- 01 Jul 2009
- Working Paper Summaries
File-Sharing and Copyright
The researchers argue that file-sharing technology has not undermined the incentives of artists and entertainment companies to create, market, and distribute new works. The advent of new technology has allowed consumers to copy music, books, video games, and other protected works on an unprecedented scale at minimal cost. Such technology has considerably weakened copyright protection, first of music and software and increasingly of movies, video games, and books. While policy discussion surrounding file-sharing has largely focused on the legality of the new technology and the question of whether declining sales in music are due to file-sharing, the debate has been overly narrow. Copyright protection exists to encourage innovation and the creation of new works—in other words, to promote social welfare. This essay analyzes the landscape and identifies areas for more research. Key concepts include: Digital technology has lowered the cost of producing movies and music and allowed artists to reach their audience in novel ways. It's difficult to argue that weaker copyright protection has had a negative impact on artists' incentives to be creative. File-sharing has not discouraged authors and publishers. The publication of new books rose by 66 percent over the 2002-2007 period. Since 2000, the annual release of new albums has more than doubled, and worldwide feature film production since 2003 is up by more than 30 percent. How markets for complementary goods (such as concerts, electronics, and communications infrastructure) have responded to file-sharing remains largely unexplored in academic research. Closed for comment; 0 Comments.
- 30 Jun 2009
- First Look
- 30 Jun 2009
- Research Event
Business Summit: The Role of Business Leaders in Sustaining Market Capitalism
Business leaders at the HBS Business Summit agreed on the threats to capitalism, but offered different opinions on the way forward. Closed for comment; 0 Comments.
- 29 Jun 2009
- Sharpening Your Skills
Sharpening Your Skills: Leading Change
Nothing like a global recession to test your change-management skills. We dig deep into the Working Knowledge vault to learn about building a business in a down economy, motivating the troops, and other current topics. Closed for comment; 0 Comments.
- 26 Jun 2009
- Research Event
Business Summit: Business and the Environment
If the causes for global climate change are not addressed, the consequences for the planet are likely to be disastrous. Governments, business, and consumers must act. Closed for comment; 0 Comments.
- 25 Jun 2009
- Working Paper Summaries
Why Do Countries Adopt International Financial Reporting Standards?
Why do some countries adopt the European Union (EU)-based International Financial Reporting Standards (IFRS) when others do not? To expand our understanding of the determinants and consequences of IFRS adoption on a global sample, HBS professor Karthik Ramanna and MIT Sloan School of Management coauthor Ewa Sletten studied variations over time in the decision to adopt these standards in more than a hundred non-EU countries. Understanding countries' adoption decisions can provide insights into the benefits and costs of IFRS adoption. Key concepts include: Countries with high quality corporate governance systems and more powerful countries are less likely to adopt IFRS. There are network benefits to IFRS adoption, i.e., the likelihood of IFRS adoption for a given country increases with the number of IFRS adopters in its geographical region and with IFRS adoption among its trade partners. As more countries adopt the international standards, the relative import of network benefits from IFRS adoption (over direct economic benefits) are likely to increase. Similar effects might be seen in the adoption of accounting methods and standards, and of corporate governance best practices by firms and jurisdictions. Closed for comment; 0 Comments.
- 24 Jun 2009
- Working Paper Summaries
Don’t Just Survive—Thrive: Leading Innovation in Good Times and Bad
The financial crisis provides a sobering reminder of what happens when innovation fails to drive productive economic growth. For over a decade, money from around the world poured into the United States seeking innovation. Despite these massive investments, when adjusted for inflation, U.S. GDP grew slowly with much of the growth coming from government, professional, and business services, including real estate and outsourcing. What's more, inflation adjusted wages stalled for many, even as consumer spending increased. This paper argues that innovation is not a side business to a real business: rather, innovation is the foundation of a successful business. Key concepts include: Entrepreneurs can be found and a culture of entrepreneurship can be developed in companies of any size and age. Entrepreneurial leaders must relentlessly—but not recklessly—pursue opportunity. They must look beyond the resources currently controlled to harness the power, resources, and reach of their organizations and networks. Breakthrough innovations that change people's lives and the very structure and power dynamics of industries cannot be managed as "silos," tucked away in corporate, university, or government research labs, in incubators, or within venture capital funded entrepreneurial start-ups. Access to the marketplace is needed to help speed commercialization and adoption. Emerging opportunities must be nurtured and the transition to high growth must be managed. Once breakthrough innovations catch hold, growth must be funded and managed to exploit the full value of the opportunity. Incremental innovations must ensure that businesses that have passed through the high-growth stage can continue to deliver the resources, capabilities, and platforms needed to fuel the emerging opportunities of the future. Different organizational structures, cultures, governance and risk management systems, and leadership styles are needed to manage the business innovation lifecycle from an initial idea to a sustainable business that leverages entry position and capabilities to exploit the full potential for growth and evolution over time. Closed for comment; 0 Comments.
