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.

July 23

How to detect fake reviews

Review sites, such as Yelp, are relied on increasingly by both consumers and businesses, some of which have been known to post fake reviews in order to attract more customers. What would make a business sink so low? "Fake it Till You Make it: Reputation, Conpetition, and Yelp Review Fraud," by Michael Luca and Georgios Zervas, finds that fake reviews among restaurants rise as a restaurant's reputation falls, while an increase in nearby competition can trigger false negative reviews on the competing restaurants' Yelp pages. Ultimately, these findings can be incorporated into more sophisticated algorithms for detecting fake reviews and ensuring quality on crowd-sourced review sites.

Why hybrids form

Little is known about why entrepreneurs decide to form hybrid organizations, companies that combine multiple existing organizational forms. "How the Zebra Got Its Stripes: Imprinting of Individuals and Hybrid Social Ventures," by Matthew Lee and Julie Battilana, proposes that the founders of hybrid organizations are influenced by past exposure to multiple, varied work environments--which predisposes them to build their ventures on a range of organizational strategies. The authors identify three main sources of these commercial imprints: the founder's own work experience; parental work experience; and professional education. Going forward, they hope to examine the larger role of social influence on hybrid organizations.

What drives capitalism

In "Debating the Responsibility of Capitalism in Historical and Global Perspective," Geoffrey Jones finds that since the nineteenth century, businesses in America, Europe, Japan, and India, have been discussing the balance of capitalism and social responsibility. They were driven by such factors as spirituality, self-interest, fear of government intervention, and the belief that governments are powerless to address the major issues within a community. Over the past 150 years, views on corporate responsibility have become widely globalized, and today, it is difficult to find any corporation that does not lay claim to a social cause (with relative degrees of sincerity and cynicism).

 

Publications

  • 2013
  • pub

Does Social Connection Turn Good Deeds into Good Feelings?: On the Value of Putting the 'Social' in Prosocial Spending

By: Aknin, Lara B., Elizabeth W. Dunn, Gillian M. Sandstrom, and Michael I. Norton

Abstract—When are the emotional benefits of generous behavior most likely to emerge? In three studies, we demonstrate that the hedonic benefits of generous spending are most likely when spending promotes positive social connection. Study 1 shows that people feel happier after giving more to charity, but only when they give to someone connected with the cause. Studies 2 and 3 show that the emotional rewards associated with giving to friends or acquaintances are greatest in situations that facilitate social connection. Thus, social connection may be important for turning good deeds into good feelings, and maximizing connectedness between givers and recipients may enhance the emotional payoff of charitable initiatives.

  • 2013
  • pub

Learning by Supplying

By: Alcácer, Juan, and Joanne Oxley

Abstract—Learning processes lie at the heart of our understanding of how firms build capabilities to generate and sustain competitive advantage: learning by doing, learning by exporting, learning from competitors, users, and alliance partners. In this paper we focus attention on another locus of learning that has received less attention from academics despite popular interest: learning by supplying. Using a detailed panel dataset on supply relationships in the mobile telecommunications industry, we address the following questions: What factors contribute to a firm's ability to learn by supplying and building technological and market capabilities? Does it matter to whom the firm supplies? Is involvement in product design important, or is manufacturing the key locus of learning? How does a supplier's initial resource endowment play into the dynamic? Our empirical analysis yields interesting findings that have implications for theory and practice and that suggest new directions for future research.

Abstract—With incidences in the 20%-25% range, the practice of firing customers has become increasingly attractive as firms try to maximize the lifetime value of their customer portfolios. This chapter traces the relationship trajectory of a 30-year customer of Filene's Basement, a retailer offering fashion goods at discounted prices, who was eventually fired by the firm. The case traces how company actions taken in the name of customer relationship management (CRM) contributed to the creation and demise of a particular type of commercial relationship: the best customer. Ironically, we find that firing the customer is often a case of blaming the victim: managers remain largely unaware of their own roles in creating the unprofitable customers they seek to shed. We reveal how CRM programs can transform best customers from highly profitable, loyal customers into high maintenance customers whose value stemming from their frequent purchasing is eroded by their increasing cost-to-serve. The case advocates a deeper appreciation of the two-way, reciprocating nature of customer relations and the dynamic processes whereby they should be nurtured and maintained.

