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- 01 Dec 2014
- Research & Ideas
The Big Influence of Small Countries in the United Nations Secretariat
Who calls the shots at the United Nations Secretariat? A new study by Eric Werker and Paul Novosad on the nationalities of senior staff draws surprising conclusions about the influence of smaller countries compared with world powers. Open for comment; 0 Comments.
- 24 Sep 2014
- Op-Ed
We Need a Miracle. New Nuclear Might Provide it.
New nuclear power technology could be the miracle we need to combat dangerous carbon emissions, says Joe Lassiter. Closed for comment; 0 Comments.
- 13 May 2014
- Op-Ed
The Alibaba Effect
Alibaba's $200 billion mega-IPO is history-making in a number of ways. Bill Kirby and Warren McFarlan discuss what the deal says about Chinese entrepreneurship and American markets. Open for comment; 0 Comments.
- 31 Mar 2014
- Research & Ideas
Encouraging Niche Content in an Ad-Driven World
Research by Feng Zhu and Monic Sun explores how advertising drives bloggers to shift their writing to subjects that will grab more eyeballs—namely, the stock market, celebrities, and salacious behavior. But surprise: Ads might also help generate more niche content. Closed for comment; 0 Comments.
- 25 Mar 2014
- Research & Ideas
Book Excerpt: ‘Can China Lead?’
Creativity and innovation can be nurtured in different educational and institutional settings, but does China have a good institutional framework for innovation? An excerpt from Can China Lead? Closed for comment; 0 Comments.
- 25 Mar 2014
- Research & Ideas
China’s Economic System has Difficult Road Overcoming its Political System
It's fashionable to be bullish on China. But the new book "Can China Lead?" urges a more cautious view on the prospects of the country, where government bureaucracy stifles innovation. Open for comment; 0 Comments.
- 11 Mar 2014
- Working Paper Summaries
Return Migration and Geography of Innovation in MNEs: A Natural Experiment of On-the-Job Learning of Knowledge Production by Local Workers Reporting to Return Migrants
Since the mid-1990s, a large number of multinational enterprises (MNEs) have set up research and development centers in China, India, and other emerging markets. Such MNEs face constraints in expanding their "geography of innovation" —that of producing and transferring knowledge across borders—because for the MNE knowledge is likely to be localized within larger, more established centers of knowledge production. How do MNEs in emerging markets circumvent this constraint? In this paper, the author uses personnel data from a Fortune 50 technology firm and studies the role of return migrants in facilitating patenting at the emerging market R&D center. The author also studies on-the-job learning of knowledge production by local employees who report to return migrants at an emerging-market R&D setting. The findings generate insights into the functioning of 'internal labor markets' of multinationals. The results are also important for managers: Given the great many Fortune 500 MNE R&D centers in countries such as China and India, and the large fraction of these centers managed by return migrants, the findings may assist those who set up and manage current and future MNE R&D centers. Key concepts include: This paper, one of the first empirical studies of skilled migration within a multinational enterprise, contributes to understanding return migration and the geography of innovation of MNEs. Return migrants and their direct reports file more patents than other local employees. (The author leverages a natural experiment to test for the latter.) Patents that have return migrants (or their direct reports) as inventors exhibit high patent citation rates, indicating that return migration is related to cross-border knowledge transfer. Local workers who report to return-migrant managers tend to benefit from on-the-job learning that they might not receive otherwise. For example, return migrant managers connect their direct reports with ideas and resources in the US headquarters; they also help their direct reports understand the patenting process at US headquarters. Closed for comment; 0 Comments.
