Barriers to Household Risk Management: Evidence from India
|Authors:||Shawn A. Cole, Xavier Giné, Jeremy Tobacman, Petia Topalova, Robert M. Townsend, and James Vickery|
|Publication:||American Economic Journal: Applied Economics (forthcoming)|
Why do many households remain exposed to large exogenous sources of non-systematic income risk? We use a series of randomized field experiments in rural India to test the importance of price and non-price factors in the adoption of an innovative rainfall insurance product. Demand is significantly price sensitive, but widespread take-up would not be achieved even if the product offered a payout ratio comparable to U.S. insurance contracts. We present evidence suggesting that lack of trust, liquidity constraints, and limited salience are significant non-price frictions that constrain demand. We suggest contract design improvements to mitigate these frictions.
Read the paper: http://www.hbs.edu/research/pdf/09-116.pdf
Sustainable Cities: Oxymoron or the Shape of the Future?
|Authors:||Robert G. Eccles, Annissa Alusi, Amy C. Edmondson, and Tiona Zuzul|
|Publication:||Chap. 18 in Infrastructure Sustainability and Design, edited by Spiro Pollalis, Andreas Georgoulias, Stephen Ramos, and Daniel Schodek, 247-265. New York: Routledge, 2012|
Two trends are likely to define the 21st century: threats to the sustainability of the natural environment and dramatic increases in urbanization. This paper reviews the goals, business models, and partnerships involved in eight early "ecocity" projects to begin to identify success factors in this emerging industry. Ecocities, for the most part, are viewed as a means of mitigating threats to the natural environment while creating urban living capacity by combining low carbon and resource-efficient development with the use of information and communication technologies to better manage complex urban systems.
Integrated Reporting Requires Integrated Assurance
|Authors:||Robert G. Eccles, Michael P. Krzus, and Liv A. Watson|
|Publication:||In Effective Auditing for Corporates: Key Developments in Practice and Procedures, edited by Joe Oringel, 161-178. London: Bloomsbury Information Ltd., 2012|
In the wake of the recent financial crisis, increasing the effectiveness of auditing has weighed heavily on the minds of those responsible for governance. When a business is profitable and paying healthy dividends to its stockholders, fraudulent activities and accounting irregularities can go unnoticed. However, when revenue and cash flow decline, internal costs and operations may be scrutinized more diligently, and discrepancies can emerge as a result. Effective Auditing for Corporates provides you with proactive advice to help you safeguard core value within a corporation and to ensure that auditing processes and key personnel meet the expectations of management, compliance, and stockholders alike. Aimed primarily at auditors (both external and internal), risk managers, accountants, CFOs, and consultants, Effective Auditing for Corporates covers the following: 1) compliance and the corporate audit, 2) fraud detection, 3) risk-based auditing, 4) the development of Sarbanes-Oxley, 5) cultural changes in external auditing, and 6) auditing management information systems.
Employee Selection as a Control System
Theories from the economics, management control, and organizational behavior literatures predict that when it is difficult to align incentives by contracting on output, aligning preferences via employee selection may provide a useful alternative. This study investigates this idea empirically using personnel and lending data from a financial services organization that implemented a highly decentralized business model. I exploit variation in this organization in whether or not employees are selected via channels that are likely to sort on the alignment of their preferences with organizational objectives. I find that employees selected through such channels are more likely to use decision-making authority in the granting and structuring of consumer loans than those who are not. Conditional on using decision-making authority, their decisions are also less risky ex post. These findings demonstrate employee selection as an important, but understudied, element of organizational control systems.
