Organizations

385 Results

 

Family Businesses Need Entrepreneurs for Long-Run Success

Families that want to stay in business for generations don't have a choice but to encourage entrepreneurship in and out of their family company, say Michael Roberts and John Davis. Here's how. Open for comment; 1 Comment posted.

The Triumph of the Humble Chief Risk Officer

How do senior risk officers strike a balance between the twin roles of "compliance champion" and "business partner"? Understanding what role risk officers may play in organizational life is especially important in the wake of the 2007-2009 financial crisis, continuing corporate debacles, and ongoing corporate governance calls for the appointment of chief risk officers (CROs) and risk-management committees. This paper tracked the evolution of the role of two highly acclaimed chief risk officers (CROs), and the tools and processes they implemented in their respective organizations. While the companies are from very different industries (one is a power company, the other is a toy manufacturer), they both embraced the concepts and tools of Enterprise Risk Management. Over a number of years, at both firms, risk management transformed from a collection of "off-the-shelf," acquired tools and practices into a seemingly inevitable and tailored control process. The paper investigated the role of the CRO in making these transformations happen and discusses implications for managers. Read More

Cohort Turnover and Productivity: The July Phenomenon in Teaching Hospitals

Nearly all managers must deal with the consequences of employee turnover within their organizations. Despite the importance of this issue, several authors have observed that academic attention has been disproportionately focused on the causes rather than consequences of turnover. To investigate consequences more closely, the authors of this paper focus on the effects of turnover in a particularly high-stakes setting: teaching hospitals. Specifically, the authors examine the effects on productivity of cohort turnover-the planned simultaneous exit of a large number of experienced employees-in this case, medical residents and fellows-and a similarly sized entry of new residents and fellows. Typically, at (or slightly before) the beginning of every July, the most senior residents at teaching hospitals move on to permanent medical positions or fellowships at other hospitals, and recent medical school graduates arrive as first-year residents. The authors examine the impact of the July turnover on hospital productivity using data on all patient admissions from a large, multi-state sample of American hospitals over a 16-year period. By comparing trends in teaching hospitals to those for non-teaching hospitals over the course of the year, they find significant negative effects of the residency turnover on hospital efficiency as measured by risk-adjusted, average length of stay. Overall, the cohort turnover of resident physicians in teaching hospitals reduces medical productivity by increasing resource utilization and, to a lesser degree, decreasing quality. The authors discuss implications for labor turnover in other types of organizations. Read More

Fixing the ‘I Hate Work’ Blues

Many employees report they are overworked and not engaged—a recent New York Times article on the phenomenon was titled, "Why You Hate Work." The problem, says Bill George, is that the way we design work stifles engagement. Here's the fix. Open for comment; 20 Comments posted.

Research Symposium 2014

Harvard Business School professors presented their research to colleagues, with topics including speaking up at work, a manager's responsibility to capitalism, and a strategy to fix the health care system. Open for comment; 0 Comments posted.

The Role of the Corporation in Society: An Alternative View and Opportunities for Future Research

Neoclassical economics and several management theories assert that the corporation's sole objective is maximizing shareholder wealth. Despite these theoretical approaches, however, actual corporate conduct in some cases is inconsistent with shareholder value maximization as the sole objective of the corporation. In fact, corporations are now engaging in environmental and social causes with multiple stakeholders in mind and this is especially true for the world's largest corporations. Overall, the author presents an alternative view of the role of the corporation in society where the objective of the corporation is a function of its size. Specifically, the largest corporations are forced to balance different stakeholders' interests instead of simply maximizing shareholder wealth. The author attributes this change in the role of the corporation to the increasing concentration of economic activity and power in a few corporations which has resulted in 1) a few companies having a very large impact on society, 2) corporations and influential actors which are easier to locate, and 3) increasing separation of ownership and control. These events have led to what scholars Berle and Means (1932) predicted more than 80 years ago: both owners and "the control" accepting public interest as the objective of the corporation. Further research on the topics outlined in this paper may increase our understanding of corporate behavior and the role of these corporations in society. Read More

Corporate and Integrated Reporting: A Functional Perspective

Corporate reporting plays two functions. The first is an "information function" that enables counterparties, such as investors, employees, customers, and regulators, to enter into an exchange of goods and services under specific terms. Companies also benefit from the information function by comparing their performance against peers, thereby informing internal resource allocation decisions. The second is a "transformation function," the result of a company engaging with stakeholders to get their input on the company's resource allocation decisions. The authors argue that integrated reporting is more likely to perform effectively these two functions than separate financial and sustainability reporting. Moreover, as the authors argue, these two functions vary in terms of how important the role of regulation is. Regulation and standard setting is likely to improve the information function but could well impede the transformation function. If regulation is too prescriptive and "rules-based," the risk is that integrated reporting becomes more of a compliance exercise. Read More

Facts and Figuring: An Experimental Investigation of Network Structure and Performance in Information and Solution Spaces

How can managers create organizations that bring people together to successfully solve problems? One increasingly popular managerial tactic to improve problem-solving performance is to increase the connectedness, or what academics call clustering, of the organization. Using everything from transparent, open offices to open social collaboration platforms, connecting everyone and everything, the theory goes, will produce better solutions. True or false? In the lab, the authors randomly assigned individuals to 70 sixteen-person organizations—some more clustered than others—and asked each organization to solve a complex problem: divine the who, what, where, and when of an impending terrorist attack (akin to the famous Clue® whodunit game). They did so using a platform not unlike real intelligence problem-solving environments: Through their computers, individuals could search for information, share information with each other, and share theories about the solutions, while the platform tracked all behavior. The results? Connectedness had different effects on the "facts" and "figuring" stages of problem solving. Search for information (facts) was, indeed, more efficient the more connected the organization. But performance in interpreting the information (figuring) to develop solutions was undermined by too much connectedness. The same connections that helped individuals coordinate their search for information also encouraged individuals to reach consensus on less-than-perfect solutions, making connectedness a true double-edged sword. The authors conclude with a discussion of implications for both theory and practice in our increasingly connected 'small world' and suggest directions for future research. Read More

Book Excerpt--‘Accelerate: Building Strategic Agility for a Faster-Moving World’

Management and leadership are not the same thing. But which is more important to a growing, innovative organization? An excerpt from John Kotter's new book, Accelerate: Building Strategic Agility for a Faster-Moving World. Open for comment; 0 Comments posted.

John Kotter’s Plan to Accelerate Your Business

In the fast-paced modern economy, businesses can no longer rely on just one organizational design, argues John Kotter in a new book, Accelerate: Building Strategic Agility for a Faster-Moving World. Why we need two "operating systems." PLUS Book excerpt. Open for comment; 5 Comments posted.

Opting Out of Good Governance

New disclosure rules of the Security and Exchange Commission (SEC) require that foreign firms listed on US exchanges articulate more clearly their compliance with exchange requirements. In this paper the authors study the extent to which cross-listed firms opt out of corporate governance rules, analyzing which firms opt out of US exchange requirements and the consequences of doing so. Opting out is quite common, with 80.2 percent of cross-listed firms opting out of at least one exchange corporate governance requirement. Firms that opt out appear to adopt weaker governance practices and have fewer independent directors. The decision to opt out appears to reflect the relative costs and benefits of this governance choice. The costs of complying are likely to be higher for insiders who might enjoy certain private benefits when following weak governance practices allowed in their home country. The benefits of complying are likely to be higher for firms that are attempting to raise capital and grow. Consistent with this tradeoff, the data show that firms based in countries with weak corporate governance are less likely to comply, and those that are based in such countries and are expanding and issuing equity are more likely to comply. Opting out of US exchange requirements also has consequences for how the market values cash holdings. For firms from countries with weak governance requirements, cash within the firm is worth significantly less if the firm opts out of more US exchange requirements. Overall, the paper provides insight about the costs and benefits of complying with stringent governance rules and also sheds light on the effect of governance requirements on valuation. Read More

Managing the Family Business: Firing the CEO

Firing a CEO is never easy—but the task gets even more difficult in a family business. John A. Davis discusses when to change out the chief executive. Open for comment; 13 Comments posted.

Consequences to Directors of Shareholder Activism

Activism by hedge fund and other investors to improve governance and performance of companies has become a significant phenomenon in recent years. In this paper the authors examine a number of career consequences for directors when firms are subject to activist shareholder interventions. Examining 1,868 activism events—all publicly disclosed shareholder activism from 2004 to 2012 conducted by hedge funds or other major shareholders—the authors find that directors exit the board at a higher rate when their firms are targeted by activists. Even directors not specifically targeted by dissident shareholders are also likely to leave the board, as are directors at firms targeted by activism with no board-related demands, let alone a formal proxy fight. Overall, whether departure is voluntary, optimal, or otherwise, the evidence suggests that activism is associated with career consequences for directors. Read More

Integrated Reporting and Investor Clientele

As a relatively new phenomenon in the world of corporate reporting, integrated reporting (IR) has gained traction across both the corporate and investor community in the last 10 years. A recent pilot program of the International Integrated Reporting Council, for example, included more than 100 large multinational companies supported by an investor network with more than 40 members. Although IR has the potential to fundamentally change corporate reporting, we still know relatively little about its causes and consequences. Proponents of IR argue that the attraction of long-term investors is a benefit of adopting IR. While anecdotal evidence has suggested the presence of a link, no empirical evidence to date has been provided to establish such a relation. In this paper, the author examines how the practice of IR affects the investor base of the firm. Specifically, analyzing data on more than 1,000 firms between 2002 and 2010, he finds that firms practicing IR have a more long-term investor base and fewer transient investors. In addition, evidence supports a causal mechanism from IR to the investor base of a firm. Investor activism on sustainability issues is shown to be effective in improving IR, but such investor-induced changes in IR do not affect the composition of the investor base. Overall, the paper contributes to emerging scholarship that seeks to understand the causes and consequences of sustainability and integrated reporting. It also contributes to studies examining how companies cater to different types of investors. Read More

Managing the Family Business: Leadership Roles

Poorly designed leadership roles set up a family business for failure. John A. Davis offers a system that produces the decisiveness and unity needed for long-term performance. Open for comment; 9 Comments posted.

From Crowds to Collaborators: Initiating Effort and Catalyzing Interactions Among Online Creative Workers

Online "organizations" are becoming a major engine for knowledge development in a variety of domains such as Wikipedia and open source software development. Many online platforms involve collaboration and coordination among members to reach common goals. In this sense, they are collaborative communities. This paper asks: What factors most inspire online teams to begin to collaborate and to do so creatively and effectively? The authors analyze a data set of 260 individuals randomly assigned to 52 teams tasked with developing working solutions to a complex innovation problem over 10 days, with varying cash incentives. Findings showed that although cash incentives stimulated a significant boost of effort per se, cash incentives did not transform the nature of the work process or affect the level of collaboration. In addition, at a basic yet striking level, the likelihood that an individual chooses to participate depended on whether teammates were themselves active. Moreover, communications among teammates led to more communications, and communications among teammates also stimulated greater continuous levels of effort. Overall, the study sheds light on how perspectives on incentives, predominant in economics, and perspectives on social processes and interactions, predominant in research on organizational behavior and teams, can be better understood. Read More

High-Tech Immigrant Workers Don’t Cost US Jobs

Hiring skilled immigrants by United States high-tech firms not only doesn't push out existing workers, it creates job opportunities for all, argues William Kerr. Open for comment; 11 Comments posted.

Language Wars Divide Global Companies

An increasing number of global firms adopt a primary language for business operations—usually English. The problem: The practice can surface dormant hostilities around culture and geography, reports Tsedal Neeley. Closed for comment; 19 Comments posted.

Managing the Family Business: It Takes a Village

Is it better to lead a family business with one ultimate leader or a team? John A. Davis, an expert on family business management, kicks off a series of articles with a look at governance models. Open for comment; 3 Comments posted.

Managing the Family Firm: Evidence from CEOs at Work

According to prior research, firm performance is weaker among companies with CEOs who have a family connection to the firm owners compared with nonfamily CEOs, that is professionals. Given the ubiquity of family firms and the implications for aggregate income and growth, what explains this variation? This paper provides evidence on the causes, features, and correlates of CEO attention allocation by looking at a simple yet critical difference between family and professional CEOs: the time they spend working for their firms. The Indian manufacturing sector makes an excellent case study because family ownership is widespread and the productivity dispersion across firms is substantial. Examining the time allocation of 356 CEOs of listed firms in this sector, the authors make several findings. First, there is substantial variation in the number of hours CEOs devote to work activities. Longer working hours are associated with higher firm productivity, growth, profitability, and CEO pay. Second, family CEOs record 8 percent fewer working hours relative to professional CEOs. The difference in hours worked is more pronounced in low-competition environments and does not seem to be explained by measurement error. Third, estimates with respect to the cost of effort, due to weather shocks and popular sport events, suggest that family CEOs place a higher relative weight on leisure, which could be due to either a wealth effect or job security. Overall, the evidence highlights the importance of how corporate leaders allocate their managerial attention. Read More

Just How Independent are ‘Independent’ Directors?

A rule in China, which mandates publicly-traded company directors to explain their dissenting votes, provides Tarun Khanna and Juan Ma with rich data looking into the inner workings of how board members interact. Open for comment; 1 Comment posted.

Cultural Disharmony Undermines Workplace Creativity

Managing cultural friction not only creates a more harmonious workplace, says professor Roy Y.J. Chua, but ensures that you reap the creative benefits of multiculturalism at its best. Open for comment; 13 Comments posted.

Is Walmart Defying Economic Gravity?

Summing Up Can Walmart sustain its half-a-trillion-dollar enterprise much longer? Jim Heskett's readers see a conflict between the company's immense size and its business model. Closed for comment; 17 Comments posted.

Companies Choreograph Earnings Calls to Hide Bad News

Data from thousands of Wall Street earnings conference calls suggests that many companies hide bad performance news by calling only on positive analysts, according to new research by Lauren Cohen and Christopher Malloy. Open for comment; 3 Comments posted.

Skilled Immigration and the Employment Structures of US Firms

The immigration of skilled workers is of deep importance to the United States, particularly in occupations closely linked to innovation and technology commercialization. Appropriate policies and admissions levels for skilled workers remain bitterly debated in the popular press. The authors analyze how the hiring of skilled immigrants affects the employment structures of US firms. This focus on the firm is both rare and important, since economists typically study immigration through the conceptual framework of shifts in the supply of workers to a labor market; yet substantial portions of the US immigration framework have been designed to allow American firms to choose the immigrants that they want to hire. Young workers account for a large portion of such skilled immigrants; for example, 90 percent of H-1B workers are under the age of 40. Given this context, the authors look specifically at the role of young skilled immigrants within more than 300 large employers and major patenting firms over the 1995-2008 period. The evidence suggests that increased employment of young skilled immigrants 1) raises the overall employment of skilled workers in the firm, 2) increases the immigrant share of these workers, and 3) reduces the older worker share of skilled employees. The latter effect is evident even among natives only. Overall, these results provide a multifaceted view of how young skilled immigration shapes the employment structures of US firms. There are significant implications for the competitiveness of American firms, the job opportunities of natives and immigrants employed by these firms, the larger national innovative capacity of the United States, and much beyond. Read More

Hiding From Managers Can Increase Your Productivity

Harvard Business School Assistant Professor Ethan S. Bernstein explains why decreasing workplace transparency can increase productivity. Open for comment; 26 Comments posted.

Is Top-Down Resource Allocation on the Rise?

Summing Up Respondents to this month's column provided Jim Heskett possible explanations for greater reliance on top-down resource allocation processes while arguing that a blend of influences from the top and bottom of an organization are still important for best results. Closed for comment; 14 Comments posted.

Do Employees Work Harder for Higher Pay?

In a recent field study, Duncan Gilchrist, Michael Luca, and Deepak Malhotra set out to answer a basic question: "Do employees work harder when they are paid more?" Closed for comment; 17 Comments posted.

When $3+$1 > $4: The Effect of Gift Salience on Employee Effort in an Online Labor Market

Do employees work harder when they are paid more? This study shows that paying above-market wages, per se, does not have an effect on effort. The authors offered an experiment in a field setting that allowed them to test for the conditions under which higher wages elicit higher effort. They hired three groups of workers for a data entry task on the online labor market oDesk.com, telling them all that this was a one-time job. Group one ("3") was hired at $3 per hour. Group two ("3+1") was also hired at $3 per hour, but before starting work, people in group two were told that there was unexpectedly extra money in the budget and they would instead be paid $4 per hour. Group three ("4") was hired directly at $4 per hour, so that the "extra" money would not signal a salient "gift" from the employer. Our findings show that higher wages in which the gift was salient (3+1) led to higher and more persistent effort. However, higher wages by themselves (4) had no effect on effort compared to the lower wage (3) condition. Moreover, higher effort in the 3+1 group was strongest for employees with the most experience on oDesk, and those who had worked most recently on oDesk-exactly the kind of workers for whom our $1 additional payment was likely to be most salient (e.g., because it is not common in this labor market). Read More

Sharing Design Rights: A Commons Approach for Developing Infrastructure

Traditionally, a commons is a natural resource that gives rise to the problem of collective action: Individuals who act alone without consideration for others will arrive at outcomes that are bad for all. Pioneering research by Elinor Ostrom, a scholar of economic governance, has revealed that the claimants to a common pool resource are sometimes able to organize themselves to manage the commons on a day-today basis and to adapt to changing circumstances. In this paper, the authors study the dynamics of a commons organization: In 2006-2007, the Manchester City Council created a commons organization to design a number of new school buildings. The Council had broad decision rights over school design and construction, but rather than delegating those rights to its own staff or to a joint venture, as were the typical practices, the Council gave each school co-equal rights to approve the design so that no building project could go forward unless signed off by both the school and the Council staff. As such, the Council converted the decision-making process from a controlled, centralized style to a commons-based approach. Using the principles of Ostrom's commons theory the authors show that, overall, the commons form of organizing brought with it concomitant risk. This risk, however, was significantly lessened through the creation of a robust commons organization. Read More

Do Mergers Hurt Product Quality?

Albert W. Sheen finds that while mergers lead to product price decreases, they generally have little effect on product quality over time. Closed for comment; 2 Comments posted.

Playing Favorites: How Firms Prevent the Revelation of Bad News

Given the current regulatory environment in the United States (and increasingly globally) of level playing-field information laws, firms can only communicate information in public exchanges. However, even in these highly regulated venues, there are subtle choices that firms make that reveal differential amounts of information to the market. In this paper the authors explore a subtle but economically important way in which firms shape their information environments, namely through their specific organization and choreographing of earnings conference calls. The analysis rests on a simple premise: firms understand they have an information advantage and the ability to be strategic in its release. The key finding is that firms that manipulate their conference calls by calling on those analysts with the most optimistic views on the firm appear to be hiding bad news, which ultimately leaks out in the future. Specifically, the authors show that "casting" firms experience higher contemporaneous returns on the (manipulated) call in question, but negative returns in the future. These negative future returns are concentrated around future calls where they stop this casting behavior, and hence allow negative information to be revealed to the market. Read More

Status: When and Why It Matters

Status plays a key role in everything from the things we buy to the partnerships we make. Professor Daniel Malter explores when status matters most. Open for comment; 9 Comments posted.

Unspoken Cues: Encouraging Morals Without Mandates

Harvard Business School professor Michel Anteby studied his own employer to better understand how organizations can create moral behavior using unspoken cues. Closed for comment; 1 Comment posted.

What Do We Know About Corporate Headquarters? A Review, Integration, and Research Agenda

For the last five decades, research on the multidivisional firm has developed into one of the most important areas of management research. While the majority of this research deals with the firm's portfolio of businesses and international subsidiaries, there is a smaller but significant body of literature on the corporate headquarters (CHQ) - the multidivisional firm's central organizational unit. In this paper, the authors identify major shortcomings and gaps in this research. They then propose five high-priority research opportunities that demand particular attention: (1) The CHQ's nature and boundaries; (2) the CHQ's "functioning"; (3) the CHQ's staff(ing); (4) the CHQ's relationship with the operating units; and (5) the CHQ's impact. Overall, there is a need for a research agenda that builds upon the collective insights from the review but, at the same time, considers the findings of related literature as well as novel ideas from practice. Read More

Earnings Calls That Get Lost in Translation

Clear communication is critical for a successful earnings call. The challenge is doubly hard for foreign executives conducting calls in English. New research by Gwen Yu and Francois Brochet provides guidance to executives speaking to investors in any language. Closed for comment; 2 Comments posted.

