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Novel Risks

by Robert S. Kaplan, Dutch Leonard, and Anette Mikes

Companies can manage known risks by reducing their likelihood and impact. But such routine risk management often prevents them from recognizing and responding rapidly to novel risks, those not envisioned or seen before. Setting up teams, processes, and capabilities in advance for dealing with unexpected circumstances can protect against their severe consequences.

Free Riding in Loan Approvals: Evidence From SME Lending in Peru

by Irani Arraiz, Miriam Bruhn, Benjamin N. Roth, Claudia Ruiz-Ortega, and Rodolfo Stucchi

Using data from a large Peruvian bank trying to expand credit access to small and medium enterprises, this study shows that competing lenders use one another’s loan approvals as an input into their own approval process. Such “free riding” has great impact on market outcomes and might warrant policy intervention.

The Effects of Hierarchy on Learning and Performance in Business Experimentation

by Sourobh Ghosh, Stefan H. Thomke, and Hazjier Pourkhalkhali

Do senior managers help or hurt business experiments? Analyzing a dataset of more than 6,300 experiments on the A/B/n testing platform Optimizely, this study suggests that involving senior executives in experimentation teams can have surprising consequences.

From Sweetheart to Scapegoat: Brand Selfie-Taking Shapes Consumer Behavior

by Reto Hofstetter, Gabriela Kunath, and Leslie K. John

Using a dataset of more than 280,000 user reviews on Yelp, this paper describes a series of eight studies exploring how brand selfie-taking affects consumers’ behavior and sense of connection toward a brand.

Impact Investing: A Theory of Financing Social Entrepreneurship

by Benjamin N. Roth

The author provides a formal definition of organizational sustainability and characterizes the situations in which a social enterprise should be sustainable. The analysis then delineates when an investment in a social enterprise delivers superior impact to a grant.

Consumer Protection in an Online World: An Analysis of Occupational Licensing

by Chiara Farronato, Andrey Fradkin, Bradley Larsen, and Erik Brynjolfsson

This paper uses new data collected by a digital platform to study the role of occupational licensing laws on individual choices and market outcomes. Results suggest that more stringent licensing laws restrict competition but do not lead to improvements in customer satisfaction.

Nominal and Opportunity Effects of Managerial Discretion

by Wei Cai, Susanna Gallani, and Jee Eun Shin

This study of field data from a Chinese manufacturing company explores the consequences of subjective performance evaluations leading to bonuses and penalties. Results may help practitioners improve the effectiveness of incentive systems.

Reinventing Retail: The Novel Resurgence of Independent Bookstores

by Ryan Raffaelli

Independent booksellers in the United States have proven resilient in the face of multiple technological and business model shifts in the bookselling industry. By tapping into a larger social movement that promotes the value of shopping local and a desire to cultivate community, successful booksellers are differentiating themselves from online and big box competitors.

Recovering Investor Expectations from Demand for Index Funds

by Mark Egan, Alexander J. MacKay, and Hanbin Yang

Understanding investor beliefs and their dynamics is important in many settings. This paper proposes a framework that uses observed ETF trades to reveal the full distribution of investor expected returns. The authors apply the framework to the S&P 500 and other asset classes over the period 2008-2018. This approach to measuring expectations and risk preferences can be applied quite broadly and provides a potentially useful signal of investor beliefs.

A Preliminary Framework for Product Impact-Weighted Accounts

by George Serafeim, Katie Trinh, and Robert Zochowski

Although there is growing interest in environmental, social, and governance measurement, the impact of company operations is emphasized over product use. A framework like this one that captures a product’s reach, accessibility, quality, optionality, environmental use emissions, and end of life recyclability allows for a systematic methodology that can be applied to companies across many industries.

