Ownership
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- 20 Oct 2015
- Working Paper Summaries
Internalizing Global Value Chains: A Firm-Level Analysis
Manufacturing activities that used to be performed in close proximity are increasingly fragmented across firms and countries. This paper provides strong evidence that considerations driven by contractual frictions critically shape firms' ownership decisions along their value chains.
- 29 Sep 2015
- Research & Ideas
Work 3.0: Redefining Jobs and Companies in the Uber Age
Companies like HourlyNerd and Lyft are redefining the job marketplace—but government has not caught up to the shift. Mess this up and we’ll stifle a major driver of innovation, business creation, and jobs, argues Andrei Hagiu. Open for comment; Comment(s) posted.
- 19 Aug 2015
- Research & Ideas
Codeacademy’s Delicate Work of Adding Monetization Without Crushing Mission
Codeacademy is one of the world's largest educational institutions, with 24 million users. But now that it must monetize, can the coding school remain successful? asks Jeffrey Bussgang. Open for comment; 1 Comment(s) posted.
- 01 Jul 2015
- Research & Ideas
A Bank That Takes Parmesan as Collateral: The Cheese Stands a Loan
Nikolaos Trichakis discusses the subject of a new Harvard Business School case study: the Italian regional bank Credito Emiliano, which accepts young Parmigiano-Reggiano as collateral, and then ages it in climate-controlled vaults. Open for comment; 0 Comment(s) posted.
- 12 May 2015
- Research & Ideas
How Crowds and Experts Kickstart the Arts
Ramana Nanda and Ethan Mollick look into how experts and crowds—the National Endowment for the Arts and Kickstarter—make choices about backing proposed theater shows. Open for comment; 3 Comment(s) posted.
- 20 Oct 2014
- Research & Ideas
Users Love Ello, But What’s the Business Model?
Social network upstart Ello is generating terrific buzz among users, but can its ad-free approach compete against Facebook? Professors John Deighton and Sunil Gupta provide insights into what drives social media success. Closed for comment; 5 Comment(s) posted.
- 22 Sep 2014
- Op-Ed
Online Banks Fill Funding Needs for Small Business
In the final column on small business lending, Karen Mills is optimistic that the rise of alternative online banks can fund entrepreneurial business growth. Closed for comment; 1 Comment(s) posted.
- 28 Aug 2014
- Op-Ed
Government Can Do More to Unfreeze Small Business Credit
In part three of her series on the state of small-business lending, Karen Mills discusses how public-private partnerships and government guarantee programs have the potential to enhance economic growth. Closed for comment; 0 Comment(s) posted.
- 04 Aug 2014
- Op-Ed
Why Small-Business Lending Is Not Recovering
Lending to small businesses has not returned to levels seen before the financial crisis. Karen Mills, former head of the US Small Business Administration, explains the reasons and why the situation is not likely to improve anytime soon. Open for comment; 6 Comment(s) posted.
- 21 Jul 2014
- Research & Ideas
Is a Gap in Small-Business Credit Holding Back the American Economy?
Karen Mills, former head of the US Small Business Administration, analyzes the current state of availability of bank capital for small business. Open for comment; 8 Comment(s) posted.
- 11 Jun 2014
- Research & Ideas
In the Future of Sports Investing, Media Is the Best Bet
Sports investing is no longer just about buying teams and selling beer. Bob Higgins discusses why media, digital devices, and invention of fan-friendly sports are driving next-generation investors. Open for comment; 2 Comment(s) posted.
- 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; 7 Comment(s) posted.
- 12 Mar 2014
- Executive Education
Managing the Family Business: Firing the CEO
Firing a CEO is never easy—but the task gets even more difficult in a family business. John A. Davis discusses when to change out the chief executive. Open for comment; 13 Comment(s) posted.
- 27 Jan 2014
- Research & Ideas
Family CEOs Spend Less Time at Work
CEOs who are related to the owners of family-owned firms work significantly fewer hours than nonfamily CEOs, according to a new study by Raffaella Sadun and colleagues. This is in light of the fact that longer working hours are associated with higher productivity, growth, and profitability. Closed for comment; 16 Comment(s) posted.
- 07 Nov 2011
- Working Paper Summaries
Investment Cycles and Startup Innovation
In this paper, HBS professors Nanda and Rhodes-Kropf examine how the environment in which a new venture was first funded relates to its ultimate outcome, by specifically looking at what happened to venture capital-backed startups funded between 1980 and 2004. Results show that firms that were funded in "hot" markets were more likely to fail but created more value and had more highly cited patents when they succeeded. These results suggest that that flood of capital in hot markets lowers the cost of experimentation for early stage investors, and therefore allows them to fund more novel projects in periods of heated financial activity. Key concepts include: Experimentation and innovation are linked to the state of the venture capital market. Even the most experienced investors invest in riskier and more innovative projects at the top of the cycle. Hot markets seem to facilitate the experimentation that is needed for the commercialization and diffusion of radical new technologies. Hot markets may therefore be a critical aspect of the process through which new technologies are commercialized. Closed for comment; 0 Comment(s) posted.
