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.

May 19, 2009

Is art corrupted by commerce? On this topic everyone has an opinion, often fervent and heartfelt. A fiery discussion at the 2007 Academy of Management conference led HBS professor Robert D. Austin and theater director Lee Devin to write the working paper "It Is Okay for Artists to Make Money … No, Really, It's Okay" [PDF]. According to Austin and Devin, "The interests of art, artists, and business can be best served if more commerce enters into the world of art, not less." The provocative paper dives into three "fallacies" about the relationship between art and commerce: that art is an indulgence, that there's a clear line between art and "nonart," and that commerce by its nature subverts the purity of art. They conclude: "To fulfill the vision of art as a humanizing force in the world, we need to make the market for artwork better, not separate the art world from markets and commercial value." Cases this week explore, among other topics, the global financial crisis, an entrepreneurial California agricultural biotech company seeking to earn carbon credits, and the growth of private universities in China, through the lens of Xi'an International University.
— Martha Lagace

Working Papers

Don't Just Survive—Thrive: Leading Innovation in Good Times and Bad (revised)


Battered by contracting markets and frozen credit, many businesses today are fighting for survival. Indeed, the current global financial crisis provides a mandate for restructuring. But survival is not the end goal. In fact, cost cutting and restructuring are simply the first steps in repositioning and leading a company and industry through the crisis and in defining how business will be conducted in the future. This paper describes how IBM managed, not just to survive the crisis it faced in the early 1990s, but to reposition the company to lead the industry. The powerful lesson from the IBM story is that innovation is not a side business to running the real business. Innovation is the business. Breakthrough innovations that change people's lives and the very structure and power dynamics of industries can't be managed as "silos," tucked away in corporate, university, or government research labs, in incubators, or within venture capital-funded entrepreneurial start-ups. Access to the marketplace is needed to help speed commercialization and adoption. Emerging opportunities must be nurtured, and the transition to high growth must be managed. Once breakthrough innovations catch hold, growth must be funded and managed to exploit the full value of the opportunity. And finally, incremental innovations must ensure that businesses that have passed through the high growth stage can continue to deliver the resources, capabilities, and platforms needed to fuel the emerging opportunities of the future. This business lifecycle view of innovation requires new leadership and organizational models and new approaches to managing risk and uncertainty.

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It Is Okay for Artists to Make Money...No, Really, It's Okay


In this paper, we examine the apparent conflict between artistic and commercial objectives within creative companies, taking as our point of departure a particularly energetic debate during a symposium at the 2007 Academy of Management meetings. We surface the assumptions that underlie such debates, compare them with findings from our research on creative industries, and identify three "fallacies" that sometimes enter into discussions of art in relation to money. This, in turn, leads us to propose a framework to support more productive discussion and to describe a direction for management research that might better integrate art and business practices. We conclude that despite an inclination to take offense that often attends the close juxtaposition of art and commerce, which was very much in evidence at that AoM symposium in Philadelphia, the interests of art, artists, and business can be best served if more commerce enters into the world of art, not less.

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Extreme Governance: An Analysis of Dual-Class Firms in the United States


We construct a comprehensive list of dual-class firms in the United States and use this list to analyze the relationship between insider ownership and firm value. Our data have two useful features. First, since dual-class stock separates cash-flow rights from voting rights, we can separately identify the impact of each. Second, we address endogeneity concerns by using exogenous predictors of dual-class status as instruments. In single-stage regressions, we find strong evidence that firm value is increasing in insiders' cash-flow rights and decreasing in insider voting rights. In instrumental variable regressions, the point estimates are similar but the significance levels are lower.


Cases & Course Materials

Adnexus Therapeutics, Inc.: Considering the Exit

Harvard Business School Case 609-015

Dr. John Mendlein, CEO of Adnexus Therapeutics Inc. (Adnexus), a private biotechnology company, must decide whether to pursue acquisition talks with Bristol-Myers Squibb (BMS) after a successful six-month collaboration or continue with Adnexus' planned IPO.