- 09 Jan 2014
- Working Paper Summaries
Economic Transition and Private-Sector Labor Demand: Evidence from Urban China
One of the key economic and historic events of the late twentieth century was the transition of centrally planned socialist economies to market economies, including the movement of labor from state employment to private employment. The authors examine two questions: 1) What are effective policies for gradually transitioning labor into the private sector? 2) What is the adaptability of labor demand in the new private sector during economic transition? Data from urban China and show that delinking housing benefits from state-sector employment accounts for more than a quarter of the overall increase in labor supply to the private sector during 1986-2005. Furthermore, increasing the private-sector labor supply by 10 percent reduces wages by 1.8 to 3.2 percent. These results have several implications: First, employer-provided housing benefits contribute to reduced labor mobility across sectors, a phenomenon called "job-lock" (similar patterns have been documented for employer-provided health benefits in the United States). Second and more importantly, the private sector, even in its infancy, can absorb a significant amount of labor without large wage declines. However, the projected magnitudes of labor movement into the Chinese private sector are so large that they still imply drastic private-sector wage reductions, if capital and technology movements remain at the same rate as in these data. Thus, to minimize wage reductions, Chinese policy makers may want to consider policies that increase the availability of other factors of production into the private sector, such as greater capital availability or adoption of newer technologies, to raise labor productivity. Key concepts include: China makes an excellent case for study, in part because, in contrast to Eastern Europe, China has experienced considerable variation in the timing of economic reforms across provinces and cities. Using the staggered timing of urban housing reform in China, the authors show that delinking housing benefits from state-sector employment accounts for more than a quarter of the overall increase in labor supply to the private sector during 1986-2005. To minimize wage reductions, Chinese policy makers may want to consider policies that increase the availability of other factors of production, such as capital or technology, in the private sector. Evidence that increasing labor mobility reduces the higher wages earned by private-sector workers suggests that transition may be very unpopular with certain segments of the population despite its potential welfare benefits. Policy makers should bear this mind. Policy experiments and newly available micro-data from transitioning economies can be used to provide well-identified estimates and enhance our understanding of the transition process. Closed for comment; 0 Comments.
- 23 Dec 2013
- Research & Ideas
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. Closed for comment; 0 Comments.
- 25 Nov 2013
- Research & Ideas
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; 0 Comments.
- 15 Aug 2013
- Working Paper Summaries
Competition and Social Identity in the Workplace: Evidence from a Chinese Textile Firm
Social identity theory suggests that individuals derive part of their self-concept from their perceived membership in a social group and behave differently towards in-group versus out-group members. But despite the importance of social identity in organizational contexts, the existing empirical evidence in managerial economics has mostly come from lab experiments, and there exist few quantitative studies on the impact of social identity on worker behaviors in real workplaces. This paper provides novel evidence of the impact of social identity on workers' competitive behaviors in a Chinese textile firm that uses relative performance incentives. The firm provides an unusual empirical setting in which there is a historical and institutional division of all weavers into two distinct groups with different social identities: urban resident and rural migrant workers. Our findings show that the weavers do not compete against coworkers who share the same social identity even though there is a tournament incentive to outperform their coworkers in general. Instead, they only compete against coworkers who do not share the same social identity. Managers who design incentive schemes without understanding the dynamics of social incentives in the workplace may fail to achieve the intended effects on productivity. Key concepts include: Social identity plays an important role in mitigating or amplifying the pecuniary incentives created by relative performance schemes. In an environment with tournament incentives, the competitive effect of tournaments may be mitigated among workers who share the same social identity, but amplified across different social groups. By taking advantage of the presence of social identities in the workplace, management can design and implement tournament that maximizes the beneficial effect of tournament and minimizes its "dark side." Closed for comment; 0 Comments.
