Working Papers
There are 546 working paper digests.
A large number of Harvard Business School faculty write working papers that summarize original research in a narrow segment of a field of study, and that are intended for publication within a period of one to three years. Descriptions and papers are posted on the HBS Faculty and Research Web site. Our archive focuses on those working papers that are publicly accessible for download. We add an executive summary to the author’s own abstract. For the most recent work, see our First Look section.
Team Scaffolds: How Minimal In-Group Structures Support Fast-Paced Teaming
| Authors: | Melissa A. Valentine and Amy C. Edmondson |
|---|---|
| Published: | February 8, 2012 |
| Paper Release Date: | January 2012 |
| Feature: | Working Papers |
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.
Earnings Management from the Bottom Up: An Analysis of Managerial Incentives Below the CEO
| Authors: | Felix Oberholzer-Gee and Julie Wulf |
|---|---|
| Published: | February 7, 2012 |
| Paper Release Date: | January 2012 |
| Feature: | Working Papers |
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.
Open Innovation and Organizational Boundaries: The Impact of Task Decomposition and Knowledge Distribution on the Locus of Innovation
| Authors: | Karim R. Lakhani and Michael L. Tushman |
|---|---|
| Published: | February 3, 2012 |
| Paper Release Date: | January 2012 |
| Feature: | Working Papers |
Open innovation, enabled by low-cost communication and the decreased costs of memory and computation, has transformed markets and social relations. In contrast to firm-centered innovation, open innovation is radically decentralized, peer based, and includes intrinsic and pro-social motives. In this paper the authors use in-depth examples from Apple, NASA, and Lego to argue that in contexts of increasing modularity and decreased communication costs, open innovation will at least complement, if not increasingly substitute for, more traditional innovation modes. For this reason emerging theories of innovation, organizational design, and leadership for innovation must be informed by these contrasting innovation modes and the implications for governance, incentives, intellectual property, managerial choice, professional and organizational identity, and organizational cultures.
Observation Bias: The Impact of Demand Censoring on Newsvendor Level and Adjustment Behavior
| Author: | David F. Drake |
|---|---|
| Published: | January 31, 2012 |
| Paper Release Date: | December 2011 |
| Feature: | Working Papers |
As the fundamental model for managing inventory under demand uncertainty, the newsvendor model has received significant research attention, but behavioral issues—the focus of this paper—have been less well studied. Nils Rudi and David Drake demonstrate how different aspects of the newsvendor model, a rather complex managerial decision setting, result in a combination of behavioral deviations from the normative solution prescribed within existing literature. The results can help managers prioritize order quantity improvements based on product margins and the degree of demand feedback available in the setting that they operate in.
Discretion Within the Constraints of Opportunity: Gender Homophily and Structure in a Formal Organization
| Authors: | Adam M. Kleinbaum, Toby E. Stuart, and Michael L. Tushman |
|---|---|
| Published: | January 27, 2012 |
| Paper Release Date: | December 2011 |
| Feature: | Working Papers |
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.
Behavioral Ethics: Toward a Deeper Understanding of Moral Judgment and Dishonesty
| Authors: | Max H. Bazerman and Francesca Gino |
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| Published: | January 26, 2012 |
| Paper Release Date: | January 2012 |
| Feature: | Working Papers |
What makes even good people cross ethical boundaries? Society demands that business and professional schools address ethics, but the results have been disappointing. This paper argues that a behavioral approach to ethics is essential because it leads to understanding and explaining moral and immoral behavior in systematic ways. The authors first define business ethics and provide an admittedly biased history of the attempts of professional schools to address ethics as a subject of both teaching and research. They next briefly summarize the emergence of the field of behavioral ethics over the last two decades, and turn to recent research findings in behavioral ethics that could provide helpful directions for a social science perspective to ethics. These new findings on both intentional and unintentional unethical behavior can inform new courses on ethics as well as new research investigations. Such new directions can meet the demands of society more effectively than past attempts of professional schools. They can also produce a meaningful and significant change in the behavior of both business school students and professionals.
Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management
| Authors: | Maria Guadalupe, Hongyi Li, and Julie Wulf |
|---|---|
| Published: | January 25, 2012 |
| Paper Release Date: | January 2012 |
| Feature: | Working Papers |
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.
What Do Development Banks Do? Evidence from Brazil, 2002-2009
| Authors: | Sergio G. Lazzarini, Aldo Musacchio, Rodrigo Bandeira-de-Mello, and Rosilene Marcon |
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| Published: | January 24, 2012 |
| Paper Release Date: | December 2011 |
| Feature: | Working Papers |
Private firms in developed and developing markets find themselves competing with the so-called "national champions"—private and state-owned enterprises that receive entitlements, mostly trade protections and/or subsidized credit from the government. Most of these national champions get support by proposing long-term projects with large capital investment that would usually not be easy to fund using private capital. This paper, written by Research by Sergio G. Lazzarini, Aldo Musacchio, Rodrigo Bandeira-de-Mello, and Rosilene Marcon, uses evidence from Brazil to look at what happens to firm performance, investment, and financial expenditures when companies get subsidized credit from the Brazilian National Bank of Economic and Social Development, known as BNDES.