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Arcadia Biosciences: Seeds of Change

Harvard Business School Case 709-019

Arcadia Biosciences is an entrepreneurial California agricultural biotech company seeking to earn carbon credits by modifying commodity crops for use in China and India. Eric Rey, Arcadia's CEO, faced a strategic inflection point in early September 2008. The company had a plan to share carbon credits allocated by the United Nations Clean Development Mechanism Executive Board to China, for use of Arcadia's rice varieties, since they enabled farmers to reduce nitrogen fertilizer use, in turn lowering greenhouse gas emissions. But the company's proprietary traits for nitrogen use efficiency, salt tolerance, and water use efficiency also had more conventional paths to market based on licensing deals to large seed companies. Alternatively, Arcadia could acquire a seed company and develop and market its seed directly. A different near-term growth area involved commercializing enriched safflower oil, which had undergone several proof-of-concept tests and for which Rey foresaw a clear market in nutritional supplements and functional foods. The case provides context on the company; describes advances in crops genetics focused to climate change and associated resource issues of fertilizer use, water use, and soil salinity; and poses strategic choices for a start-up company operating at the intersection of business, agriculture, and climate change.

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CalPERS' Emerging Equity Markets Principles

Harvard Business School Case 409-054

The California Public Employees' Retirement System (CaIPERS)—the largest public pension fund in the U.S.—had adopted a new principles-based approach to investing in emerging market equities in November 2007. Previously, CalPERS internal and external money managers were prohibited from investing in certain developing countries because the countries failed to meet certain standards for political stability, human rights, market regulation, etc. The new principles-based approach would allow CalPERS money managers to invest in companies that were financially attractive and competitively positioned provided their business practices were sound from an environmental, social, and governance (ESG) perspective regardless of where they were located. By allowing investment in these types of companies regardless of where they operated, CalPERS had hoped to improve its investment returns. The case is set in January 2009, a little more than a year from the time the principles-based approach had been adopted. It is a good time to review the implementation process and how the new principles-based approach changed CaIPERS' emerging market equities portfolios and their returns. The case focuses on one of CalPERS' external fund managers, Dimensional Fund Advisors (DFA), and a service provider to DFA and CalPERS, KLD Research & Analytics. One question facing CalPERS with this new approach is whether to invest in PetroChina, which had been off-limits previously due to the screening criteria that were used to identify which countries qualified for emerging markets investments. The case also raises the issue of the difference between "value" and "values" investing and the future importance of ESG investing.

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China Rising: An Economic Snapshot

Harvard Business School Note 308-064

"China Rising: An Economic Snapshot" provides readers with an overview of China's economic transformation, relying on economic data from a variety of sources. It is organized into three sections: (1) "The Big Picture" explores macroeconomic indicators, as well as those associated with the opportunities and constraints of the business environment; (2) "Regional Variation" makes a strong case for situating any analysis of China's economy in context; and finally (3) "China and the Global Economy" shows how China's engagement with the global economy has changed over time. These materials should be of interest to observers and participants of Chinese business and as a means to consider the bigger picture shaping the environment in which they must operate. In addition, they may be used as a basis for class discussion and lecture or as a complement to cases focused on companies doing business in China.

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China's Energy Industry

Harvard Business School Note 309-057

China is ranked the world's second-largest consumer of energy. This note provides background on China's energy industry and provides details on China's leading state-owned energy companies, production and consumption statistics, and government policies in support of the industry domestically and internationally. In addition, we provide details on the leading sources of energy in China as well as information on the rise of alternative energy.

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Corporate Solutions at Jones Lang LaSalle

Harvard Business School Case 409-111

Peter Barge, CEO of the newly created Corporate Solutions Group of Jones Lang LaSalle (JLL), is executing a restructuring of the U.S. corporate real estate services division that will enable the company to offer its clients integrated solutions. Barge has created an account management function to coordinate the activities of the three product-based business units which, until now, have operated autonomously. As he is executing the restructuring, Bank of America, an important account of the firm, announces its intention to reduce its providers to the two or three who can offer forward-looking, integrated services. While Barge's new organization is not yet fully in place, he is determined to win the Bank of America business and moves quickly to hire a senior account manager and establish an organizational architecture that will encourage collaboration within his group. The case examines the many tradeoffs Barge must make in balancing the benefits of the former organization with those of the new structure to achieve the firm's strategic goal of becoming more customer-solutions oriented.

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Congo River Basin Project: Role for Dr. Beni

Harvard Business School Exercise 909-041

The director of a research coalition and the founder/coordinator of an NGO consortium meet to discuss the possibility of jointly drafting a proposal for an integrated research and development project in the Congo River basin. Approved projects will receive an annual operating budget of $2 million. Together they must develop a joint plan for how the money should be spent.

