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.

January 12, 2016

When mediators should be hostile

We tend to think of mediators defusing hostile situations with calmness and kindness. But new research indicates that mediators should handle hostility with more hostility. "Hostile mediators generate greater willingness to reach agreements between adversaries," write Ting Zhang, Francesca Gino, and Michael Norton. "Consequently, negotiators interacting with hostile mediators are better able to reach agreements in incentive-compatible negotiations than those interacting with nice mediators." Read "The Surprising Effectiveness of the Hostile Mediator" in a forthcoming issue of Mangement Science.

Globalization of angel investing

In "The Globalization of Angel Investments: Evidence Across the Globe," researchers examine investments by 13 angel groups across 21 nations. "The positive impact of angel financing is independent of the level of venture activity and entrepreneur friendliness in the country," write authors Josh Lerner, Antoinette Schoar, Stanislav Sokolinski, and Karen Wilson. "But we find that the development stage and maturity of startups that apply for angel funding (and those that are ultimately funded) is inversely correlated with the entrepreneurship friendliness of the country, which may reflect self-censoring by very early stage firms that do not expect to receive funding in these environments."

Birth of Turbo Tax Personal Pro

A new case looks at the birth of a product that connects consumers with professional accountants online, allowing them to have their taxes prepared by a professional. "Intuit: Turbo Tax Personal Pro -- A Tale of Two Entrepreneurs" was written by Shikhar Ghosh, Joseph Fuller, and Michael Roberts.

A complete list of new research and publications from Harvard Business School faculty follows.

— Carmen Nobel
 
  • November–December 2015
  • Operations Research

Active Postmarketing Drug Surveillance for Multiple Adverse Events

By: Goh, Joel, Margrét V. Bjarnadóttir, Mohsen Bayati, and Stefanos A. Zenios

Abstract—Postmarketing drug surveillance is the process of monitoring the adverse events of pharmaceutical or medical devices after they are approved by the appropriate regulatory authorities. Historically, such surveillance was based on voluntary reports by medical practitioners, but with the widespread adoption of electronic medical records and comprehensive patient databases, surveillance systems that utilize such data are of considerable interest. Unfortunately, existing methods for analyzing the data in such systems ignore the open-ended exploratory nature of such systems that requires the assessment of multiple possible adverse events. In this article, we propose a method, SEQMEDS, that assesses the effect of a single drug on multiple adverse events by analyzing data that accumulate sequentially and explicitly captures interdependencies among the multiple events. The method continuously monitors a vector-valued test-statistic derived from the cumulative number of adverse events. It flags a potential adverse event once the test-statistic crosses a stopping boundary. We employ asymptotic analysis that assumes a large number of observations in a given window of time to show how to compute the stopping boundary by solving a convex optimization problem that achieves a desired Type I error and minimizes the expected time to detection under a pre-specified alternative hypothesis. We apply our method to a model in which the interdependency among the multiple adverse events is captured by a Cox proportional hazards model with time-dependent covariates and demonstrate that it provides an approximation of a fully sequential test for the maximum hazard ratio of the drug over multiple adverse events. A numerical study verifies that our method delivers Type I /II errors that are below pre-specified levels and is robust to distributional assumptions and parameter values.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50304

  • October 2015
  • Health Affairs

Exposure to Harmful Workplace Practices Could Account for Inequality in Life Spans Across Different Demographic Groups

By: Goh, Joel, Jeffrey Pfeffer, and Stefanos A. Zenios

Abstract—The existence of important socioeconomic disparities in health and mortality is a well-established fact. Many pathways have been adduced to explain inequality in life spans. In this article we examine one factor that has been somewhat neglected: people with different levels of education get sorted into jobs with different degrees of exposure to workplace attributes that contribute to poor health. We used General Social Survey data to estimate differential exposures to workplace conditions, results from a meta-analysis that estimated the effect of workplace conditions on mortality, and a model that permitted us to estimate the overall effects of workplace practices on health. We conclude that 10%–38% of the difference in life expectancy across demographic groups can be explained by the different job conditions their members experience.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50307

  • forthcoming
  • Management Science

The Relationship Between Workplace Stressors and Mortality and Health Costs in the United States

By: Goh, Joel, Jeffrey Pfeffer, and Stefanos A. Zenios

Abstract—Even though epidemiological evidence links specific workplace stressors to health outcomes, the aggregate contribution of these factors to overall mortality and health spending in the United States is not known. In this paper, we build a model to estimate the excess mortality and incremental health expenditures associated with exposure to the following 10 workplace stressors: unemployment, lack of health insurance, exposure to shift work, long work hours, job insecurity, work–family conflict, low job control, high job demands, low social support at work, and low organizational justice. Our model uses input parameters obtained from publicly accessible data sources. We estimated health spending from the Medical Expenditure Panel Survey and joint probabilities of workplace exposures from the General Social Survey, and we conducted a meta-analysis of the epidemiological literature to estimate the relative risks of poor health outcomes associated with exposure to these stressors. The model was designed to overcome limitations with using inputs from multiple data sources. Specifically, the model separately derives optimistic and conservative estimates of the effect of multiple workplace exposures on health and uses optimization to calculate upper and lower bounds around each estimate, which accounts for the correlation between exposures. We find that more than 120,000 deaths per year and approximately 5%–8% of annual healthcare costs are associated with and may be attributable to how U.S. companies manage their work forces. Our results suggest that more attention should be paid to management practices as important contributors to health outcomes and costs in the United States.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50305

  • October 2015
  • Negotiation Journal

Dualities in Negotiation: Introduction

By: Sebenius, James K.

