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.
Are female hurricanes really deadlier?
Researchers recently made big headlines with a study that found hurricanes with female names are deadlier than male-named storms. Their conclusion: Gender stereotypes suggest female storms have lower perceived risk and thus less preparedness. But it turns out the analysis might not be correct. In his soon-to-be-published comment "Female Hurricanes Are Not Deadlier than Male Hurricanes," Daniel Malter counters that the results "are likely a function of spurious correlation and missing variable bias." His comment will be published in a forthcoming issue of Proceedings of the National Academy of Sciences of the United States of America.
Monetary policy effects longer lasting than previously thought
Economists generally believe that changes in monetary policy do not influence real rates long term, but researchers Samuel G. Hanson and Jeremy C. Steinover find contrary evidence. "A 100 basis point increase in the two-year nominal yield on an FOMC announcement day is associated with a 42 basis point increase in the ten-year forward real rate," they report. Their paper "Monetary Policy and Long-Term Real Rates" will be published in an upcoming issue of Journal of Financial Economics.
Intel employees consider a stock option dilemma
In the updated case "Underwater Engineer at Intel Corporation," Mayfield E. Scott considers the deliberations of employee Molly Miller, who must decide to vote for or against Intel's proposed option exchange program. With 99 percent of the chip maker's employee options underwater, Intel needs to find new ways to attract talent and reward employees. "If the program is approved by shareholders, Molly must decide whether to participate in the program and tender her underwater employee stock options," he writes.
- August 2014
- Management Science
Abstract—Although individuals can derive substantial benefits from exchanging information and ideas, many individuals are reluctant to seek advice from others. We find that people are reticent to seek advice for fear of appearing incompetent. This fear, however, is misplaced. We demonstrate that individuals perceive those who seek advice as more competent than those who do not seek advice. This effect is moderated by task difficulty, advisor egocentrism, and advisor expertise. Individuals perceive those who seek advice as more competent when the task is difficult than when it is easy, when people seek advice from them personally than when they seek advice from others, and when people seek advice from experts than from non-experts or not at all.
Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=47824
- August 2014
- Administrative Science Quarterly
The Contaminating Effects of Building Instrumental Ties: How Networking Can Make Us Feel Dirty
Abstract—To create social ties to support their professional or personal goals, people actively engage in instrumental networking. Drawing from moral psychology research, we posit that this intentional behavior has unintended consequences for an individual's morality. Unlike personal networking in pursuit of emotional support or friendship, and unlike social ties that emerge spontaneously, instrumental networking in pursuit of professional goals can impinge on an individual's moral purity-a psychological state that results from viewing the self as clean from a moral standpoint-and thus make an individual feel dirty. We theorize that such feelings of dirtiness decrease the frequency of instrumental networking and, as a result, work performance. We also examine sources of variability in networking-induced feelings of dirtiness by proposing that the amount of power people have when they engage in instrumental networking influences how dirty this networking makes them feel. Three laboratory experiments and a survey study of lawyers in a large North American law firm provide support for our predictions. We call for a new direction in network research that investigates how network-related behaviors associated with building social capital influence individuals' psychological experiences and work outcomes.
- August 2014
- Child Development
Abstract—Theory of Mind (ToM) allows children to achieve success in the social world by understanding others' minds. A study with 3-12 year olds, however, demonstrates that gains in ToM are linked to decreases in children's desire to engage in performative behaviors associated with health and well-being-such as singing and dancing. One hundred and fifty nine middle-class children from diverse backgrounds in a northeastern USA metropolitan area completed the study in 2011. The development of ToM is associated with decreases in self-esteem, which in turn predicts decreases in children's willingness to perform. This shift away from performance begins at age 4 (when ToM begins to develop), years before children enter puberty.
- August 2014
- Journal of Financial Economics
Abstract—Changes in monetary policy have surprisingly strong effects on forward real rates in the distant future. A 100 basis point increase in the two-year nominal yield on an FOMC announcement day is associated with a 42 basis point increase in the ten-year forward real rate. This finding is at odds with standard macro models based on sticky nominal prices, which imply that monetary policy cannot move real rates over a horizon longer than that over which all prices in the economy can readjust. Rather, the responsiveness of long-term real rates to monetary shocks appears to reflect changes in term premia. One mechanism that may generate such variation in term premia is based on demand effects due to the existence of what we call "yield-oriented" investors. We find some evidence supportive of this channel.
