Technology →
- 18 Nov 2013
- Op-Ed
Twitter IPO: Overvalued or the Start of Something Big?
Although it has yet to make a dime, share buyers valued Twitter's IPO at $25 billion. Asks professor Chet Huber, what do they see? Open for comment; 0 Comments.
- 24 Jun 2013
- Research & Ideas
Is Your iPhone Turning You Into a Wimp?
The body posture inherent in operating everyday gadgets affects not only your back, but your behavior. According to a new study by Maarten Bos and Amy Cuddy, operating a relatively large device inspires more assertive behavior than working on a small one. Closed for comment; 0 Comments.
- 29 Apr 2013
- Working Paper Summaries
Exclusive Preferential Placement as Search Diversion: Evidence from Flight Search
Measuring the net effect of search diversion is important for understanding the extent to which search engines and other intermediaries may act to influence consumer behavior. This paper makes two contributions. First, the authors develop a theoretical model to establish conditions when a search engine chooses to divert search to a less relevant service. Results indicate that search engines have a larger incentive to divert search when they are able to alter the consumers' perceptions of the difference between non-paid and paid placements, and when search engines place a large weight on revenue. These results are consistent with instances where some search engines have labeled paid links with confusing euphemisms or not at all, and where some search engines have mixed paid and non-paid links in the same area of the screen. Second, the authors measure the impact of a diversion mechanism where a search engine exclusively awards a non-paid preferred placement slot to its own service. Specifically, they examine Google's preferred placement of Flight Search. Analysis indicates that there was an 85 percent increase in click-through rates for paid advertising and a 65 percent decrease in click-through rates for non-paid algorithmic search traffic to competing online travel agencies. Both changes are statistically significant, providing evidence of Google's ability to influence how consumers choose services after they search. Key concepts include: There are significant cost increases for Internet startups that obtain large quantities of incoming traffic from search engines. These increases in costs could deter entry into thriving online industries. Search diversion particularly harms the sites that provide services most relevant to users' search queries. Closed for comment; 0 Comments.
- 19 Oct 2012
- Research & Ideas
Digital Technology’s Profound Game Change for Marketers
Within a few years, chief marketing officers will spend more on technology--digital marketing--than CIOs. Jeffrey Bussgang says it is clear that technology is radically transforming the marketing function and the role of the marketing professional. Closed for comment; 0 Comments.
- 02 Apr 2012
- Research & Ideas
Do Online Dating Platforms Help Those Who Need Them Most?
The $2 billion online dating industry promises the possibility of a priceless product: romantic love. Associate Professor Mikolaj Piskorski investigates whether these sites are helping the lonely—or just making life easier for young singles who are popular already. Key concepts include: Researchers studied a random sample of 500,000 OKCupid members, focusing on two important stages of forming a relationship: spotting a potential mate, and initiating contact. Older, shorter, and relatively overweight men tended to view more profiles than their younger, taller, slimmer counterparts. However, those who were most likely to view lots of profiles were least likely to initiate contact with an e-mail message. Some of the features on OKCupid helped users to overcome the normative restrictions of the offline world, while others only served to help those who really needed the least help. Closed for comment; 0 Comments.
- 09 Feb 2012
- Sharpening Your Skills
Sharpening Your Skills: Online Marketing
In this collection from our archives, Harvard Business School faculty discuss the latest research on online marketing techniques, including consumer reviews, video ads, loyalty programs, and coupon offerings. Open for comment; 0 Comments.
- 07 Oct 2011
- Research & Ideas
The Steve Jobs Legacy
Harvard Business School faculty offer their perspectives on the legendary career of Steve Jobs, who remade several industries even as he changed how we use technology. Closed for comment; 0 Comments.
