- 05 Jul 2006
- Working Paper Summaries
Bankers, Industrialists, and Their Cliques: Elite Networks in Mexico and Brazil During Early Industrialization
Mexico and Brazil had different institutional structures in the early 20th century. Did entrepreneurs in these two countries organize their business networks differently to deal with the different institutional settings? And, how can we compare the impact of the institutional structure of Mexico and Brazil on the networks of entrepreneurial finance and entrepreneurship in general? In this research, Musacchio and Read look at the networks of interlocking boards of directors of major joint stock companies in two large Latin American societies in 1909. Key concepts include: Business networks were more important for entrepreneurs, bankers, and politicians in Mexico, supplanting formal institutions to the great benefit of connected Mexican elite. In Mexico, informal monitoring and enforcement provided by the network compensated for the relatively weak rule of law. The Mexican network successfully substituted for formal institutions because it included many politicians. In Brazil, politicians were uncommon in the network because of the stronger formal institutions. At low levels of development, there is no significant difference in how a country grows, either through strong formal institutions or by substituting networks for some of those institutions. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Why IT Matters in Midsized Firms
What does IT actually contribute to a business? Is IT a commodity like electricity or is it a crucial element of competitive advantage? In a study of over 600 medium-sized global firms to analyze the business benefits that IT can enable, the authors found that IT capability was key to profitable business growth. This was true in both the U.S. product and services sectors as well as in Germany and Brazil. Key concepts include: IT matters. IT enables firms to scale. The amount a company spends on IT is a poor indicator of IT functionality and business impact. Firms with business process scalability find it easier to overcome obstacles to growth, differentiate themselves from competitors, and quickly capitalize on opportunities. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
A Survey-Based Procedure for Measuring Uncertainty or Heterogeneous Preferences in Markets
People who buy retail prescription drugs, invest funds, or participate in auctions rarely have complete information about the product they are buying. Often the only auction information participants have is the number of bidders, observed bids, and product characteristics. If data from an auction, for instance, is a function of bidder behavior, then external survey data may help in testing hypotheses about bidding behavior. Researchers often avoid using surveys because they consume time and effort, but Yin presents a survey design technique and econometric tool to deal with a general population of survey respondents. Her application tested eBay online auctions selling personal computers. Key concepts include: Survey data may be a good complement for market data, especially for auctions, as a measure of uncertainty or different preferences. Survey data may be more valuable than other methods of evaluation because it exploits the human ability to assess complex sets of information. A survey may be implemented more quickly with a larger number of respondents, even if they are inexperienced, than with a smaller number of experienced respondents, by correcting for survey bias. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Schumpeter’s Plea: Rediscovering History and Relevance in the Study of Entrepreneurship
Academic studies of entrepreneurship have focused on people and firms but ignored the context of history. The result is an over-reliance in the experiences of high-tech start-ups in the U.S., leading to generalizations using empirical evidence from an exceptional and atypical industry and location. Economist Joseph Schumpeter believed the study of entrepreneurial behavior made little sense without the equal study of the broader industrial, social, and economic setting in which they operated. An exchange between historical and social scientific approaches will yield far richer understanding. Key concepts include: The lessons we are learning from studies of entrepreneurship are incomplete, lacking the perspective of historical context. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Reinventing Savings Bonds
At one point in American history, savings bonds were an important tool families used to build assets and get ahead. While times have changed, this function of savings bonds may be even more important now, especially for the 41 million low- and moderate-income American households. Tufano and Schneider lay out a case for why savings bonds should be reimagined to help millions of Americans build assets now. Key concepts include: Allow taxpayers to purchase bonds with Federal tax refunds. Help low- and moderate-income families redeem their bonds before twelve months. Enlist private sector social marketing for savings bonds. Find a role for savings bonds in the life cycles of low- and moderate-income families. Make the process of buying savings bonds more user friendly. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
The Power of Stars: Do Stars Drive Success in Creative Industries?