Download the paper: http://www.hbs.edu/research/pdf/11-021.pdf
How Do Risk Managers Become Influential? A Field Study of Toolmaking and Expertise in Two Financial Institutions
|Authors:||Matthew Hall, Anette Mikes, and Yuval Millo|
In this study, we examine transformations in the influence of risk managers in two large UK banks over a period of six years. Our analysis highlights that a process we term toolmaking, whereby experts create, articulate, and shape tools that embody their expertise, is central to the way in which the risk managers in our study garner influence in their organizations. Based on our field study, we identify two dimensions that help to explain experts' organizational influence: their ability to (a) incorporate their expertise into highly communicable tools and (b) develop a personal involvement in the deployment and interpretation of those tools in important decision-making forums. Based on experts' ability to combine and balance these two processes, we distinguish analytically among four positions of influence they can occupy-compliance expert, technical champion, trusted advisor, and engaged toolmaker-and trace the movements of experts among these positions. Our empirical findings and theoretical framework contribute to our understanding of the nature of expert influence and how and why functional groups, such as risk managers, can become influential.
Download the paper: http://www.hbs.edu/research/pdf/11-068.pdf
Measuring Teamwork in Health Care Settings: A Review of Survey Instruments
|Authors:||Melissa A. Valentine, Ingrid M. Nembhard, and Amy C. Edmondson|
Objective. To identify and review survey instruments used to assess dimensions of teamwork, a vital input to delivering quality care, so as to facilitate high quality research on this topic. Data sources. The ISI Web of Knowledge database, which includes articles from MEDLINE, Social Science Citation Index, and Science Citation Index. Study design. We conducted a systematic review of articles published before January 2010 to identify survey instruments used to measure teamwork and to assess their conceptual content, psychometric validity, and relationships to outcomes of interest. Data extraction. We identified relevant articles using the search terms team, teamwork, work groups, or collaboration, in combination with survey or questionnaire. Principal findings. We found 35 surveys that measured teamwork. Surveys differed in the dimensions of teamwork that they assessed. The most commonly assessed dimensions were communication, coordination, and respect. Of the 35 surveys, 9 met all of the criteria for psychometric validity and 13 have shown significant relationship to non-self-report outcomes. Conclusions. "Teamwork" can refer to many different behavioral processes and emergent states, making it challenging and critical for researchers to develop a theory of teamwork consistent with their research context before selecting a survey. Psychometric validity is also vitally important. This review can help researchers identify high-quality teamwork surveys.
Download the paper: http://www.hbs.edu/research/pdf/11-116.pdf
The Flattened Firm—Not as Advertised
For decades, management consultants and the popular business press have urged large firms to flatten their hierarchies. Flattening (or delayering, as it is also known) typically refers to the elimination of layers in a firm's organizational hierarchy and the broadening of managers' spans of control. The alleged benefits of flattening flow primarily from pushing decisions downward to enhance customer and market responsiveness and to improve accountability and morale. Has flattening delivered on its promise to push decisions downward? In this article, I present evidence suggesting that while firms have delayered, flattened firms can exhibit more control and decision making at the top. Managers take note. Flattening can lead to exactly the opposite effects from what it promises to do.
Download the paper: http://www.hbs.edu/research/pdf/12-087.pdf
Cases & Course Materials
The Freelancers Union (B)
Michel Anteby and Erin McFee
Harvard Business School Supplement 412-066
One month after the launch of the Freelancers Insurance Company, Sara Horowitz, founder and CEO, holds a staff meeting to discuss the outcome. The discussion focuses in particular on members' reaction. With the staff at odds with one another, Horowitz considers what next steps to take.
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Customer Discovery and Validation for Entrepreneurs
Frank V. Cespedes, Thomas R. Eisenmann, and Steven G. Blank
Harvard Business School Note 812-097
Provides practical guidelines for conducting market research to explore and validate demand for entrepreneurial offering. Explains how the research objectives of entrepreneurs might differ from those relevant to managers evaluating product or service offerings to established markets. For each of several research techniques, specifies conditions under which the technique is most likely to yield valuable insights; describes how the technique should be adapted for use in an entrepreneurial context; and offers tips and cautions about applying the technique. The techniques include customer surveys, usability tests, market trials, split tests, and Net Promoter Score. Appendices discuss the use of focus groups and conjoint analysis in an entrepreneurial context. The note is therefore suitable for use in MBA, Executive Education, Field Study, or project contexts where the focus is startups, new business development, product development, or innovation.