- 09 Sep 2011
- Working Paper Summaries
Quantity vs. Quality: Exclusion by Platforms with Network Effects
Many well-known platforms regulate access and transactions even though excluded users would be willing to pay the "price of admission." For example, Apple routinely excludes certain application developers from its highly popular iPhone store, and videogame console manufacturers such as Microsoft, Sony, and Nintendo restrict access to a select set of game developers. Exclusion is oftentimes a necessary strategic instrument, which allows platforms to trade off the quantity versus the "quality" of users. Andrei Hagiu's paper builds a simple strategic model that formalizes the choices of possible exclusion policies and discusses the potential gains and losses of exclusion. Key concepts include: This model captures the incentives that platforms (one-sided and multi-sided) have to exclude some participants who would be willing to pay the price of access. As soon as at least one side of the market values a quality attribute of at least one other side, the platform may find it optimal to sacrifice quantity to a certain degree in order to increase the average quality of agents on the second side. Platforms' incentives to exclude are determined by several key parameters: users' preferences for quality (which unambiguously increase the incentives to exclude); the proportion of high-quality users in the overall population; and the relative cost advantage of high-quality users (the last two factors have ambiguous effects on the incentives to exclude). Closed for comment; 0 Comments.
- 02 Aug 2011
- Working Paper Summaries
To Groupon or Not to Groupon: The Profitability of Deep Discounts
For consumers, online discount vouchers (like those offered by Groupon.com) have obvious appeal: discounts as large as 90 percent. But for retailers offering the deals through the site, does the publicity compensate for the deep hit to profit margins? This paper sets out to help small businesses decide whether it makes sense to offer discount vouchers. Research was conducted by Harvard Business School professor Ben Edelman, Business Economics PhD candidate Scott Duke Kominers, and by Sonia Jaffe of the Harvard University Department of Economics. Key concepts include: For retailers, discount vouchers provide price discrimination, letting merchants reach customers who know about the business, but wouldn't ordinarily go there without a discount. These vouchers also benefit merchants through advertising, simply by informing consumers of a merchant's existence via e-mail. For some merchants, the benefits of offering discount vouchers are sharply reduced if individual customers buy multiple vouchers. As a marketing tool, discount vouchers are likely to be more effective for businesses that are relatively unknown and have low marginal costs. Closed for comment; 0 Comments.
- 01 Aug 2011
- Research & Ideas
Immigrant Innovators: Job Stealers or Job Creators?
The H-1B visa program, which enables US employers to hire highly skilled foreign workers for three years, is "a lightning rod for a very heated debate," says Harvard Business School professor William Kerr. His latest research addresses the question of whether the program is good for innovation, and whether it impacts jobs for Americans. Key concepts include: An uptick in the number of H-1B visas given to Indian and Chinese engineers correlates with an increase in the number of US patents. The H-1B program seems to have no overall effect on the number of jobs held by American-born scientists and engineers, nor does it affect the number of patents from inventors who have Anglo-Saxon names. Closed for comment; 0 Comments.
- 11 Jul 2011
- Research & Ideas
Non-competes Push Talent Away
California is among several states where non-compete agreements are essentially illegal. Is it a coincidence that so many inventors flock to Silicon Valley? New research by Lee Fleming, Matt Marx, and Jasjit Singh investigates whether there is a "brain drain" of talented engineers and scientists who leave states that allow non-competes and move to states that don't. Key concepts include: The research shows that inventors are leaving states that allow non-competes and moving to states that don't. The results are most pronounced among those inventors with the most patent citations—that is, those who are most productive, collaborative, and valuable to their firms. The researchers hope that their study will induce state legislators to consider regional rules regarding non-compete agreements. Open for comment; 0 Comments.
- 31 May 2011
- Research & Ideas
Japan Disaster Shakes Up Supply-Chain Strategies
The recent natural disaster in Japan brought to light the fragile nature of the global supply chain. Professor Willy Shih discusses how companies should be thinking about their supply-chain strategy now. Closed for comment; 0 Comments.
- 11 Apr 2011
- Lessons from the Classroom
Teaching a ‘Lean Startup’ Strategy
Most startups fail because they waste too much time and money building the wrong product before realizing what the right product should have been, says HBS entrepreneurial management professor Thomas R. Eisenmann. Closed for comment; 0 Comments.
