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.

June 17

Technology trends in transport

Rosabeth Moss Kanter writes a background note identifying five trends in transportation innovation: connected vehicles; connected roads; big data analytics in air transportation; intelligent transportation systems; and innovation in information infrastructure. Her report is titled The Information Superhighway Meets the Highway: Technology and Mobility Trends and Opportunities.

GE's billion-dollar bet on the 'industrial Internet'

The new case "GE and the Industrial Internet" follows CEO Jeff Immelt as he appraises his company's significant investment in the Industrial Internet Initiative. The undertaking includes "building out an Industrial Internet, connecting machines and devices, collecting their data and operations, and providing services to clients based on analytics of this data and information." With $1 billion budgeted, Immelt wonders if GE is moving as quickly as it needs to be. The case was written by Karim Lakhani, Marco Iansiti, and Kerry Herman.

Reviving optimism in Singapore's future

In the case study "Singapore's Mid-life Crisis?," Richard H.K. Vietor and Hilary White consider the island's transformation, starting in 1965, from third world nation to a city-state with massive GDP per capita. Now the country's leaders are asking whether its export-driven growth model needs tinkering as the economic fortunes of some of partners decline.

 

Publications

  • August 2013
  • California Management Review

What Impact? A Framework for Measuring the Scale & Scope of Social Performance

By: Ebrahim, Alnoor, and V. Kasturi Rangan

Abstract—Organizations with social missions, such as nonprofits and social enterprises, are under growing pressure to demonstrate their impact on pressing societal problems such as global poverty. This article draws on several cases to build a performance assessment framework premised on an organization's operational mission, scale, and scope. Not all organizations should measure their long-term impact, defined as lasting changes in the lives of people and their societies. Rather, some organizations would be better off measuring shorter-term outputs or individual outcomes. Funders such as foundations and impact investors are better positioned to measure systemic impacts.

  • August 2013
  • Science

A Better Route to Tech Standards

By: Lerner, Josh, and Jean Tirole

Abstract—No abstract available.

Publisher's link: http://www.sciencemag.org/content/343/6174/972.figures-only

  • August 2013
  • Management Science

Observation Bias: The Impact of Demand Censoring on Newsvendor Level and Adjustment Behavior

By: Rudi, Nils, and David Drake

Abstract—In an experimental newsvendor setting we investigate three phenomena: level behavior-the decision-maker's average ordering tendency; adjustment behavior-the tendency to adjust period-to-period order quantities; and observation bias-the tendency to let the degree of demand feedback influence order quantities. We find that the portion of mismatch cost due to adjustment behavior exceeds the portion of mismatch cost due to level behavior in three out of four conditions. Observation bias is studied through censored demand feedback, a situation that arguably represents the majority of newsvendor settings. When demands are uncensored, subjects tend to order below the normative quantity when facing high margin and above the normative quantity when facing low margin, but in neither case beyond mean demand (a.k.a. the pull-to-center effect). Censoring in general leads to lower quantities, magnifying the below-normative level behavior when facing high margin but partially counterbalancing the above-normative level behavior when facing low margin, violating the pull-to-center effect in both cases.

Publisher's link: http://pubsonline.informs.org/doi/abs/10.1287/mnsc.2013.1825

  • August 2013
  • Academy of Management Journal

Relational Pluralism Within and Between Organizations

By: Shipilov, Andrew, Ranjay Gulati, Martin Kilduff, Stan Li, and Wenpin Tsai

Abstract—Relational pluralism exists when actors maintain multiple kinds of relationships with one another and develop multiple identities as a result. The outcomes of relational pluralism can include greater flexibility in building network ties, more stable exchange relationships, and the ability to adopt tailored innovations. We develop a typology of relational pluralism and examine both the positive and negative features of relational pluralism inside and across organizations. We conclude with a discussion of future directions for research.

  • August 2013
  • Psychological Science

A 'Present' for the Future: The Unexpected Value of Rediscovery

By: Zhang, T., T. Kim, A.W. Brooks, F. Gino, and M. Norton

Abstract—Although documenting everyday activities may seem trivial, four studies reveal that creating records of the present generates unexpected benefits by allowing future rediscoveries. In Study 1, we use a "time capsule" paradigm to show that individuals underestimate the extent to which rediscovering experiences from the past will be curiosity provoking and interesting in the future. In Studies 2 and 3, we find that people are particularly likely to underestimate the pleasure of rediscovering ordinary, mundane experiences compared to rediscovering extraordinary experiences. Finally, Study 4 demonstrates that underestimating the pleasure of rediscovery leads to time-inconsistent choices: individuals forgo opportunities to document the present but then prefer to rediscover those moments in the future. Underestimating the value of rediscovery is linked to people's erroneous faith in their memory of everyday events. By documenting the present, people provide themselves with the opportunity to rediscover mundane moments that may otherwise have been forgotten.

