The Need for Sector-Specific Materiality and Sustainability Reporting Standards
|Authors:||Robert G. Eccles, Jr., Michael P. Krzus, Jean Rogers, and George Serafeim|
|Publication:||Journal of Applied Corporate Finance (forthcoming)|
Even though the supply of sustainability information has increased considerably in the last decade, companies are still failing to disclose material information in a comparable format. We believe this has two downsides. On the one hand, companies are not adequately managing important business issues. On the other hand, risks to investors' portfolios, such as exposure to climate change, remain hidden. If this disclosure void continues to exist, the competitiveness of U.S. companies and its capital market will be at risk. While not a panacea, we believe that developing sector-specific guidelines on what sustainability issues are material to that sector and the Key Performance Indicators (KPIs) for reporting on them would significantly improve the ability of companies to report on their Environmental, Social and Governance (ESG) performance.
Here's a Tip: Prosocial Gratuities Are Linked to Corruption
|Authors:||Magnus Thor Torfason, Francis J. Flynn, and Daniella Kupor|
|Publication:||Social Psychological & Personality Science (forthcoming)|
We investigated the link between tipping, an altruistic act, and bribery, an immoral act. We found a positive relationship between these two seemingly unrelated behaviors, using archival cross-national data for 32 countries, and controlling for per capita GDP, income inequality, and other factors. Countries that had higher rates of tipping behavior tended to have higher rates of corruption. We suggest that this surprising association may be accounted for by temporal focus-people may tip and bribe others in order to receive special services in the future. Indeed, in a pair of follow-up survey studies, we find evidence that the link between tipping and bribery can be partly accounted for by prospective orientation.
Incentivizing Calculated Risk-Taking: Evidence from an Experiment with Commercial Bank Loan Officers
|Authors:||Shawn Cole, Martin Kanz, and Leora Klapper|
This paper uses a series of experiments with commercial bank loan officers to test the effect of performance incentives on risk-assessment and lending decisions. We first show that, while high-powered incentives lead to greater screening effort and more profitable lending, their power is muted by both deferred compensation and the limited liability typically enjoyed by credit officers. Second, we present direct evidence that incentive contracts distort judgment and beliefs, even among trained professionals with many years of experience. Loans evaluated under more permissive incentive schemes are rated significantly less risky than the same loans evaluated under pay-for-performance.
Download the paper: http://www.hbs.edu/research/pdf/13-002.pdf
Engaging Supply Chains in Climate Change
|Authors:||Chonnikarn Fern Jira and Michael W. Toffel|
Suppliers are increasingly being asked to share information about their vulnerability to climate change and their strategies to reduce greenhouse gas emissions. They vary widely in their responses. We theorize and empirically identify several factors associated with suppliers being especially willing to share this information with buyers, focusing on attributes of the buyers seeking this information and of the suppliers being asked to provide it. We test our hypotheses using data from the Carbon Disclosure Project's Supply Chain Program, a collaboration of multinational corporations requesting such information from thousands of suppliers in 49 countries. We find evidence that suppliers are more likely to share this information when requests from buyers are more prevalent, when buyers appear committed to using the information, and when suppliers belong to more profitable industries. Moreover, we find evidence that these three factors also influence the comprehensiveness of the information suppliers share and their willingness to share the information publicly. Finally, we find that suppliers in countries with greenhouse gas regulations are more likely to share greenhouse gas emissions levels and reduction targets.
Download the paper: http://www.hbs.edu/research/pdf/12-026.pdf
The Rich Get Richer: Enabling Conditions for Knowledge Use in Organizational Work Teams
|Authors:||Melissa A. Valentine, Bradley R. Staats, and Amy C. Edmondson|
Individuals on the periphery of organizational knowledge sharing networks, due to inexperience, location, or lack of social capital, may struggle to access useful knowledge at work. An electronic knowledge repository (KR) has the potential to help peripheral individuals gain access to valuable knowledge because a KR is universally and constantly available and can be used without social interaction. However, for it to serve this equalizing function, those on the periphery of the organization must actually use it, possibly overcoming barriers to doing so. In this paper, we develop a multi-level model of knowledge use in teams and show that individuals whose experience and position already provide them access to vital knowledge use a KR more frequently than individuals on the organizational periphery. We argue that this occurs because the KR-despite its appearance of equivalent accessibility to all-is actually more accessible to central than peripheral players due to their greater experience and access to colleagues. Thus, KR use is not driven primarily by the need to overcome limited access to other knowledge sources. Rather KR use is enabled when actors know how to reap value from the KR, which ironically improves with increasing access to other sources of knowledge. Implications for both team effectiveness and knowledge management research are offered. We conclude that KRs are unlikely to serve as a knowledge equalizer without intervention.
Download the paper: http://www.hbs.edu/research/pdf/13-001.pdf
Cases & Course Materials
Introducing iSnack 2.0: The New Vegemite
Anat Keinan, Francis Farrelly, and Michael Beverland
Harvard Business School Case 512-020
Vegemite is an iconic Australian breakfast spread and is often seen as a quintessential Australian product. This case focuses on Kraft's decision to revitalize brand performance through the introduction of a brand extension. Drawing on extensive social media analysis of brand image, the brand team led by Simon Talbot identified a gap in the market for a line extension involving a blend of Vegemite and Kraft's other iconic brand, Philadelphia Cream Cheese. Following a high profile campaign involving a competition to name the new extension Talbot's team chose the name iSnack 2.0 for the new product. The case starts two days after the public unveiling of this name and subsequent nationwide backlash against it. Talbot needs to consider whether to continue with the brand name or change it in light of the public outcry.
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Social Failures and Social Solutions: Meet Products
Mikołaj Jan Piskorski
Harvard Business School Module Note 712-478
This note applies the social failures and social solutions framework to understanding when establishing interactions with strangers fails and examines the various ways in which the failures can be solved. It identifies three processes through which people establish new relationships and examines three types of failures associated with each. Subsequently, it discusses solutions for each failure type, and examines strategy implications for these solutions.
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The Venture Capital Problem Set
William A. Sahlman
Harvard Business School Background Note 812-039
This note consists of three valuation/analysis exercises often found in venture capital financing deals.
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