Publisher's link: http://www.amazon.com/dp/0415783135

 

Working Papers

Marketplace or Reseller?

By: Hagiu, Andrei, and Julian Wright

Abstract—Intermediaries can choose between functioning as a marketplace (on which suppliers sell their products directly to buyers) or as a reseller (purchasing products from suppliers and selling them to buyers). We model this as a choice between whether control rights over a non-contractible decision variable (the level of marketing activities) are better held by suppliers (the marketplace-mode) or by the intermediary (the reseller-mode). Whether the marketplace- or the reseller-mode is preferred depends on whether independent suppliers or the intermediary are better suited to optimally tailor marketing activities for each specific product. We show that this tradeoff is shifted towards the reseller-mode when marketing activities create spillovers across products and when network effects lead to unfavorable expectations about supplier participation, whereas it is shifted towards the marketplace for long-tail products. We thus provide a theory of which products an intermediary should offer in each mode.

Download working paper: http://www.hbs.edu/faculty/Pages/download.aspx?name=13-092.pdf

Abstract—This working paper examines the evolution of concepts of the responsibility of business in a historical and global perspective. It shows that from the nineteenth century American, European, Japanese, Indian, and other business leaders discussed the responsibilities of business beyond making profits, although until recently such views have not been mainstream. There was also a wide variation concerning the nature of this responsibility. This paper argues that four factors drove such beliefs: spirituality, self-interest, fear of government intervention, and the belief that governments were incapable of addressing major social issues.

Download working paper: http://ssrn.com/abstract=2291145

Abstract—Restaurant hygiene inspections are often cited as a success story of public disclosure. Hygiene grades influence customer decisions and serve as an accountability system for restaurants. However, cities (which are responsible for inspections) have limited resources to dispatch inspectors, which in turn limits the number of inspections that can be performed. We argue that Natural Language Processing (NLP) can be used to improve the effectiveness of inspections by allowing cities to target restaurants that are most likely to have a hygiene violation. In this work, we report the first empirical study demonstrating the utility of review analysis for predicting restaurant inspection results.

Download working paper: http://ssrn.com/abstract=2293165

Abstract—Hybrid organizations that combine multiple, existing organizational forms are frequently proposed as a source of organizational innovation, yet little is known about the origins of such organizations. We propose that individual founders of hybrid organizations acquire imprints from past exposure to work environments, thus predisposing them to incorporate the associated logics in their subsequent ventures, even when doing so requires deviation from established organizational templates. We test our theory on a novel dataset of over 700 founders of social ventures, all guided by a social welfare logic. Some of them also incorporate a commercial logic along with the social welfare logic, thereby creating a hybrid social venture. We find evidence of three sources of commercial imprints: the founder's own, direct work experience, as well as the indirect influence of parental work experiences and professional education. Our findings further suggest that the effects of direct imprinting are strongest from the early tenure of for-profit experience but diminish with longer tenure. In supplementary analyses, we parse out differences between the sources of imprints and discuss implications for how imprinting functions as an antecedent to the creation of new, hybrid forms.

Download working paper: http://ssrn.com/abstract=2291686

Abstract—Review sites have become increasingly important sources of information for consumers. Because these reviews affect sales, businesses have the incentive to game the system by leaving positive reviews for themselves or negative reviews for their competitors. Such review fraud undermines the trustworthiness of consumer reviews and constitutes a major risk factor for review sites. In this paper, we investigate review fraud on the popular consumer review site Yelp. We construct a novel data set to analyze this problem, combining restaurant reviews with Yelp's algorithmic indicator of fake reviews. Using this imperfect indicator as a proxy, we develop an empirical methodology to identify the points in the life cycle of a business during which review fraud is most prevalent. We find that a restaurant's changing reputation affects its decision to engage in review fraud. Specifically, a restaurant is more likely to seek a positive fake review when its reputation is weak, i.e., when it has few reviews, or it has recently received bad reviews. Consistent with theory, we find that chains are less likely than independent restaurants to engage in review fraud. We then turn our attention to negative review fraud and find that increased competition by similar restaurants is the driving force behind it.