Income Inequality and Social Preferences for Redistribution and Compensation Differentials
| Author: | William R. Kerr |
|---|---|
| Published: | January 20, 2012 |
| Paper Release Date: | December 2011 |
| Feature: | Working Papers |
Market-based factors have substantially increased inequality in the United States over the last three decades. If the inequality caused by these mechanisms reduces social preferences regarding distributive equality, the inequality can become amplified and entrenched. The potential thus exists for the formation of a "vicious cycle" where increases in disparity weaken concern for wage equality or redistribution. This weakened concern affords greater future compensation differentials, a shrinking of the welfare state, and so on that further increase inequality and again shift preferences. Alternatively, changes in social preferences can counteract inequality increases. William Kerr characterizes how changes in inequality affect social attitudes towards government-led redistribution and compensation differentials. The results of this study provide mixed evidence regarding the vicious-cycle hypothesis. Kerr's findings suggest that social preferences regarding inequality adjust to desire more redistribution while allowing greater labor market inequality.
Got Local Food?
| Authors: | Baris Ata, Deishin Lee, and Mustafa H. Tongarlak |
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| Published: | January 19, 2012 |
| Paper Release Date: | January 2012 |
| Feature: | Working Papers |
As consumers become more aware of the health and environmental implications of how food is grown and produced, demand for local food has increased considerably. This paper examines the operational tradeoffs in fresh produce supply to gain insights on what drives the structure of the supply chain and how "local food" can become a viable sourcing strategy for a large retailer. HBS professor Deishin Lee and coauthors show that there are complementary operational synergies when retailers and farmers increase scale and specialize. This implies that when small farmers are capacity constrained, they can be squeezed out of the supply chain. Technological advances in farming practices, efficiency gains in transportation, and space constraints in retail stores result in supply chain members mutually benefitting from their decision to increase scale, leading to specialization. The study characterizes the conditions under which vertical differentiation and operational scope can increase the viability of the small local farmer. This paper contributes to work on supply chain design and environmental sustainability.
Expectations, Network Effects and Platform Pricing
| Authors: | Andrei Hagiu and Hanna Hałaburda |
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| Published: | January 17, 2012 |
| Paper Release Date: | December 2011 |
| Feature: | Working Papers |
In markets with network effects, the value that users gain from platforms depends on the number of other users of the same type who join the same platform (direct network effects) or the number of users of a different type that join (cross-group network effects). Examples include social networks like Facebook or Google+, payment systems like PayPal or Visa, videogame systems like PlayStation 3 and Xbox 360, smartphone platforms like Apple's iPhone or Google's Android, etc. Users typically rely on the media, market reports, or word of mouth to form expectations about the total number of other users that join a given platform. However, most of the time these users are unable to calculate the effect of platforms' prices on adoption by other users. In other words, they do not take price into account when forming expectations. To analyze platform profits, Andrei Hagiu and Hanna Hałaburda model different degrees of user sophistication in forming price expectations in markets with network effects. They show that firms have different preferences regarding the average sophistication of their user base depending on market structure.
The Impact of Modularity on Intellectual Property and Value Appropriation
| Authors: | Carliss Y. Baldwin and Joachim Henkel |
|---|---|
| Published: | January 13, 2012 |
| Paper Release Date: | December 2011 |
| Feature: | Working Papers |
Distributed innovation in open systems is an important trend in the modern global economy. In general, distributed innovation in open systems is made possible by the modularity of the underlying product or process. Carliss Y. Baldwin and Joachim Henkel provide a systematic analysis of value appropriation in closed and open modular systems, with implications for managers. Modular systems are made up of components that are highly interdependent within sub-blocks, called modules, and largely independent across those sub-blocks. Despite the technical benefits of modularity, history shows that it is not always straightforward for firms to capture value in a modular system. The paper argues that strategies for capturing value in an open, modular system must be formulated at the module level. But modularity is not a single strategy: it is rather a large set of strategic options and related tactics that can be deployed in different ways depending on the interplay of countervailing forces.
Intermediaries for the IP Market
| Authors: | Andrei Hagiu and David Yoffie |
|---|---|
| Published: | January 13, 2012 |
| Paper Release Date: | October 2011 |
| Feature: | Working Papers |
Some assets are traded in liquid markets with the help of many, thriving intermediaries: houses and apartments, financial products, books, DVDs, electronics and all sorts of collectibles. Intellectual property (IP) in general, and patents in particular, are not among those assets. In fact, one could argue that the market for patents is one of the last large and inefficient markets in the economy. IP is the ultimate intangible asset and extremely hard to value. Moreover, there are high search and transaction costs on both sides of the market, and the risk of litigation makes all potential participants even more cautious. Despite these difficulties, there could be attractive opportunities to create intermediation mechanisms to match patent creators with patent users and facilitate transactions between them. In recent years, a variety of novel intermediaries has emerged, all using different business models while attempting to bring more liquidity to the patent market. In this paper, Andrei Hagiu and David Yoffie explore the fundamental economic issues responsible for the low liquidity in the market for patents and provide a brief overview of patent intermediaries. They next focus on platform-type intermediaries (i.e., who enable search and transactions without ever taking possession of IP assets) and discuss the reasons for their lack of traction to date. The authors then turn to merchant-like intermediaries and the factors that have made them comparably more successful and influential than platforms. Finally, they discuss efficiency questions raised by patent intermediaries.