How the Zebra Got Its Stripes: Imprinting of Individuals and Hybrid Social Ventures

Creating hybrid organizations that combine existing organizational forms is a complex process. Given the legitimacy challenges facing hybrid organizations, why are they created in the first place? The authors focus on the role of "environmental imprinting" on individuals: this means the persistent effects that individuals' environments during sensitive periods have on their subsequent behaviors. After constructing and analyzing a novel dataset of over 700 founders of social ventures, all guided by a social welfare logic, the authors suggest that individual imprinting helps to explain why an entrepreneur founding a social venture might create a hybrid by incorporating a secondary, commercial logic. Overall, the paper contributes to the understanding of hybrid organizations by providing the first large-scale, empirical examination of the antecedents of the widely-discussed type of hybrids that combine social welfare and commercial logics. Read More

Firm Competitiveness and Detection of Bribery

Bribery is widespread around the world, illegal, detrimental to economic progress and social stability, and at the same time it can have clear economic benefits for a firm. While the benefits of bribery for a firm, through acquisition of contracts or avoidance of government bureaucracy, are intuitive and well documented, the costs after detection are less well understood. In this paper the author examines how the impact on firm competitiveness from the detection of bribery varies with the identity of the initiator, the method bribery was detected, and the firm's response after detection. All three dimensions are significantly associated with the impact on firm competitiveness. In addition, the data suggest that the most significant impact is on employee morale, followed by business relations and reputation, and then regulatory relations. Read More

‘Hybrid’ Organizations a Difficult Bet for Entrepreneurs

Hybrid organizations combine the social logic of a nonprofit with the commercial logic of a for-profit business, but are very difficult to finance. So why would anyone want to form one? Julie Battilana and Matthew Lee investigate. Closed for comment; 14 Comments posted.

Why Unqualified Candidates Get Hired Anyway

Why do businesses evaluate candidates solely on past job performance, failing to consider the job's difficulty? Why do university admissions officers focus on high GPAs, discounting influence of easy grading standards? Francesca Gino and colleagues investigate the phenomenon of the "fundamental attribution error." Closed for comment; 24 Comments posted.

Detroit Files for Bankruptcy: HBS Faculty Weigh In

After a long period of economic decline, the city of Detroit filed for bankruptcy protection last week. John Macomber, Robert Pozen, Eric Werker, and Benjamin Kennedy offer their views on some down-the-road scenarios. Closed for comment; 22 Comments posted.

Catching Up With Boards--Jay Lorsch

Few scholars have studied the behavior of boards as extensively as Jay Lorsch. In this interview, Lorsch discusses current issues facing boards including executive pay, underrepresentation of women, and proposals to cleave the roles of CEO and chairman. Open for comment; 4 Comments posted.

What Are the Limits of Transparency?

Summing Up: What's the proper balance in an organization between transparency and opaqueness? Many of Jim Heskett's readers would err on the side of management forthrightness. Closed for comment; 22 Comments posted.

The Entrepreneurial Gap: How Managers Adjust Span of Accountability and Span of Control to Implement Business Strategy

The management accounting literature of the past twenty years is replete with studies of budgeting systems, balanced scorecards, performance measures, and contract-based incentives. Relatively little attention has been devoted, however, to the organization structure in which these systems exist. Existing accounting theory has little to say, for example, on how the design of performance measures might differ if a business is organized by function, by region, or by product or customer group. In this study, which augments in-depth field data collected by the author in three separate companies with a larger data set generated by 72 teams of MBA student researchers, organization design is reintroduced as a critical variable in understanding management control systems in the context of intensifying global competition. Results suggest that managers appear to adjust span of accountability relative to span of control based on the degree of innovation and independent initiative they wish to foster. In addition, when managers want employees to build long-term relationships with customers, develop new products and services, or navigate the labyrinths created by complex organization designs, they set span of accountability wider than span of control. Read More

Analyzing Institutions to Solve Big Problems

The academic study of institutions provides important insights into complex problems, but is often criticized for lacking practical relevance. Institutional theorists gathered at Harvard Business School to discuss how to make their work more broadly understood and useful. Closed for comment; 2 Comments posted.

How to Do Away with the Dangers of Outsourcing

The collapse of the Rana Plaza garment factory in Bangladesh should be a warning to companies that embrace outsourcing, says Professor Ranjay Gulati. Closed for comment; 8 Comments posted.

Prosocial Bonuses Increase Employee Satisfaction and Team Performance

Designing effective incentive schemes is a central challenge for a wide range of organizations, from multinational corporations to academic departments. In pursuit of identifying the most effective strategies, organizations have devised an impressive variety of such bonuses, from fixed salaries to pay-per-performance, from commissions to end-of-year bonuses. In this paper, the authors suggest that the wide variety in such schemes masks a shared assumption: That the best way to motivate employees is to reward them with money that they then spend on themselves. The authors—Lalin Anik, Lara B. Aknin, Michael I. Norton, Elizabeth W. Dunn, and Jordi Quoidbach—propose an alternative means of incentivizing employees—what they term "prosocial bonuses"—in which organizations provide employees with bonuses used to engage in positive actions towards charities and coworkers, from donating money to remote countries to taking a coworker to lunch. The authors examine the impact of these prosocial bonuses on employee satisfaction and team performance, by reporting results from field experiments in settings ranging from bank employees in Australia to pharmaceutical sales representatives in Belgium to dodgeball teams in Canada. Overall, results suggest that a minor adjustment to employee bonuses—shifting the focus from the self to others—can produce measurable benefits for employees and organizations. Read More

Improving Store Liquidation

Store liquidation, defined as the time-constrained divestment of retail stores through an in-store sale of inventory, is a critical aspect of the retail industry for both defunct and going concerns. Store liquidation is important for firms and investors, affecting everything from retailer performance to how retailers are financed and how investors are compensated. Further, store liquidation is fundamental to innovation in the retail sector, since extracting value from defunct stores and firms is a key step in the process of creative destruction. In this paper, the authors introduce methods for increasing the efficiency of store liquidations operated by retail asset disposition firms, and they thus extend management science techniques to a consequential problem that has not yet been addressed by the literature. These methods were developed through a collaboration with GBG, a prominent liquidator, during the liquidation of over $3B of inventory. Read More

Board Games: Timing of Independent Directors’ Dissent in China

Independent directors are an integral part of corporate governance. Despite the copious scholarly debates surrounding board independence, however, little progress has been made in studying the inner workings of public boards. Fortunately, the regulatory environment in China offers a rare window to observe the inner workings of independent directors. This paper is one of the first statistical investigations of the circumstances under which so-called "independent" directors voice their independent views. The authors explore the following questions: 1) Why do independent directors dissent? 2) Under which circumstances is an independent director more likely to issue an open dissent? and 3) Does dissent matter sufficiently to affect independent directors' careers and firm performance? Unlike most of the previous models that view boards as a monolithic entity that "shares a common agenda on all matters," this study allows the authors to see boards as consisting of individuals with different utility functions and to examine board behaviors at the individual director level. Read More

How to Demotivate Your Best Employees

Many companies hand out awards such as "employee of the month," but do they work to motivate performance? Not really, says professor Ian Larkin. In fact, they may turn off your best employees altogether. Closed for comment; 62 Comments posted.

First Minutes are Critical in New-Employee Orientation

Employee orientation programs ought to be less about the company and more about the employee, according to new research by Daniel M. Cable, Francesca Gino, and Bradley R. Staats. Closed for comment; 16 Comments posted.

How CEOs Sustain Higher-Ambition Goals

At a recent conference, executives underscored the importance of employee engagement, contributing to the community, and creating sustainable environment strategies. Closed for comment; 6 Comments posted.

Marissa Mayer Should Bridge Distance Gap with Remote Workers

Marissa Mayer's decision to bring work-at-home Yahoo! employees back to the office has set off a firestorm. Lakshmi Ramarajan writes on how to mitigate the problem. Closed for comment; 13 Comments posted.

Who Should Manage Our Work Time?

Summing Up Who will save us from our work habits? Jim Heskett's readers offer a range of viewpoints on the responsibility of employees to manage their time at work. Open for comment; 26 Comments posted.

Hurry Up and Wait: Differential Impacts of Congestion, Bottleneck Pressure, and Predictability on Patient Length of Stay

This paper quantifies and analyzes trends related to the effects of increased workload on processing time across more than 250 hospitals. Hospitals are useful settings because they have varying levels of workload. In addition, these settings have high worker autonomy, which enables workers to more easily adjust their processing times in response to workload. Findings show that heavy load plays a significant role in processing times. Congestion is associated with longer lengths of stay. More surprisingly, when there is a high load of incoming patients from a low pressure area (emergency medical patients), current hospital inpatients' stays are longer compared to when incoming patients are from a high pressure area (emergency surgical patients). Furthermore, high predictability of the incoming patients (e.g. scheduled surgical patients) is associated with shorter lengths of stays for the current inpatients than when the incoming patients are less predictable (emergency surgical patients). In this study, there was no decrease in quality of care for patients with shorter lengths of stay. Read More

Fostering Organizational Learning: The Impact of Work Design on Workarounds, Errors, and Speaking Up About Internal Supply Chain Problems

In competitive environments, it is essential that organizations develop techniques that increase the willingness of employees to improve organizational performance. This is especially true in complex service organizations, such as hospitals, where employees have a wide range of discretionary activities that they can perform and lower levels of supervision. For this paper, the author conducted a series of laboratory experiments to test the possibility that managers can manipulate specific work circumstances to increase employees' willingness to speak up about problems, regardless of the employees' individual characteristics. Findings show that participants were more likely to contribute improvement suggestions when employees' role orientation was primed to include process improvement as part of daily work activities and when deliberate blockages made it difficult to work around problems in a way that conformed with policy. The study supports the notion that employee positive behavior can stem from deliberate work design, which falls under managers' jurisdiction, rather than solely from self-motivated employees. Overall, the research advances understanding of the influence of work design on two important employee behaviors-improvement-oriented action and risky workarounds that may harm customers. Read More

Do Bonuses Enhance Sales Productivity? A Dynamic Structural Analysis of Bonus-Based Compensation Plans

Personal selling is a primary marketing mix tool for most B2B firms to generate sales. Yet there is little research on how the compensation plan motivates a sales force and affects performance. This paper develops and estimates a dynamic structural model of sales force response to a compensation plan with various components: salary, commissions, lump-sum bonus for achieving quotas, and different commission rates beyond achieving quotas. Overall, the analysis helps assess the impact of (1) different components of compensation and (2) the differential importance of periodic bonuses on performance on different segments of sales people. Read More

Which Does More to Determine the Quality of Corporate Governance in Emerging Economies, Firms or Countries?

Governance scholars debate the relative importance of country characteristics and firm characteristics in understanding variations in corporate governance practices of firms in emerging economies. One of the main questions is whether weak or incomplete public institutions dictate the governance quality of firms located in these countries. Results of analysis in this paper provide evidence that many emerging economy firms distinguished themselves above and beyond their home country peers in corporate governance ratings during the last decade. This rise was due primarily to firm-level characteristics. The fact that firm characteristics, and especially fixed effects, played a substantially greater role in emerging economies suggests that there is something happening inside these firms that allowed them to differentiate themselves from their home institutions and peer firms. These findings are important for both investors and firms in emerging economies. Investors will be able to observe corporate governance variance within countries and identify valuable investment opportunities. Also, firms should enjoy a sense of agency in their prospects for growth, unhampered by an environment with weak and incomplete governance institutions or low financial market development. Read More

Boardroom Centrality and Firm Performance

Economists and sociologists have long studied the influence of social networks on labor markets, political outcomes, and information diffusion. These networks serve as a conduit for interpersonal and inter-organizational support, influence, and information flow. This paper studies the boardroom network formed by shared directorates and examines the implications of having well-connected boards, finding that firms with the best-connected boards on average earn substantially higher future excess returns and other advantages. Read More

Punctuated Generosity: How Mega-events and Natural Disasters Affect Corporate Philanthropy in US Communities

Even in a global age, local communities offer a critical context for organizational behavior. This paper asks: Since corporate giving is often locally focused, what happens to local firms' philanthropy when a major event disrupts the life of the community? Mega-events might be actively solicited (such as the Olympics, the Super Bowl, political conventions), or natural (floods and hurricanes). In particular, the authors studied how major events within communities affected the philanthropic contributions of locally headquartered corporations in the US between 1980 and 2006. There are three main findings: 1) Actively solicited mega-events had a positive effect in the event year, but also displayed more complex time-dependent dynamics. In some cases, the effects on corporate philanthropy were visible two years before the event and lasted up to six years, before eventually tapering off. 2) The impact of destructive, unexpected events depended on their magnitude. While major natural disasters depressed philanthropic spending by local corporations, smaller-scale disasters stimulated it. 3) Organizational and community factors moderated some of the effects of events. Overall, findings demonstrate the theoretical importance of looking at geography and events in tandem. Mega-events shape institutional processes in significant ways. This paper is forthcoming in Administrative Science Quarterly. Read More

Few Women on Boards: Is There a Fix?

Women hold only 14 percent of the board seats at S&P 1500 companies. Why is that, and what—if anything—should business leaders and policymakers do about the gender disparity? Research by Professor Boris Groysberg and colleagues shows that male and female board members have very different takes on the issue. Closed for comment; 17 Comments posted.

Should Pay-for-Performance Compensation be Replaced?

Summing up: In spite of its naysayers, pay for performance compensation still makes sense to most of us, according to those responding to Jim Heskett's column on the subject. But there is a difference of opinion of about when and how it works and how it should be structured. Open for comment; 24 Comments posted.

No Margin, No Mission? A Field Experiment on Incentives for Pro-Social Tasks

Organizations from large corporations to NGOs use a range of nonfinancial performance rewards to motivate their employees, and these rewards are highly valued. While theory has suggested mechanisms through which nonfinancial incentives can elicit employee effort, evidence on the mechanisms, and on their effectiveness relative to financial incentives, remains scarce. This paper helps to fill this gap by providing evidence from a collaboration with a public health organization based in Lusaka, Zambia, that recruits and trains hairdressers and barbers to sell condoms in their shops. This setting is representative of many health delivery programs in developing countries where embedded community agents are called upon to deliver services and products, but finding an effective way to motivate them remains a significant challenge. Findings show the effectiveness of financial and nonfinancial rewards for increasing sales of condoms. Agents who are offered nonfinancial rewards ("stars" in this setting) exert more effort than either those offered financial margins or those offered volunteer contracts. Read More

Pay Harmony: Peer Comparison and Executive Compensation

This paper demonstrates how horizontal wage comparisons within firms and concerns for "pay harmony" affect firm policies in setting pay for executives. Using a rich dataset of pay practices for the senior-most executives within divisions, Gartenberg and Wulf ask whether horizontal comparisons between managers in similar jobs affect pay. The authors also evaluate evidence in support of a tradeoff between pay harmony and performance pay. Findings are consistent with the presence of peer effects in influencing pay policies for executives inside firms. These results contribute to the ongoing policy debate on the consequences of transparency and mandatory information disclosure and potential ratchet-effects in executive pay. For practitioners involved in designing the structure of executive compensation and pay disclosure policies for firms -- including compensation committee directors, senior human resource executives, and compensation consultants -- it is important to recognize the tradeoff between the incentive effects of performance-based pay and costs of peer comparison that arise from unequal pay when designing executive wage contracts. The research also raises questions on the costs of pay disclosure and on labor markets more generally. Read More

Governing Misvalued Firms

For decades, economists have argued that stocks can get priced irrationally and that this divergence from fundamental value may impact managerial decisions. If overvaluation leads to misbehavior and if strong governance curbs misbehavior, then governance should be particularly valuable in times of overvaluation. This simple yet powerful idea surprisingly has not been explored in the literature. In this paper, the authors fill the gap and ask whether strong corporate governance is especially important during periods of overvaluation when agency costs of managerial misbehavior are high. Results of joint tests of the perverse effects of overvaluation and the ability of governance to counteract them suggest that boards and shareholders looking to create long run value need to increase vigilance and oversight during times when the firm's stock is outperforming. This vigilance is especially important when CEOs have powerful pay-for-performance incentives. Read More

New Agenda for Corporate Accountability Reporting

Professor Karthik Ramanna explains three ways to make corporate accountability reports potentially more useful to constituencies that include shareholders, communities, bondholders, and customers. Open for comment; 2 Comments posted.

Pay Workers More So They Steal Less

New research by professor Tatiana Sandino confirms what many top companies have long believed: Good wages and benefits are linked to a company's low turnover and to happier, more honest workers. Open for comment; 15 Comments posted.

Blue Skies, Distractions Arise: How Weather Affects Productivity

New studies show that workers are more productive on rainy days than on sunny ones. Does your office take advantage? Research by Francesca Gino and colleagues. Closed for comment; 15 Comments posted.

The Unexpected Link Between Cadavers and Careers

Illustrating the strange socializing power of our occupational pursuits, a new study by professor Michel Anteby and colleagues finds a strong association between jobs and corpse donations. Open for comment; 2 Comments posted.

Spatial Organization of Firms: Internal and External Agglomeration Economies and Location Choices Through the Value Chain

How do firms decide location strategy for distinct activities in the value chain, such as manufacturing, research and development, or sales? Does strategy depend on geographically bounded spillovers between firms, or within firms? This paper uses data for organic expansions in the US by firms in pharmaceuticals in 1993-2005 to consider two types of expansions. The first is internal: an increase in employment in existing establishments. The second is external: opening new establishments. Alcacer (HBS) and Delgado (Fox School of Business) argue that decisions about geographical location are a tradeoff between external drivers pulling firms to geographically disperse activities and internal drivers pushing within-firm collocation, either across activities (such as manufacturing and R&D) or within activities (such as multiple R&D labs). Read More

Incentivizing Calculated Risk-Taking: Evidence from an Experiment with Commercial Bank Loan Officers

Recent research presents convincing evidence that incentives rewarding loan origination may cause severe agency problems and increase credit risk, either by inducing lax screening standards or by tempting loan officers to game approval cutoffs even when such cutoffs are based on hard information. Yet to date there has been no evidence on whether performance-based compensation can remedy these problems. In this paper, the authors analyze the underwriting process of small-business loans in an emerging market, using a series of experiments with experienced loan officers from commercial banks. Comparing three commonly implemented classes of incentive schemes, they find a strong and economically significant impact of monetary incentives on screening effort, risk-assessment, and the profitability of originated loans. The experiments in this paper represent the first step of an ambitious agenda to fully understand the loan underwriting process. Read More

Employee-Suggestion Programs That Work

The key to operating a successful employee-suggestion program is to stop spending so much time on big-bang projects and focus on solving "low-hanging-fruit" problems. Research by Anita L. Tucker and Sara J. Singer. Open for comment; 13 Comments posted.