- 22 Mar 2011
- Working Paper Summaries
Platform Competition under Asymmetric Information
Research by Hanna Halaburda (Harvard Business School) and Yaron Yehezkel (Tel Aviv University) shows how pricing, profits, and market efficiency are affected in two-sided markets, such as with smartphone and video game platforms, when users and developers do not know the utility or costs associated with the platform until they join. Key concepts include: Under competition, asymmetric information-where one party has more or better information than the other-may lead to a downward distortion of trade, even market failure, while under monopoly full efficiency is achieved. The combination of the informational problem and the presence of competition creates the market inefficiency. A third main result concerns multi-homing, the ability for a developer to create applications for multiple platforms. The incumbent platform earns higher profit under multi-homing, and multi-homing eliminates the incumbent's need to distort the quantity downward. The model underscores why it is usually entrants, not incumbents, that bring major technological innovations to the market. Entrants are more likely to adopt a new, highly risky technology given the information problem. Closed for comment; 0 Comments.
- 02 Mar 2011
- Research & Ideas
Managing the Open Source vs. Proprietary Decision
In their new book, The Comingled Code, HBS professor Josh Lerner and London School of Economics professor Mark Schankerman look at the impact of open source software on economic development. Our book excerpt discusses implications for managers. Closed for comment; 0 Comments.
- 28 Jan 2011
- Working Paper Summaries
Agglomerative Forces and Cluster Shapes
HBS professor William R. Kerr and doctoral candidate Scott Duke Kominers develop a theoretical model for analyzing the forces that drive agglomeration, or industrial clustering. It is rare that researchers systematically observe the forces like technology sharing, customer/supplier interactions, or labor pooling that lead to firm clustering. Instead, the data only portray the final location decisions that firms make (for example, firms that utilize one type of technology are clustered over 50 miles, while those using another technology are clustered over 100 miles). The researchers' model identifies how these observable traits can be used to infer properties of the underlying clustering forces. Key concepts include: Most industries exhibit spatial clustering. The paper's framework provides a theoretical foundation for inferring properties of agglomerative forces through observed spatial concentrations of industries. The model demonstrates that agglomeration clusters generally cover a substantially larger area than the micro-interactions among firms upon which they build. This structure is present, for example, in the technology and labor flows in Silicon Valley. Agglomerative forces with longer micro-interactions are associated with fewer, larger, and less-dense clusters. These patterns are evident in both technology clusters and industrial agglomerations. Closed for comment; 0 Comments.
- 10 Jan 2011
- Research & Ideas
Is Groupon Good for Retailers?
For retailers offering deals through the wildly popular online start-up Groupon, does the one-day publicity compensate for the deep hit to profit margins? A new working paper, "To Groupon or Not to Groupon," sets out to help small businesses decide. Harvard Business School professor Benjamin G. Edelman discusses the paper's findings. Key concepts include: Discount vouchers provide price discrimination, letting merchants attract consumers who would not ordinarily patronize their business without a major price incentive. These vouchers also benefit merchants through advertising, simply by informing consumers of a merchant's existence via e-mail. For some merchants, the benefits of offering discount vouchers are sharply reduced if individual customers buy multiple vouchers. As a marketing tool, discount vouchers are likely to be most effective for businesses that are relatively unknown and have low marginal costs. Closed for comment; 0 Comments.