Publisher's link: http://www.hbs.edu/faculty/Publication%20Files/Rediscovery_177a286d-307f-4ad9-9dd9-e477ab73a51c.pdf

 

Working Papers

Abstract—This paper examines the relation between managerial ownership and bank risk exposure for a large sample of international financial institutions. We seek empirical evidence suggested by theories concerning conflicts between managers and owners over risk-taking. We argue that managers holding equity of their bank take less risk because they have fewer opportunities to diversify risk compared with outside shareholders. Our findings are consistent with this idea. We document lower risk levels for banks that employ bank managers with higher equity stakes. Our evidence also suggests that external shareholders affect risk taking via directors representing their interests. We also demonstrate that regulation hardly affects the risk-taking of bank managers holding onto their bank's shares. This contrasts with outside shareholders who are more likely to expose their bank to higher risk levels when regulation protects the bank against default. Managerial equity incentives may, therefore, serve as a risk reduction instrument.

Download working paper: http://www.hbs.edu/faculty/Pages/download.aspx?name=14-070.pdf

Abstract—Applying a "co-search" algorithm to Internet traffic at the SEC's EDGAR website, we develop a novel method for identifying economically related peer firms and for measuring their relative importance. Our results show that firms appearing in chronologically adjacent searches by the same individual (Search-Based Peers or SBPs) are fundamentally similar on multiple dimensions. In direct tests, SBPs dominate GICS6 industry peers in explaining cross-sectional variations in base firms' out-of-sample (a) stock returns, (b) valuation multiples, (c) growth rates, (d) R&D expenditures, (e) leverage, and (f) profitability ratios. We show that SBPs are not constrained by standard industry classification and are more dynamic, pliable, and concentrated. We also show that co-search intensity captures the degree of similarity between firms. Our results highlight the potential of the collective wisdom of investors―extracted from co-search patterns―in addressing long-standing benchmarking problems in finance.

Download working paper: http://ssrn.com/abstract=2171497

Does 'Could' Lead to Good? Toward a Theory of Moral Insight

By: Zhang, Ting, Francesca Gino, and Joshua D. Margolis

Abstract—We introduce the construct of moral insight and study how it can be elicited when people face ethical dilemmas-challenging decisions that feature tradeoffs between competing and seemingly incompatible values. Moral insight consists of discovering solutions that move beyond selecting one conflicting ethical option over another. Moral insight encompasses both a cognitive process and a discernible output: it involves the realization that an ethical dilemma might be addressed other than by conceding one set of moral imperatives to meet another, and it involves the generation of solutions that allows competing objectives to be met. Across four studies, we find that moral insight is generated when individuals are prompted to consider the question "What could I do?" in place of their intuitive approach of considering "What should I do?" Together, these studies point toward a theory of moral insight and important practical implications.

Download working paper: http://ssrn.com/abstract=2444741

 

Cases & Course Materials

  • Harvard Business School Case 614-058

Hospital Clínic de Barcelona

No abstract available.

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http://hbr.org/product/hospital-clinic-de-barcelona/an/614058-PDF-ENG

Technological innovation is considered a competitive strength for America, but the nation does not score as high in deploying its technology. U.S. transportation systems are in need of repair and renewal, and the sector is at the cusp of a technological revolution. The Information Superhighway could reinvent the highway-and airways, railroads, vehicles, and more-by making aspects of the system "smarter" and more connected, cost-effective, fuel-efficient, safer, and more convenient for consumers, businesses, and communities. This paper discusses five trends in technology-enabled transportation innovation: connected vehicles; connected roads; big data analytics in air transportation; Intelligent Transportation Systems; and innovation in information infrastructure.

Purchase this case:
http://hbr.org/product/the-information-superhighway-meets-the-highway-technology-and-mobility-trends-and-opportunities/an/314093-PDF-ENG

  • Harvard Business School Case 614-032

GE and the Industrial Internet

CEO Jeff Immelt considers whether GE is moving fast enough on its new Industrial Internet initiative. The undertaking includes building out an Industrial Internet, connecting machines and devices, collecting their data and operations, and providing services to clients based on analytics of this data and information. The case considers the implications of such an initiative across all six of GE's business units and how best and how quickly to execute the strategy. The firm has committed $1b in investment, building out a new software center in California and a commercial sales function at headquarters to deploy the new products and services.

Purchase this case:
http://hbr.org/product/ge-and-the-industrial-internet/an/614032-PDF-ENG

Goldman Sachs, a longtime venerable financial institution headquartered in New York City, had a partnership culture that was known to value its clients. But when the financial crisis hit in 2008 and Goldman Sachs emerged relatively unscathed, its public image took a large blow as people questioned the inner workings of the bank. To address the situation, Goldman Sachs CEO Lloyd Blankfein called for the creation of the Business Standards Committee (BSC) to carry out a rigorous introspection of the firm. This case explores the reactions of the executives at the bank, over the short- and medium-term, to public accusations and scrutiny and whether the implemented solutions devised by the BSC are sustainable. It details the themes of individual and collective accountability, reputational awareness, and client care.