Key Drivers of Successful Implementation of an Employee Suggestion-Driven Improvement Program

Service organizations frequently implement improvement programs to increase quality. These programs often rely on employees' suggestions about improvement opportunities. Yet organizations face a trade-off with suggestion-driven improvement programs. Should managers use an "analysis-oriented" approach to surface a large number of problems, prioritize these, and select a small set of high priority ones for solution efforts? Or is it better to take an "action-oriented" approach, addressing problems raised by frontline staff regardless of priority ranking? In this paper the authors weigh the tradeoff between these two different approaches. Using data from 58 work groups in 20 hospitals that implemented an 18-month-long employee suggestion-driven improvement program, the authors find that an action-oriented approach was associated with higher perceived improvement in performance, while an analysis-oriented approach was not. The study suggests that the analysis-oriented approach negatively impacted employees' perceptions of improvement because it solicited, but not act on, employees' ideas. Read More

A Randomized Field Study of a Leadership WalkRounds™-Based Intervention

Hospitals face an imperative to improve quality, increase efficiency, and improve customer experience. Many hospitals utilize process improvement techniques to achieve these goals. One technique to involve senior managers, known in hospitals most commonly as Leadership WalkRounds™, is a program of visiting the organization's frontlines to observe and talk with employees while they do their work. The intention is that managers and frontline staff will work together to identify and resolve obstacles to efficiency, quality, or safety. (For brevity, the authors refer to it in this paper as WalkRounds™.) Rigorous testing of the effectiveness of process improvement interventions generally, and WalkRounds™ particularly, however, has been rare. This paper presents results from a field study that tested the effectiveness of a safety improvement program inspired by WalkRounds™. The authors compare pre-program and post-program measures of perceived improvement in performance (PIP) from work areas in hospitals that were randomly selected to implement the program, with pre- and post- measures from the same types of work areas in control hospitals. Findings show that, contrary to expectations, the WalkRounds™-based program was associated with decreased PIP. This study calls into question the general effectiveness of WalkRounds™ on employees' perceptions, which had been assumed in prior literature. Read More

Dividends as Reference Points: A Behavioral Signaling Approach

While managers appear to view dividends as a signal to investors, managers also argue that standard dividend signaling models are not focused on the correct mechanisms. These standard models posit that executives use dividends to destroy some firm value and thereby signal that plenty remains: The "money burning" typically takes the form of tax-inefficient distributions, foregone profitable investment, or costly external finance. Executives who actually set dividend policy overwhelmingly reject these ideas yet, at the same time, are equally adamant that dividends are a signal to shareholders and that cutting them has negative consequences. In this paper, the authors develop what they believe to be a more realistic signaling approach. Using core features of prospect theory as conceptualized by Daniel Kahneman and Amos Tversky (the fathers of behavioral economics), they create a model in which past dividends are reference points against which future dividends are judged. The theory is consistent with several important aspects of the data. Baker and Wurgler also find support for its broader intuition that dividends are paid in ways that make them memorable and thus serve as stronger reference points and signals. Read More

When Good Incentives Lead to Bad Decisions

New research by Associate Professor Shawn A. Cole, Martin Kanz, and Leora Klapper explores how various compensation incentives affect lending decisions among bank loan officers. They find that incentives have the power to change not only how we make decisions, but how we perceive reality. Open for comment; 10 Comments posted.

Strategic Intelligence: Adapt or Die

In his new book, Strategic IQ, Professor of Management Practice John R. Wells explains why adapting to changing circumstances isn't only smart, it's also a matter of survival. Closed for comment; 12 Comments posted.

Should CEOs Worry About ‘Too Big to Succeed?’

Summing Up Is there a right size for a company? Jim Heskett's readers ponder his question: Can companies become too big to succeed? Open for comment; 20 Comments posted.

Book Excerpt: ‘Talk, Inc.’

In their book Talk, Inc. Boris Groysberg and Michael Slind show how several global companies are adapting the principles of face-to-face conversation to improve companywide corporate communication. Closed for comment; 1 Comment posted.

The Power of Conversational Leadership

Communication is always a challenge, especially in multinational corporations. Boris Groysberg and Michael Slind discuss why it makes sense to adopt the principles of face-to-face conversation in organizational communication. Closed for comment; 24 Comments posted.

Penn State Lesson: Today’s Cover-Up was Yesterday’s Opportunity

While leaders may rationalize that a cover-up protects the interests of their organizations, the inevitable damage harms their institutions far more than acknowledging a mistake, says professor Bill George. Closed for comment; 16 Comments posted.

Book Excerpt: ’The Future of Boards’

In an excerpt from The Future of Boards, Professor Jay Lorsch discusses why directors are newly questioning their roles. Closed for comment; 0 Comments posted.

The Future of Boards

In The Future of Boards: Meeting the Governance Challenges of the Twenty-First Century, Professor Jay Lorsch brings together experts to examine the state of boards today, what lies ahead, and what needs to change. Open for comment; 3 Comments posted.

Why Good Deeds Invite Bad Publicity

Many executives assume that investments in corporate social responsibility create public goodwill. But do they? Felix Oberholzer-Gee and colleagues find surprising results when it comes to oil spills. Closed for comment; 21 Comments posted.

Location Choices Under Strategic Interactions

How do firms decide their location when expanding geographically? This paper explores how strategic interaction among competitors affects firms' geographic expansion across time and markets. HBS professor Juan Alcacer builds a model in which two firms that differ in their capabilities enter sequentially into two markets with different potentials for profit. The model is solved using game theory under three learning scenarios that capture the ability of a firm to transfer its capabilities across markets: no learning, local learning, and global learning. Three equilibrium strategies emerge: accommodate, marginalize, and collocate. Alcacer identifies how these strategies are more or less likely to emerge depending on three parameters: initial relative firm capabilities, relative market profitability, and learning rates. For managers, the paper illustrates different ways that firms can use location choices across time and geographic markets as a tool to enhance or preserve their competitive position within an industry. Read More

Is Something Wrong with the Way We Work?

Summing Up Who is to blame for our pressure-packed 24/7 work culture? Technology? Globalization? Increasingly demanding customers? Jim Heskett's readers say it's best to first look in the mirror. Closed for comment; 41 Comments posted.

Conflict Policy and Advertising Agency-Client Relations: The Problem of Competing Clients Sharing a Common Agency

This paper takes a fresh look at a recurring and often contentious issue in agency-client relations: Should an advertising agency simultaneously serve competing accounts or should the agency be restricted from doing so? Professor Alvin J. Silk traces the evolution and current state of industry practices with respect to conflict norms and policies; reviews the body of conceptual and empirical research that is available about the sources and consequences of conflicts, and outlines some directions for future research to address unresolved policy issues. Read More

OSHA Inspections: Protecting Employees or Killing Jobs?

As the federal agency responsible for enforcing workplace safety, the Occupational Safety and Health Administration is often at the center of controversy. Associate Professor Michael W. Toffel and colleague David I. Levine report surprising findings about randomized government inspections. Closed for comment; 11 Comments posted.

Organization Design for Distributed Innovation

MIT professor Eric von Hippel first coined the term "distributed innovation" to describe a system in which innovation emanates not only from the manufacturer of a product but from many sources including users and rivals. Over the years, systems of distributed innovation—so-called business ecosystems—have become increasingly prevalent in many industries. These entities generally encompass numerous corporations, individuals, and communities that might be individually autonomous but related through their connection with an underlying, evolving technical system. In this paper, prepared for the 1st Organizational Design Conference, held at Harvard Business School in August 2012, HBS professor Carliss Baldwin examines four central themes: 1) Distributed innovation as the unintended consequence of modularity; 2) The advantage of business ecosystems for creative problem-solving; 3) Organizational design of business ecosystems; and 4) Competition and technological innovation in business ecosystems. Overall, Baldwin argues that the potential benefits of distributed innovation must be recognized, and the field of organization design must broaden its traditional focus on the individual firm to encompass this compelling new approach for creating value. Read More

Can Decades of Military Overspending be Fixed?

Costs tend to rise in all organizations unless managers and their staffs have the motivation and skill to control them. Professor emeritus J. Ronald Fox analyzes this phenomenon during 50 years of US military overspending. Open for comment; 4 Comments posted.

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. While flattening is said to reduce costs, its alleged benefits flow primarily from changes in internal governance: by pushing decisions downward, firms not only enhance customer and market responsiveness, but also improve accountability and morale. But has flattening actually delivered on its promise and pushed decisions down to lower-level managers? In this paper, Julie Wulf shows that flattening actually can lead to exactly the opposite effects from what it promises to do. Wulf used a large-scale panel data set of reporting relationships, job descriptions, and compensation structures in a sample of over 300 large U.S. firms over roughly a 15-year period. This historical data analysis was complemented with exploratory interviews with executives (what CEOs say) and analysis of data on executive time use (what CEOs do). Results suggest that flattening transferred some decision rights from lower-level division managers to functional managers at the top. Flattening is also associated with increased CEO involvement with direct reports—the second level of top management—suggesting a more hands-on CEO at the pinnacle of the hierarchy. In sum, flattening at the top is a complex phenomenon that in the end looks more like centralization. Yet it is crucial to consider different types of decisions and activities and how they vary by level in the hierarchy. Read More

No News Is Good News: CSR Strategy and Newspaper Coverage of Negative Firm Events

This study examines the gatekeeping role of the media in determining which negative corporate events reach a broader audience. Jiao Luo, Stephan Meier, and Felix Oberholzer-Gee test the idea that investments in corporate social responsibility (CSR) create public good will, leading the media to treat companies with a superior CSR track record in a favorable manner. They find the opposite. Newspapers are more likely to report negative news about companies if the companies invested heavily in CSR. For example, oil companies that invest in clean energy face a greater risk of media coverage in the event of an oil spill. An analysis of the tone of media coverage shows that news reports are no more positive for CSR leaders than for the average company. Read More

What Makes a Critic Tick? Connected Authors and the Determinants of Book Reviews

The professional critic has long been heralded as the gold standard for evaluating products and services such as books, movies, and restaurants. Analyzing hundreds of book reviews from 40 different newspapers and magazines, Professor Michael Luca and coauthors Loretti Dobrescu and Alberto Motta investigate the determinants of professional reviews and then compare these to consumer reviews from Amazon.com. Read More

Technology Choice and Capacity Portfolios Under Emissions Regulation

What technologies should firms invest in when emissions are costly? With the European Union Emissions Trading Scheme in the EU, California's Assembly Bill 32, the Regional Greenhouse Gas Initiative in the northeastern US, and now Australia's Clean Energy Bill, more and more firms are having to ask themselves that question when planning their capacity portfolios. This paper uses formal theory to analyze firms' technology choice and capacity portfolios, both when emissions are taxed and when they are regulated under cap-and-trade. David Drake, Paul R. Kleindorfer, and Luk N. Van Wassenhove find that even when average emissions price is assumed to be equivalent to that under an emissions tax, firms are more profitable under cap-and-trade. The emissions price uncertainty under cap-and-trade that many argue will destroy value instead equips firms with a real option that increases value. In addition to comparing profits under emissions tax and cap-and-trade regimes, the authors identify a number of potential adverse outcomes that can arise as a consequence of emissions legislation that should be taken into consideration when formulating future climate policy. Read More

The Inner Workings of Corporate Headquarters

Analyzing the e-mails of some 30,000 workers, Professor Toby E. Stuart and colleague Adam M. Kleinbaum dissected the communication networks of HQ staffers at a large, multidivisional company to get a better understanding of what a corporate headquarters does, and why it does it. Open for comment; 6 Comments posted.

HBS Cases: Overcoming the Stress of ‘Englishnization’

CEOs of global companies increasingly mandate that their employees learn English. The problem: these workers can experience a loss of status and believe they aren't as effective in their learned language, says Assistant Professor Tsedal Neeley. Closed for comment; 18 Comments posted.

Crowded at the Top: The Rise of the Functional Manager

It's not lonely at the top anymore—today's CEO has an average of 10 direct reports, according to new research by Julie M. Wulf, Maria Guadalupe, and Hongyi Li. Thank a dramatic increase in the number of "functional" managers for crowding in the C-suite. Open for comment; 13 Comments posted.

Leadership Program for Women Targets Subtle Promotion Biases

Despite more women in the corporate work force, they still are underrepresented in executive officer positions. Professor Robin Ely and colleagues propose a new way to think about developing women for leadership. Closed for comment; 12 Comments posted.

Breaking Them In or Revealing Their Best? Reframing Socialization around Newcomer Self-Expression

How can organizations build strong, sustainable employment relationships from the very start? To date, the socialization literature has focused on transmitting and maintaining culture so that new employees accept the organizational values and behavioral norms. Many organizations require newcomers to wear standard wardrobes, forbid personal possessions, follow detailed verbal scripts, and enforce appropriate displays of emotion all designed to hinder individuality. In two studies described in this paper, the authors found that organizational and employee outcomes were better when socialization tactics encouraged authentic self-expression of newcomers' personal identities and signature strengths. Organizational socialization is optimized when organizations start by recognizing and highlighting newcomers' unique identities at the very beginning of the employment relationship, when identity negotiation is a critical concern for both parties. Read More

Team Scaffolds: How Minimal In-Group Structures Support Fast-Paced Teaming

It is increasingly necessary for 24/7 shift operations to include some component of team-based work. But how can organizations support such work among constantly changing groups of people in a setting where stable teams are not feasible? This research investigates an organizational structure the authors call team scaffolds: a role set with collective responsibility for accomplishing interdependent tasks. Studying the implementation of team scaffolding in a high-stakes setting, a city hospital emergency room, the authors observed that workers readily affiliated with the temporary teams—even without ongoing relationships—and worked together intensely during the short duration of these groupings, even developing a competitive dynamic with other team scaffolds. The role sets established job placeholders in an interdependent group so that people starting up a shift could take their places in the set and immediately understand the interdependence and accountability they shared with others. Overall, this design improved the ability and motivation of clinicians to engage in teaming. Read More

Earnings Management from the Bottom Up: An Analysis of Managerial Incentives Below the CEO

Many studies as well as anecdotes document a link between the structure of chief executive officer (CEO) compensation and various measures of earnings manipulation. In this paper, HBS professors Oberholzer-Gee and Wulf analyze all components of compensation packages for CEOs and for managers at lower levels in a large sample of firms over more than 10 years, between 1986 and 1999. Results suggest that the effects of incentive pay on earnings management vary considerably by both type of incentive pay and position. Overall, it appears that the primary focus of compensation committees on equity incentives for CEOs overlooks a critical component in curbing earnings manipulation. If one wanted to weaken incentive pay to get more truthful reporting, diluting bonuses-particularly that of the chief financial officer (CFO)-would be the place to start. This may be the first study to analyze the relationship between CEO, division manager, and CFO compensation and earnings management. Read More

Discretion Within the Constraints of Opportunity: Gender Homophily and Structure in a Formal Organization

Research has demonstrated that people associate most with others who are similar to themselves, including others of the same sex. What are the implications of such patterns for organizations? This study, written by Adam M. Kleinbaum, Toby E. Stuart, and Michael L. Tushman, offers evidence of how and by whom formal lateral structures serve to link together an otherwise siloed organization. Analyzing millions of e-mail interactions among tens of thousands of employees of a single large firm, the researchers find that it is women more than men who tend to bridge formal structural boundaries in organizations. Thus women play a potentially valuable role in creating ties throughout an otherwise siloed multidivisional corporation. Despite the influence of a firm's formal organizational structure, people often have plenty of discretion to exercise choice. Same-sex interaction results from discretionary choice within the boundaries of the firm's opportunity structure. These results suggest (but do not prove) that same-sex interaction especially by woman can help to span formal organizational boundaries that are otherwise difficult to traverse. The findings raise questions for future research about whether conventional wisdoms regarding gender differences in social network structure remain accurate in current-day organizations. Read More

Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management

The size of a CEO's executive team has increased dramatically in recent decades, but little has been known about its composition. Using a rich dataset of US firms from 1986 to 2006, this paper documents the dramatic increase in the number of functional managers in the executive team. The size of the team in these firms doubled over the time period from five to 10 positions, with approximately three-fourths of the increase attributable to functional managers (such as Chief Financial Officer, Chief Marketing Officer, and so on) rather than general managers. The paper explores the drivers of these changes. Findings are critical for practitioners, and specifically CEOs, as they structure their executive teams and more generally as they make decisions to implement or execute strategy. Read More

A Few Firms Have Outsized Influence in D.C.

New research by Harvard Business School Associate Professor William R. Kerr suggests the number of companies affecting government policy through lobbying may be smaller—but more powerful—than previously thought. Open for comment; 4 Comments posted.

Location, Location, Location: The Strategy of Place

Business success in one geographic location doesn't necessarily follow a company to a new setting. Professor Juan Alcácer discusses the importance of taking a long-term strategic view. Open for comment; 12 Comments posted.

What Impedes Oil and Gas Companies’ Transparency?

Oil and gas companies face asset expropriations and corruption by foreign governments in many of the countries where they operate. In addition, most of these companies operate in multiple host countries. What determines their disclosure of business activities and hence transparency? Paul Healy, Venkat Kuppuswamy, and George Serafeim examine three forms of disclosure costs that oil and gas managers could potentially consider. Both the US government and the European Union are currently considering laws that would require oil and gas companies to disclose information about operations in host countries. Read More

The Dynamics of Firm Lobbying

Lobbying is a primary avenue through which firms attempt to change policy in the United States, with total expenditures outnumbering campaign contributions by a factor of nine. While lobbying by businesses is a frequently debated issue, there has been little systematic empirical evidence on these behaviors at the firm level. This paper is one of the first to begin to fill this gap. To do so, the researchers constructed an empirical model of lobbying behavior of publicly traded, US-headquartered firms between 1998 and 2006. They also looked in depth at a specific policy shift that has been the subject of significant public debate: the dramatic decline in the limit on H-1B visas that occurred in 2004. Findings show that the decline in the limit on H-1Bs did not induce new firms to lobby that were not previously lobbying on other issues. The decline did, however, significantly shift lobbying resources towards high-skilled immigration issues amongst firms that had lobbied previously for other issues. Moreover, the manner in which this shift occurs among firms already lobbying indicates little constraint on adjustments across issues important for firms. Read More

Sharpening Your Skills: Organizational Design

In this collection from our archives, Harvard Business School faculty discuss specific challenges that can be solved with the right organizational design. Read More

Creating a Global Business Code

In the wake of corporate scandals, many companies are looking more closely at how to manage business conduct worldwide. Realizing the complexity of this issue, Harvard Business School professors Rohit Deshpandé, Lynn S. Paine, and Joshua D. Margolis decided to evaluate standards of corporate conduct around the world—one of the most daunting research projects the three faculty have undertaken. Open for comment; 9 Comments posted.

CEO Bonus Plans: And How to Fix Them

Discussions about incentives for CEOs in the United States begin, and often end, with equity-based compensation. After all, stock options and (more recently) grants of restricted stock have comprised the bulk of CEO pay since the mid-1990s, and the changes in CEO wealth due to changes in company stock prices dwarf wealth changes from any other source. Too often overlooked in the discussion, however, is the role of annual and multiyear bonus plans—based on accounting or other non-equity-based performance measures—in rewarding and directing the activities of CEOs and other executives. In this paper, Kevin J. Murphy and Michael C. Jensen describe many of the problems associated with traditional executive bonus plans, and offer suggestions for how these plans can be vastly improved. The paper includes recommendations and guidelines for improving both the governance and design of executive bonus plans and, more broadly, executive compensation policies, processes, and practices. The paper is a draft of a chapter in Jensen, Murphy, and Wruck (2012), CEO Pay and What to Do About it: Restoring Integrity to both Executive Compensation and Capital-Market Relations, forthcoming from Harvard Business School Press. Read More

The Most Powerful Workplace Motivator

When evaluating compensation issues, economists often assume that both an employer and an employee make rational, albeit self-interested choices while working toward a goal. The problem, says Assistant Professor Ian Larkin, is that the most powerful workplace motivator is our natural tendency to measure our own performance against the performance of others. Open for comment; 33 Comments posted.

Chasing Stars: Why the Mighty Red Sox Struck Out

When the Red Sox announced they had signed away veteran pitcher John Lackey from the Anaheim Angels, it was the start of one of the most expensive talent hunts in baseball history. So why were the Red Sox an epic failure in 2011? Lackey's lackluster performance is a case study in the perils of chasing superstars, says Professor Boris Groysberg. Open for comment; 7 Comments posted.

How ‘Hybrid’ Nonprofits Can Stay on Mission

As nonprofits add more for-profit elements to their business models, they can suffer mission drift. Associate Professor Julie Battilana says hybrid organizations can stay on target if they focus on two factors: the employees they hire and the way they socialize those employees. Open for comment; 14 Comments posted.

What Environmental Ratings Miss

Environmental ratings of companies are based on "green" management efforts and the environmental performance of their operations. In this paper, Michael Toffel and Auden Schendler argue that these ratings neglect companies' actions that seek to influence environmental policy, which can have a much broader impact than their internal efforts. As a result, sustainability ratings risk seriously misleading consumers and investors, and can even enable "greenwashing" by allowing corporations to game the system, gaining high rankings for greening their operations despite advocating for less stringent environmental policy. Toffel and Schendler argue that environmental ratings should factor in political contributions, CEO advocacy work, and engagement with non-governmental organizations, among other actions. This would erode the environmental ratings of companies advocating weaker environmental policy, and bolster the ratings of those advocating more stringent environmental policy. Read More

The Profit Power of Corporate Culture

In the new book The Culture Cycle, Professor Emeritus James L. Heskett demonstrates that developing the right corporate culture helps companies be more profitable and provides sustainable competitive advantage. Open for comment; 8 Comments posted.