The Evolving Basis for Legitimacy of the World Trade Organization: Dispute Settlement and the Rebalancing of Global Interests
| Author: | Arthur Daemmrich |
|---|---|
| Published: | January 10, 2012 |
| Paper Release Date: | December 2011 |
| Feature: | Working Papers |
The WTO is reconfiguring people's relationships to goods and services by facilitating trade and the consequent conversion of goods and ideas into property, including ones previously gifted or kept local. Unsurprisingly, there has been considerable opposition from the losers in the free trade system and attendant challenges to the legitimacy of the WTO. Arthur Daemmrich argues that understandings of legitimacy change over time, especially as organizations like the WTO interact with organized interests, including member countries and outside NGOs. He provides a brief history of the WTO as an organizational entity managing the institution of free trade, and a case study of a lengthy international trade dispute between Brazil and the United States over agricultural subsidies generally and cotton subsidies in particular. At the WTO, he writes, an important shift has taken place from the strategy of building organizational legitimacy through expanding membership to institutional deepening via the dispute process. Thus the WTO has become one of a few key sites for working out how knowledge claims will be formulated, framed, and validated on the international level.
When to Sell Your Idea: Theory and Evidence from the Movie Industry
| Author: | Hong Luo |
|---|---|
| Published: | January 9, 2012 |
| Paper Release Date: | November 2011 |
| Feature: | Working Papers |
How completely should an innovator develop his idea before selling it? HBS assistant professor Hong Luo addresses this question in a theoretical framework that links the sales stage to the innovator's "observable quality." She uses the context of Hollywood movie script writing-looking at whether it's better to pitch the mere idea for a film or to write the entire screenplay and then try to sell it "on spec."
Published in 2011
Charitable Giving When Altruism and Similarity Are Linked
| Author: | |
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| Published: | December 13, 2011 |
| Paper Release Date: | November 2011 |
| Feature: | Working Papers |
Harvard Business School professor Julio J. Rotemberg looks at what makes people decide to contribute to a charity. He focuses on two psychological factors: that people feel better about themselves when other people agree with them, and that people tend to be more charitable to other like-minded people.
Are There Too Many Safe Securities? Securitization and the Incentives for Information Production
| Authors: | Samuel G. Hanson and Adi Sunderam |
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| Published: | December 8, 2011 |
| Paper Release Date: | November 2011 |
| Feature: | Working Papers |
| Forum: | closed | 0 Comments posted |
Markets for near-riskless securities have suffered numerous shutdowns in the last 40 years, with the recent financial crisis the most prominent example. This suggests that instability could be a general characteristic of such markets, not just a one-time problem associated with the subprime mortgage crisis. Professors Samuel G. Hanson and Adi Sunderam argue that the infrastructure and organization of professional investors are in part determined by the menu of securities offered by originators. Since robust infrastructure is a public good to originators, it may be underprovided in the private market equilibrium. The individually rational decisions of originators may lead to an infrastructure that is overly prone to disruptions in bad times. Policies regulating originator capital structure decisions may help create a more robust infrastructure.
What Impedes Oil and Gas Companies' Transparency?
| Authors: | Paul Healy, Venkat Kuppuswamy, and and George Serafeim |
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| Published: | December 6, 2011 |
| Paper Release Date: | November 2011 |
| Feature: | Working Papers |
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.
Local Industrial Structures and Female Entrepreneurship in India
| Authors: | Ejaz Ghani, William R. Kerr, and and Stephen O'Connell |
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| Published: | November 29, 2011 |
| Paper Release Date: | November 2011 |
| Feature: | Working Papers |
Despite its recent economic advances, India's gender balance for entrepreneurship remains among the lowest in the world. Improving this balance is an important step for India's achievement of greater economic growth and gender equality. This paper uses detailed micro-data on the unorganized manufacturing and services sectors of India in 2000-2005 to identify and quantify the importance of existing female business networks for promoting subsequent entrepreneurship among women at the district-industry-year level.
The Organization of Firms Across Countries
| Authors: | Nicholas Bloom, Rafaella Sadun, and and John Van Reenen |
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| Published: | November 23, 2011 |
| Paper Release Date: | August 2011 |
| Feature: | Working Papers |
Economists have been paying increasing attention to the role that culture plays in a firm's overall performance. This paper focuses on how trust—a key cultural factor—affects firms' decision-making process, size, and productivity. Research was conducted by Nicholas Bloom of Stanford University, Rafaella Sadun of the Harvard Business School, and John Van Reenen of the London School of Economics.