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http://hbr.org/product/goldman-sachs-anchoring-standards-after-the-financial-crisis/an/514020-PDF-ENG

A company with a strong commitment toward corporate social responsibility since its founding days, Green Mountain faced an ethical decision point in 2007 as new information from the field uncovered a chronic dire problem facing coffee communities-seasonal starvation. Company leaders are driven to reassess their social impact and address this widespread problem while aligning their efforts with their broader, rapidly expanding business of selling coffee.

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http://hbr.org/product/green-mountain-coffee-roasters-inc/an/414065-PDF-ENG

  • Harvard Business School Case 114-059

Arcos Dorados: How to Lead and From Where

Acros Dorados, an Argentina-based multinational, is facing new organizational challenges as it seeks to build on its recent turnaround and grow in Brazil and Mexico. Woods Staton and his management team have to make some hard decisions on how to structure and lead the company going forward.

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http://hbr.org/product/arcos-dorados-how-to-lead-and-from-where/an/114059-PDF-ENG

  • Harvard Business School Case 714-475

Social Strategy at Cisco Systems

In April 2013, Jeanne Beliveau-Dunn, vice president and general manager for Learning@Cisco Systems, was planning the future of the Cisco Learning Network, an online platform hosted at Cisco.com. Since its launch in 2008, the Cisco Learning Network provided content to prepare networking professionals for certification exams, as well as social functionalities to let users interact with each other. To help realize the company's vision for "The Internet of Everything (IOE)," a world where nearly all physical objects, places, people, and processes were connected through the Internet, Cisco estimated that 75% to 90% of all IT workers needed to be re-skilled. The Cisco Learning Network played an important role in that process, helping to train networking professionals to design, build, and manage more complex networks. Aware of just how much was riding on the success of the learning platform, Beliveau-Dunn needed to decide whether to invest heavily in content-and have Cisco employees post videos, tutorials, and study guides to the site-or invest in more social networking tools to enable the community to produce content and help one another master the material in preparation for new certifications.

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http://hbr.org/product/social-strategy-at-cisco-systems/an/714475-PDF-ENG

  • Harvard Business School Case 314-005

Equity Awards at GulfShore Rigging

No abstract available.

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http://hbr.org/product/equity-awards-at-gulfshore-rigging/an/314005-PDF-ENG

  • Harvard Business School Case 514-003

Demarketing Soda in New York City

In 2013, New York City Mayor Michael Bloomberg tried and failed to institute a ban on serving sizes of large sugary beverages. Obesity posed a large public health risk to the city. Mayor Bloomberg's proposed ban was one of many attempts to combat the rising threat of obesity. The case discusses the efficacy of the proposed ban on large soda serving sizes in the context of the other anti-obesity initiatives crafted by Bloomberg's administration.

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http://hbr.org/product/demarketing-soda-in-new-york-city/an/514003-PDF-ENG

Significant negotiation-related achievements from the career of Ambassador Tommy Koh of Singapore are highlighted in brief form along with elements of his background and career. In light of these accomplishments, Koh was selected as the recipient of the 2014 Great Negotiator Award, presented by the Program on Negotiation, an interuniversity consortium of Harvard, MIT, and Tufts that is based at the Harvard Law School. Summaries of several of Koh's negotiations are presented in order to stimulate further research and analysis. Among numerous other activities, the episodes described include his leadership in forging the United States-Singapore Free Trade Agreement (USSFTA), the development and ratification of a charter for the Association of Southeast Asian Nations (ASEAN), the resolution of territorial and humanitarian disputes in the Baltics and Asia, and successful chairmanship of two unprecedented global megaconferences: the Third U.N. Conference on the Law of the Sea and the U.N. Conference on the Environment and Development, also known as the Earth Summit.

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http://hbr.org/product/tommy-koh-background-and-major-accomplishments-of-the/an/914021-PDF-ENG

  • Harvard Business School Case 914-011

Progress Energy and Duke Energy (A)

Just as Duke Energy and Progress Energy announce their merger-forming the largest utility company in the United States, to be led by the current Progress CEO-a nuclear reactor owned by Progress suffers major damage and must be taken offline. While Progress grapples with the scope of the repairs and an increasingly skeptical insurance provider, the Duke board begins to doubt their choice for the leader of the combined companies.

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http://hbr.org/product/progress-energy-and-duke-energy-a/an/914011-PDF-ENG

  • Harvard Business School Case 714-039

Singapore's 'Mid-life Crisis'?

Since its expulsion from Malaysia in 1965, Singapore had transformed itself from a third world island nation into a vibrant city-state with one of the highest levels of GDP per capita in the world. However, sluggish demand among Singapore's major trade partners began testing the nation's export-driven growth model. It was also becoming clear that the Singaporean government could no longer focus single-mindedly on economic growth. Was Singapore facing a mid-life crisis? If so, how could the government revive optimism in the nation's future?

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http://hbr.org/search/714039-PDF-ENG