- 23 Jun 2009
- First Look
- 23 Jun 2009
- Research Event
Business Summit: Global Environment-Transformed Organization
According to two panel sessions led by HBS professor Clayton M. Christensen, successful organizations must continually transform themselves in today's dynamic world. Closed for comment; 0 Comments.
- 22 Jun 2009
- Research & Ideas
“Too Big To Fail”: Reining In Large Financial Firms
Four little words have cost U.S. taxpayers dearly in government bailouts of once-mighty Wall Street firms. Congress can put an end to such costly rescues, says HBS professor David A. Moss, and the Federal Reserve could be a super regulator, adds senior lecturer Robert C. Pozen. But will Congress enact the regulatory cure that is required? From the HBS Alumni Bulletin. Key concepts include: No firm should be too big to fail. The federal government should slap tough new regulations on all firms that pose "systemic risk"—the risk that a failure of one institution could wreak havoc across the entire financial system. The majority of financial firms that pose no systemic risk should face relatively light regulation, ensuring their continued dynamism and innovation. Not everyone on the politically divided Congressional Oversight Panel agrees with Moss's analysis and recommendations. The general concept of regulating systemic risk has gained broad support from a wide range of influential economists, lawmakers, and interest groups. Closed for comment; 0 Comments.
- 19 Jun 2009
- Research Event
Business Summit: The Evolution of Agribusiness
Agribusiness has come to be seen not just as economically important, but as a critical part of society. The future for this massive industry will be both exciting and complex. Closed for comment; 0 Comments.
- 18 Jun 2009
- Working Paper Summaries
Elections and Discretionary Accruals: Evidence from 2004
How does the political process affect accounting? During the 2004 U.S. congressional elections, outsourcing of American jobs was a major campaign issue. Because outsourcing is assumed to be net profitable, the use of income-decreasing accruals would enable donor firms to deflect public scrutiny of both the firm and the political candidate over outsourcing. HBS professor Karthik Ramanna and MIT Sloan School professor Sugata Roychowdhury examine the accrual choices made by outsourcing firms with links to U.S. congressional candidates during the 2004 elections, and specifically test for income-decreasing discretionary accruals. Evidence is consistent with firms using earnings management to reduce both direct political costs and the costs associated with causing embarrassment to affiliated political candidates. Key concepts include: Politically connected firms with more extensive outsourcing activities had more income-decreasing discretionary accruals in the two calendar quarters immediately preceding the 2004 congressional elections. The use of accounting discretion to manage political costs is potentially more evolved than currently discussed in academic literature. Closed for comment; 0 Comments.
- 17 Jun 2009
- Working Paper Summaries
Innovation Communication in Multicultural Networks: Deficits in Inter-cultural Capability and Affect-based Trust as Barriers to New Idea Sharing in Inter-Cultural Relationships
What makes sharing new ideas across cultural lines so difficult? Given that disclosing new ideas makes one person vulnerable to the other, innovation communication requires trust. The literature on workplace relationships distinguishes affect-based trust—feelings of socio-emotional bond with the other—and cognition-based trust—judgments of the other's reliability and competence. Recent organizational psychology research on capabilities needed to work across cultures has also identified affect-relevant strengths such as confidence and nonverbal communication. HBS professor Roy Y.J. Chua and Columbia Business School professor Michael W. Morris survey a sample of business executives with diverse professional networks, assessing their inter-cultural capability and measuring both kinds of trust as well as idea sharing in their working relationships. Key concepts include: A diverse professional network is not sufficient for cultural idea exchange and cross-pollination. In the study, individuals with low inter-cultural capabilities did not share new ideas across inter-cultural ties due to deficits of affect-based trust, but not cognition-based trust. Inter-cultural capability may be particularly predictive of affect-loaded interactions and relationships, such as mentoring an employee or inspiring an audience, rather than more intellectual tasks, such as evaluating performance. Individual differences play a role in harnessing the power of multiculturalism for creativity. Closed for comment; 0 Comments.