What’s Apple’s Biggest Challenge: Replacing Steve or Wall Street?

Summing Up: Steve Jobs' influence on Apple is pervasive--maybe too much so. Jim Heskett's readers think Apple faces an almost impossible task in replacing the visionary founder. Closed for comment; 17 Comments posted.

The Globalization of Corporate Environmental Disclosure: Accountability or Greenwashing?

Between 2005 and 2008, the world saw a dramatic increase in corporate environmental reporting. Yet this transition toward greater transparency and accountability has occurred unevenly across countries and industries. Findings by professors Christopher Marquis and Michael W. Toffel provide the first systematic evidence of how the global environmental movement affects corporations' environmental management practices. Firms' use of symbolic compliance strategies, for instance, is affected by specific corporate characteristics and by institutional context. This study contributes to a larger body of research on the effects of global social movements and environmental reporting. Read More

Non-Audit Services and Financial Reporting Quality: Evidence from 1978-1980

What are the costs and benefits of auditors providing non-audit services? In this paper, the authors investigate whether high non-audit services (NAS) fees relative to audit fees are associated with poor quality financial reporting. Associate Professor Suraj Srinivasan and colleagues look specifically at a sample of S&P 500 firms during the years 1978-80. The authors thus provide an early history analysis of a long-standing regulatory concern that NAS fees create an economic dependence that causes the auditor to acquiesce to the client's wishes in financial reporting, reducing the quality of the audit. This concern led the Sarbanes-Oxley Act to prohibit auditors from providing most consulting services. The authors find that, contrary to regulatory concerns, NAS are associated with better quality financial reporting: lower earnings management and higher earnings informativeness. Conclusions rely on the specific institutional features of the years 1978-80. Read More

How Firms Respond to Mandatory Information Disclosure

Companies are facing increasing pressure to reveal information about their operations, including their environmental performance. This research examines which types of organizations are especially likely to reduce their pollution levels once they face mandatory disclosure requirements. Research conducted by Anil Doshi and Michael Toffel of Harvard Business School, and Glen Dowell of the Johnson School of Management at Cornell University compares the responses of companies based on their proximity to headquarters and to corporate siblings, organizational size and the density of their surrounding communities, and whether they are part of publicly- or privately-held firms. Read More

A Dynamic Perspective on Ambidexterity: Structural Differentiation and Boundary Activities

Firms renew themselves by exploring new business models even as they exploit existing ones. But to conduct "explore and exploit" simultaneously, organizations must reconcile associated internal tensions and conflicting demands. Sebastian Raisch and Michael L. Tushman explore the shifting nature of differentiation and integration in organizations attempting to explore and exploit. Read More

Rupert Murdoch and the Seeds of Moral Hazard

Harvard Business School faculty Michel Anteby, Rosabeth Moss Kanter, and Robert Steven Kaplan explore the moral, ethical, and leadership issues behind Rupert Murdoch's News of the World fiasco. Open for comment; 12 Comments posted.

Non-competes Push Talent Away

California is among several states where non-compete agreements are essentially illegal. Is it a coincidence that so many inventors flock to Silicon Valley? New research by Lee Fleming, Matt Marx, and Jasjit Singh investigates whether there is a "brain drain" of talented engineers and scientists who leave states that allow non-competes and move to states that don't. Open for comment; 8 Comments posted.

Delegation in Multi-Establishment Firms: Adaptation vs. Coordination in I.T. Purchasing Authority

Scholars have intensely studied the similarities and differences between organizations that are decentralized in their decision making versus those favoring more command-and-control central authority. What leads to a firm following a decentralized approach, and can that approach be predicted? Professor Kristina McElheran advances previous, largely theoretical, research on this subject to explore in the real world the economic determinants affecting how IT purchasing authority in 3,000 multi-establishment companies was allocated between central headquarters and outlying establishments. Read More

QuikTrip’s Investment in Retail Employees Pays Off

Instead of treating low-paid staffers as commodities, a new breed of retailers such as QuikTrip assigns them more responsibility and invests in their development, says professor Zeynep Ton. The result? Happy customers and even happier employees. Open for comment; 9 Comments posted.

The Consequences of Mandatory Corporate Sustainability Reporting

The number of firms reporting sustainability information has grown significantly in the past decade, both due to voluntary actions and to mandates from several national governments and stock exchange authorities. In this paper, London Business School's Ioannis Ioannou and Harvard Business School's George Serafeim investigate whether mandatory sustainability reporting has any effect on a company's tendency to engage in socially responsible management practices. Read More

Building a Better Board

While corporate board members take their jobs more seriously than ever, they are not necessarily as helpful or effective as they could be, says HBS senior lecturer Stephen Kaufman. He recently sat down with HBS Working Knowledge to discuss what he considers to be the biggest practical issues facing boards today. Closed for comment; 11 Comments posted.

Moving From Bean Counter to Game Changer

New research by HBS professor Anette Mikes and colleagues looks into how accountants, finance professionals, internal auditors, and risk managers gain influence in their organizations to become strategic decision makers. Open for comment; 12 Comments posted.

How Do Risk Managers Become Influential? A Field Study of Toolmaking and Expertise in Two Financial Institutions

Most organizations have technical experts on staff—accountants, finance professionals, internal auditors, risk managers-but not all experts are listened to at higher levels. To understand how expert influence on strategic thinking can be increased, Matthew Hall, Anette Mikes, and Yuval Millo followed the organizational transformation of risk experts in two large UK banks. One transformation was successful, the other not. Are your experts merely "box-tickers," or are they influential "frame-makers"? Read More

Casino Payoff: Hands-Off Management Works Best

Micromanagers beware: Research of casino hosts by Harvard Business School's Dennis Campbell and Francisco de Asís Martinez-Jerez and Rice's Marc Epstein makes the case that hands-off management can work to improve employee learning and decision making. Open for comment; 14 Comments posted.

Temptation at Work

Among the many distractions that keep office employees from their work, surfing the web is arguably the most irresistible time-waster of all. In order to deal with that problem, many companies either prohibit Internet use during working hours, or closely monitor employees' web activity. This means workers must wait until they get home to get their daily YouTube fix. But does forbidding this distraction actually increase productivity? In this paper, researchers find that the answer is no—and that delaying gratification actually has a negative impact on employee performance. Research was conducted by Alessandro Bucciol of the University of Verona and the University of Amsterdam, Daniel Houser of George Mason University, and Marco Piovesan, a research fellow at Harvard Business School. Read More

Do US Market Interactions Affect CEO Pay? Evidence from UK Companies

CEOs of UK firms receive higher total compensation if their companies have interactions with US product, capital, and labor markets. Moreover, the compensation package is often adopted from American-style arrangements, such as the use of incentive-based pay. Researchers Joseph J. Gerakos (University of Chicago), Joseph D. Piotroski (Stanford), and Suraj Srinivasan (Harvard Business School) analyzed data on the compensation practices of 416 publicly traded UK firms over the period 2002 to 2007. Read More

Memory Lane and Morality: How Childhood Memories Promote Prosocial Behavior

Little Damien from The Omen notwithstanding, we generally associate childhood with goodness, purity, and innocence. This paper investigates whether feelings of moral purity can be triggered by reminding adults of their childhoods, and whether this can help to induce kind and philanthropic behavior both in social settings and in the workplace. Research was conducted by Harvard Business School professor Francesca Gino and Sreedhari D. Desai of the Edmond J. Safra Center for Ethics at Harvard University. Read More

How Foundations Think: The Ford Foundation as a Dominating Institution in the Field of American Business Schools

What causes institutions to change? This paper adds organizational and exogenous perspective to existing theories by looking at the idea of "dominating institutions"—a class of formal organizations purposively designed to change other institutions. HBS professor Rakesh Khurana and colleagues look at the Ford Foundation and its work reshaping America's graduate schools of management between 1952 and 1965 through funding of "centers of excellence" at a number of schools, including Harvard Business School. Read More

The Importance of ‘Don’t’ in Inducing Ethical Employee Behavior

In a new study, HBS professors Francesca Gino and Joshua D. Margolis look at two ways that companies can encourage ethical behavior: the promotion of good deeds or the prevention of bad deeds. It turns out that employees tend to act more ethically when focused on what not to do. That can be problematic in firms where success is commonly framed in terms of advancement of positive outcomes rather than prevention of bad ones. Closed for comment; 18 Comments posted.

Creating the Founders’ Dilemmas Course

In HBS professor Noam Wasserman's second-year MBA course, Founders' Dilemmas, students study quandaries that virtually all entrepreneurs face when trying to realize the dream of launching a startup—from deciding when to start the company to learning how to make a graceful exit. Guest speakers discussing their experiences include All-Star pitcher-turned-entrepreneur Curt Schilling and Tom & Tom, the Nantucket Nectars guys. Open for comment; 12 Comments posted.

Terror at the Taj

Under terrorist attack, employees of the Taj Mahal Palace and Tower bravely stayed at their posts to help guests. A new multimedia case by Harvard Business School professor Rohit Deshpandé looks at the hotel's customer-centered culture and value system. Closed for comment; 0 Comments posted.

Learning from Customers in Outsourcing: Individual and Organizational Effects

In farming out work to an external service provider, companies often count on volume-based learning--the idea that outsourced workers will build experience and improve their productivity if there is a large volume of work for them to do, and that the bigger the volume, the more productive and efficient they'll eventually become. However, there are several factors that challenge that education process. This paper explores whether and how repetition can breed competence in a business setting, using data from a provider of outsourced radiological services. Research was conducted by Harvard Business School professor Robert S. Huckman, Jonathan R. Clark (HBS PhD 2010) of Pennsylvania State University, and Bradley R. Staats (HBS MBA 2002, DBA 2009) of the University of North Carolina at Chapel Hill. Read More

Activist Board Members Increase Firm’s Market Value

Board members nominated by activist investors presumably have one primary goal: change the status quo. Does that agenda create or diminish value of the firm in the eyes of shareholders? New evidence offered by Harvard Business School professors Bo Becker, Daniel B. Bergstresser, and Guhan Subramanian suggests financial markets value a new approach. Open for comment; 3 Comments posted.

The Psychological Costs of Pay-for-Performance: Implications for Strategic Compensation

In studying pay-for-performance-based compensation systems, economic scholars often adhere to agency theory, which hypothesizes that firms should prominently use performance-based compensation—it alleviates the problems of employee "shirking" and ensures highly skilled employees' desire to work for the company. However, firms use performance-based pay far less frequently than agency theory predicts. This paper posits that the psychological costs of pay-for-performance systems often dominate their benefits to firms, and proposes an integrated theory of strategic compensation that takes into account the economic and psychological benefits and costs of pay-for-performance. Research was conducted by Harvard Business School professors Francesca Gino and Ian Larkin, and Lamar Pierce of Washington University. Read More

New Dean Sets Five Priorities for HBS

Harvard Business School's new Dean Nitin Nohria outlines five priorities that will shape the agenda for the School during his tenure: curriculum innovation, intellectual ambition, internationalization, inclusion, and closer ties to the University. Read More

Managing the Support Staff Identity Crisis

Employees not connected directly to profit and loss can suffer from a collective "I-am-not-strategic" identity crisis. Professor Ranjay Gulati suggests that business managers allow so-called support function employees to become catalysts for change. Open for comment; 29 Comments posted.

Do Bonuses Enhance Sales Productivity? A Dynamic Structural Analysis of Bonus-Based Compensation Plans

Companies generally pay their sales staff with some combination of salary, commissions, and bonuses for meeting quotas-with sales force costs averaging about 10 percent of sales revenue in the United States. This paper aims to gain insight into the most effective way to design a compensation plan, concentrating on whether bonuses boost sales productivity and whether they should be awarded quarterly or annually. Research, focusing on the sales force of a large office supply company, was conducted by Harvard Business School professor Thomas Steenburgh and Doug J. Chung and K. Sudhir of the Yale School of Management. Read More

How to Fix a Broken Marketplace

Alvin E. Roth was a co-winner of the Nobel Prize in Economic Science this week for his Harvard Business School research into market design and matching theory. This article explores his research. Open for comment; 5 Comments posted.

The Work-Around Culture: Unintended Consequences of Organizational Heroes

Professor Anita Tucker shares findings from her research on the problems caused by "work-around cultures" in hospitals. Read More

Why Do We Chase Stars?

Summing Up: Is it wise for companies to recruit "star" performers? Discussing the book "Chasing Stars", Jim Heskett's readers support the idea that talent is portable between employers and that women are better at it than men. (Next Forum opens December 2) Closed for comment; 46 Comments posted.

Making the Numbers? ‘Short Termism’ & the Puzzle of Only Occasional Disaster

Executives at public companies are always under pressure to "meet the numbers" each quarter, often so much so that they sacrifice long-term investments in order to make everything look rosy in the short term. In this paper, Harvard Business School professor Rebecca M. Henderson and Sloan School of Management professor Nelson P. Repenning set out to reconcile the apparently contradictory strategies of short-term results and long-term investments. Read More

How IT Shapes Top-Down and Bottom-Up Decision Making

What determines whether decisions happen on the bottom, middle, or top rung of the corporate ladder? New research from professor Raffaella Sadun finds that the answer often lies in the technology that a company deploys. Open for comment; 15 Comments posted.

Will I Stay or Will I Go? How Gender and Race Affect Turnover at ‘Up-or-Out’ Organizations

Gender and racial inequalities continue to persist at "up-or-out" knowledge organizations, making it difficult for women and minorities to advance to senior levels, professor Kathleen McGinn says. Read More

The Distinct Effects of Information Technology and Communication Technology on Firm Organization

At what point in the corporate food chain are big decisions made? It depends on technology, according to new research, which finds that information-based software will help to push decisions further down the corporate ladder, whereas communication technologies will push decisions up to the top. Research was conducted by Nicholas Bloom of Stanford University; Assistant Professor Raffaella Sadun of Harvard Business School; and Luis Garicano and John Van Reenen of the London School of Economics. Read More

Reversing the Queue: Performance, Legitimacy, and Minority Hiring

While there has been a steady rise in the number of black executives in corporate America, the fact remains that white males have a persistent advantage in terms of access to managerial positions. This paper sets out to find out how a company's performance influences the hiring of minorities into management positions, and whether the presence of minorities in senior management positions affects the racial composition of the subordinate management team. Research, which focused on the corporate structure of the National Football League, was conducted by Harvard Business School doctoral candidate Andrew Hill and professor David Thomas. Read More

Employee Selection as a Control System

One of the most powerful tools that an organization has to achieve its goals is the ability to hire employees with complementary values and capabilities. Reviewing personnel and lending data from a financial services organization undergoing a major decentralization process, Dennis Campbell offers the first direct empirical evidence establishing a link between employee selection and better alignment with organizational performance goals. Read More

Will Transparency in CEO Compensation Have Unintended Consequences?

Summing Up: The Dodd-Frank legislation requiring companies to compare CEO compensation with rank-and-file pay will have little or no impact on executive compensation levels, say Jim Heskett's readers. (Online forum has closed; next forum opens November 4.) Closed for comment; 55 Comments posted.

Using What We Know: Turning Organizational Knowledge into Team Performance

An organization's captured (and codified) knowledge--white papers, case studies, documented processes--should help project teams perform better, but does it? Existing research has not answered the question, even as U.S. companies alone spend billions annually on knowledge management programs. Looking at large-scale, objective data from Indian software developer Wipro, researchers Bradley R. Staats, Melissa A. Valentine, and Amy C. Edmondson found that team use of an organization's captured knowledge enhanced productivity, especially for teams that were geographically diverse, relatively low in experience, or performing complex work. The study did not find effects of knowledge use on the quality of the team's work, except for dispersed teams. Read More

A Positive Approach to Studying Diversity in Organizations

Considering that the topic of workplace diversity often garners unhappy discussions of prejudice, isolation, and conflict, it's not surprising that many researchers avoid the topic altogether. Only 5 percent of articles published in management journals from 2000-2008 included race or gender in their keywords. In this paper, Harvard Business School professors Lakshmi Ramarajan and David Thomas propose a positive approach to studying diversity, with hopes that this will lead managers to feel more positive about adopting diversity policies in the workplace. Read More

How Transparent Should Boards Be?

Summing Up: When should boards fire CEOs? How transparent should boards be? Jim Heskett's readers are divided as they look at the HP/Mark Hurd case. What do you think? (Online forum has closed; next forum opens October 8.) Closed for comment; 50 Comments posted.

The Role of Organizational Scope and Governance in Strengthening Private Monitoring

Governments have long debated which tasks should be outsourced to the private sector. Although often justified on the basis of the cost-efficiencies of market competition, outsourcing to private firms carries its own risks, which can reduce the quality of services provided. In addition to more conventional services such as garbage and recycling collection, some governments outsource the enforcement of laws and regulations. This paper by Olin Business School's Lamar Pierce and HBS professor Michael W. Toffel examines the automobile emissions testing market in one state where this form of regulatory enforcement has been outsourced to the private sector. Their analysis illustrates the importance of considering organizational scope and private governance mechanisms such as monitoring provided by corporate headquarters and independent third-parties in efforts to assure the reliability of firms that provide outsourced services. Read More

Disagreement about the Team’s Status Hierarchy: An Insidious Obstacle to Coordination and Performance

What happens when team members disagree about how much status each of the other members actually deserves? Does it matter that members might not even be aware that they disagree with one another? Published research on status conflict has so far focused primarily on the effects of overt status challenges, often originating from high-status members jockeying for top positions to attain valuable resources such as power, credit, and a better reputation. Yet new research by HBS professor Heidi K. Gardner explores how small differences, even latent ones, in team members' perceptions about their group's status hierarchy can undermine group collaboration, heighten team conflict, and lower performance. Read More

Rocket Science Retailing: A Practical Guide

How can retailers make the most of cutting-edge developments and emerging technologies? Book excerpt plus Q&A with HBS professor Ananth Raman, coauthor with Wharton professor Marshall Fisher of The New Science of Retailing: How Analytics Are Transforming the Supply Chain and Improving Performance. Read More

Is Profit as a “Direct Goal” Overrated?

Summing Up: The word profit provoked a wide range of issues and emotions among respondents, says Jim Heskett. It also launched debates, and many readers argued for measures of success other than profit. (Online forum has closed; next forum opens August 5.) Closed for comment; 84 Comments posted.

Cincinnati Children’s Hospital Medical Center

A recent Harvard Business School case by HBS professors Amy C. Edmondson and Anita Tucker explores how one hospital implemented its own version of health-care reform, taking overall performance levels from below average to the top 10 percent in the industry. From the HBS Alumni Bulletin. Read More

The Role of Institutional Development in the Prevalence and Value of Family Firms

Family firms dominate economic activity in most countries, and are significantly different from other companies in their behavior, structural characteristics, and performance. But what explains the significant variation in the prevalence and value of family firms around the world? The two leading explanations are legal investor protection and institutional development, but cross-country studies are unable to rule out the alternative explanation that cultural norms are what account for these differences. In contrast, China provides an excellent laboratory for addressing this question because it offers great variation in institutional efficiency across regions, yet the country as a whole shares cultural and social norms together with a common legal and regulatory framework. In this paper, HBS professor Belén Villalonga and coauthors study ownership data from a sample of nearly 1,500 publicly listed firms on the Chinese stock market. They conclude that institutional development plays a critical role in the prevalence and value of family firms, and that the differences observed across regions are not attributable to cultural factors. Read More

Does Diversification Create Value in the Presence of External Financing Constraints? Evidence from the 2008-2009 Financial Crisis

The global financial crisis of 2008-2009 has led academics and practitioners to question many widely held beliefs about business and economics. One such belief relates to the value of corporate diversification. Popular views about diversification have swung like a pendulum over the past half-century, from a generally positive view in the 1960s and 1970s, when many large conglomerates were formed, to a generally negative view in the 1980s and early 1990s, when many such conglomerates were dismantled or at least fell out of the stock market's favor. In 2009, in the wake of the global financial crisis, a new view seems to be emerging that conglomerates are ready for a comeback. In this paper, HBS doctoral candidate Venkat Kuppuswamy and professor Belén Villalonga examine whether and why conglomerates have become more valuable during the 2008-2009 financial crisis. They find that they have, and that the increase does not simply reflect changes in investor perceptions but real differences in corporate finance and investment. Read More

Corporate Governance and Internal Capital Markets

What is the impact of corporate ownership on corporate diversification and on the efficiency of firms' internal capital markets? Corporate governance and internal capital markets are two topics closely intertwined in theoretical research; for example, agency problems—which corporate governance mechanisms seek to mitigate in a variety of ways—are at the heart of every theory of inefficient internal capital markets. Yet surprisingly few empirical studies have looked into the actual link between corporate governance and internal capital markets. This paper by University of Amsterdam professor Zacharias Sautner and HBS professor Belén Villalonga seeks to fill the gap by taking advantage of a natural experiment provided by a tax change in Germany in 2002. The researchers provide direct evidence of the effect of governance structures on how markets work, as well as new evidence about the benefits and costs of ownership concentration. Read More

How Do You Weigh Strategy, Execution, and Culture in an Organization’s Success?

