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 1

An under-studied minority

In "The Shifting Landscape of LGBT Organizational Research," Michel Anteby and Caitlin Anderson note the historical dearth of management studies focused on sexual minorities in the workplace. Their article, forthcoming in the journal Research in Organizational Behavior, identifies four scholarly frames that have informed—and sometimes constrained— LGBT research for more than a century. "We conclude by calling for more attention to the frames organizational scholars adopt when studying sexual minorities, but also for more research on both minority and majority sexual orientations in organizations."

How to invest in superstars

Coinciding nicely with the World Cup, a new article by Anita Elberse looks at the winner-take-all markets in the world of soccer, in which "a select few top players earn extremely high rewards." "¿Cómo Invertir en Superestrellas? Lecciones del Mundo del Fútbol" appears in the current issue of Foreign Affairs Latinoamérica.

The business of immersive theater

A new case homes in on a well-known theater impresario in order to explore the tensions between artistic and financial priorities—and the line between avant garde and controversial art. Read "Milk Baths and Charm Necklaces: Had Randy Weiner (Finally) Gone Too Far?" by Mukti Khaire and Hannah Catzen.

 

Publications

  • August 2013
  • Research in Organizational Behavior

The Shifting Landscape of LGBT Organizational Research

By: Anteby, Michel, and Caitlin Anderson

Abstract—Over the past generation, sexual minorities-particularly lesbian, gay, bisexual, and transgendered (LGBT) persons-have gained increased visibility in the public arena. Yet organizational research has lagged behind in recognizing and studying this category of organizational members. This article offers a critical review of this growing body of research. More specifically, we identify and discuss four dominant scholarly frames that have informed LGBT organizational research from the late nineteenth century to date. The frames include a "medical abnormality," "deviant social role," "collective identity," and "social distinctiveness" view of sexual minorities. We argue that these frames have profoundly shaped the scope and range of organizational scholarship devoted to sexual minorities by showing that scholars using such contrasted frames have been drawn to very different research questions with respect to sexual minorities. We document and discuss the main and contrasted questions asked within each of these frames and show how they have both enabled and constrained LGBT organizational research. We conclude by calling not only for more attention to the frames organizational scholars adopt when studying sexual minorities, but also for more research on both minority and majority sexual orientations in organizations.

Publisher's link: http://www.hbs.edu/faculty/Publication%20Files/Shifting%20Landscape%20of%20LGBT%20Org%20Research_0d247765-4372-49ed-9aae-dce41aef12b7.pdf

  • August 2013
  • Foreign Affairs Latinoamérica

¿Cómo Invertir en Superestrellas? Lecciones del Mundo del Fútbol

By: Elberse, Anita

Abstract—Markets for soccer players are winner-take-all markets in which a select few top players earn extremely high rewards. The search for effective talent strategies in these conditions has led clubs to pursue a superstar-acquisition model, a talent-development model, or a mix of both. Wherever clubs fall on this spectrum, having a strategy that recognizes the global importance of stars is critical to long-lasting financial success.

  • August 2013
  • Journal of Finance

A Comparative-Advantage Approach to Government Debt Maturity

By: Greenwood, Robin, Samuel G. Hanson, and Jeremy C. Stein

Abstract—We study optimal government debt maturity in a model where investors derive monetary services from holding riskless short-term securities. In a setting where the government is the only issuer of such riskless paper, it trades off the monetary premium associated with short-term debt against the refinancing risk implied by the need to roll over its debt more often. We then extend the model to allow private financial intermediaries to compete with the government in the provision of short-term, money-like claims. We argue that if there are negative externalities associated with private money creation, the government should tilt its issuance more towards short maturities. The idea is that the government may have a comparative advantage relative to the private sector in bearing refinancing risk and, hence, should aim to partially crowd out the private sector's use of short-term debt.

