit strong return predictability up to three years ahead and produce an aggregate equity term structure that tracks economic conditions. The implied term structure is upward sloping during normal or expansion periods but flattens or inverts during economic downturns or times of high uncertainty. Finally, we show that ignoring the dynamics of expected returns can produce large valuation errors.

Download working paper: http://ssrn.com/abstract=2182628

Abstract—We conduct an empirical investigation on the impact of pooling tasks and resources on throughput times in a discretionary work setting. We use an Emergency Department's (ED) patient-level data (N = 234,334) from 2007 to 2010 to test our hypotheses. We find that when the ED's work system had pooled tasks and resources, patients' lengths of stay were longer than when the ED converted to having dedicated tasks and resources. More specifically, we find that dedicated systems resulted in a 9% overall decrease in length of stay, which corresponds to a 25-minute reduction in length of stay for an average patient of medium severity in this ED. We propose that the improved performance comes from a reduction in social loafing and a more distributed utilization of shared resources. These benefits outweigh the expected efficiency gains from pooling, which are commonly predicted by queuing theory.

Download working paper: http://www.hbs.edu/faculty/product/44534

 

Cases & Course Materials

  • Harvard Business School Case 513-065

Agriculture in Mexico

No abstract available.

Purchase this case:
http://hbr.org/search/513065-PDF-ENG

  • Harvard Business School Case 313-090

Omidyar Network: Pioneering Impact Investment

Omidyar Network (ON), having deployed over $500 million in ways ranging from donations to commercial equity capital, must decide whether to back Anudip, an Indian organization dedicated to rural employment. The social impact of Anudip is high, but its financial performance is lackluster. Able to deploy all the tools along the capital curve of impact investing, which if any is optimal for Anudip? The case recounts the transition of eBay founder Pierre Omidyar and his wife, Pam, from the Omidyar Family Foundation (OFF) to ON, going from a traditional grant-making organization to being a pioneer of impact investing: the application of investment practices in the delivery of high impact social interventions, with the intent of providing positive financial returns to investors.

Purchase this case:
http://hbr.org/search/313090-PDF-ENG

  • Harvard Business School Case 413-102

Buro Happold (B)

Supplements the (A) case.

Purchase this case:
http://hbr.org/search/413102-PDF-ENG

No abstract available.

Purchase this case:
http://hbr.org/search/113090-PDF-ENG

  • Harvard Business School Case 413-031

Talking Strategy at Greighton Partners

Since its inception, London-based private equity firm Greighton Partners had managed over $15 billion in investor capital. The firm employed about 150 professionals around the globe and had completed over 175 company acquisitions since its founding. Started with a small intimate team in London, the firm had merged with a continental PE firm and was successful, with an increased focus on Asia deals. After a long day of global partner meetings behind them, a group of Greighton partners, eager to unwind, gathered to discuss the firm's success in terms of executing on its recently refined strategy. Opinions ranged across the following strategic issues: growing the firm's Asian footprint versus remaining focused in Europe; aiming to be a top performing mid-market firm or focusing on moving up a tier to compete for bigger deals against larger firms; growth and expansion through organic growth, merger/acquisition, or through lateral hires; and finally, sector mix and client mix/client focus.

Purchase this case:
http://hbr.org/search/413031-PDF-ENG

  • Harvard Business School Case 713-424

Videogames: Clouds on the Horizon?

Since the creation of the first videogame systems in the 1970s, the videogame industry has undergone numerous transformations as new technologies and market entrants fundamentally changed the gaming experience of customers. In the early 21st century, customers began accessing games without the use of a physical gaming console, either through their mobile devices, or increasingly, through the "cloud" where customers could play videogames through specially enabled devices without the need for a physical game console or game disk. How might the cloud impact the dynamics of the industry?

Purchase this case:
http://hbr.org/search/713405-PDF-ENG

No abstract available.

Purchase this case:
http://hbr.org/search/409112-PDF-ENG

  • Harvard Business School Case 813-160

Launching Global Ventures: Location Choices

No abstract available.

Purchase this case:
http://hbr.org/search/813160-PDF-ENG

  • Harvard Business School Case 513-090

Juan Valdez: Innovation in Caffeination

Corporate entrepreneurs attempt to revive Colombia's famous Juan Valdez brand in the age of Starbucks, with café chain and packaged coffee ventures. In the 1970s and 80s, the iconic "Juan Valdez" ingredient brand was the most recognized in the world of coffee. The success of advertising based on this character garnered the Colombian coffee industry price premiums in international markets, especially the U.S. By the 2000s, Colombia's coffee sector was being battered and its branding power diminished as café chains such as Starbucks increasingly captured profits in the value chain. In reaction, Colombia's coffee federation develops a semi-independent, for-profit branding arm-Procafecol-to rebuild the Juan Valdez brand. Procafecol launches the first Juan Valdez cafés and a packaged coffee line, putting Colombian coffee into competition with many of its traditional customers. The case examines the successes and failures of the first five years of the new strategy, encouraging discussion of what changes must be made to Procafecol's innovation program.

Purchase this case:
http://hbr.org/search/513090-PDF-ENG

  • Harvard Business School Case 713-474

The Basque Country: Strategy for Economic Development

The Basque country, with a population of 2.1 million and covering 7,233 square kilometers, is an autonomous region located in the north of Spain, physically separated from it by the Pyrenees Mountains. Presents the history of the region-highly prosperous at the turn of the 20th century but nearing bankruptcy by the 1950s. By 2001, the Basque GDP per capita had risen to a level well ahead of Spain and most European countries. At the same time that the region was enjoying the spoils of admirably executed cluster initiatives, it was being threatened by the destabilizing violence of the Basque separatist extreme, a slowing global economy, and an always precarious balance of power between the Basque's own government and the government of Spain.

Purchase this case:
http://hbr.org/search/713474-PDF-ENG