- 01 Jun 2011
- Working Paper Summaries
The First Deal: The Division of Founder Equity in New Ventures
When starting a company, entrepreneurs must decide how to divide shares among the founders. The simplest way is to split the shares equally, which is what one third of startups decide to do. But that may not be the fairest or most effective way—especially in cases where some founders are doing more for the company than others. In this paper, Thomas F. Hellman (University of British Columbia) and Noam Wasserman (Harvard Business School) examine when and whether teams are likely to divide shares equally among all the founders, and explore whether such an equity split is good for the company. Key concepts include: The researchers consider four founder characteristics: years of work experience, prior founding experience, whether the founder contributed to the founding idea, and the amount of capital invested into the venture. They find that greater team heterogeneity in entrepreneurial experience, idea generation, and capital contributions predict a lower probability of equal splitting. The larger the founding team, the less likely it is to divide shares equally. The more combined work experience a team has, the less likely the team will split the shares equally. Teams where founders are related through family are more likely to split the equity equally. An equal split is associated with a lower valuation than an unequal split, especially in cases of quick negotiations. Founders who split equally when they should split unequally may be giving up a substantial amount of financial value. (Related research suggests that such teams may also be less stable.) Closed for comment; 0 Comment(s) posted.
- 20 Oct 2010
- Working Paper Summaries
Financing Risk and Bubbles of Innovation
While start-up firms are key to any technological revolution, they also run a high risk of failure. To that end, investors often provide limited capital in several careful stages, gaining confidence in a firm before doling out another round of funding. However, these investors still face the possibility that other investors won't provide follow-on funding, even when the firm's prospects remain sound. That's a big risk for individual investors who can't afford to fund a new firm all by themselves, and whose investment will flounder if others don't invest, too. Research by HBS professors Ramana Nanda and Matthew Rhodes-Kropf explores why future investors may not fund the project at its next stage even if the fundamentals of the project have not changed. Key concepts include: The paper introduces the concept of financing risk--the risk that a project cannot garner the additional funding it needs to proceed, even if its fundamentals remain sound. When investors become worried, future investors will not support the project. Withdrawing support today leads to a self-fulfilling jump to a poor financing environment. Investors face a trade-off: either providing more capital to novel ideas to protect against financing risk, or providing less funding to maximize knowledge before providing more capital. The most innovative firms face the most acute trade-off situations, and thus, funding to these firms is the most unstable. The additional capital that enters the market during "hot" times goes not only to weaker projects, but also to more innovative projects that are a good investment only when financing risk is low. Thus, the most innovative projects may need a hot funding environment to get funding at all. Closed for comment; 0 Comment(s) posted.
- 27 Jan 2010
- Working Paper Summaries
Labor Regulations and European Private Equity
Recent theoretical models predict that countries with stricter labor policies will specialize in less innovative activities due to the higher worker turnover frequently associated with rapidly changing sectors. HBS visiting scholar Ant Bozkaya and HBS professor William R. Kerr examine how differences in labor regulations across European countries influence the development of private equity markets, comprised of venture capital and buy-out investors. In so doing, the researchers provide the first empirical evidence for this theoretical prediction at the industry level in the entrepreneurial finance literature. They also make a methodological contribution by demonstrating how jointly modeling the different policies for providing worker insurance delivers more consistent results than their individual relationships would indicate by themselves. Key concepts include: Policy choices regarding the optimal levels and mechanisms of labor market insurance are complex and should consider many economic and non-economic factors. Worker insurance policies favoring labor market expenditures (e.g., unemployment insurance benefits) over employment protection regulations encourage greater private equity entry and larger investment levels. This is true for both domestic investors and U.S.-inbound venture capital investments. This effect is conditional on the level of worker insurance provided, which is of lesser importance for private equity patterns than the policy mechanisms employed. Closed for comment; 0 Comment(s) posted.
- 07 Dec 2009
- Research & Ideas
Government’s Positive Role in Kick-Starting Entrepreneurship
The U.S. government has spent billions of dollars bailing out troubled companies. Is it time for Uncle Sam to invest in new entrepreneurial firms as well? Professor Josh Lerner makes the case for limited government involvement in his book Boulevard of Broken Dreams. Closed for comment; 0 Comment(s) posted.
It’s Hard to Fix the Family Business Without Offending the Family
Navigating complex relationships and understanding unwritten processes are among the many challenges of transitioning a family-owned business to the next generation. Len Schlesinger, Michael Raiche, and Roger Zhu discuss the dilemmas of a small Vietnamese restaurant in the case study “Pho Hoa Dorchester.” Open for comment; Comment(s) posted.