Summing up: Respondents who ventured to place weights on the determinants of success gave the nod to culture by a wide margin, says HBS professor Jim Heskett. (Online forum now closed. Next forum opens July 2.) Closed for comment; 77 Comments posted.

Unraveling Results from Comparable Demand and Supply: An Experimental Investigation

In many professional labor markets, most entry-level hires begin work at around the same time: for example, soon after graduating from college or graduate or professional school. Despite a common start time, offers can be made and contracts can be signed at any time prior to the start of employment, sometimes well over a year before employment will begin. "Unraveling" happens in markets in which competition for the elite firms and workers is fierce, but the quality of workers may not be reliably revealed until after a good deal of hiring has already been completed. Thus unraveling is sometimes a cause of market failure, particularly when contracts come to be determined before critical information is available. In this paper Muriel Niederle of Stanford, Alvin E. Roth of HBS, and M. Utku Ünver of Boston College consider conditions related to supply and demand that tend to facilitate or mitigate unraveling. Read More

Audit Quality and Auditor Reputation: Evidence from Japan

High-quality external auditing is a central component of sound corporate governance, yet what determines audit quality? Douglas J. Skinner, of the University of Chicago Booth School of Business, and Suraj Srinivasan, of Harvard Business School, study the Japanese audit market, where recent events provide a powerful setting for investigating the effect of auditor reputation on audit quality absent litigation effects. Specifically, Skinner and Srinivasan analyze events surrounding the collapse of ChuoAoyama, the PricewaterhouseCoopers affiliate in Japan that was implicated in a massive accounting fraud at Kanebo, a large Japanese cosmetics company. Taken as a whole, the researchers' evidence provides support for the view that auditor reputation is important in an economy where the legal system does not provide incentives for auditors to deliver quality. Read More

Why Do Firms Use Non-Linear Incentive Schemes? Experimental Evidence on Sorting and Overconfidence

The use of "non-linear" performance-based incentive contracts is very common in many business environments. The most well-known example is salesperson compensation, though many other types of performance-based pay, including stock options, bonus systems based on defined metrics, and pay based on subjective performance, often exhibit non-linear characteristics. Research has demonstrated that non-linear incentives are highly distortionary because employees manipulate their work in order to maximize their pay. While some scholars have recommended that companies stop using non-linear incentives, little research has been done to investigate the possible benefits of non-linear schemes. In this paper, HBS professor Ian Larkin and Ross School of Business professor Stephen Leider (HBS PhD '09) explore the role that the behavioral bias of overconfidence may play in explaining the prevalence of non-linear incentive schemes. They conclude that the linearity or non-linearity of an incentive system could play an important role in sorting employees according to their level of confidence; in addition, there may be three possible benefits to having overconfident employees. Read More

One Report: Better Strategy through Integrated Reporting

Stakeholders expect it. And smart companies are doing it: integrating their reporting of financial and nonfinancial performance in order to improve sustainable strategy. HBS senior lecturer Robert G. Eccles and coauthor Michael P. Krzus explain the benefits and value of the One Report method. Plus: book excerpt from One Report: Integrated Reporting for a Sustainable Strategy. Read More

Matching Firms, Managers, and Incentives

Do different kinds of firm ownership drive the adoption of different managerial practices? HBS professor Raffaella Sadun and coauthors focus on the difference between the two most common ownership modes, family firms and firms that are widely held, namely that have no dominant owner. They find that the greater weight attached by family firms to benefits from control induces a conflict of interest between family-firm owners and high-ability, risk-tolerant managers. Read More

Conceptual Foundations of the Balanced Scorecard

This article documents the precursors of the Balanced Scorecard (BSC) strategic performance management tool and describes the evolution of the BSC since its introduction in 1992 in the Harvard Business Review. During the last 15 years, the BSC has been adopted by thousands of private, public, and nonprofit enterprises around the world. HBS professor Robert S. Kaplan, who created the concept and tool with David Norton, explains the roots and motivation for their original article as well as subsequent innovations that connect it to a larger management literature. Read More

The Many Faces of Nonprofit Accountability

Nonprofit leaders face multiple, and sometimes competing, accountability demands: from numerous actors (upward, downward, internal), for varying purposes (financial, governance, performance, mission), and requiring differing levels of organizational response (compliance and strategic). Yet is it feasible, or even desirable, for nonprofit organizations to be accountable to everyone for everything? The challenge for leadership and management is to prioritize among competing accountability demands. This involves deciding both to whom and for what they owe accountability. HBS professor Alnoor Ebrahim provides an overview of the current debates on nonprofit accountability, while also examining the tradeoffs inherent in a range of accountability mechanisms. Read More

A Reexamination of Tunneling and Business Groups: New Data and New Methods

"Tunneling" refers to efforts by firms' controlling owner-managers to take money for themselves at the expense of minority shareholders. Looking at emerging economies in general and at India in particular, HBS professor Jordan I. Siegel and doctoral student Prithwiraj Choudhury argue for a simultaneous analysis of corporate governance and strategic activity differences in order to reveal the quality of firm-level corporate governance. The development of rigorous methodology in corporate governance is not merely an academic issue but has enormous real-world consequences. It is critical that scholars gain deeper empirical and theoretical insights into the question of whether these business groups serve primarily as theft devices for the controlling owners, or whether they serve primarily as a positive force that enables the creation of scale and scope efficiencies. Read More

Will I Stay or Will I Go? Cooperative and Competitive Effects of Workgroup Sex and Race Composition on Turnover

Inequalities in the senior ranks by sex and race remain rampant in up-or-out knowledge organizations such as consulting firms, law firms, and universities. HBS professor Kathleen L. McGinn and Wharton School professor Katherine L. Milkman focus on patterns of voluntary and involuntary turnover over six years in one such organization to untangle the multiple ways in which social identity influences career mobility. Predicting that higher proportions of demographically similar supervisors will reduce the likelihood of subordinate turnover, while higher proportions of demographically similar peers will increase the likelihood of turnover, the researchers find evidence of the hypothesized effects. They suggest that integrating research about social cohesion and social comparison enhances understanding of racial and gender inequality within organizations and facilitates organizations' ability to reduce that inequality. Read More

To What Degree Does “Identity” Affect Economic Performance?

Summing up comments to his March column, Jim Heskett says perceptions vary widely on the issue of "identity" and economic performance, particularly as it applies to the U.S. What will it take to turn around negative trends in employee identity? (Forum now closed. Next forum begins April 2.) Closed for comment; 33 Comments posted.

Manager Visibility No Guarantee of Fixing Problems

Managers who merely put in time "walking the floor" are not doing enough when it comes to problem solving; in fact, it can make employees feel worse about their situation, says HBS professor Anita Tucker. Read More

The Mirroring Hypothesis: Theory, Evidence and Exceptions

In its simplest form, the mirroring hypothesis suggests that the organizational patterns of a development project, such as communication links, geographic collocation, and team and firm membership, correspond to the technical patterns of dependency in the system under development. According to the hypothesis, independent, dispersed contributors develop largely modular designs, while richly interacting, collocated contributors develop highly integral designs. Yet many development projects do not conform to the mirroring hypothesis. HBS doctoral graduate Lyra Colfer and professor Carliss Y. Baldwin synthesize observations from a large number of cases that violate the hypothesis to explain when and how development organizations can "break the mirror." Read More

The Outside-In Approach to Customer Service

Is your enterprise resilient or rigid? In this Q&A, HBS professor Ranjay Gulati, an expert on leadership, strategy, and organizational issues in firms, describes how companies can evolve through four levels to become more customer-centric. Plus: book excerpt from Reorganize for Resilience: Putting Customers at the Center of Your Business. Read More

Accountability and Control as Catalysts for Strategic Exploration and Exploitation: Field Study Results

The need for organizations to both exploit current resources and explore new opportunities is a central and long-standing theme in the literature of organizations. The challenge, of course, is that these two imperatives require very different structures and skills. Exploitation demands a focus on efficiency and effectiveness in executing preset plans and procedures. Exploration requires the ability to step outside these routines by emphasizing experimentation, creativity, and novelty. In this study, HBS professor Robert L. Simons focuses on the relationship between two organization design variables—span of control and span of accountability. Using data from 102 field studies, he illustrates how these variables can be manipulated by managers to tilt the balance toward either exploration or exploitation in response to different tasks, different organizational contexts, and changing competitive environments. Read More

Does Product Market Competition Lead Firms To Decentralize?

There is a widespread sense that over the last two decades firms have been decentralizing decisions to employees further down the managerial hierarchy. Economists have developed a range of theories to account for delegation, but there is less empirical evidence, especially across countries. This has limited the ability to understand the phenomenon of decentralization. Nicholas Bloom, HBS professor Raffaella Sadun, and John Van Reenen assembled a new data set on about 4,000 firms across 12 countries in Europe, North America, and Asia, and then measured the delegation of authority from central headquarters to local plant managers. Read More

Going Through the Motions: An Empirical Test of Management Involvement in Process Improvement

How can managers better lead their organizations to improve work processes? Describing their study of hospitals over an 18-month period, HBS professor Anita L. Tucker and Harvard School of Public Health professor Sara J. Singer detail how and why managers' taking action was more effective than their communicating about actions taken. Findings suggest, first, that taking action on known problems in specific work areas on at least a quarterly basis may improve the organizational climate for improvement. Second, the study indicates that managers would be well advised to take action-preferably substantive and intense action-in response to frontline workers' communications about problems. Overall, the research provides insight for senior managers who want to improve their organization's climate for process improvement. Read More

Sharpening Your Skills: Managing the Economic Crisis

The economic crisis is tapping the inner reserves of experienced leaders and introducing a new generation of managers to crisis management. These previous WK articles explore leadership, the role of the Board, the emotional needs of managers, and the risk to corporate giving programs. Read More

International Differences in the Size and Roles of Corporate Headquarters: An Empirical Examination

Are small headquarters more nimble and efficient than large ones? Not necessarily, according to HBS adjunct professor David Collis and coauthors David Young and Michael Goold. Even within a single industry in one country, the variance can be enormous: In Germany in the late 1990s, for instance, Hoechst, the chemical and pharmaceutical manufacturer, had only 180 people in the headquarters function at the same time that Bayer had several thousand. This paper seeks to fill gaps in the research by using a unique database of over 600 companies in seven countries to determine whether systematic differences in the size and roles of corporate headquarters between countries actually exist, and if so, how they differ. In particular, the authors examine whether there is a systematic difference between market- and bank-centered economies, and between developed and developing countries. Read More

Integrity: Without It Nothing Works

"An individual is whole and complete when their word is whole and complete, and their word is whole and complete when they honour their word," says HBS professor Michael C. Jensen in this interview that appeared in Rotman: The Magazine of the Rotman School of Management, Fall 2009. Jensen (and his coauthors, Werner Erhard and Steve Zaffron) define and discuss integrity ("a state or condition of being whole, complete, unbroken, unimpaired, sound, in perfect condition"); the workability that integrity creates for individuals, groups, organizations, and society; and its translation into organizational performance. He also discusses the costs of lacking integrity and the fallacy of using a cost/benefit analysis when deciding whether to honor your word. Read More

Should Immigration Policies Be More Welcoming to Low-Skilled Workers?

Immigration is a topic that stirs passions globally, judging from the responses to this month's column, says HBS professor Jim Heskett. Readers suggested ways to bring immigration policy into alignment with the reality of what is happening at borders and in workplaces around the world. (Online forum now closed. Next forum begins January 6.) Closed for comment; 43 Comments posted.

Management’s Role in Reforming Health Care

Health care managers are the missing link in debate over reform. Their skills and ideas are needed to sustain and improve upon multiple advances in the delivery of health care for the benefit of patients. An interview with HBS professor Richard M.J. Bohmer, MD, and an excerpt from his book Designing Care: Aligning the Nature and Management of Health Care. Read More

Walking Through Jelly: Language Proficiency, Emotions, and Disrupted Collaboration in Global Work

As organizations increasingly globalize, individuals are required to collaborate with coworkers across international borders. Many organizations are mandating English as the lingua franca, or common language, regardless of the location of their headquarters, to facilitate collaboration across national and linguistic boundaries. What is the emotional impact of lingua franca adoption on native and nonnative speakers who work closely together and often across national boundaries? This study examines the communication experience for native and nonnative English speakers in an organization that mandates English as the lingua franca for everyday use, and the impact of the lingua franca on collaboration among globally distributed coworkers. HBS professor Tsedal Neeley and coauthors describe in detail how emotions and actions were intertwined and evolved recursively as coworkers attempted to release themselves from unwanted negative emotions and inadvertently acted in ways that transferred negative experiences to their distant coworkers. Their findings have implications for managers who are charged with overseeing internationally distributed projects. Read More

Shareholders Need a Say on Pay

"Say on pay" legislation now under debate Washington D.C. can be a useful tool for shareholders to strengthen the link between CEO pay and performance when it comes to golden parachutes, says Harvard Business School professor Fabrizio Ferri. Here's a look at how the collective involvement of multiple stakeholders could shape the future of executive compensation. Read More

Estimating the Effects of Large Shareholders Using a Geographic Instrument

Are large shareholders good monitors of management? A public firm's shareholders have extensive legal control rights in the corporation, but in practice much of this control is delegated to managers. In companies with small, dispersed shareholders, owners may find it costly to coordinate and exercise monitoring and control, leaving management with considerable discretion. Large shareholders, however—by concentrating a block of shares in the hands of a single decision-maker—may play a beneficial role in facilitating effective owner control. Yet large shareholders are not without their costs. HBS professor Bo Becker and coauthors develop and test a framework to quantify the impact of large owners (individual non-managerial blockholders, not mutual funds or other institutions) on several key aspects of firm behavior. They show that such shareholders play an important role for corporate governance in sizable U.S. public firms, and can affect several firm policies. Read More

Transforming Giants

A new type of 21st century company is emerging that is transforming how business is conducted. These are values-driven companies that define a core set of values and rely on these values in making all strategic decisions. Read More

Specific Knowledge and Divisional Performance Measurement

Performance measurement is one of the critical factors that determine how individuals in an organization behave. It includes subjective as well as objective assessments of the performance of both individuals and subunits of an organization such as divisions or departments. Besides the choice of the performance measures themselves, performance evaluation involves the process of attaching value weights to the different measures to represent the importance of achievement on each dimension. This paper examines five common divisional performance measurement methods: cost centers, revenue centers, profit centers, investment centers, and expense centers. The authors furnish the outlines of a theory that attempts to explain when each of these five methods is likely to be the most efficient. Read More

The Vanguard Corporation

In the book SuperCorp, Rosabeth Moss Kanter lays out a model for 21st-century companies that care as much about creating value for society as they do value for shareholders and employees. The best part: It pays to be good. Read More

Improving Accountability at the World Bank

Its legitimacy and effectiveness on the line, the World Bank faces criticism from its constituents and the civil society organizations that serve them. What options and arguments for accountability make the most sense for global governance institutions like the World Bank? HBS professor Alnoor Ebrahim testified before the U.S. House of Representatives on paths to change. Read More

Operational Failures and Problem Solving: An Empirical Study of Incident Reporting

Operational failures occur within organizations across all industries, with consequences ranging from minor inconveniences to major catastrophes. How can managers encourage frontline workers to solve problems in response to operational failures? In the health-care industry, the setting for this study, operational failures occur often, and some are reported to voluntary incident reporting systems that are meant to help organizations learn from experience. Using data on nearly 7,500 reported incidents from a single hospital, the researchers found that problem-solving in response to operational failures is influenced by both the risk posed by the incident and the extent to which management demonstrates a commitment to problem-solving. Findings can be used by organizations to increase the contribution of incident reporting systems to operational performance improvement. Read More

Excessive Executive Pay: What’s the Solution?

Now that the worst fears about economic meltdown are receding, what should be done about lingering issues such as over-the-top executive compensation? Does government have a role? Is it time we rethink corporate governance? HBS faculty weigh in. From the HBS Alumni Bulletin. Read More

Perspectives from the Boardroom--2009

Chief executives and regulators have been blamed for the current economic crisis, but in some ways what is surprising is that boards have generally escaped notice. Clearly the experience of corporate boards in the downturn has not been explored. To understand what transpired in the boardrooms of complex companies, and to offer a prescription to improve board effectiveness, eight senior faculty members of the HBS Corporate Governance Initiative talked with 45 prominent directors about what has happened to their companies and why. These directors, who serve on the boards of financial institutions and other complex companies, were asked two broad questions: How well did their boards function before the recession? And, what do they believe should be improved as they look to the future?

This white paper [PDF] first explains how the interviewees characterize the strengths of their boards, then examines in depth six areas in which they identified shortcomings or needs for improvement: 1) clarifying the board's role; 2) acquiring better information and deeper knowledge of the company; 3) maintaining a sound relationship with management; 4) providing oversight of company strategy; 5) assuring management development and succession; 6) improving risk management. Finally, the paper discusses two issues that appeared not to trouble the interviewees but that the public feels are important: executive compensation and the relationship between the board and shareholders. This paper was written by Jay Lorsch with the assistance of Joseph Bower, Clayton Rose, and Suraj Srinivasan. The interviews were conducted by Joseph Bower, Srikant Datar, Raymond Gilmartin, Stephen Kaufman, Rakesh Khurana, Jay Lorsch, and Clayton Rose. Read More

Are Retention Bonuses Worth the Investment?

There is a time and place for retention bonuses but they should be used sparingly, wrote many respondents to this month's column, says Professor Jim Heskett. Others challenged the value of bonuses, and suggested compelling alternatives. (Online forum now closed; next forum begins October 2.) Closed for comment; 42 Comments posted.

SuperCorp: Values as Guidance System

In her new book SuperCorp, professor Rosabeth Moss Kanter details how vanguard companies such as IBM, Cemex, and Omron are rewriting the nature of the business enterprise and how firms will gain sustainable prosperity in the 21st century. Read our excerpt. Read More

Culture Clash: The Costs and Benefits of Homogeneity

Culture clash is often considered a major cause for the failing of mergers and acquisitions, and for this reason it is an important consideration for corporate strategy. Although less publicized, culture clash has also plagued alliances and long-term market relationships. It provides a unique lens on the performance effects of corporate culture itself, and thus culture's potential to generate a competitive advantage. This paper develops an economic theory of the costs and benefits of corporate culture—in the sense of shared beliefs and values—in order to study the effects of culture clash in mergers and acquisitions. Read More

High Commitment, High Performance Management

High commitment, high performance organizations such as Southwest Airlines, Johnson & Johnson, McKinsey, and Toyota effectively manage three paradoxical goals, says HBS professor Michael Beer. His new book explains what all companies can learn. Q&A Read More

Why Can’t Americans Get Health Care Right?

Change is desperately needed, agreed readers of Professor Jim Heskett's online forum. But how to make that change remains in doubt. What can Americans learn from solutions implemented by other countries? (Forum now closed; next forum begins September 4.) Closed for comment; 103 Comments posted.