Abstract—Richard Walton and Robert McKersie's closeness to practice, disciplinary rigor, and successful search for powerful generalizations help explain the lasting impact of their 1965 book, A Behavioral Theory of Labor Negotiations. Central to their argument are three important "dualities" in negotiation: integrative v. distributive bargaining, attitudinal v. substantive (re)structuring, and intra-organizational v. inter-organizational bargaining. This short article introduces and comments on essays that evaluate and discuss these dualities.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50288

Abstract—Richard Walton and Robert McKersie's closeness to practice, disciplinary rigor, and successful search for powerful generalizations help explain the lasting impact of the Behavioral Theory of Labor Relations. Ironically, the names they chose for the fundamental processes they explicated—especially "attitudinal structuring" and "intra-organizational bargaining"—have limited the impact of some of their most interesting and original work. By contrast, some of their most successful labels—"distributive" and "integrative" bargaining—have generated at least three ongoing areas of analytic and practical confusion despite the exemplary sophistication of the authors' underlying analysis. First, classifying each issue by itself as integrative or distributive (or mixed) has led some to erroneously conclude that "purely distributive" issues cannot admit joint gain beyond the fact of agreement. Second, though Walton and McKersie are clear on the point, later analysts and practitioners often exhibit confusion about whether the terms "integrative" and "distributive" refer to behavior or to underlying issue structure (or both). Third, the authors develop the "Distributive Bargaining Model" and the "Integrative Bargaining Model" in separate chapters and seemingly as alternative models of the process. Walton and McKersie themselves insightfully treat the tight relationship of these two processes in a series of "dilemmas." Yet it is common to this day to hear integrative and distributive bargaining wrongly described as wholly separate, even as warring conceptions of the negotiation process—when, both analytically and practically, they are inherently linked. In addition, to the student or lay negotiator, "integrative" and "distributive" are not naturally evocative terms, but rather serve as terms of art. Other labels, such as "creating" and "claiming" value, are more analytically precise while directly communicating to a non-specialist audience.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50289

  • forthcoming
  • Management Science

The Surprising Effectiveness of the Hostile Mediator

By: Zhang, Ting, Francesca Gino, and Michael Norton

Abstract—Contrary to the tendency of mediators to defuse negative emotions between adversaries by treating them kindly, we demonstrate the surprising effectiveness of hostile mediators in resolving conflict. Hostile mediators generate greater willingness to reach agreements between adversaries (Experiment 1). Consequently, negotiators interacting with hostile mediators are better able to reach agreements in incentive-compatible negotiations than those interacting with nice mediators (Experiments 2). By serving as common enemies, hostile mediators cause adversaries in conflict to feel more connected and become more willing to reach agreement (Experiments 3 and 4). Finally, we manipulate the target of mediators’ hostility to document the moderating role of common enemies: mediators who directed their hostility toward both negotiators (bilateral hostility)—becoming a common enemy—increased willingness to reach agreement; those who directed hostility at just one negotiator (unilateral hostility) did not serve as common enemies, eliminating the hostile mediator effect (Experiment 5). We discuss theoretical and practical implications and suggest future directions.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50313

Forward Guidance in the Yield Curve: Short Rates versus Bond Supply

By: Greenwood, Robin, Samuel G. Hanson, and Dimitri Vayanos

Abstract—We present a model of the yield curve in which the central bank can provide market participants with forward guidance on both future short rates and on future Quantitative Easing (QE) operations, which affect bond supply. Forward guidance on short rates works through the expectations hypothesis, while forward guidance on QE works through expected future bond risk premia. If a QE operation is expected to be undone in the near term, then its announcement will have a hump-shaped effect on the yield and forward-rate curves; otherwise the effect may be increasing with maturity. Humps associated to QE announcements typically occur at maturities longer than those associated to short-rate announcements, even when the effects of the former are expected to last over a shorter horizon. We use our model to re-examine the empirical evidence on QE announcements in the United States.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=50177

The Globalization of Angel Investments: Evidence across Countries

By: Lerner, Josh, Antoinette Schoar, Stanislav Sokolinski, and Karen Wilson

Abstract—This paper examines investments made by 13 angel groups across 21 countries. We compare applicants just above and below the funding cutoff and find that these angel investors have a positive impact on the growth, performance, and survival of firms as well as their follow-on fundraising. The positive impact of angel financing is independent of the level of venture activity and entrepreneur friendliness in the country. But we find that the development stage and maturity of startups that apply for angel funding (and those that are ultimately funded) is inversely correlated with the entrepreneurship friendliness of the country, which may reflect self-censoring by very early stage firms that do not expect to receive funding in these environments.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=50237