Download working paper: http://ssrn.com/abstract=2293164

 

Cases & Course Materials

  • Harvard Business School Case 913-061

Mobilizing an Online Business

Entrepreneurs starting online businesses often need to mobilize multiple sets of users or customers, each of whom hesitates to participate unless others join also. This case presents several challenges with similar structure.

Request a courtesy copy:
http://www.benedelman.org/publications/request/?doc=913061

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  • Harvard Business School Case 813-164

Grupo RBS (A)

No description available.

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http://hbr.org/search/813164-PDF-ENG

Aditya Birla Financial Services Group is a large, broad-based, Indian financial services institution offering products ranging from life insurance and mutual funds to private equity. The company has witnessed a turnaround in recent years and regained lost market share. However, in recent years, concerns about investor protection has increased financial sector regulatory oversight specifically in the asset management and life insurance space and changed the rules of the game. Additionally, the central bank has invited new banks to apply for licenses to operate in the country. In the face of these changes, the company has to figure out what its strategy should be to realize its vision of becoming a leading integrated financial services player offering customers a menu of products that support their needs at different stages of their lives.

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This case focuses on the growth of an innovative non-profit institution that motivates aboriginal children to attend school by harnessing their love of football.

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http://hbr.org/search/913416-PDF-ENG

  • Harvard Business School Case 813-178

Getit

Sidharth Gupta, CEO of Getit Infomediary Ltd., had just received a term sheet from Helion Venture Partners (Helion), one of India's independent venture capital firms, offering to invest Rs 200 million in return for an equity stake in the company. His dream of transforming Getit from a regional print company into a digital company with broad geographical reach was within grasp. However, Gupta had to act fast; Helion's term sheet would expire in a fortnight if unexecuted. Bank finance and trade credit had tided Getit through tough times in the past, and Getit still had a Rs 250 million bank line to draw on. Should he take the venture capital investment? And if so, what implications would this have for his family business and for him personally?

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  • Harvard Business School Case 713-407

Yammer (A)

In spring 2012, Yammer was on track to become a highly successful standalone company. Yammer was a leading Enterprise Social Network (ESN), providing companies a private social network in which employees could collaborate securely and efficiently. However, later that year, Microsoft executives unexpectedly reached out with an offer to acquire Yammer for $1.2 billion and integrate Yammer into the Microsoft Office division. An integration with Microsoft would have a profound effect on Yammer's scalability, software development, and organizational culture. David Sacks, CEO of Yammer, debated the challenges and opportunities related to competition, product, and culture as he thought about the offer on the table.

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  • Harvard Business School Case 713-483

Yammer (B)

Supplement to "Yammer (A)," HBS case 713-407

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http://hbr.org/search/713483-PDF-ENG

State health care reform in Massachusetts has involved a phased process, focusing first on coverage expansion and then turning to delivery system innovation and cost containment. In 2006, the state adopted an individual mandate to obtain health care coverage, which, along with a Medicaid expansion and creation of an exchange for two new health insurance programs, reduced the proportion of uninsured to below 3% within three years. In 2009, high and rising health care spending called into question the sustainability of these reforms. Massachusetts prepared to implement its second wave of changes, which included delivery system reforms and a proposed shift from fee-for-service to "global payments" covering all or most of an individual's care. The case examines the content and sequencing of both phases of health care reform in Massachusetts, enabling discussion of health care system-level strategy and the relationship between coverage, care delivery, and spending.

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  • Harvard Business School Case 613-056

ASUSTeK and the Google Nexus 7 Tablet

Days after Jerry Shen introduced a new tablet computer at the Consumer Electronics Show, a Google meeting convinced him to go with a lower price point and co-branding as the Nexus 7. While his company would have a premier position at launch, companies like Samsung posed a large competitive threat. He also knew he would sell more of the Android-powered tablets at the lower price, but how would he make money? The case explores the challenges of innovating in the Android value network in which firms specialized in only one part of the value chain, yet collectively they had to compete with a more vertically integrated Apple and its iPad. The case is intended to be part of a discussion on modularity and industry structure.

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