Fluid Teams and Fluid Tasks: The Impact of Team Familiarity and Variation in Experience

In the context of team performance, common wisdom suggests that performance is maximized when individuals complete the same work with the same people. Although repetition is valuable, at least up to a point, in many settings such as consulting, product development, and software services organizations consist largely of fluid teams executing projects for different customers. In fluid teams, members bring their varied experience sets together and attempt to generate innovative output before the team is disassembled and its individual members move on to new projects. Using the empirical setting of Wipro Technologies, a leading firm in the Indian software services industry, this study examines the potential positive and negative consequences of variation in team member experience as well as how fluid teams may capture the benefits of variation while mitigating the coordination costs it creates. Read More

Firsthand Experience and the Subsequent Role of Reflected Knowledge in Cultivating Trust in Global Collaboration

How can workers better collaborate across vast geographical distances? Distributed collaboration—in which employees work with, and meaningfully depend on, distant colleagues on a day-to-day basis—allows firms to leverage their intellectual capital, enhance work unit performance, face ever-changing customer demands more fluidly, and gain competitive advantage in a dynamic marketplace. Research over the last decade, however, has provided mounting evidence that while global collaboration is a necessary strategic choice for an ever-increasing number of organizations, socio-demographic, contextual, and temporal barriers engender many interpersonal challenges for distant coworkers and are likely to adversely affect trust between and among workers across sites. In this paper that examines employee relations at a multinational organization, HBS professor Tsedal Beyene and MIT Sloan School of Management professor Mark Mortensen find that firsthand experience in global collaborations is a crucial means of engendering trust from shared knowledge among coworkers. Their findings reinforce the important role of others' perceptions in our own self-definition, and suggest a means of addressing some of the problems that arise in cross-cultural global collaborations. Read More

Business Summit: Managing Human Capital—Global Trends and Challenges

Human capital needed for globalization is lacking. Progress is required in important areas such as elevating more women to leadership positions, according to panelists at the HBS Business Summit. Read More

Performance Pressure as a Double-Edged Sword: Enhancing Team Motivation While Undermining the Use of Team Knowledge

Why do teams often fail to use their knowledge resources effectively even after they have correctly identified the experts among them? Project teams are a prominent feature of the knowledge-based economy, and member expertise has long been recognized as an important resource that can greatly affect team performance, but only to the extent that it is accurately recognized and used to accomplish the objective. The step between recognizing others' expertise and then actually applying it to achieve a collective outcome, however, is highly problematic: Even when individuals know who holds relevant task expertise, they are often unwilling or unable to give the experts appropriate influence over the group process and outcomes. HBS professor Heidi K. Gardner takes a multidisciplinary approach to develop theory explaining how interpersonal dynamics in teams affect members' use of each other's distinct knowledge, ultimately leading to differential performance outcomes. Read More

Conducting Layoffs: ’Necessary Evils’ at Work

"The core challenge for everyone who performs necessary evils comes from having to do two seemingly contradictory things at once: be compassionate and be direct," say Joshua D. Margolis of Harvard Business School and Andrew L. Molinsky of Brandeis University International Business School. Their research sheds light on best practices—typically overlooked—for the well-being of those who carry out these emotionally difficult tasks. Q&A Read More

On Good Scholarship, Goal Setting, and Scholars Gone Wild

When confronted by anecdotal evidence and some causal evidence, how should scholars—and indeed businesses and society—react? In this response to a critique in the journal Academy of Management Perspectives, the authors articulate the aims of their article "Goals Gone Wild: How Goals Systematically Harm Individuals and Organizations," describe points of disagreement with the critics, offer a definition of good scholarship, and suggest a program of research for future studies of goal setting. Read More

Sharpening Your Skills: Managing Teams

The ability to lead teams is fast becoming a critical skill for all managers in the 21st century. Here are four HBS Working Knowledge stories from the archives that address everything from how teams learn to turning individual performers into team players. Read More

Do Innovation and Entrepreneurship Have to Be Incompatible with Organization Size?

Like a good case study, this month's question divided respondents nearly down the middle, says professor Jim Heskett. Can managers lead both a large, established organization and encourage intrapreneurial effort inside it? Readers weighed in. (Online forum now closed. Next forum begins June 5.) Closed for comment; 81 Comments posted.

Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting

For decades, goal setting has been promoted as a halcyon pill for improving employee motivation and performance in organizations. Advocates of goal setting argue that for goals to be successful, they should be specific and challenging, and countless studies find that specific, challenging goals motivate performance far better than "do your best" exhortations. The authors of this article, however, argue that it is often these same characteristics of goals that cause them to "go wild." Read More

Where is Home for the Global Firm?

Global markets are changing the relationship between firms and nation-states in important ways, says HBS professor Mihir A. Desai. His new working paper, "The Decentering of the Global Firm," offers a practical framework for business leaders to think strategically about where to locate their company's financial and legal homes, and managerial talent. Q&A with Desai. Read More

The Value of a ‘Portable’ Career

Can you predict whether star performers will replicate their success in a new environment? HBS professor Boris Groysberg and colleagues ask this question of professional football teams, and the results offer valuable lessons for star performers and hiring executives of business firms, too. Q&A with Groysberg, Lex Sant, and Robin Abrahams. Read More

10 Reasons to Design a Better Corporate Culture

Organizations with strong, adaptive cultures enjoy labor cost advantages, great employee and customer loyalty, and a smoother on-ramp in leadership succession. A book excerpt from The Ownership Quotient: Putting the Service Profit Chain to Work for Unbeatable Competitive Advantage by HBS professors Jim Heskett and W. Earl Sasser and coauthor Joe Wheeler. Read More

The Surprisingly Successful Marriages of Multinationals and Social Brands

What happens when small iconic brands associated with social values—think Ben & Jerry's—are acquired by large concerns—think Unilever? Can the marriage of a virtuous mouse and a wealthy elephant work to the benefit of both? Professors James E. Austin and Herman B. "Dutch" Leonard discuss their recent research. Read More

Quality Management and Job Quality: How the ISO 9001 Standard for Quality Management Systems Affects Employees and Employers

Nearly 900,000 organizations in 170 countries have adopted the ISO 9001 Quality Management System standard. This is a remarkable figure given the lack of rigorous evidence regarding how the standard actually affects organizational practices and performance. Proponents claim that quality programs such as ISO 9001 improve both management practices and production processes, and that these improvements, in turn, will increase both sales and employment. Documenting and training proper work practices can also reduce potentially dangerous "work arounds," and thus could reduce the risk of workplace accidents and injuries. Some critics, on the other hand, point to the potential for quality programs such as ISO 9001 to be detrimental to employees by documenting work practices, resulting in routinization that may reduce skill requirements and increase repetitive motion injuries. This paper reports the first large-scale evaluation of how ISO 9001 affects workers, focusing in particular on employment, total payroll, average annual earnings, and workplace health and safety. Read More

Technology, Identity, and Inertia through the Lens of ‘The Digital Photography Company’

Why do established firms find some technological change so challenging? While existing research has identified numerous sources of inertia in established firms exploring new technological domains, identity is a critical piece of the puzzle. As the core essence of an organization, identity directs and constrains action. The routines, procedures, capabilities, knowledge base, and beliefs of an organization all reflect its identity. So when a technology is identity-challenging to an organization—when pursuing it would violate the core beliefs of both insiders and outsides about what the firm represents—organizations face significant obstacles to adopting it. This study by Tripsas highlights the importance of recognizing and evaluating the tradeoffs associated with technological opportunity and organizational identity. Read More

Variation in Experience and Team Familiarity: Addressing the Knowledge Acquisition-Application Problem

Team familiarity helps team members successfully locate knowledge within a group, share the knowledge they possess, and respond to the knowledge of others. While team familiarity may help all teams to better coordinate their actions, it may play a particularly important role for teams with individuals looking to apply knowledge from their varied experience. This possibility leads to the question that provides the foundation for this paper: Does team familiarity moderate the relationship between variation in experience and performance? Prior research attempting to link variation in experience and performance has found effects ranging from positive to neutral to negative. Huckman and Staats explain these differential results by drawing on related work from learning, knowledge management, and social networking. Read More

Responding to Public and Private Politics: Corporate Disclosure of Climate Change Strategies

Social activists are increasingly attempting to directly influence corporation behavior, using tactics such as shareholder resolutions and product boycotts to encourage companies to improve their environmental performance, increase their transparency about operations and governance, and more stringently monitor their suppliers' labor practices. This paper examines how companies are responding to these pressures, in the context of requests for greater transparency about the risks climate change poses to their business—and the strategies these companies have developed to address these risks. This paper reveals that a company is more likely to comply with social activists' requests for greater transparency about climate change when the company itself, or other companies in its industry, has been targeted by formal shareholder resolutions on environmental topics—and when the company is facing potential regulations restricting greenhouse gas emissions. These findings demonstrate that changes in corporate practices may be sparked by both social activists and by the mere threat of government regulations, and that challenges mounted against a specific firm may inspire broader changes within its industry. Read More

How Economics May Lead to Better Football Games

When economists watch football games they see more than flying pigskin and stadiums overflowing with fans. In the case of U.S. college football, Harvard Business School professor Alvin E. Roth along with Guillaume R. Fréchette and M. Utku Ünver studied the timing of team selection for championship bowls. What they found: Good teams are much better matched up than they used to be, and there are implications beyond sports. Q&A with Al Roth. Read More

CEO and CFO Career Penalties to Missing Quarterly Analysts Forecasts

(Previous title: "CEO and CFO Career Consequences to Missing Quarterly Earnings Benchmarks.") This paper investigates whether the failure to meet quarterly earnings benchmarks such as the analysts' consensus forecast matters to CEO and CFO careers, after controlling for both operating and stock return performance and the magnitude of the earnings "surprise" revealed at the earnings announcement. In particular, it evaluates a comprehensive set of career consequences such as the impact on compensation, in the form of bonus and equity grants, and the dismissal of both the CEO and the CFO, conditioned on the failure to meet quarterly earnings benchmarks. Read More

The Silo Lives! Analyzing Coordination and Communication in Multiunit Companies

A new Harvard Business School working paper looks inside the communications "black box" of a large company to understand who talks to whom, and finds the corporate silo as impenetrable as ever. Q&A with professor Toby E. Stuart. Read More

The Internalization of Advertising Services: An Inter-Industry Analysis

When are advertisers more likely to establish and maintain their own in-house agencies? Despite occasional indications to the contrary, such self-sufficiency has long been viewed by industry observers and scholars as more the exception than the rule in the U.S. advertising and marketing services business. With the background that vertical integration in this industry is a neglected domain of research, analysis by HBS professor emeritus Alvin J. Silk and colleagues suggests that while most large U.S. advertisers rely primarily on independent agencies for advertising services, many other advertisers operate in-house advertising units. Read More

Wellsprings of Creation: Perturbation and the Paradox of the Highly Disciplined Organization

Many organizations struggle to balance the conflicting demands of efficiency and innovation. Organizations can become more efficient in the short run by replacing costly, unpredictable problem solving activity with consistent, streamlined routines. However, this efficiency often comes at the cost of long-run adaptability. The more organizational activity is dominated by stable routines, the less the organization learns, and the more rigid and inflexible it becomes. To escape this fate, the authors of this working paper theorize that highly disciplined organizations must actively engage in strategic and selective perturbation of established routines. A perturbation interrupts an established routine and creates an opportunity to innovate and learn. Using illustrations from Toyota, the authors investigate the conditions under which perturbations can sustain exploration in highly disciplined organizations. Read More

Communication (and Coordination?) in a Modern, Complex Organization

Coordination, and the communication it implies, is central to the very existence of organizations. Despite their fundamental role in the purpose of organizations, scholars have little understanding of actual interaction patterns in modern, complex, multiunit firms. To open the proverbial "black box" and begin to reveal the internal wiring of the firm, this paper presents a detailed, descriptive analysis of the network of communications among members of a large, structurally, functionally, geographically, and strategically diverse firm. The full data set comprises more than 100 million electronic mail messages and over 60 million electronic calendar entries for a sample of more 30,000 employees over a three-month period in 2006. Read More

A Replication Study of Alan Blinder’s “How Many U.S. Jobs Might Be Offshorable?”

The movement of business activity from developed economies to developing economies—commonly called offshoring—has become the focus of heated debates. Behind these debates lies a pivotal question of scale: How much business activity and how many jobs are at stake? Official statistics are nearly silent, and private-sector researchers vary widely in their estimates of the number of U.S. jobs that have moved offshore, will move offshore, or could move offshore. In an effort to address this gap in prior literature, Princeton economist Alan Blinder released an innovative working paper in 2007 in which he personally reviewed more than 800 occupations in the United States, assessed the "offshorability" of each, and used the evaluations to estimate the total number of U.S. jobs that might be offshorable. Here, HBS research associate Troy Smith and Professor Jan W. Rivkin describe an online exercise that allowed 152 teams of HBS MBA students, collectively, to recreate Blinder's study and to develop insights about the future of offshoring. Read More

What Should Employers Do about Health Care?

Companies that cut health care costs without improving the overall value of care eventually pay a price in terms of employee absenteeism and chronic ailments. According to Harvard University professor and strategy expert Michael E. Porter and coauthors, the best way to truly reduce health care costs is to improve quality. Read More

Innovation Corrupted: How Managers Can Avoid Another Enron

The train wreck that was Enron provides key insights for improving corporate governance and financial incentives as well as organizational processes that strengthen ethical discipline, says HBS professor emeritus Malcolm S. Salter. His new book, Innovation Corrupted: The Origins and Legacy of Enron's Collapse, is a deep reflection on the present and future of business. Read More

Evaluating the Impact of SA 8000 Certification

The Social Accountability 8000 Standard (SA 8000), along with other types of certification standards and corporate codes of conduct, represents a new form of voluntary "private-governance" of working conditions in the private sector, initiated and implemented by companies, labor unions, and nongovernmental activist groups cooperating together. There is an ongoing debate about whether this type of governance represents real and substantial progress or mere symbolism. This paper reviews prior evaluations of private codes of conduct governing workplace conditions, including Ethical Trading Initiative's Base Code, Nike's Code of Conduct, and Fair Trade certification. The authors then discuss several best practices that should be employed in future evaluations of such codes of conduct. Read More

Coming Clean and Cleaning Up: Is Voluntary Disclosure a Signal of Effective Self-Policing?

This paper demonstrates some of the benefits and limitations of industry self-policing programs. Many self-regulation programs are operated exclusively by the private sector, often in the hope of garnering goodwill with consumers or staving off more stringent government regulation. Less well known are voluntary self-regulation programs operated by government regulators seeking innovative approaches to further regulatory objectives and to stretch shrinking agency budgets. Little is known about the effects of these programs, or how they might contribute to the overall effectiveness of a regulatory regime. Michael Toffel and Jodi Short seek to determine whether the self-policing required under the U.S. Environmental Protection Agency's Audit Policy affects the behavior of regulators and participating facilities and the relationship between them. Specifically, the researchers examine whether self-policing is associated with improved environmental performance at these facilities and whether regulators reduce their scrutiny over self-policing facilities. Read More

Organizational Design and Control across Multiple Markets: The Case of Franchising in the Convenience Store Industry

Chain organizations operate units that are typically dispersed across different types of markets, and thus serve significantly different customer bases. Such "market-type dispersion" is likely to compromise the headquarters' ability to control its stores for two reasons: Relative differences in local conditions make it difficult to monitor a store manager's behavior, and a chain with wide-ranging customer bases will have a harder time serving its customers and will need to rely more heavily on store managers' ability to adapt to local needs. This study identifies market-type dispersion as a factor that is systematically related to firms' organizational design choices. The results may help managers and consultants who deal with control challenges related to a chain's geographic expansion into different markets. Read More

The New Math of Customer Relationships

Harvard Business School professor emeritus James L. Heskett has spent much of his career exploring how satisfied employees and customers can drive lifelong profit. Heskett and his colleagues will soon introduce a new concept into the business management literature: customer and employee "owners." Read More

The Surprising Right Fit for Software Testing

Software analysts and programmers live to innovate—but hate to run tests. Yet top-notch testing saves many a company money when bugs are caught early. A new case coauthored by HBS professor Robert D. Austin describes the secret behind a Danish consultancy's success: The majority of its testers have Asperger syndrome or a form of autism spectrum disorder. Read More

Sharpening Your Skills: Disaster!

Disaster brings out the best in some, the worst in others. But every disaster tells a tale we can learn from. Here we look at lessons learned from failures involving polar explorer Sir Ernest Shackleton, NASA, and a Mount Everest climbing team. Read More

Where Will Management Innovation Take Us?

Management could change a lot in the coming years, says HBS professor Jim Heskett. A few reasons: continued development of the Internet and the transparency and communities it has spawned, and new attitudes toward work. But will innovation in management mostly be confined to entrepreneurs? What do you think? Online forum now closed. Closed for comment; 60 Comments posted.

Board of Directors’ Responsiveness to Shareholders: Evidence from Shareholder Proposals

How well do boards of directors respond to shareholder concerns? The recent wave of corporate scandals has raised questions about the effectiveness of boards in their monitoring role. The subsequent reform debate focused on enhancing boards' independence from management, increasing their accountability to shareholders through a different board election system, and improving boards' internal processes and practices. One direct example of this alleged lack of responsiveness to shareholder concerns is the historically low frequency of adoption of non-binding shareholder proposals receiving a majority vote, even when the vote is overwhelmingly in favor of the proposal and has been repeated for a number of years. Ignoring majority-vote shareholder proposals may be increasingly expensive, however, both for the targeted firms and for the individual directors. HBS professor Ferri and coauthors analyze the frequency of implementation of non-binding, majority-vote shareholder proposals and examine the determinants and consequences of the boards' implementation decisions. Read More

Unconventional Insights for Managing Stakeholder Trust

Most organizations understand the need to manage stakeholder trust. The bad news: Most organizations don't really understand how to manage the difficult job effectively. However, for those companies wishing to reap the benefits of improved cooperation with suppliers, increased motivation and productivity among employees, enhanced loyalty among customers, and higher levels of support from investors, managing stakeholder trust is a prudent, if not critical investment. Trust management may require an appreciation for some unconventional insights regarding the appropriate investment of resources. Stakeholders differ in regard to the kinds and degrees of vulnerability they face; what they need to believe before they will trust also differs. Would-be trust managers will be wise to consider these varying needs and to anticipate the tradeoffs that exist in strengthening relationships with specific stakeholders. Read More

The Small World of Investing: Board Connections and Mutual Fund Returns

How does information flow in security markets, and how do investors receive information? In the context of information flow, social networks allow a piece of information to flow along a network often in predictable paths. HBS professors Lauren Cohen and Christopher Malloy, along with University of Chicago colleague Andrea Frazzini, studied a type of dissemination through social networks tied to educational institutions, examining the information flow between mutual fund portfolio managers and senior officers of publicly traded companies. They then tested predictions on the portfolio allocations and returns earned by mutual fund managers on securities within and outside their networks. Read More

See No Evil: When We Overlook Other People’s Unethical Behavior

Even good people sometimes act unethically without their own awareness. This paper explores psychological processes as they affect the ethical perception of others' behavior, and concludes with implications for organizations. First, there is a tendency for people to overlook unethical behavior in others when recognizing such behavior would harm them. Second, people might readily ignore unethical behavior when others have an agent do their dirty work for them. Third, gradual moral decay leads people to grow comfortable with behavior to which they would otherwise object. Fourth, the tendency to value outcomes over processes can lead us to accept unethical processes for far too long. Read More

What Is Management’s Role in Innovation?

Online forum closed. It's an open question whether management, as it is currently practiced, contributes much to creativity and innovation, says HBS professor Jim Heskett. What changes will allow managers, particularly in larger organizations, to add value to the creative process? What do you think? Closed for comment; 93 Comments posted.