Publisher's link: http://www.people.hbs.edu/shanson/long_rate_paper_20140814_FINAL.pdf
- August 2014
- Journal of Experimental Psychology: General
Abstract—The present studies investigate the hypothesis that guilt influences risk-taking by enhancing one's sense of control. Across multiple inductions of guilt, we demonstrate that experimentally induced guilt enhances optimism about risks for the self (Study 1), preferences for gambles versus guaranteed payoffs (Studies 2, 4, and 6), and the likelihood that one will engage in risk-taking behaviors (Study 5). In addition, we demonstrate that guilt enhances the sense of control over uncontrollable events, an illusory control (Studies 3, 4, and 5), and found that a model with illusory control as a mediator is consistent with the data (Studies 5 and 6). We also found that a model with feelings of guilt as a mediator, but not generalized negative affect, fits the data (Study 4). Finally, we examined the relative explanatory power of different appraisals and found that appraisals of illusory control best explain the influence of guilt on risk-taking (Study 6). These results provide the first empirical demonstration of the influence of guilt on sense of control and risk-taking, extend previous theorizing on guilt, and more generally contribute to our understanding of how specific emotions influence cognition and behavior.
Publisher's link: http://wjh.harvard.edu/~oveis/publications/kouchaki.oveis.gino.2015.pdf
Abstract—We provide theoretical and empirical evidence on the evolution and impact of non-practicing entities (NPEs) in the intellectual property space. Heterogeneity in innovation, given a cost of commercialization, results in NPEs that choose to act as "patent trolls" that chase operating firms' innovations even if those innovations are not clearly infringing on the NPEs' patents. We support these predictions using a novel, large dataset of patents targeted by NPEs. We show that NPEs on average target firms that are flush with cash (or have just had large positive cash shocks). Furthermore, NPEs target firm profits arising from exogenous cash shocks unrelated to the allegedly infringing patents. We next show that NPEs target firms irrespective of the closeness of those firms' patents to the NPEs', and that NPEs typically target firms that are busy with other (non-IP related) lawsuits or are likely to settle. Lastly, we show that NPE litigation has a negative real impact on the future innovative activity of targeted firms.
Download working paper: http://ssrn.com/abstract=2464303
Abstract—To assess and manage reputational risks associated with supply chains, buyers are increasingly seeking information about their suppliers' labor and environmental performance. Several voluntary programs have arisen to encourage suppliers to report this information in a standardized manner, but the information companies report might misrepresent their performance and can thus mislead rather than inform buyers. We hypothesize particular circumstances in which buyers can screen suppliers based on their participation in voluntary programs requiring public commitments and public reporting. In particular, we theorize that stakeholder scrutiny can effectively deter companies with misrepresentative disclosures from participating in such programs, and that this deterrence effect is stronger for smaller companies and in institutional contexts featuring stronger activist pressures and stronger norms of corporate transparency. Examining the decisions of 2,043 firms headquartered in 42 countries of whether to participate in the UN Global Compact, we find support for these hypotheses.
Download working paper: http://ssrn.com/abstract=2480097
Abstract—Transnational business regulation is increasingly implemented through private voluntary programs-like certification regimes and codes of conduct-that diffuse global standards. But little is known about the conditions under which companies adhere to these standards. We conduct one of the first large-scale comparative studies to determine which international, domestic, civil society, and market institutions promote supply chain factories' adherence to the global labor standards embodied in codes of conduct imposed by multinational buyers. We find that suppliers are more likely to adhere when they are embedded in states that participate actively in the ILO treaty regime and that have stringent domestic labor law and high levels of press freedom. We further demonstrate that suppliers perform better when they serve buyers located in countries where consumers are wealthy and socially conscious. Taken together, these findings suggest the importance of overlapping state, civil society, and market governance regimes to meaningful transnational regulation.
Download working paper: http://ssrn.com/abstract=2178540
Cases & Course Materials
- Harvard Business School Case 212-047
Molly Miller, an Intel employee and shareholder, must decide whether to vote FOR or AGAINST Intel's proposed 2009 option exchange program. Given recent declines in Intel's stock price, more than 99% of Intel's outstanding employee stock options are "underwater," and employee motivation and retention are serious concerns. If the program is approved by shareholders, Molly must decide whether to participate in the program and tender her underwater employee stock options. As a shareholder and an employee, Molly must assess the pros and cons of Intel's proposed exchange program from both perspectives. In addition, she must consider Intel's proposal in light of the alternative approaches pursued by other corporations that have recently confronted the problem of underwater employee stock options.