- 23 May 2013
- Working Paper Summaries
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. Key concepts include: Independent directors dissent more when social connections that might hold back a dissent is less constraining on one hand, and when firms have poor performance that might impose threats to independent directors' personal reputations on the other hand. Boards can be reconceptualized: not as monolithic checks on managerial actions, but as social institutions with emergent norms, and sanctions and rewards to (non-)compliance on occasion. The labor market not only rewards independent directors for their superior decision making expertise, but also punishes those who openly challenged listed companies' management teams. For Chinese independent directors, this work suggests an inescapable dilemma whereby the Confucian doctrine of Golden Mean is the only survival guide. That is, independent directors must ensure that their relationships with listed companies are conducted on an open and mutually advantageous basis. On one hand, independent directors need to build a good public reputation for being an active monitor, and on the other hand, they need to establish a good "private" reputation for being friendly with the controlling shareholders and top management. Closed for comment; 0 Comments.
- 22 Oct 2012
- Research & Ideas
Not Your Father’s State-Run Capitalism
The face of state-owned companies in Russia, China, and other countries has changed dramatically over the last several decades, says professor Aldo Musacchio. What capitalists need to know about these increasingly powerful competitors. Closed for comment; 0 Comments.
- 06 Mar 2012
- Working Paper Summaries
Big BRICs, Weak Foundations: The Beginning of Public Elementary Education in Brazil, Russia, India, and China
Economists have argued that the "Great Divergence" between the developed and underdeveloped world in the nineteenth century was reinforced—if not caused—by rapid improvements in schooling that occurred in the advanced economies. Explaining differences in economic development today may hinge on understanding why most societies failed to develop adequate primary education in the late nineteenth and early twentieth centuries. This study sheds new light on the comparative experiences of Brazil, Russia, India, and China (BRIC) during the formative years of their primary education systems. Key concepts include: Extreme decentralization in environments without democracy or accountability for local officials may lead to unequal educational outcomes within countries, as elites in certain provinces may choose to spend less on public goods, such as education. Brazil, Russia, India, and China were among the largest and poorest states in the world in the early twentieth century, and their low level of development limited investments in mass schooling. Brazil and Russia—marginally richer and possessing slightly broader forms of elite democracy—saw greater investments in public primary schooling than India and China. Central authorities in each BRIC country mostly absolved themselves of the responsibility of providing primary education. The provision of education was frequently decentralized to lower levels of government, where the absence of accountable and representative democracy allowed local elites to capture political institutions, limit redistributive taxation, and dictate how public resources were allocated. Variation among elites or in the political and economics conditions they faced (whether across space or over time) generated multiple schooling equilibriums across and within BRIC. Closed for comment; 0 Comments.
- 19 Dec 2011
- Research & Ideas
Climbing the Great Wall of Trust
New research from Assistant Professor Roy Y.J. Chua investigates the difficulties for foreigners doing business in China, and what they can do to overcome the challenge. Key concepts include: Foreign businesspeople must learn their way around Chinese cultural customs and the importance of personal relationships and trust in order to be successful in that country. For companies doing business in China, one solution might be to consciously hire executives of Chinese ancestry in key roles or placing more emphasis and attention on cultural sensitivity. The researchers believe that similar dynamics are likely to rule in any business situation that mixes partners from different cultures or countries. Closed for comment; 0 Comments.
- 18 Oct 2011
- Working Paper Summaries
Historical Trajectories and Corporate Competences in Wind Energy
Analyzing developments in the wind turbine business over more than a century, Geoffrey Jones and Loubna Bouamane argue that public policy has been a key variable in the spread of wind energy since the 1980s, but that public policy was more of a problem than a facilitator in the earlier history of the industry. Geography has mattered to some extent, also: Both in the United States and Denmark, the existence of rural areas not supplied by electricity provided the initial stimulus to entrepreneurs and innovators. Building firm-level capabilities has been essential in an industry which has been both technically difficult and vulnerable to policy shifts. Key concepts include: Firms from Denmark have been unusually prominent throughout the history of the wind energy business. The basis of the competitive Danish industry was laid without support or even encouragement from its government. US-based firms have also been regularly found among the leading wind energy companies. But their relative importance varied considerably over time, has rarely reflected the overall importance of the U.S. market, and has involved a changing cast of actual firms. German and Spanish, and more recently Indian and Chinese firms, have emerged to become amongst the largest turbine manufacturers in the industry. The most striking change over the last decade has been in the competitive landscape. Engineering powerhouses, such as GE and Siemens, and wholly or partly state-owned Chinese firms with low-cost bases, are now prominent actors in this industry. Closed for comment; 0 Comments.