Accountability in Complex Organizations: World Bank Responses to Civil Society

What difference has civil society activism made to the World Bank? More specifically, how and to what extent have civil society actors furthered the accountability of the World Bank to its constituents? The case of the World Bank is important for 2 main reasons: The Bank has not only been a major target of civil society activism, but it has also been comparatively responsive in developing various forms of engagement with civil society, possibly more than any other multilateral institution. This paper describes key accountability challenges facing the institution and reviews accountability mechanisms currently in place at 4 different organizational levels. It then explores efforts from civil society groups to increase accountability, and notes the successes and failures of these reform efforts. Read More

Growing CEOs from the Inside

Who is the best CEO candidate? An insider with intimate knowledge of your company, or an outsider who is ready to put sacred cows out to pasture? The answer, says HBS professor Joseph L. Bower, is both. In this Q&A, he discusses his new book, The CEO Within, and why inside-outsiders are the key to succession planning. Read More

How Firms Respond to Being Rated

(Previously titled "Shamed and Able: How Firms Respond to Information Disclosure.") As national governments lose the ability to regulate business activities, interest groups and concerned citizens are turning to private governance to monitor global supply chains, ensure product safety, and provide incentives for improved corporate environmental performance. Proponents hope that private governance incentives will encourage firms to act responsibly, but critics worry that these developments will merely forestall necessary government regulation. Social ratings provide one way to benchmark and compare firms' social performance. But are such ratings schemes effective? This paper investigates the effects of third-party environmental ratings, and finds that firms are particularly likely to respond to such ratings by improving their environmental performance when two circumstances arise simultaneously: (1) when the ratings threaten their legitimacy, and (2) when they face relatively low cost improvement opportunities. Read More

The Causes and Consequences of Industry Self-Policing

The corporate confession is a paradox, as described in this paper aimed at managers, policymakers, and citizens. Why would a firm that identifies regulatory compliance violations within its own operations turn itself in to regulators, rather than quietly fix the problem? Economic intuition suggests that firms will self-disclose violations only when the cost of doing so is less than the expected cost of hiding violations. However, while the cost of doing so can be increased regulatory scrutiny, there is often almost no expected cost of hiding violations. To explore the complex behavior of corporate self-disclosure, Short and Toffel conducted a large-scale analysis in the context of the U.S. Environmental Protection Agency's Audit Policy. They investigated what factors lead organizations to self-disclose violations that went undiscovered by regulators, and asked whether these self-disclosing organizations were obtaining any unofficial regulatory benefits above and beyond formal penalty mitigation. They also evaluated whether self-policing promotes the regulatory objective of improving compliance records. Read More

Team Familiarity, Role Experience, and Performance:Evidence from Indian Software Services

In contexts ranging from product development to service delivery, a significant amount of an organization's work is conducted by "fluid teams" that strive for innovative output. Fluid project teams exist only for the duration of a single project, and are comprised of members who may join or leave a team during the course of a project. In such settings, simple measures of cumulative output may not accurately capture team experience, particularly when changes in team composition are substantial over time. This study of an Indian software services firm, Wipro Technologies, considers an approach for capturing the experience held by fluid teams. It extends the concept of team fluidity in a way that allows for greater granularity in the measurement of team experience and a finer understanding of the determinants of team performance. Read More

Encouraging Dissent in Decision-Making

Our natural tendency to maintain silence and not rock the boat, a flaw at once personal and organizational, results in bad—sometimes deadly—decisions. Think New Coke, The Bay of Pigs, and the Columbia space shuttle disaster, for starters. Here's how leaders can encourage all points of view. Read More

Mattel: Getting a Toy Recall Right

Mattel has been criticized heavily for having to recall not once but twice in as many weeks 20 million toys manufactured in China. But Mattel also deserves praise for stepping up to its responsibilities as the leading brand in the toy industry. Harvard Business School professor John Quelch examines what Mattel did right. Read More

The Hedge Fund as Activist

Do hedge funds improve management of the companies they invest in? A new study by Harvard Business School professor Robin Greenwood and coauthor Michael Schor argues that, in fact, hedge funds create shareholder value through anticipation of change, not necessarily delivering it. Read More

HBS Cases: Using Investor Relations Proactively

Investor relations has a delicate balancing act. It communicates with stakeholders, of course, but can also help employees take a step back and analyze their firm as outsiders do. Harvard Business School's Gregory S. Miller, Vincent Dessain, and Daniela Beyersdorfer explain where IR is going, with energy giants BP and Total leading the way. Read More

Improving Patient Outcomes: The Effects of Staff Participation and Collaboration in Healthcare Delivery

Health-care organizations have a well-documented, industry-wide need to improve their processes. To that aim, the Institute of Medicine has made at least 2 recommendations that focus on front-line staff—physicians, nurses, and respiratory therapists. The first recommendation states that front-line staff should be involved in unit decision-making and the design of work processes and workflow (participation). The second emphasizes respectful interactions among front-line staff, including information-sharing and coordinating activities to achieve organizational goals (collaboration). This study provides preliminary supporting evidence for the Institute of Medicine's recommendations to use a dual, front-line strategy of participation and collaboration to improve patient outcomes. Read More

How Will Millennials Manage?

Gen Yers or "millennials"—those born beginning in the late 1970s—are generally bright, cheery, seemingly well-adjusted, and cooperative, says Jim Heskett. Their work styles are sometimes confounding, though. As managers, how will they shape organizations of the future? Online forum now closed. Closed for comment; 112 Comments posted.

HBS Cases: How Wikipedia Works (or Doesn’t)

For HBS professor Andrew McAfee, Wikipedia is a surprisingly high-quality product. But when his concept of "Enterprise 2.0" turned up on the online encyclopedia one day—and was recommended for deletion—McAfee and colleague Karim R. Lakhani knew they had the makings of an insightful case study on collaboration and governance in the digital world. Read More

Leading and Creating Collaboration in Decentralized Organizations

No matter how a multi-divisional organization is designed, it will need to find effective ways for its units to spontaneously and responsively cross boundaries. This paper discusses 3 key barriers to collaboration and information-sharing within an organization, and offers 3 strategies to overcome them. Read More

How Should Pay Be Linked to Performance?

Online forum now CLOSED. Professor Jim Heskett sums up 98 reader responses from around the world. As he concludes, is there another subject as important as this one about which we assume so much and know so little? Closed for comment; 98 Comments posted.

Organizational Designs and Innovation Streams

Ambidextrous organizational designs are those that sustain current success while simultaneously building new products, services, or processes. This research looks at a sample of 13 business units and describes the relations between alternative organizational designs and innovation streams. These business units used 4 distinct organizational designs in service of innovating and improving existing products: functional, cross-functional, spinouts, and ambidextrous. The researchers also used longitudinal data in order to explore how designs evolve over time and how design transitions affect innovation success. Read More

Ambidexterity as a Dynamic Capability: Resolving the Innovator’s Dilemma

Can organizations adapt and change—and if so, how does this occur? There are two major camps in the research on organizational change: those that argue for adaptation, and those that argue that as environments shift, inert organizations are replaced by new forms that better fit the changed context. There are data to support both arguments. This paper discusses the idea and practicality of ambidexterity and shows how the ability to simultaneously pursue emerging and mature strategies is a key element of long-term success. Read More

Self-Regulatory Institutions for Solving Environmental Problems: Perspectives and Contributions from the Management Literature

What role can business managers play in protecting the natural environment? Academic research on when it might "pay to be green" has advanced understanding of how and when firms achieve sustained competitive advantage. The focus of such research, however, has begun to change in light of limits to available "win-win" opportunities and to gaps in regulation. This paper, intended as a book chapter, reviews current literature and explores the potential of self-regulatory institutions to solve environmental problems. Read More

The Key to Managing Stars? Think Team

Stars don't shine alone. As Harvard Business School's Boris Groysberg and Linda-Eling Lee reveal in new research, it is imperative that top performers as well as their managers take into account the quality of colleagues. Groysberg and Lee explain the implications for star mobility and retention in this Q&A. Read More

Are Great Teams Less Productive?

While studying teamwork, Harvard Business School professor Amy Edmondson chanced upon a seeming paradox: Well-led teams appeared to make more mistakes than average teams. Could this be true? As it turned out, good teams, which value communication, report more errors. In a recent research paper Edmondson and doctoral student Sara Singer explore this and other hidden barriers to organizational learning. Read More

Industry Self-Regulation: What’s Working (and What’s Not)?

Self-regulation has been all over the news, but are firms that adopt such programs already better on important measures like labor and quality practices? Does adopting a program help companies improve faster? In this Q&A, HBS professor Michael Toffel gives a reality check and discusses the trends for managers. Read More

Initiating Divergent Organizational Change: The Enabling Role of Actors’ Social Position

Does social position influence the ability to launch groundbreaking organizational projects? This study investigates that question as well as whether workers' social position in their professional field affects their ability to begin such projects. Using data based on more than ninety clinical managers in the United Kingdom's National Health Service, Battilana studied initiatives such as the development of an alternative to hospitalization for older people and another that would shift role division by transferring decision-making power from physicians to nurses. Her results indicate that social position is an important condition at the heart of organizational change. Read More

Managing Know-How

For many firms, the ability to create, organize, and disseminate know-how is a key factor in their ability to succeed. But should all companies engage in formal knowledge management? If not, which companies derive most value from a formal knowledge system? Conditional on implementing such a system, should the company focus more on learning from successes or learning from failures? Should such knowledge systems simply capture all experience, or should they be more selective? This paper develops and applies an economic framework to examine these questions. Read More

Is There Too Little “Know Why” In Business?

There's know-how in business and then there's "know why." Purpose is a powerful motivator on many levels, says Jim Heskett. Can we aspire to a strong sense of "know why" even if our organization is not out to change the world? What do you think? Online forum now open. Closed for comment; 83 Comments posted.

When Good Teams Go Bad

Know when teamwork doesn't work—and how to fix it. Professors Jeff Polzer and Scott Snook teach "The Army Crew Team" case and the dilemma faced by a rowing coach who has great individual parts but can't get them to synchronize. From HBS Alumni Bulletin. Read More

Learning from Private-Equity Boards

Boards of professionally sponsored buyouts are more informed, hands-on, and interventionist than public company boards. HBS professor emeritus Malcolm S. Salter argues that this board model could have helped Enron—and perhaps your company as well. Read More

The Challenge of Managing National Security

What can we learn from mistakes made in managing national intelligence before 9/11? Professor Jan Rivkin discusses the difficulties of integrating a highly differentiated organization, and the dangers of overcentralizing decision making. From HBS Alumni Bulletin. Read More

The Demise of Cost and Profit Centers

The Balanced Scorecard has proven to be a general and powerful performance management framework for units previously treated as profit and investment centers. The management control literature, however, identifies other organizational forms for decentralized units, including standard cost centers, revenue centers, and support units treated as discretionary expense centers. Starting from the example of a classic teaching case, Empire Glass Company, Kaplan explains how strategy maps and the Balanced Scorecard transform cost, revenue, and discretionary expense centers into strategic business units in their own right. Read More

Grooming Next-Generation Leaders

Organizations succeed by identifying, developing, and retaining talented leaders. Professors W. Earl Sasser and Das Narayandas, who teach leadership development in one of Harvard Business School's Executive Education programs, discuss the fine points of leadership development. Read More

Three Perspectives on Team Learning: Outcome Improvement, Task Mastery, and Group Process

Organizations increasingly rely on teams to carry out critical strategies and operational tasks. How do teams learn, and what factors are most important to team learning? This paper reports on current perspectives and findings that address these questions, looking at empirical studies on team learning from three areas of research: outcome improvement, task mastery, and group process. Overall, Edmondson and coauthors characterize the nature of research to date and assemble what is known and unknown about the theoretically and practically important topic of team learning. Read More

When Learning and Performance are at Odds: Confronting the Tension

While most people agree that learning leads to improved performance, there are several ways in which learning and performance in organizations can be at odds. First, when organizations take on a new learning challenge, performance often suffers in the short term, because new behaviors or practices are not yet highly skilled. Second, by revealing and analyzing their failures and mistakes—a critical aspect of learning—individuals or work groups may appear to be performing less well than they would otherwise. This paper reviews research that describes the challenges of learning from failure in organizations, and argues that these challenges can be at least partly addressed by leadership that creates a climate of psychological safety and that promotes inquiry. Read More

What’s to Be Done About Performance Reviews?

What can we do to make performance reviews more productive and less distasteful? Should their objectives be scaled back to just one or two? Should they be disengaged from the determination of compensation and, if so, how? Closed for comment; 93 Comments posted.

Manly Men, Oil Platforms, and Breaking Stereotypes

Men who work in dangerous places often act invulnerable to prove their merit as workers and as men—objectives that can lead to decreased safety and efficiency. Professor Robin Ely and her team helicoptered to offshore oil platforms in order to understand "manly men" and how working environments can be changed to alter men's enactments of manhood. Read More

CEO Succession: The Case at Ford

When Ford Motor Company looked to replace Bill Ford as CEO, it turned not to another auto industry insider but instead to Boeing's Alan Mulally. We talk with Harvard Business School professor Joseph L. Bower to better understand Ford's move and the larger issues of CEO succession. Read More

Managing Functional Biases in Organizational Forecasts: A Case Study of Consensus Forecasting in Supply Chain Planning

By their very nature, consensus forecasts contain subjective elements that can compromise forecast accuracy. In this case study of the implementation of a sales and operations planning process in a consumer electronics company, Oliva and Watson studied the organizational and political dimensions of forecast generation and improvement. Ultimately, consensus forecasting constructively managed the influence of biases (such as overconfidence) on forecasts. Read More

Resolving Information Asymmetries in Markets: The Role of Certified Management Programs

Hundreds of thousands of firms rely on voluntary management programs to signal superior management practices to interested buyers, regulators, and local communities. Such programs typically address difficult-to-observe management attributes such as quality practices, environmental management, and human rights issues. The absence of performance standards and, in most cases, verification requirements has led critics to dismiss voluntary management programs as marketing gimmicks or "greenwash." Toffel examines whether a voluntary environmental management program with a robust verification mechanism attracts participants with superior environmental performance, and whether the program elicits improved environmental performance. His study focuses on the ISO 14001 Environmental Management System Standard, but the results have implications for voluntary management programs that govern many other difficult-to-observe management issues. Read More

Governing Sumida Corporation

In a new Harvard Business School case, Professor Lynn Paine and her colleagues explore the nature of corporate governance systems by studying Japanese electronics components maker Sumida Corp. CEO Shigeyuki Yawata looks to create a governance structure that would be transparent to investors and stakeholders worldwide. Read More

Fixing Executive Options: The Veil of Ignorance

Who says you can't rewrite history? Dozens of companies have been caught in the practice of backdating options for top executives. But this is only part of the problem with C-level compensation packages, which often motivate top executives to act in their own best interests rather than those of shareholders. Professors Mihir Desai and Joshua Margolis turn to philosopher John Rawls for a solution: Reward the execs, but don't give them the details. Read More

Racial Diversity Initiatives in Professional Service Firms: What Factors Differentiate Successful from Unsuccessful Initiatives?

What organizational factors are needed for racial diversity initiatives to succeed? While diversity continues to grow in importance in organizations, very little research has focused on the processes that underlie diversity management. Modupe Akinola and David A. Thomas propose a study intended to explore management initiatives that focus on racial diversity in professional service firms. Given that such firms rely on the high level of skills, expertise, and diverse perspectives offered by their professional staff, these firms may be ideal laboratories for examining diversity initiatives. Read More

Coerced Confessions: Self-Policing in the Shadow of the Regulator

Are regulators necessary? In industry, self-regulation and self-policing have been touted as a new paradigm of regulation that trades outmoded "command-and-control" strategies for industry-directed, market-based solutions. Short and Toffel's work, one of the first empirical studies to address self-policing behavior, examined a rich data set of companies' voluntary disclosures of regulatory violations under the U.S. Environmental Protection Agency's Audit Policy. The goal: to learn how violators behave when offered the option of voluntarily self-disclosing. The results show that even as corporations are given an expanding role in their own governance, the success of "voluntary" self-policing depends on the continued involvement of regulators with coercive powers. Read More

Rising CEO Pay: What Directors Should Do

Compensation committees are under pressure to keep CEO pay high, even as shareholders and the media agitate for moderation. The solution? Boards of directors need better competitive information and an ear to what shareholders are saying, says Jay Lorsch. Read More

Cross Functional Alignment in Supply Chain Planning: A Case Study of Sales & Operations Planning

Why do companies have such a hard time getting various functions to coordinate? Leitax, the pseudonym for a consumer electronics company studied by the authors, was suffering major supply-chain planning problems in 2002. The chief reason was typical to organizations: poor integration among the various functions. In response, the company introduced a system (rather than just a set of mechanisms) to better coordinate all processes and functions. The new system led to better collaboration from all participants, improved information-sharing, accurate and validated plans, and alignment in the execution of those plans. Read More

Are We Ready for Self-Management?

On its face, self-management looks like a "win-win" answer to the scarcity of good managers and the predominance of low-involvement entry-level jobs. But are sufficient numbers of entry-level employees ready for self-management? And is management ready? Closed for comment; 94 Comments posted.

The Compensation Game

Do CEOs deserve "star" compensation? The idea that CEO pay is driven by the invisible hand of market forces is a myth from which chief executives have long benefited, say Harvard professors Lucian Bebchuk and Rakesh Khurana. Read More

Enron Jury Sent the Right Message

Although the actions of Enron's executives were in many areas neither clearly legal nor illegal, jurors sent an unambiguous message that all executives should heed: Truth telling and ethical discipline are the cornerstone values in corporate governance. Read More

Corporate Governance Activists are Headed in the Wrong Direction

Corporate governance reformers are pushing the idea of majority voting for directors. But that solution, as Joseph Hinsey sees it, won't produce the desired outcome. The answer? Keep CEOs and board chairs separate. Read More

The Accidental Innovator

Many important innovations are the byproduct of accidents—the key is to be prepared for the unexpected. Professor Robert D. Austin discusses his research and practical implications on the concept of accidental innovation. Read More

Why CEOs Are Not Plug-and-Play

Company-specific skills may be valuable in a new job under the right conditions, say Harvard Business School's Boris Groysberg, Andrew N. McLean, and Nitin Nohria. They studied GE; here's an excerpt from Harvard Business Review. Read More

What Companies Lose from Forced Disclosure

Increased corporate financial reporting may benefit many parties, but not necessarily the companies themselves. New research from Harvard Business School professor Romana Autrey and coauthors looks at the relationship between executive performance and public disclosure. Read More

Implementing New Practices: An Empirical Study of Organizational Learning in Hospital Intensive Care Units

How do hospital units, as complex service organizations, successfully implement best practices? Practices involve people and knowledge; people must apply knowledge to particular situations, so changing practices requires changing behavior. This study is a starting point for healthcare organizations to improve work practices. The researchers drew from literature on best practice transfer, team learning, and process change and developed four hypotheses to test at highly specialized hospital units that care for premature infants and critically ill newborns. Read More

Do I Dare Say Something?

Are you afraid to speak up at work? The amount of fear in the modern workplace is just one surprising finding from recent research done by HBS professor Amy Edmondson and her colleague, Professor James Detert from Penn State. Read More

Take Responsibility for Rising Stars

Leadership succession and recruitment need the sharp attention of your company's top executives and board. But who should be held accountable—and how? An excerpt from a Harvard Business Review article by Jeffrey Cohn, Rakesh Khurana, and Laura Reeves. Read More

Should CEOs of Public Companies Offer Earnings Guidance?

A small but growing chorus of public company CEOs is deciding not to provide quarterly earnings guidance. Is this a good or bad development for shareholders, investors, analysts, the marketplace, and the company’s short- and long-term health? Closed for comment; 17 Comments posted.

Using the Law to Strategic Advantage

Used proactively, corporate legal departments can give you a strategic advantage, argues HBS professor Constance Bagley. It's time for a new relationship between managers and legal. Read More

The Geography of Corporate Giving

Where a company is headquartered influences the types of social programs it supports, such as housing assistance, disease research, and the arts, according to new research by professor Christopher Marquis and his coauthors. Is social spending too confined by geography? Read More

Tuning Jobs to Fit Your Company

In this article excerpt from Harvard Business Review, professor Robert Simons looks at how organizations can adjust the "span" of jobs to increase performance. Read More

Building an IT Governance Committee

Boards need to take more accountability for IT, argue professors Richard Nolan and Warren McFarlan. In this excerpt from their recent Harvard Business Review article, the authors detail what an IT governance committee should look like. Read More

Homers: Secrets on the Factory Floor

Homers are things you make for personal use while on company time. Professor Michel Anteby says that although the practice might be illegal, some companies secretly endorse it. Here's why. Read More

Rethinking Company Loyalty

These days, your best workers are likely to show more loyalty to their careers than the company. What's needed, says this Harvard Management Update article, is a new view of loyalty and its meaning to employers and employees. Read More

The Hard Work of Failure Analysis

We all should learn from failure—but it's difficult to do so objectively. In this excerpt from "Failing to Learn and Learning to Fail (Intelligently)" in Long Range Planning Journal, HBS professor Amy Edmondson and coauthor Mark Cannon offer a process for analyzing what went wrong. Read More

Decision Rights: Who Gives the Green Light?

