Technology →
- 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.
- 12 Mar 2012
- Research & Ideas
Crowded at the Top: The Rise of the Functional Manager
It's not lonely at the top anymore—today's CEO has an average of 10 direct reports, according to new research by Julie M. Wulf, Maria Guadalupe, and Hongyi Li. Thank a dramatic increase in the number of "functional" managers for crowding in the C-suite. Key concepts include: The number of managers reporting directly to the CEO has doubled, from an average of 5 direct reports in 1986 to an average of 10 today. In 2008, companies averaged 2.9 general managers, compared with 1.6 in 1986, according to data from several surveys. The average number of functional managers reporting directly to the CEO increased much more dramatically, from 3.1 in the late 1980s to 6.7 in 2008. Two main factors have driven the C-suite sea change: an overall increase in IT investments and an overall decrease in firm diversification. As hierarchical flattening occurs, companies are pushing some decisions toward the top, casting doubt on the common idea that firms flatten in order to push ideas down the organization. Closed for comment; 0 Comments.
- 16 Feb 2012
- Working Paper Summaries
Platform Competition Under Partial Belief Advantage
In platform competition in a two-sided market, a platform's ability to attract consumers depends not only on the consumers' beliefs regarding its quality, but also on consumers' beliefs regarding the platform's ability to attract the other side of the market. For example, in the market for smart-phones the recent introductions of Apple's iPhone 4S with the improved operating system, and Samsung's Galaxy II with the improved Android 4, open a new round in the competition between the two platforms. The ability of each platform to attract users depends not only on its perceived quality, but also on users' beliefs regarding the number new applications developed for the platform. Likewise, the ability to attract application developers to the platform depends on their beliefs regarding the number of users that will join the platform. In a competitive market, some platforms may enjoy more favorable beliefs of the market (about their ability to attract ``the other side) than other platforms. Such a belief advantage may be source of a competitive advantage. In this paper, the authors look at how the belief advantage helps the platform to compete in the market, and also how a platform may create the belief advantage. The authors find that the degree of the platform's belief advantage affects its decision regarding its business model (whether to subsidize buyers or sellers), as well as the access fees and the size of the platform. Moreover, the paper looks into the optimal advertising strategy that leads to creating belief advantage. This paper contributes to scholarship on economics and business strategy. Key concepts include: The advantaged platform can win the market even if it offers a lower quality than the disadvantaged platform, because of its ability to exploit its beliefs advantage. It is also possible for the disadvantaged platform to win if it offers substantially higher quality. 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.
- 06 Feb 2012
- Research & Ideas
Kodak: A Parable of American Competitiveness
When American companies shift pieces of their operations overseas, they run the risk of moving the expertise, innovation, and new growth opportunities just out of their reach as well, explains HBS Professor Willy Shih, who served as president of Eastman Kodak's digital imaging business for several years. Key concepts include: Outsourcing ends up chipping away at America's "industrial commons"—the collective R&D, engineering, and manufacturing capabilities that are crucial to new product development. If the United States wants to keep from slipping any further in its ability to compete on the industrial stage, the government must increase its support of scientific research and collaborate with the business and academic world. Open for comment; 0 Comments.
- 03 Nov 2011
- Working Paper Summaries
Pricing and Efficiency in the Market for IP Addresses
Every device connected to the Internet—from PCs to tablets, printers to cash registers—needs an IP address. The current addressing standard, IPv4, uses addresses with 32 binary digits, allowing approximately 4 billion IP addresses. The world's centralized supply of unused IP addresses reached exhaustion in February 2011, and networks in most countries will soon find they cannot easily obtain additional IPv4 addresses. While addresses may now be bought and sold, the institutions and rules of these transfers are not yet well-developed. Nor have economic models examined the unusual characteristics of this market. Benjamin Edelman and Michael Schwarz model the market for IPv4 addresses, including evaluating novel rules intended to avoid possible harms from the purchase and sale of IP addresses, as well as predicting price trends. Key concepts include: Facing limited availability of IPv4 addresses, growing or newly created networks have several options. Many growing networks will, in the short run, turn to IPv4 purchases to meet their v4 needs—prompting questions of the design of markets and institutions to facilitate such transfers. While trade in IPv4 addresses promises various benefits, transfers also prompt concerns. Most common is the fear that certain address transfers might threaten the Internet's routing system—the systems that transfer data from one network to another. Suitable market rules can moderate these concerns. Closed for comment; 0 Comments.
- 24 Oct 2011
- Research & Ideas
The Yelp Factor: Are Consumer Reviews Good for Business?
Michael Luca shows just how much restaurant reviews on Yelp affect companies' bottom lines. The more difficult question: Are these ratings reliable as a measure of product quality? 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.