- 17 Jun 2011
- HBS Case
KFC’s Explosive Growth in China
In China, Yum! Brands is opening a KFC store every day. But this is not the KFC you know in America. A recent case study written by professor David Bell and Agribusiness Program director Mary Shelman reveals how the chicken giant adapted its famous fast-food formula for the local market. Closed for comment; 0 Comments.
- 03 May 2011
- Working Paper Summaries
Big BRICs, Weak Foundations: The Beginning of Public Elementary Education in Brazil, Russia, India, and China, 1880-1930
In deducing why some nations are more developed than others, it makes sense to look at their educational systems. While comparative studies on the subject focus either on developed nations or on differences between developed and developing economies, this paper hones in four of the largest developing nations at the turn of the twentieth century: Brazil, Russia, India, and China (BRIC). Research was conducted by Aldo Musacchio of Harvard Business School, Laktika Chaundhary of Scripps College, Steven Nafziger of Williams College, and Se Yan of Peking University. Key concepts include: BRIC comprised half of the world's population in 1900, but only 14, 21, 9, and 4 percent of school-age children in Brazil, Russia, India, and China, respectively, were enrolled in primary school, compared with more than 75 percent in Germany, the United Kingdom, and the United States. In BRIC, decentralized political structures and lack of accountability led to situations in which public resources were funneled to educate the elites. Meanwhile, poor communities had to rely on insufficient private contributions to fund their schools. However, in many areas, the elites supported the expansion of mass education, either because they wanted to produce skilled labor for their companies or because they perceived political benefits from an educated population. Their results explain why it has been so hard for BRIC countries to catch up with the education levels developed countries in the twentieth century. While the United States, Germany, and the United Kingdom had two hundred years to get to their current levels of education, BRIC countries had a late start. Additionally, the paper highlights the importance of having centralized education balancing education deficiencies in distant localities or in provinces in which elites that are not interested in educating the masses capture the government. Closed for comment; 0 Comments.
- 30 Nov 2010
- Working Paper Summaries
The New Face of Chinese Industrial Policy: Making Sense of Anti-Dumping Cases in the Petrochemical and Steel Industry
The researchers set out to explain differences in China's antidumping actions against importers in the petrochemical and steel industries. During the study period, 66 percent of the country's antidumping cases targeted petrochemical imports, while steel imports were targeted only in 5 percent of the cases. Why did China's petrochemical and steel industries behave so differently in seeking trade protection? The answers put forward by researchers Regina Abrami (Harvard Business School) and Yu Zheng (University of Connecticut) point toward the structural nature of the industries themselves, and against arguments that antidumping actions in China have been driven by retaliation or national industrial strategy alone. Key concepts include: Existing patterns of antidumping investigations in China mainly reflect how firms may respond to economic challenges in the context of structural constraints. Rather than serving as a defense against global competition, strong local interests in China seem to be facilitating it. They do so by getting in the way of the kinds of industrial consolidations that seem necessary to wage successful battles through antidumping mechanisms. The research does not dismiss a role for economic or political interests as motivating factors, but does suggest that in their own right they cannot explain fully the patterns that exist. The research demonstrates that domestic business interest groups can influence state policy outcomes in China; that their ability to do so is closely related to resolution of collective action problems; and that Chinese industrial strategy is a far less coordinated political outcome than the increasingly popular idea of "China Inc." suggests. Closed for comment; 0 Comments.
China’s Complicated Relationship With Mother Nature
Bill Kirby discusses how a historic international accord on reducing environmental emissions might signal a greener future for the world's most populous nation. Open for comment; 0 Comments.