Four steps to ensure that the right decisions are made by the right people. HBS professor emeritus Michael C. Jensen explains in Harvard Management Update. Read More

Is There an “Efficient Market” in CEO Compensation?

There appears to be little or no relationship between the size of American CEO compensation awards and actual corporate performance. Will change come from the increased level of competition among global companies with significantly different approaches to the compensation of senior managers? Closed for comment; 12 Comments posted.

An Organization Your Customers Understand

Defining your primary customer is an ideal "outside-in" approach to better designing your whole organizational structure. In this excerpt from his new book, Levers of Organization Design, HBS professor Robert Simons describes how to do it. Read More

The Potential Downside of Win-Win

You and your negotiating partner may reach a wonderful agreement for both parties, but have you forgotten people who aren't at the bargaining table, such as your consumers? HBS Professor Max H. Bazerman reflects in this article from Negotiation. Read More

Don’t Listen to “Yes”

It's essential for leaders to spark conflict in their organizations, as long as it is constructive. A Q&A with Professor Michael Roberto, author of the new book Why Great Leaders Don't Take Yes for an Answer. Read More

Germany’s Pioneering Corporate Managers

Professor Jeffrey Fear's new book Organizing Control takes a fresh look at corporate management innovations created by German companies and managers over the last two centuries. A Q&A with the author. Read More

Can an Organization’s “Deep Smarts” Be Preserved?

When employees leave, they take more than their coat and hat. How can companies better preserve the accumulated knowledge of individuals? Isn’t that what separates average companies from truly great ones? Closed for comment; 24 Comments posted.

Reinforcing Values: A Public Dressing Down

Often the hardest part of a turnaround is improving bad interpersonal behavior in the organization. A Harvard Business Review excerpt by professors David Garvin and Michael Roberto. Read More

Governance and CEO Turnover: Do Something or Do the Right Thing?

CEOs who become "entrenched" by the board of directors can gain an extra buffer between themselves and angry shareholders. Entrenchment has potential costs (a poorly performing CEO hangs on to the job) but also benefits (the board can deflect shareholder cries for dismissal of a CEO who was merely unlucky). The authors hope to shift the emphasis of the debate on entrenchment to a consideration of these tradeoffs and to shift the focus of the entrenchment-performance discussion toward the decisions, such as CEO dismissal, that are directly tied to the actions of the board. Read More

The Knowledge Coach

Make sure the knowledge gained by top employees doesn't leave with their retirement, say Dorothy Leonard and Walter Swap in their new book, Deep Smarts. One solution: Develop a knowledge transfer coach. Read More

Learning Tradeoffs in Organizations: Measuring Multiple Dimensions of Improvement to Investigate Learning-Curve Heterogeneity

How and why experience leads to performance improvement has made the learning curve an important management topic for sites ranging from nuclear power plants to cardiac surgical units. This new research looks deeper at learning curves by focusing on learning rates in technology adoption in similar organizations along multiple, potentially competing dimensions. Using longitudinal data from sixteen hospitals that are adopting a new technology for cardiac surgery, it specifically studies two dimensions: efficiency and application innovation and the potential tradeoff between efficiency and application innovation. It also asks how such tradeoffs are influenced. Read More

Caves, Clusters, and Weak Ties: The Six Degrees World of Inventors

Your company's scientists and investors can be antennas that bring great ideas into your company. The key, says HBS professor Lee Fleming, is understanding small-world networks. Read More

Bypass Marketing: Are Docs Influenced?

Although they are prescription drugs, Viagra, Prozac, Allegra and many others are pitched directly to consumers. Do physicians take notice? HBS professor Alvin Silk and Harvard's Joel Weissman discuss a recent study. Read More

IBM Finds Profit in Diversity

Former CEO Lou Gerstner established a diversity initiative that embraced differences instead of ignoring them. In this Harvard Business Review excerpt, professor David A. Thomas describes why IBM made diversity a cornerstone strategy. Read More

Mapping Your Board’s Effectiveness

To be effective, board members must understand their company’s strategy. Professor Robert S. Kaplan offers methods for using the Balanced Scorecard and strategy maps to increase board power. From Strategy & Innovation. Read More

For Greater Transparency, Is Section 404 an Effective Response?

Section 404 of the Sarbanes-Oxley Act requires that managers certify the integrity of their internal controls for financial reporting. In the end, are shareholders getting their money’s worth? Are more costly amendments to come? Closed for comment; 15 Comments posted.

Why Innovations Sit on the Shelf

Why can't your organization capitalize on great ideas? Surprise! The answer may have more to do with communication than inventiveness. From Strategy and Innovation. Read More

Enron’s Lessons for Managers

Like the Challenger space shuttle disaster was a learning experience for engineers, so too is the Enron crash for managers, says Harvard Business School professor Malcolm S. Salter. Yet what have we learned? Read More

Work-Life: Is Productivity in the Balance?

Many organizations regard work-life benefits as an investment designed, among other things, to attract and retain talent. How do such benefits affect productivity for the individuals, the company, and society? Closed for comment; 38 Comments posted.

Racial Diversity Pays Off

Diversity has been a buzzword in organizations for at least fifteen years. How much is really known about its effects on performance? HBS professors Robin Ely and David Thomas investigate. Read More

Should We Brace Ourselves for Another Era of M&A Value Destruction?

It looks like more mergers and acquisitions are on the horizon. Time and again, why do so few mergers and acquisitions meet expectations? Is the information about human resources just too difficult to obtain during a sensitive acquisition process? Closed for comment; 11 Comments posted.

Mission to Mars: It Really Is Rocket Science

Do the successful Mars missions mean NASA again has the right stuff? Professor Alan MacCormack dissects the space agency’s "Faster, Better, Cheaper" program. Read More

Got a New Strategy? Now Make it Happen

Many strategies never take off for lack of honest discussion, say Harvard Business School's Michael Beer and co-author Russell A. Eisenstat. A Harvard Business Review excerpt. Read More

Leadership: A Matter of Sustaining or Eliminating Groupthink?

Fighting groupthink is probably just as worthy an endeavor as attaining "buy in." But what are the risks for the leader and his or her subordinates? What has worked for you? What hasn't worked? Closed for comment; 13 Comments posted.

Failing to Learn and Learning to Fail (Intelligently): How Great Organizations Put Failure to Work to Improve and Innovate

Successful companies see failure as a part of the innovative process, but there are social (organizational) and technical (skill-based) reasons why it is difficult to turn failures into learning opportunities. First, executives need to develop the skills to probe failures and analyze the root causes. Then improve management's technical skills in problem diagnosis, statistical process design, and qualitative and quantitative analysis. Organizationally, executives should create an environment where people are encouraged to identify failures, rather than encourage a "shoot the messenger" mindset. Read More

Does Your HQ Operation Fit With Corporate Strategy?

Is a lean headquarters operation the key to success? How should headquarters design fit with corporate strategy? New research from professor David J. Collis has surprising answers. Read More

How to Build a Better Board

Boards need to work smarter and with a design in mind, says professor Jay Lorsch. Lorsch discusses his new book Back to the Drawing Board, co-written with Colin B. Carter. Read More

Women Leaders and Organizational Change

Merely expanding the number of women in leadership roles does not automatically induce organizational change. Harvard professor Robin Ely and Debra Meyerson call for fundamental changes to transform organizations. Read More

Improving Corporate Governance with the Balanced Scorecard

The authors review the key roles of corporate boards and recommend a Balanced Scorecard approach to help boards work smarter, not harder. Kaplan and Nagel recommend a three-part Balanced Scorecard program: Part 1: An Enterprise Scorecard that includes enterprise-wide strategic objectives, performance measures, targets, and initiatives; Part 2: A Board Scorecard that defines and clarifies the strategic contributions and requirements of the board, and provides a tool to manage the board's performance; Part 3: Executive Scorecards, which define strategic contributions of top management and are used to select, evaluate, and reward senior executives. Read More

Boards and Corporate Governance: A Balanced Scorecard Approach

HBS professors Robert S. Kaplan and Krishna G. Palepu discuss a Balanced Scorecard approach to how companies can create shareholder value through more effective governance. Read More

The Business Case for Diabetes Disease Management

Diabetes is a tough disease to tackle. A case-study discussion led by HBS professor Nancy Beaulieu asked why it is so complex for business and society, and what might be done to curb its incidence. Read More

To Whom Should Boards be Accountable?

A well-respected and influential newspaper was forced into a public auction by a hostile buy-out offer. Let's say you were on the board. How would you have reacted? Closed for comment; 18 Comments posted.

The Organizational Model for Open Source

A surprising entity has emerged to protect the interests of open source software developers: the non-profit foundation. HBS professor Siobhán O'Mahony discusses this emerging organizational model. Read More

Are You Supporting Your B Players?

B players are the heart and soul of top organizations, says HBS professor Thomas J. DeLong. Here’s why—and what you can do to manage B players better. Read More

Psychology, Pathology, and the CEO

In difficult times, organizational pathologies can cause a death spiral. Here’s how the CEO can win back the hearts and minds of staff, according to HBS professor Rosabeth Moss Kanter. Read More

When Silence Spells Trouble at Work

Harvard Business School professor Leslie A. Perlow explains how being nice can lead to disastrous results in this Harvard Business Review excerpt. Read More

Sharing the Responsibility of Corporate Governance

Is business malfeasance always the board's fault? HBS professor Constance Bagley argues that everyone has a stake in ethical behavior and moral reasoning. Read More

Greed, Fear, and The System Hinder Corporate Reform

If we’re going to fix the system we need to take a realistic look at the possibilities and limitations of regulation, said panelists. Here’s their diagnosis. Read More

What It Takes to Restore Trust in Business

What’s still wrong with American business? Start with pervasive conflicts of interest and the limits of enforcement. Read More

SEC Commissioner Sees “Healing and Reform”

SEC Commissioner Harvey J. Goldschmid blames corporate failures in part on inadequate gatekeepers, but sees healing in history. Read More

Shareholders Key to Corporate Reform

Want fundamental corporate reform? Start with shareholders, say Harvard Business School professor Cynthia Montgomery and research associate Rhonda Kaufman. Excerpted from Harvard Business Review. Read More

How the U.S. Army Develops Leaders

Leadership development in the U.S. Army has ramifications beyond American borders. In this e-mail interview, HBS professor Scott A. Snook, a retired Army colonel, describes how military leaders grow. Plus: Book excerpt Read More

At the Center of Corporate Scandal Where Do We Go From Here?

What’s at the heart of recent corporate misdeeds and scandals? Harvard Business School Dean Kim B. Clark looks at the causes and the potential remedies needed to restore public trust in institutions of business. Read More

Fixing Corporate Governance: A Roundtable Discussion at Harvard Business School

Bad business practices on a huge scale have made corporate governance Topic A of late. In a roundtable discussion, Harvard Business School professors Krishna Palepu, Jay Lorsch, Rosabeth Moss Kanter, Nancy Koehn, Brian Hall, and Paul Healy explore guidelines for change. Read More

Partnering and the Balanced Scorecard

Created in 1992, the Balanced Scorecard has become an effective tool for managing strategy. Now authors Robert S. Kaplan and David P. Norton propose using it to communicate values and vision to employees and partners. The payoff? Better strategic relationships with partners. Read More

Marrying Distance and Classroom Education

Distance learning—extending the classroom over time and space using technology—certainly holds appeal for companies looking to keep executives on the cutting edge. In an interview, HBS professor Dorothy Leonard looks at the strengths and weaknesses of the online classroom, and how it can marry with traditional face-to-face teaching. Read More

Mentoring—Using the Voice of Experience

Companies crave experienced executives—so why don't they do more to make sure that wisdom is captured in the corporate DNA? Harvard Business Professor Dorothy Leonard discusses the differences between mentoring and coaching; why it can be difficult for "masters" to reach "novices" and who should be responsible for managing a corporate mentoring program. Read More

From Lone Star to Team Player

If you're serious about building a collaborative company and want to reap the economic rewards from doing so, you have to screen out "lone stars." Harvard Business School professor Morten T. Hansen explains. Read More

Want a Happy Customer? Coordinate Sales and Marketing

In today's hyper-competitive world, your sales and marketing functions must yoke together at every level—from the core central concepts of the strategy to the minute details of execution. Harvard Business School professor Benson Shapiro on creating the customer-centric team. Read More

What Leaders Need to Do To Restore Investor Confidence

Where corporate ethics are concerned, the buck stops with the CEO, says HBS professor Thomas R. Piper. In this interview from the Harvard Management Update, Piper explains how corporate malfeasance found a foothold and suggests ways that all companies can restore trust. Read More

The Irrational Quest for Charismatic CEOs

Companies reflexively look to charismatic CEOs to save them, and that's a bad idea, says HBS professor Rakesh Khurana. In this excerpt from his new book and in an e-mail interview with HBS Working Knowledge, he explains how the CEO cult arose. Read More

Get Off the Dime!

If you want large-scale change in your organization, you must change people's behaviors, say authors John Kotter and Dan Cohen. In an excerpt from their new book, The Heart of Change: Real Life Stories of How People Change Their Organizations, the authors outline the importance of imparting urgency to the troops. Read More

Reinventing the Industrial Giant

It's not easy to transform a trusty but ailing old stalwart. In an excerpt from their book, Changing Fortunes: Remaking the Industrial Corporation, HBS professor Nitin Nohria and co-authors Davis Dyer and Frederick Dalzell discuss how General Motors and Kodak are attempting precisely that. Read More

A Cure for Enron-Style Audit Failures

In an opinion piece in the Financial Times, Harvard Business School professor Jay Lorsch argues for legislation to create an independent, self-regulatory organization to oversee accounting firms. Enron, he says, is not an isolated incident. Read More

Star Power! How to Win in Professional Services

Leaders of professional service firms face challenges unknown to most other CEOs. Jay W. Lorsch, an HBS professor, and Thomas J. Tierney, of The Bridgespan Group, explain why, in this excerpt from their new book Aligning the Stars: How to Succeed When Professionals Drive Results. Plus: Q&A with Jay Lorsch Read More

You’re Wasting Your Employees! What You Can Do About It

A decade of organizational restructuring has produced employees "who are more exhausted than empowered, more cynical than self-renewing," says Harvard Business School professor Christopher Bartlett. CEOs must rethink how they use their people. Read More

Governance in India and Around the Globe

India is not known for rigid corporate governance standards. Is software giant Infosys changing all that? A working paper by HBS professors Tarun Khanna and Krishna Palepu looks at how globalization may—or may not—foster convergence of corporate governance. Read More

How Toyota Turns Workers Into Problem Solvers

Toyota's reputation for sustaining high product quality is legendary. But the company's methods are not secret. So why can't other carmakers match Toyota's track record? HBS professor Steven Spear says it's all about problem solving. Read More

Why Corporate Budgeting Needs To Be Fixed

Not to mince words, but corporate budgeting is a joke, argues HBS professor emeritus Michael C. Jensen in this Harvard Business Review excerpt. The problem isn't with the budget process—it's when budget targets are used to determine compensation. Read More

Can Religion and Business Learn From Each Other?

Do religion and business have anything to say to each other? HBS senior research fellow Laura Nash believes they do. Read More

The Three Components of Family Governance

Having described the framework of family business governance and the governance of the business, John Davis discusses the most challenging of the family business governance topics—governance of the family itself. Read More

Driven: How Human Nature Shapes Organizations

Exclusive! In this first look at a new book, HBS professors Paul Lawrence and Nitin Nohria explore how human nature shapes business organizations. Does your organization reflect the four basic human drives? Plus: Q&A. Read More

Do You Have Change Fatigue?

Many corporate change efforts are greeted with rolling eyes from employees. Harvard Business School professors David Garvin and Rosabeth Moss Kanter help identify the keys to a successful company transformation. Read More

Looking for CEOs in All the Wrong Places

In searching for a new CEO, many companies depend on board contacts to find candidates and diminish the role of search firms. And that may be a big mistake, suggests HBS assistant professor Rakesh Khurana. Read More

Race Does Matter in Mentoring

In studying the different career paths of whites and minorities, HBS Professor David Thomas finds one characteristic of people of color who advance the furthest: a strong network of mentors and corporate sponsors. Read More

Are You Managing To a ‘T’? Time To Break With Tradition

Say hello to the T-shaped manager. In this HBR excerpt, HBS professor Morten Hansen and colleague Bolko Von Oetinger introduce a new-generation exec who shares information horizontally across the organization as well as vertically among individual business units. Read More

The Gulf: It’s a Family Affair

In a wide-ranging interview with HBS Working Knowledge, HBS professor John Davis discusses the state of family-business research—and the special challenges faced by families in the Gulf Region. Read More

John Irving’s Lessons for Business

John Irving might seem an unlikely candidate to teach managers and business leaders how to foster creativity in their organizations. Not so, found HBS professor Teresa Amabile. Read More

Managing to Learn: How Companies Can Turn Knowledge into Action

New ideas are important, says HBS professor David Garvin, but they're not enough: A true "learning organization" must enable every member of the organization to act in an informed way upon what's been learned before. Read More

The Strategy-Focused Organization

In the ten years since it was introduced, Robert Kaplan's and David Norton's Balanced Scorecard has become not just a measurement tool but a means of putting strategy at the center of a company's key management processes and systems. Read More

Inside the OR: Disrupted Routines and New Technologies

A hospital operating room may seem an unlikely place to attract the attention of a group of management professors. But for HBS faculty members Amy Edmondson, Richard Bohmer and Gary Pisano it's a setting that offers great insights into work teams and the ways they adapt and learn. Read More

Minding the Muse: The Impact of Downsizing on Corporate Creativity

HBS Professor Teresa Amabile's in-house study of creativity at a high-tech Fortune 500 firm took on new implications when the company began a significant reduction in the size of its global workforce. Expanding the research to measure changes in the creative environment during and after the layoffs, Amabile and colleague Regina Conti of Colgate University showed that downsizing can have surprising effects on the creativity of remaining employees and the company's strategic position in the marketplace. Read More

Leading Professional Service Firms

Firms in the $80 billion professional services industry all face the same fundamental challenge: aligning their most valuable assets—the talents of their employees—with the strategy and organization of the firm. In this interview, HBS Professor Jay Lorsch, chair of the Executive Education program Leading Professional Service Firms, discusses the role these firms play in the world's economy and the keys to their success. Read More

Learning in Action

Most managers today understand the value of building a learning organization. But in moving from theory into practice, managers must realize there's no one-size-fits-all strategy applicable to every company and every situation. In this excerpt from his book Learning in Action: A Guide to Putting the Learning Organization to Work (HBS Press), HBS Professor David A. Garvin shows how different organizations put different learning strategies to work. Read More

Leading Change and Organizational Renewal

A critical question confronting organizations today is not whether to change in response to their swiftly changing environment, but precisely how to manage that change. In this interview, HBS Professors Michael Tushman and Charles O'Reilly, developers of the Executive Education program Leading Change and Organizational Renewal, describe their thinking about the impact of rapid-fire change on contemporary organizations, and what managers must do to effectively lead the change process. Read More

Decoding the DNA of the Toyota Production System

How can one production operation be both rigidly scripted and enormously flexible? In this summary of an article from the Harvard Business Review, HBS Professors H. Kent Bowen and Steven Spear disclose the secret to Toyota's production success. The company's operations can be seen as a continuous series of controlled experiments: whenever Toyota defines a specification, it is establishing a hypothesis that is then tested through action. The workers, who have internalized this scientific-method approach, are stimulated to respond to problems as they appear; using data from the strictly defined experiment, they are able to adapt fluidly to changing circumstances. Read More

What It Takes: Minorities in the Executive Suite

For diversity to take hold in America's corporate boardrooms, companies need to find new ways to develop more conducive environments for minority advancement and opportunity. But minority executives who want to move up can't simple wait for their work environment to be perfect. HBS Professors David Thomas and John Gabarro are studying what it takes — on both sides — to make corporate diversity a reality. Read More

A Perfect Fit: Aligning Organization & Strategy

Is your company organizationally fit? HBS Professor Michael Beer believes business success is a function of the fit between key organizational variables such as strategy, values, culture, employees, systems, organizational design, and the behavior of the senior management team. Beer and colleague Russell A. Eisenstat have developed a process,termed Organizational Fitness Profiling, by which corporations can cultivate organizational capabilities that enhance their competitiveness. Read More