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Business Model Analysis for Entrepreneurs
Thomas R. Eisenmann
Harvard Business School Note 812-096
This note defines a business model and its major elements: a customer value proposition, a technology and operations management plan, a go-to-market plan, and a profit formula. For each element, the note lists questions that an entrepreneur must address when evaluating an early-stage opportunity. The note explores in greater depth several business-model issues that are especially relevant to entrepreneurial ventures, including the impact of network effects and customer switching costs; conditions when a startup should consider vertical integration; the nature of first- and late-mover advantage; and conditions that favor viral marketing. The note concludes with practical guidelines for early-stage entrepreneurs on how to conduct business model analysis.
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Hayman Capital Management
Robin Greenwood, Julie Messina, and Jared Dourdeville
Harvard Business School Case 212-091
In late December 2011, Hayman Capital founder and portfolio manager Kyle Bass was reviewing Japanese government budget projections for 2012. The projections appeared contrary to Hayman Capital's views on Japan, where the fund had built a bearish position. Japan had the world's highest debt burden, whether expressed as a percentage of GDP or government revenue. Guided by recent global events, Bass forecast that Japan would soon experience increases in interest rates, a devaluation of the currency, and, eventually, a restructuring of the country's debt.
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Fighting Corruption at Siemens
Paul Healy and Djordjija Petkoski
Harvard Business School Multimedia/Video Case 112-702
On November 15, 2006, German prosecutors raided offices and homes of Siemens AG staff as part of an ongoing investigation into bribery. The subsequent investigations covered business representing 60% of Siemens' revenues and spanned operations in Asia, Africa, Europe, the Middle East, and the Americas. Through interviews with key Siemens executives and supporting internal materials, this multimedia case takes a look at how one of the world's largest companies faced corruption head-on.
China Magic Going Home
Li Jin, Zhihong Yi, and Jun Jiang
Harvard Business School Case 211-036
The largest Chinese energy company is thinking about a cross-listing back into the mainland stock exchange after seeing the valuation of comparable companies on the so-called A share market skyrocketing. We discuss the cause and the consequence of investor sentiment on the cross-listing decision of firms and the responsibilities of corporate managers to maximize existing shareholder interests through catering to such investor sentiment.
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Joseph B. Lassiter III, and Evan W. Richardson
Harvard Business School Case 812-046
Brian Chesky, Joe Gebbia, and Nathan Blecharczyk, the three founders of Airbnb, an online private accommodation rental market, stared at each other across the kitchen table in their San Francisco apartment. It was March of 2009. A single sheet of paper sat on the table in front of them. The three founders were on the verge of finishing the three month program at YCombinator (YC), a business accelerator located in Mountain View, California.
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PNC Financial: Grow Up Great (B)
Christopher Marquis, William Drewery, Bradley Crane, and Laura Velez Villa
Harvard Business School Supplement 412-119
In 2011, the PNC Financial Services Group announced the addition of $250 million to the $100 million that it had pledged to its early childhood education program, Group Up Great, in 2003. The case serves as an update to the "PNC Financial: Grow Up Great (A)" case, which outlined the design and implementation of the program and presented key challenges. The (B) case will show some of the program's responses to challenges like the strategic integration to Grow Up Great into the bank's business; the introduction of the program to new markets following the bank's geographical expansion; and the measurement of the programs' social impact.
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Legal Compliance Programs
Lynn S. Paine and Lara Adamsons
Harvard Business School Note 312-111
Describes the basic elements of a typical corporate compliance or ethics program, focusing on the components of an "effective" program set forth in the U.S. Organizational Sentencing Guidelines as revised in 2010. Outlines key issues in program design and implementation and provides an overview of relevant research.
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The Hybrid Vehicle Market
Michael W. Toffel and Nazli Z. Uludere Aragon
Harvard Business School Note 612-084
This note describes the hybrid electric vehicle market, the results of different automaker strategies, and the environmental regulatory issues that can promote or inhibit market growth in the United States.
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Negotiating Equity Splits at UpDown
Noam Wasserman and Deepak Malhotra
Harvard Business School HBSP Online Case Product 812-701
An abstract is unavailable at this time.