- 16 Jun 2009
- First Look
- 16 Jun 2009
- Research Event
Business Summit: The Future of Market Capitalism
Professor Michael E. Porter leads a discussion on the shortcomings of the capitalist system and ways the business community can better serve broader societal interests. Closed for comment; 0 Comments.
- 15 Jun 2009
- Research & Ideas
GM: What Went Wrong and What’s Next
For decades, General Motors reigned as the king of automakers. What went wrong? We asked HBS faculty to reflect on the wrong turns and missed opportunities of the former industry leader, and to suggest ideas for recovery. Closed for comment; 0 Comments.
- 12 Jun 2009
- Research Event
Business Summit: Lawrence Summers on Market Capitalism’s Historic Opportunity
Confronting today's economic challenges represents an historic opportunity to save capitalism from itself, and in doing so, to create more prosperity and improve the lives of more people, says Lawrence Summers. Closed for comment; 0 Comments.
- 11 Jun 2009
- Working Paper Summaries
Social Influence Given (Partially) Deliberate Matching: Career Imprints in the Creation of Academic Entrepreneurs
How do people select partners for relationships? Most relationships arise from a matching process in which individuals pair on a limited number of high-priority dimensions. Although people often match on just a few attributes, it may be that some set of additional characteristics, which was not considered when a choice was made to develop the relationship, results in the social transmission of attitudes and behaviors. For this reason, social matching is only "partially" deliberate. HBS professor Toby Stuart and coauthors observe this phenomenon in an analysis of the origins and consequences of the matching of postdoctoral biomedical scientists to their faculty advisers. This work shows the imprints of postdoctoral advisers on the subsequent choices of the scientists-in-training who travel through their laboratories. The researchers' findings contribute to a burgeoning literature on the interface between academic and commercial science. Key concepts include: The fact that matching is only partially deliberate clearly opens avenues for the unforeseen transmission of attitudes and behaviors. In certain circumstances, the attributes to which we are unexpectedly exposed can matter. Particularly when these exposures take place in the context of relationships with long durations or ones in which there are notable status or experience differentials between partners, chance exposures can fundamentally change individuals' points of view. In long running, asymmetric relationships (such as those between protégés and advisers), the length of interaction provides ample opportunity for the standard pathways of influence to take hold. And when these experiences occur in the process of professional development as seen in this study, they may result in turning points that reorient actors' career trajectories. Such partially deliberate matching may permeate the sociology of the economy, as many social relationships in market contexts arise from a limited set of economic imperatives, but subsequently become pipelines for social influence. Closed for comment; 0 Comments.
- 09 Jun 2009
- First Look
Technology Innovation and Diffusion as Sources of Output and Asset Price Fluctuations
A central challenge to modern business cycle analysis is that standard macro models are unable to generate fluctuations in the stock market with the amplitude, persistence, and lead-lag pattern observed in the data. At the same time, standard macro models predict that good news about future, such as those received during 1994-1995 on the arrival of IT, lead to recessions rather than expansions. HBS professor Diego Comin and coauthors develop a model that overcomes these two problems by explicitly incorporating an endogenous speed of diffusion of technologies that is increasing in the resources spent in adoption. Revisions in beliefs about future profits generate fluctuations in the stock market with the amplitude and lead over output observed in the data. The firms' investment decisions in adoption leads to a shift in labor demand that increases hours worked and output. Key concepts include: In the model, news about future growth prospects produces movements in current output and hours that are positively correlated with the news. The mechanism described here is also potentially relevant to business fluctuations driven by factors other than news about future technological prospects. In particular, endogenous technology adoption amplifies the effects of these shocks vis-à-vis a model without this mechanism. The framework also broadly captures the cyclical pattern of stock price movements. It can account for the run-up of stock prices in the mid 1990s and also some of the decline preceding the most recent recession. Closed for comment; 0 Comments.