Publisher's link: http://www.people.hbs.edu/shanson/Comparative_Advantage_paper_20140623.pdf

  • August 2013
  • Management Science

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 decision between whether control rights over a non-contractible decision variable (the choice of some marketing activity) 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 have more important information relevant to the optimal tailoring of 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. If the reseller has a variable cost advantage (respectively, disadvantage) relative to the marketplace, then the tradeoff is shifted towards the marketplace for long-tail (respectively, short-tail) products. We thus provide a theory of which products an intermediary should offer in each mode. We also provide some empirical evidence that supports our main results.

Publisher's link: http://www.hbs.edu/faculty/Pages/download.aspx?name=Marketplace_Reseller_HBS%20WP%2001312014.pdf

  • August 2013
  • Corporations and Citizenship

Can For-Profit Corporations Be Good Citizens? Perspectives from Four Business Leaders

By: Hsieh, Nien-hê

Abstract—This chapter serves an epilogue, turning to ask practitioners how they would answer the question, "Can for-profit corporations be good citizens?" In reflecting on their answers, the chapter puts forward an account that grounds the purpose and responsibilities of for-profit corporations in their role in enabling productive activity that allows members of society to meet their needs and wants. This account is contrasted with prevailing accounts in scholarly literature (e.g., shareholder primacy and stakeholder theory) that frame corporate purpose and responsibility in terms of whose interests the corporation is meant to serve. One area of comparison concerns a central activity of citizenship, which is participation in the political and legislative processes.

Publisher's link: http://www.upenn.edu/pennpress/book/15241.html

  • August 2013
  • Journal of Financial Economics

The Cross Section of Expected Holding Returns and Their Dynamics: A Present Value Approach

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

Abstract—We provide a tractable model of firm-level expected holding period returns using two firm fundamentals-book-to-market ratio and ROE-and study the cross-sectional properties of the model-implied expected returns. We find that 1) firm-level expected returns and expected profitability are time-varying but highly persistent; 2) forecasts of holding period returns strongly predict the cross section of future returns up to three years ahead. We document a highly significant predictive pooled regression slope for future quarterly returns of 0.86, whereas the popular factor-based expected return models have either an insignificant or a significantly negative association with future returns. In supplemental analyses, we show that these forecasts are also informative of the time-series variation in aggregate conditions: 1) for a representative firm, the slope of the conditional expected return curve is more positive in good times, when expected short-run returns are relatively low; 2) the model-implied forecaster of aggregate returns exhibits modest predictive ability. Collectively, we provide a simple, theoretically motivated, and practically useful approach to estimating multi-period ahead-expected returns.

Publisher's link: http://ssrn.com/abstract=2182628

  • August 2013
  • Corporations and Citizenship

Corporate Power and the Public Good

By: Paine, Lynn S.

Abstract—No abstract available.

Publisher's link: http://www.upenn.edu/pennpress/book/15241.html

  • August 2013
  • Journal of Public Economics

The Promise of Positive Optimal Taxation

By: Weinzierl, Matthew

Abstract—A prominent assumption in modern optimal tax research is that the objective of taxation is Utilitarian. I present new survey evidence that most people disagree with this assumption, preferring tax policies based at least in part on a classic alternative objective: the principle of Equal Sacrifice. I generalize the standard model to accommodate this preference for a mixed objective, proposing a method by which to make disparate criteria commensurable while respecting Pareto efficiency. Then, I show that optimal policy in this generalized model, calibrated to the survey evidence and U.S. microdata, quantitatively matches several features of existing tax policy that are incompatible in the conventional model but widely endorsed in reality, including the coexistence of substantial redistribution and limited tagging. Together, these findings demonstrate the potential of a positive theory of optimal taxation.