The importance of star power is evident in creative industries from music and film to fashion and architecture. Star actors are paid millions of dollars, but is star talent critical to product success? What determines the value of stars? In the context of the movie business, Elberse calculated the returns in a study comparing 1,200 casting announcements on trading behavior in a simulated and real stock market setting. In a separate study, she also looked at the stars' impact on expected revenues. Key concepts include: Star participation positively impacts movie revenue. Do not just bet on an A-list star: Combine the right star with the right cast. These interdependencies complicate talent recruitment and compensation decisions. Star participation may not add to firm studios' valuation. If profitability or shareholder value is a key objective, studio executives could alter their talent compensation schemes. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Maximizing Joint Gains: Transaction Utility Within and Between Groups
Win-win deals are more easily described than carried out. Earlier studies have shown that when people don't know the gender or social category of their negotiating partner, they are happy to make a profit even if their partner earns a greater profit. Four new studies looked at how gender or other social contexts influence the way people cut a deal. Key concepts include: Social category in context is key to negotiation. What we consider a good deal within our own social category may be a worse deal when we compare ourselves to members of a different social category. "Maximizing the pie" in negotiation may be more difficult across social category lines (e.g., countries, regions, etc.). Brokering win-win deals across national, cultural, and religious lines therefore requires special care. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Information Technology Ecosystem Health and Performance
An IT ecosystem is "the network of organizations that drives the creation and delivery of information technology products and services." To understand the health and well being of the IT industry in the context of an ecosystem, the authors looked at three crucial IT ecosystem metrics: productivity, robustness, and innovation. Key concepts include: The IT ecosystem is strong in all three of the most important sectors of hardware, software, and services. Since the recession and retrenchment several years ago, the IT ecosystem has regained its health, competitiveness, and productivity. There are currently significant levels of innovation from both new market entrants as well as incumbent market leaders. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Information Dispersion and Auction Prices
How can auctions be used most effectively? Government and industry traditionally use auctions to price and allocate assets and contracts with high but unknown value. Millions of people use Internet auctions for goods that are often of unknown value (e.g., used goods, unknown brands). This paper asks: Do bidders behave in the way auction theory predicts they should? And, what are the effects of different types of information on prices? To answer these questions, Yin combined theory, econometric modeling, and survey data. Key concepts include: Reputation lends credibility to the information about the product; both are important when analyzing auction prices. Information in auctions is dispersed among many participants. In analysis, this dispersion is a more important source of uncertainty than any information asymmetry between buyer and seller. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Promoting a Management Revolution in Public Education
Public school districts are difficult to lead and manage, and the idea of applying business principles to school reform is popular. But is it practical? This paper describes the work of Harvard's Public Education Leadership Program as it helps school districts grapple with performance challenges, including student achievement that compares unfavorably with other countries, and a significant performance gap between white and minority students. Complicating the picture: The concept of managing for accountability is new in education. The authors studied the effects of improved management on public school student performance by comparing fifteen large urban school districts with similar peer districts. Key concepts include: There is a connection between improved management and better educational outcomes. Districts that organized activities more coherently and focused efforts on the "core business" of student performance and classroom instruction outperformed other school districts suffering similar constraints. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Empirical Tests of Information Aggregation
While neither buyers nor sellers may be certain of the worth of used goods, both may possess private information about the value. Do prices become more informative as the number of bidders grows? Using data from a sample of eBay auctions for computers, Yin looked at how and under what conditions auction prices converge to the common value of a given item. Key concepts include: Ebay prices do become more meaningful as the number of bidders increases; however, there is insufficient evidence to conclude that they aggregate information as fully as they could, given the number of bidders. Even partial information aggregation by eBay auction prices suggests a potential efficiency gain over one-to-one trade of used goods with uncertain common values Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Behavioral Operations
Organizations often commit to more product development projects than they can handle. And while people do not always behave rationally, most research on operations management still assumes they do. This paper explores theoretical and practical ways to study the effects of behavior and cognition on operations. Key concepts include: Recognize the role of common cognitive biases such as wishful thinking, overconfidence, and procrastination in order to understand and solve chronic problems in operations management. Such knowledge may help improve the operating systems that people design, implement, and use. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Effects of Task Difficulty on Use of Advice
We make most of our choices by weighing other people's advice counter to our own opinions. People generally underweight advice from others, though the practice is not universal. In two studies, it is determined that people overweight advice on difficult tasks but underweight it on the easy ones. Key concepts include: Understand built-in biases when weighing advice, especially on difficult tasks. Don't automatically give more credence to the opinions of advisers or consultants over your own experience. Closed for comment; 0 Comments.
Determinants of Early-Stage Startup Performance: Survey Results
In this study of 470 founders/CEOs and their management practices, startups that employ lean startup techniques had better valuation outcomes. So did ventures that balanced hiring for skill versus attitude and, more broadly, made early efforts to professionalize human resource management.
A Quantity-Driven Theory of Term Premia and Exchange Rates
This paper provides a framework for understanding how the detailed structure of financial intermediation affects foreign exchange rates.
How do Private Equity Fees Vary Across Public Pensions?
As state and local defined-benefit pensions increasingly shift capital from traditional asset classes to private-market investment vehicles, this analysis shows that public pensions investing in the same private-market fund can experience very different returns.
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Deep Links: Business School Students’ Perceptions of the Role of Law and Ethics in Business
The researchers spent more than a year eliciting twelve MBA students' thoughts and feelings about the role of law in starting and running a U.S. business. This research offers new insights into the ongoing debate about how best to educate the business leaders of tomorrow. More than a standalone course in business law or ethics, it would be wise for educators to use an approach that treats the role of law and business in the broader context of societal needs and norms. Key concepts include: Business school curricula that ignore the role law plays in making markets possible may undermine students' appreciation of how law undergirds the capitalist system. Business students need to learn both more ethics and law. Teaching materials should highlight the positive associations or linkages between law, business, and societal welfare. The systems approach to management is one way to link law, business, and ethics to create an integrated mental model. Closed for comment; 0 Comments.