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Auditor Independence and Outsourcing: Aligning Incentives to Mitigate Shilling and Shirking

by Ashley Palmarozzo, Jodi L. Short, and Michael W. Toffel

Firms use external auditors to monitor the quality of difficult-to-observe aspects of their business partners’ performance, including the working conditions of their suppliers. Firms can improve monitoring accuracy by having their own employees conduct some audits, and by rotating across third-party auditing firms.

Private and Social Returns to R&D: Drug Development and Demographics

by Efraim Benmelech, Janice Eberly, Dimitris Papanikolaou, and Joshua Krieger

Research and development (R&D) by pharmaceutical firms focuses disproportionately on medical conditions afflicting the elderly. The proportion of R&D spending targeting older age groups is increasing over time. Even though these investments in R&D prolong life expectancy and improve quality of life, they have little effect on measured productivity and output growth.

Bollywood, Skin Color, and Sexism: The Role of the Film Industry in Emboldening and Contesting Stereotypes in India after Independence

by Sudev Sheth, Geoffrey Jones, and Morgan Spencer

Analysis of interviews with Bollywood producers and actors shows the extent of biases in the film industry during the decades after India’s independence in 1947. Gender stereotyping has remained a noteworthy feature of films, and bias towards light skin has only intensified.

Information Avoidance and Image Concerns

by Christine L. Exley and Judd B. Kessler

People avoid information that might compel them to behave more generously. While many people avoid information due to concerns about their self-image, there is a substantial role for other reasons, such as inattention and confusion.

In the Red: Overdrafts, Payday Lending, and the Underbanked

by Marco Di Maggio, Angela Ma, and Emily Williams

Low-income customers turn to payday lenders and check cashers for basic financial needs when traditional banks push them out of the system through high overdraft fees and other penalties. Reducing overdraft fees improves consumers’ overall financial health and access to cheaper credit.

Nonprofits in Good Times and Bad Times

by Christine L. Exley, Nils H. Lehr, and Stephen J. Terry

Tax returns from millions of US nonprofits reveal that charities do not expand during bad times, when need is the greatest. Although they are able to smooth the swings of their activities more than for-profit organizations, nonprofits exhibit substantial sensitivity to economic cycles.

Hate Crime Increases with Minoritized Group Rank

by Mina Cikara, Vasiliki Fouka, and Marco Tabellini

Attitudes and behaviors toward social categories are not fixed but vary depending on perceived group size and rank. In the United States, an increase in a group’s size-based rank relative to those of other minority groups is associated with greater likelihood of being targeted with hate crimes.

Learning with People Like Me: The Role of Age-Similar Peers on Online Business Course Engagement

by Laura R. Huber, Jacqueline N. Lane, and Karim R. Lakhani

Online learning usually has lower course engagement and higher dropout rates than in-person instruction. However, when classmates are of similar ages it helps boost retention and engagement. Similar-aged classmates have more in common, making interactions mutually rewarding.

The Evolutionary Nature of Breakthrough Innovation: Re-Evaluating the Exploration vs. Exploitation Dichotomy

by Dominika K. Sarnecka and Gary P. Pisano

Analyzing more than 2,500 firm-level innovation histories spanning 30 years, this study shows that breakthrough innovation requires organizational capabilities for both exploration and exploitation. Managers should therefore question the frequent advice to put exploration- and exploitation-related innovative efforts into different organizational units.

India’s Food Supply Chain During the Pandemic

by Matt Lowe, G V Nadhanael, and Benjamin N. Roth

Policy makers in the developing world face important tradeoffs in reacting to a pandemic. The quick and complete recovery of India’s food supply chain suggests that strict lockdown measures at the onset of pandemics need not cause long-term economic damage.

The Value of Descriptive Analytics: Evidence from Online Retailers

by Ron Berman and Ayelet Israeli

Analytics are descriptive when they describe what happened. Descriptive-analytics solutions are popular among marketers and retailers. This paper provides a benchmark for the benefits of using a descriptive dashboard and illustrates how to potentially extract these benefits.

The Role of Constraints in Creative Problem-Solving

by Daniel Ehls, Karim R. Lakhani, and Jacqueline N. Lane

This study shows that constraints can support creative problem solving in a consumer electronics setting. Adding (some) constraints increased the quantity and quality of strong ideas generated and selected through an open innovation process.

Dog Eat Dog: Measuring Network Effects Using a Digital Platform Merger

by Chiara Farronato, Jessica Fong, and Andrey Fradkin

With heated debate over antitrust regulation of online platforms, this study finds that when a larger platform acquired its greatest competitor, users were not better off with a single platform compared with two competitors, despite marked efficiency improvements experienced by the acquiring platform.

Accounting for Product Impact in the Airlines Industry

by George Serafeim and Katie Trinh

A systematic methodology for measuring product impact can be applied across a range of industries. Examining two competitor companies in the airlines industry, this study finds that analyzing each dimension of product impact allows for deeper understanding of each company’s business strategies.

The Political Effects of Immigration: Culture or Economics?

by Alberto Alesina and Marco Tabellini

This paper reviews and explains the growing literature focused on the political effects of immigration, and highlights fruitful avenues for future research. When compared to potential labor market competition and other economic forces, broadly defined cultural factors have a stronger political and social impact.

Aggregate Advertising Expenditure in the US Economy: What's Up? Is It Real?

by Alvin J. Silk and Ernst R. Berndt

We analyze total United States advertising spending from 1960 to 2018. In nominal terms, the elasticity of annual advertising outlays with respect to gross domestic product appears to have increased substantially beginning in the late 1990s, roughly coinciding with the dramatic growth of internet-based advertising.

The ESG-Innovation Disconnect: Evidence from Green Patenting

by Lauren Cohen, Umit G. Gurun, and Quoc H. Nguyen

Energy-producing firms are more likely to produce “blockbuster” green patents than other firms. Yet energy firms are excluded from many environmental, social, and governance (ESG) funds, and are the targets of divestiture campaigns whose stated aims often include green energy innovation.

The Twofold Effect of Customer Retention in Freemium Settings

by Eva Ascarza, Oded Netzer, and Julian Runge

Many digital products offer “freemiums”: that is, part of the product for free, often with advertising, and an enhanced customer experience for payment. This research, in a mobile game context, shows the importance of recognizing the short- and long-term effects on customer retention when managing the tradeoffs between free and paid aspects of freemium products.

Hospital Allocation and Racial Disparities in Health Care

by Amitabh Chandra, Pragya Kakani, and Adam Sacarny

Black Americans experience disparities in health outcomes in the United States relative to other demographic groups. This study of heart attack sufferers over two decades develops a framework to examine the allocation of health care and the effectiveness of medical treatments, including beta-blockers and other technologies.

How Do CEOs Make Strategy?

by Mu-Jeung Yang, Michael Christensen, Nicholas Bloom, Raffaella Sadun, and Jan Rivkin

A study of 262 Harvard Business School-educated CEOs traces differences in strategic decision-making across managers. CEOs leading larger, faster-growing firms tend to make highly structured strategic decisions and use more analytical deliberation. Management education has long-lasting effects on decision-making.