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Congo River Basin Project: Role for Dr. Campos

Harvard Business School Exercise 909-040

The director of a research coalition and the founder/coordinator of an NGO consortium meet to discuss the possibility of jointly drafting a proposal for an integrated research and development project in the Congo River basin. Approved projects will receive an annual operating budget of $2 million. Together they must develop a joint plan for how the money should be spent.

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Disaster in April: The Obligations of Kelly Construction

Harvard Business School Case 209-099

A construction company experiences a crane accident with multiple fatalities. The CEO, a client, and an employee must make choices to meet the company's obligations. Set in 2006, the case looks at the choices faced by board members of a museum that is an important client and that is faced with a completion deadline and of a key employee who has other offers of employment and is negotiating a stay-put bonus. The rights and interests of the surety company that provided the construction bond are also interwoven. The protagonist is the CEO of a multi-generational family business who must now negotiate with these parties and then decide whether to attempt to raise new capital, declare bankruptcy, or try to lead a controlled wind-down. The case explores crisis management, decisions by principals operating in the zone of insolvency, construction contract types, the limits of recourse available from construction bonds, roles of board members, calculation of an employee stay-put bonus pool, subcontractor and vendor communication, and reputational issues around bankruptcy or closure of a closely held family business. Analytical tools include contract status report, contractor balance sheet, and stay-put bonus pool.

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The Financial Crisis of 2008

Harvard Business School Case 709-036

This case presents excerpts from the speeches of observers to the 2008 financial crisis, including former and current central bankers, a private banker, and a Nobel-prize winning economist. They present different interpretations of the causes of the financial crisis and make proposals about how a similar crisis might be stopped in the future. The goal of the case is to provide students with alternative perspectives and broad historical data so that they can evaluate both causes of and responses to the crisis.

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The First Global Financial Crisis of the 21st Century

Harvard Business School Case 709-057

The global economy was expected to suffer from negative growth for the full year in 2009, a phenomenon not seen since World War II. While the U.S. subprime mortgage disaster was blamed as the original instigator, it was noted that the "global imbalances" of the U.S. current account deficit funded for many years by other nations such as China were also a chief culprit of the crisis. Policymakers around the world recognized that the scope and scale of the financial crisis required a coordinated global response. Yet there were conflicting views on what kind of action was needed to address the first global financial crisis of the 21st century.

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From xiaonei to hainei: The Quest for the Social Networking Service Market in China

Harvard Business School Case 808-164

Wang Xing, the founder of, one of the fastest growing social networking service (SNS) providers in China, was preparing to raise funds from venture capitalists. Since late 2003, Wang had established several Internet startups in China., which he founded in December 2005, had been the most notable in China and around the globe for its resemblance in website design and marketing strategies to those of Facebook. The market landscape of SNSs in China had changed drastically since Wang founded, with domestic and local competitors flocking into the market. With all his experience and knowledge in the SNS market, Wang had to convince the potential investors that his new venture could warrant sustainable growth and profitable returns.

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An Introduction to Consumer Credit

Harvard Business School Note 209-107

This note reviews a variety of shorter-term consumer credit products in the U.S. with an emphasis on the types of products that low—and moderate—income consumers use. Included here are the following: credit cards, bank overdraft products, payday lending, personal loans and peer-to-peer lending, home-equity lending, rent-to-own contracts, auto-title lending, pawnbroking, refund-anticipation loans, and informal lending.

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Invest Early: Early Childhood Development in a Rural Community

Harvard Business School Case 309-089

Invest Early was an early childhood development partnership in rural northern Minnesota between 14 different organizations, which worked together through an advisory board, governing board, and leadership team in order to deliver coordinated early childhood services to young children living in poverty and just above poverty. Initial results showed that Invest Early children were better prepared for kindergarten than their low-income counterparts and the proficiency gap between Invest Early and high-income children had decreased significantly. Integrating and sustaining such a complicated network of individuals and organizations was not easy; it had taken over 10 years and thousands of hours of meetings. Issues such as the continued availability of funding and leadership turnover still threatened the effectiveness of the collaboration, and the economic recession would almost certainly impact future leadership team decisions. Furthermore, the longstanding Head Start Education Manager, Dolores Bretti, was set to retire. Future challenges, such as declining budgets and Bretti's retirement, would require many more hours of meetings and collaborative solutions. Invest Early Director, Jan Reindl, felt that she and the Leadership Team members were ready for anything but also wondered how new personalities and a different operating environment would influence Invest Early. What would need to change? What should remain the same? How could Invest Early and the Leadership Team be prepared for it all?