  • Harvard Business School Case 616-032

Integrating Avocent Corporation into Emerson Network Power

This case reviews Emerson Electric’s proposed acquisition of Avocent Corporation in 2009. The focus of this case is how a technology company such as Avocent, with a dramatically different business model compared to its acquirer, should be integrated into a large, multi-industry conglomerate like Emerson. Underlying this managerial question is a broader strategy question—under what conditions should the acquiring firm A modify its own business model and/or fold itself into its acquisition B, rather than trying to integrate B into the old business model? The case also touches upon themes related to the management of human capital during the acquisition of a technology startup.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/616032-PDF-ENG

The case tells the story of a product manager within Intuit who develops an idea for a new product that spans two of the company’s existing business units—professional tax software, sold to accountants, and the consumer focused TurboTax product. The new product—TurboTax Personal Pro—connects consumers with professional accountants online, allowing them to have their taxes prepared by a professional. The cycle of product development transpires within the larger, corporate context of Intuit, where founder Scott Cook has been attempting to transform the enterprise into a leaner, more innovative company. The case describes in detail the lean startup methods used by the new product team and how their attempts bump up against the existing, entrenched systems and processes of the larger enterprise.

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https://cb.hbsp.harvard.edu/cbmp/product/816048-PDF-ENG

  • Harvard Business School Case 816-042

Clover Food Lab: Building Out the Team

No abstract available.

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https://cb.hbsp.harvard.edu/cbmp/product/816042-PDF-ENG

  • Harvard Business School Case 114-029

Alcoa's Bid for Alcan (A)

In spring 2007, Alcoa CEO Alain Belda was concerned about the company's market position in light of increased competition from developing markets. China's recent entry into the aluminum market was affecting both supply and demand. Furthermore, downstream and upstream product was coming online from other parts of the world, including Russia. As a result, Alcoa had lost its historical market dominance and stock premium. Belda was convinced that for Alcoa to regain its leadership position, the company would have to increase efficiencies by expanding its scale, diversification, and reach. The acquisition of a large competitor presented the best opportunity to achieve this goal, and, as a result, Belda was particularly intrigued by Canadian rival Alcan because its assets would complement Alcoa's portfolio and enhance its reach. Further, Alcan had sold off non-aluminum assets, essentially making it a pure play in aluminum. That and its access to relatively cheap Canadian hydropower made it an even more intriguing acquisition opportunity for Alcoa. However, another major competitor, Rio Tinto, was also interested in Alcan; the company was in play.

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https://cb.hbsp.harvard.edu/cbmp/product/114029-PDF-ENG

  • Harvard Business School Case 114-030

Alcoa's Bid for Alcan (B)

Supplements the (A) case.

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https://cb.hbsp.harvard.edu/cbmp/product/114030-PDF-ENG

  • Harvard Business School Case 815-042

The Structure and Functioning of Art Markets

The production, valuation, and consumption of contemporary art are guided by cultural and economic forces that play out in primary and secondary markets. Artists seek the attention of art dealers who, along with auction houses, play a large role in determining what is and is not innovative and important—and therefore valuable—in the market. Museums, collectors, and critics also play a significant role in affecting public perception and valuation of works of art, while ancillary service providers such as advisors, insurers, and private wealth management and financial services firms support the workings of the market.

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https://cb.hbsp.harvard.edu/cbmp/product/815042-PDF-ENG

  • Harvard Business School Case 816-052

El Sistema

No abstract available.

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https://cb.hbsp.harvard.edu/cbmp/product/816052-PDF-ENG

  • Harvard Business School Case 616-015

BandPage (A)

BandPage CEO James "J" Sider is about to receive results from BandPage's targeted advertising campaign on music streaming service Rhapsody and learn whether BandPage's strategy to improve ad click through rates and generate revenue has succeeded. BandPage, which began as a Facebook app to help musicians build professional-looking pages and convert fan "likes" into revenue, has become a major hub in the online music network. BandPage has deals with upstream and downstream music partners, from streaming services to ticket sellers to merchandise companies, and has built relationships with artists by providing a one stop shop to update current band information across most major music sites simultaneously. BandPage's most recent project has been to differentiate fans by their behavior on streaming sites in order to target super fans with high priced, exclusive and/or personalized offers from artists. At a time when tensions are high between streaming services and artists who believe that they are not being fairly compensated for the use of their music, Sider is convinced that BandPage can help streaming services drive revenue growth for artists through ticket, merchandise, and exclusive offer sales. If the Rhapsody data proves that BandPage's strategy is working, the potential revenue growth for BandPage and all of its partners is massive.

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https://cb.hbsp.harvard.edu/cbmp/product/616015-PDF-ENG

  • Harvard Business School Case 416-014

Bandwidth.com: Answering the Call

No abstract available.

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https://cb.hbsp.harvard.edu/cbmp/product/416014-PDF-ENG