- 30 Nov 2010
- Working Paper Summaries
Sponsored Links’ or ’Advertisements’?: Measuring Labeling Alternatives in Internet Search Engines
In processing a search for a particular phrase, Internet search engines generally offer two types of results: the algorithmic results, which a search engine selects based on relevance, and the "sponsored links," for which advertisers pay. The latter often occupy prominent screen space. But does the average web surfer realize that they are advertisements? In an online experiment, Harvard Business School professor Benjamin Edelman and doctoral candidate Duncan S. Gilchrist show that "sponsored link" is too vague a term for some users to understand, and that "paid advertisement" is a label that better clarifies the nature of the link. They call on the FTC to compel search engines to improve their disclosures. Key concepts include: Through October 2010, leading search engines Google, Yahoo!, and Bing presented their advertisements with the labels "sponsored links," "sponsored results," and "sponsored sites," respectively. (In November, Google substituted the term "ads.") In an online experiment that replaced these labels with the term "paid advertisement," users were up to 33 percent less likely to click on the sponsored link. Certain categories of users were particularly influenced by the improved label. The improved labels had largest effect on users without college degrees, users with annual income below $100,000, and users who utilize the web less than 12 hours per week. The Federal Trade Commission has called for "clear and conspicuous disclosures" to label search advertisements. Because available evidence suggests users do not understand widely used labels, the researchers believe the FTC should require search engines to use the label "advertisement" or "paid advertisement" rather than vague or easily overlooked alternatives. Closed for comment; 0 Comments.
- 23 Nov 2010
- Working Paper Summaries
Growth Through Heterogeneous Innovations
Economists have long recognized that innovation is central to economic growth and development. But as a profession, economics is just beginning to model the many types of innovations that exist and the amazing heterogeneity in the firms that conduct research and development--from General Electric to Silicon Valley start-ups. This paper provides theoretical and empirical evidence surrounding how firm size influences the types of R&D undertaken, with particular focus on choices to pursue exploration R&D (capturing new product lines) versus exploitation R&D (refining current product lines internally). From the choices made by individual firms and new entrepreneurs, the model then builds to consider aggregate economic growth. Research was conducted by Ufuk Akcigit of the University of Pennsylvania and William R. Kerr of Harvard Business School. Key concepts include: Exploration R&D seeks to create new technologies and products for the company to build market leadership. Exploitation R&D focuses on improving existing product lines that the firm already owns, in order to build stronger profits. Large firms have many product lines and thus naturally engage in extensive exploitation R&D to improve their current technologies. Small firms and new start-ups have a comparative advantage for undertaking exploration R&D. Quantitative tests find that exploration R&D has had a greater spillover effect into economic growth than exploitation R&D in the United States over the last couple of decades. This illustrates one channel through which small, innovative businesses and start-ups can play an especially important role in economic growth. Closed for comment; 0 Comments.
Information and Incentives in Online Affiliate Marketing
Compared to historic advertising methods, online marketing invites advertisers to attempt a sharply increased quantity of partnerships. Online relationships reduce the transaction costs of buying ad placements. In many advertising marketplaces, standardized contracts let an advertiser accept a proposed placement with a single click, and ad networks widely sell bundles of hundreds or thousands of placements. Meanwhile, many advertisers find they can get valuable leads and favorable pricing from the Internet's myriad small sites. These numerous relationships entail costs, too, such as selecting, compensating, and supervising the sites, making sure each site is suitable to show the advertiser's offer, and making sure sites in fact deliver the promised benefits. Advertisers thus turn to specialists and outside firms to handle important aspects of advertising-buying. In this paper, the authors evaluate advertisers' chosen management structures by measuring the relative prevalence of advertising fraud targeting advertisers engaged in online "affiliate marketing," a performance-based compensation system increasingly common in online ad campaigns. Specifically, the authors identify the vulnerabilities best addressed by outsourcing marketing management to external specialists, versus the problems better overseen by keeping management decisions in-house. They find outside advisors most effective at enforcing clear rules, but in-house staff excel at preventing practices viewed as "borderline" under industry norms. While the results apply most directly to advertisers considering the management structure of their online marketing programs, the analysis also speaks to broader concerns of outsourcing and the boundary of the firm. Key concepts include: Affiliate marketing broadly aligns incentives between advertisers and affiliates by compensating affiliates only when sales occur. Rogue affiliates may seek commissions they have not fairly earned, typically by claiming to have referred customers who were already going to buy. Alternative structures of affiliate program management can influence merchants' vulnerability to affiliate fraud. Outsourced marketing managers tend to enjoy superior information about affiliates' practices, but outsourcers' incentives differ from advertisers' objectives. Closed for comment; 0 Comments.