Publisher's link: http://ssrn.com/abstract=2304825

 

Working Papers

Abstract—Using data from a novel laboratory experiment on complex problem solving in which we varied the network structure of 16-person organizations, we investigate how an organization's network structure shapes performance in problem-solving tasks. Problem solving, we argue, involves both search for information and search for solutions. Our results show that the effect of network clustering is opposite for these two important and complementary forms of search. Dense clustering encourages members of a network to generate more diverse information but discourages them from generating diverse theories: in the language of March (1991), clustering promotes exploration in information space but decreases exploration in solution space. Previous research, generally focusing on only one of those two spaces at a time, has produced an inconsistent understanding of the value of network clustering. By adopting an experimental platform on which information was measured separately from solutions, we were able to bring disparate results under a single theoretical roof and clarify the effects of network clustering on problem-solving behavior and performance. The finding both provides a sharper tool for structuring organizations for knowledge work and reveals the challenges inherent in manipulating network structure to enhance performance, as the communication structure that helps one antecedent of successful problem solving may harm the other.

Download working paper: http://www.hbs.edu/faculty/Pages/download.aspx?name=14-075.pdf

 

Cases & Course Materials

  • Harvard Business School Case 814-100

Clef Company: Turnover

The Clef case focuses on the issue of turnover in a firm's sales force. Students must analyze the factors contributing to turnover as well as the role of the field sales force in Clef's profitable business strategy. Among other things, the Clef case illustrates that managing field marketing requirements entails managing individual people but also a certain aggregate call capacity and a set of sales tasks determined by business strategy. In turn, that analysis of strategy-sales linkages often changes students' minds about what to do about turnover in Clef's sales force.

Purchase this case:
http://hbr.org/product/clef-company-turnover/an/814100-PDF-ENG

The case on Randy Weiner explores the tensions between artistic and financial imperatives in a for-profit immersive theater venture. In order to revive the dormant Manhattan nightclub "The Diamond Horseshoe," theater-impresario Randy Weiner created "The Queen of the Night," a hybrid performance that combines food, opera, circus arts, and dance. While "The Queen of the Night" is the latest in a string of productions categorized as "immersive theater," a category Weiner is credited with inventing, it is also more expensive and more artistically risky than anything he has ever done before. Has Weiner finally gone too far, or will he be able to pull this off? This case explores the creation of a market for immersive theater, as well as structures Weiner has created to fund, manage, and create his productions. Additionally, this case examines the psyche of Weiner, a successful artist-entrepreneur, and investigates the role of risk, controversy, and the line between avant-garde and controversial art in creating works that are both financially profitable and artistically impactful.

Purchase this case:
http://hbr.org/product/milk-baths-and-charm-necklaces-had-randy-weiner-finally-gone-too-far/an/814079-PDF-ENG

  • Harvard Business School Case 496-023

Cambridge Consulting Group: Bob Anderson

Describes the situation facing the head of a rapidly growing industry-focused group within a consulting company. Highlights the dilemmas of being a "producing manager" (i.e., a professional who has both individual production as well as management responsibilities). Issues raised include delegation, developing subordinates, developing an agenda, and building an organization.

Purchase this case:
http://hbr.org/search/496023-PDF-ENG

  • Harvard Business School Case 114-051

Tapestry Networks

Tapestry Networks assembled industry leaders and their regulators in small, private meetings to build new frameworks for pressing regulatory challenges. Tapestry's motivating principle was to reimagine solutions to complex problems (e.g., drug-approval standards) in ways that created a win-win for firms and society. Tapestry meetings on bank-governance standards-initiated after the 2008-2009 Financial Crisis-had experienced some success in rebuilding trust between regulators and banks. But, five years on, the initiative faced important challenges. First, as the urgency of the Financial Crisis faded, it was becoming more difficult to show concrete successes, particularly to the meetings' sponsors-one participant described Tapestry as "sculpting fog." Second, participants differed on what they wanted to get out of the meetings-with some participants less focused on the meetings' broader social objectives. Third, Tapestry faced lingering questions about the meetings' legitimacy and whether they facilitated greater "coziness" between regulators and the regulated.

Purchase this case:
http://hbr.org/product/tapestry-networks/an/114051-PDF-ENG