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Keeping Google "Googley" (Abridged)

Harvard Business School Case 409-099

No abstract is available at this time.

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Note on the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)

Harvard Business School Note 209-133

In 2005, new legislation was passed by the U.S. Congress and signed into law by the President that introduced a number of major amendments to U.S. bankruptcy law, affecting both business and consumer bankruptcies. This legislation, called the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), became effective on October 17, 2005. This note summarizes key provisions of the new law that affect business bankruptcy reorganization under Chapter 11 of the U.S. Bankruptcy Code, contrasting these provisions with corresponding provisions in the old law.

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Note on Multi-Sided Platforms: Economic Foundations and Strategy

Harvard Business School Note 709-484

No abstract is available at this time.

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Performance Management at Intermountain Healthcare

Harvard Business School Case 609-103

Intermountain Healthcare is a 21-hospital integrated delivery system serving Utah and southern Idaho that is nationally recognized for its highly structured approach to managing the quality of clinical care. This case describes Intermountain's system for improving clinical performance that makes use of the organization's extensive set of standardized clinical protocols and associated clinical process and outcome measures. The measures underpin a sophisticated set of financial incentives that are applied to both administrative and clinical staff. The case allows students to evaluate the strengths and weaknesses of financial incentives in clinical medicine.

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Process of Strategy Making

Harvard Business School Module Note 709-500

No abstract is available at this time.

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Supply Chain Optimization at Hugo Boss (A)

Harvard Business School Case 609-029

We evaluate the impact of a supply chain pilot implemented at Hugo Boss. This pilot entailed altering the way in which Hugo Boss orders from its suppliers. We explore the challenge of assessing the impact of supply chain change, the link between operational performance and firm performance, and the relationship between sales, inventory, and product availability.

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Supply Chain Optimization at Hugo Boss (B)—The M Ratio

Harvard Business School Supplement (B), 609-055

No abstract is available at this time.

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Xi'an International University: The Growth of Private Universities in China

Harvard Business School Case 309-074

Huang Teng founded Xi'an International University (XAIU) as a private institute of higher education in 1992. Throughout its ensuing years, the school filled a niche and met the demand of students who did not test into one of China's public institutions. In 2008, it was seeking to grow by aggressively pursuing opportunities in other provinces and municipalities. Huang's plan was to franchise his university throughout China. However, in pursuing this strategy in Beijing, Shanghai, and Guangzhou, China's largest cities, Huang was not receiving warm responses. Local officials feared XAIU would jeopardize the survival of locally run private universities, and competition among private universities was heating up as institutions from the United Kingdom and Hong Kong partnered with public universities to form joint-ventured "independent colleges." Buoyed by the success of XAIU, Huang was confident that despite these setbacks, his franchise model would work. But was an alternative plan of expanding into second- or third-tier cities compromising too much of the groundwork that had already been laid, would it jeopardize XAIU's funding opportunities, and finally, would it hurt the academic quality and integrity XAIU had built up at home?

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Yataro Iwasaki: Founding Mitsubishi (A)

Harvard Business School Case 808-158

Considers the entrepreneurial career of the founder of Mitsubishi, Yataro Iwasaki, who built a large shipping company against the opposition of powerful Western incumbents. Although sometimes supported by the Japanese government, and often times opposed, the case identifies Iwasaki's entrepreneurial talent and organization-building skills as key drivers of success. This case provides a vehicle for examining the entrepreneurial factors behind Japan's remarkable transition from a feudal to a modern society in the second half of the nineteenth century.

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Yataro Iwasaki: Founding Mitsubishi (B)

Harvard Business School Supplement 809-038

This brief (B) case documents the fate of Mitsubishi and the shipping company NYK after the death of Yataro Iwasaki in 1885. The case supplements case 808-158, "Yataro Iwaski: Founding Mitsubishi (A)."

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