The Impact of Technology and Trade on Migration: Evidence from the US

by Marius Faber, Andres Sarto, and Marco Tabellini

Labor mobility can re-equilibrate local labor markets after an economic shock. Both robot adoption and Chinese import competition between 1990 and 2015 caused large declines in manufacturing employment across US local labor markets (commuting zones, CZs). However, only robots were associated with a decline in CZ population, which resulted from reduced in-migration rather than by increased out-migration.

Fostering Perceptions of Authenticity via Sensitive Self-Disclosure

by Li Jiang, Maryam Kouchaki, Francesca Gino, Reihane Boghrati, and Leslie John

By making sensitive self-disclosures, leaders can enhance how authentic their followers perceive them to be, leading to positive interpersonal outcomes and potentially organizational ones as well. Aside from the obvious costs of disclosing weaknesses, leaders may also reap surprising benefits from doing so.

The Old Boys' Club: Schmoozing and the Gender Gap

by Zoë B. Cullen and Ricardo Perez-Truglia

Over a four-year period, male employees assigned a male manager were promoted at a faster rate than their female counterparts, with no observable difference in performance. Women, in turn, were promoted at the same rate whether assigned to a male manager or female manager. Male employees benefited from the higher rates of social interactions with their male managers.

Competition in Pricing Algorithms

by Zach Y. Brown and Alexander MacKay

The adoption of pricing technology can lead to higher prices, by increasing the frequency of price changes and/or encoding pricing strategies in algorithms. This raises new antitrust questions for policymakers, as firms do not need to coordinate or collude to raise prices.

Does Apple Anchor a Shopping Mall? The Effect of the Technology Stores on the Formation of Market Structure

by Doug J. Chung, Kyoungwon Seo, and Reo Song

Anchor stores are the key tenants in a mall, occupying most of the gross leasable area and generating much of the foot traffic. This research provides a framework to understand why new and traditional anchor stores join a shopping mall and how their decisions affect mall configuration.

The Impact of the General Data Protection Regulation on Internet Interconnection

by Ran Zhuo, Bradley Huffaker, KC Claffy, and Shane Greenstein

While many countries consider implementing their own versions of privacy and data protection regulations, there are concerns about whether such regulations may negatively impact the growth of the internet and reduce technology firms’ incentives in operating and innovating. Results of this study suggest limited effects of such regulations on the internet layer.

Engineering Serendipity: The Role of Cognitive Similarity in Knowledge Sharing and Knowledge Production

by Jacqueline N. Lane, Ina Ganguli, Patrick Gaule, Eva C. Guinan, and Karim R. Lakhani

By creating opportunities for cross-disciplinary scientists to meet and talk as part of a natural field experiment, this study analyzes and finds evidence for a systematic relationship between knowledge sharing and knowledge production in the sciences. Findings may extend to similar types of cross-disciplinary knowledge-sharing opportunities in other settings.

Managerial Recognition as an Incentive for Innovation Platform Engagement: A Field Experiment and Interview Study at NASA

by Jana Gallus, Olivia S. Jung, and Karim R. Lakhani

What gets workers to go the extra mile in creative problem solving? A field experiment and interviews with NASA employees finds that employees respond to managerial appreciation above other incentives.

From Know-It-Alls to Learn-It-Alls: Executive Development in the Era of Self-Refining Algorithms, Collaborative Filtering and Wearable Computing

by Mihnea Moldoveanu and Das Narayandas

Learning happens most reliably and efficiently when it is contextualized, personalized, and socialized. This is important for executive learning in particular and adult learning more generally. Innovators and educational designers can leverage technologies that enable sensing, interacting, computing, searching, and storing to produce learner-optimal experiences.

The Future of Executive Development: The CLO’s Compass and The Executive Programs Designer’s Guide

by Mihnea Moldoveanu and Das Narayandas

Digitalization is reshaping companies’ demand for executive education. Executive education providers have to adapt quickly to these new demands and cost structures if they wish to survive. This paper guides providers as well as chief learning officers and chief talent officers who want to chart effective routes through the emerging landscape of executive development.