- 12 Oct 2011
- Research & Ideas
Creating Online Ads We Want to Watch
The mere fact that an online video advertisement reaches a viewer's computer screen does not guarantee that the ad actually reaches the viewer. New experimental research by Thales S. Teixeira looks at how advertisers can effectively capture and keep viewers' attention by evoking certain emotional responses. Closed for comment; 0 Comments.
- 10 Oct 2011
- Research & Ideas
Retailing Revolution: Category Killers on the Brink
Mass-market retailers, particularly big-box "category killers," are under critical pressure from online competitors. For retailers that can react quickly enough, this upheaval is survivable. But those slow to see the tsunami wave on the horizon stand to be swept away, according to professors Rajiv Lal and José B. Alvarez. Key concepts include: Retailing generally is at a tipping point, with category killers being the first significant casualties. Online competitors are making retail stores, which spent much of the last decade adding floor space, less productive. The impact of emerging technologies, expanding price and assortment transparency, and the increasing amount of excess retail space has created similar challenges for all mass-market retailers. Physical stores can compete by emphasizing instant gratification, unique shopping experiences, and customized support. Closed for comment; 0 Comments.
- 04 Oct 2011
- Working Paper Summaries
Reviews, Reputation, and Revenue: The Case of Yelp.com
In just six years, Yelp.com has managed to crowdsource 20 million reviews of restaurants and other services by creating and leveraging an impressive social network of people who enjoy writing reviews. But can a bunch of amateur opinionators working for free really transform the restaurant industry, where heavily marketed chains and highly regarded professional critics have long had a stronghold? To answer this question, HBS professor Michael Luca combined Yelp reviews with revenues for every restaurant that operated in Seattle, WA at any point between 2003 and 2009. Applying a new method to tease out the causal effect of reviews (separate from the effect of underlying quality), the study shows that a one-star increase on Yelp leads to a 5 to 9 percent increase in revenue. Yet Yelp doesn't work for all restaurants. Chain restaurants —which already spend heavily on branding —are unaffected by changes in their Yelp ratings. This suggests that consumer reviews present a new way of learning in the Internet age, and are fast becoming a substitute for traditional forms of reputation. Key concepts include: Online consumer review websites provide more information to consumers than was previously thought to be cost-effective. By relying on user-generated content, Yelp is able to review more products than traditional media such as newspaper reviews. More than 70 percent of Seattle restaurants are on Yelp. The impact of consumer reviews depends on the existing reputation of a company or product. Consumer reviews are effective overall, but ineffective when a product has a firmly established reputation (such as a chain restaurant). Consumer reviews provide a substitute for more traditional forms of marketing. Other forms of reputation such as chain affiliation may become less influential as websites like Yelp continue to gain traction. Evidence suggests that this pattern is already emerging. Consumers rely on simple metrics such as the average rating and the number of reviews, and are more trusting of reviews that are written by "elite" reviewers (as identified by Yelp). Closed for comment; 0 Comments.
- 15 Aug 2011
- Research & Ideas
A New Model for Business: The Museum
Looking for a new model to think about business? Look no further than your local art museum, says Assistant Professor Ray Weaver. Some of the most profitable Web businesses and retailers such as Apple succeed by acting like museum curators: providing a very limited amount of choices at a time; offering a brief, engaging description of each choice; and classifying products honestly. Key concepts include: "The firm as curator" is the theme of still-nascent research by HBS Assistant Professor Ray Weaver, who mis seeking feedback on the idea from practitioners. Weaver argues that Web giants Groupon and Facebook are successful not only because they offer great deals and engender social networking, but because of the careful way in which they present and organize information. Closed for comment; 0 Comments.
- 19 Jul 2011
- Working Paper Summaries
Signaling to Partially Informed Investors in the Newsvendor Model
Why might firms make operational decisions that purposefully do not maximize expected profits? This model looks at the question by developing scenarios using the example of inventory management in the face of an external investor. The research was conducted by Vishal Gaur of Cornell University, Richard Lai of the University of Pennsylvania, and Ananth Raman and William Schmidt of Harvard Business School. Key concepts include: Companies face pressure from external investors that leads them to make suboptimal operations decisions. This pressure arises from three forces: a strong prior belief that firms are of a "low" type (one with a low quality investment opportunity), an inability for firms to mitigate the information asymmetry regarding their actual type, and an emphasis on short-term valuation. Surprisingly, this scenario includes instances in which a firm with a high quality investment opportunity finds it attractive to underinvest. There have been relatively few applications of signaling games in the operations management literature and this model provides an important application of signaling game theory to the problem of inventory management in the face of an external investor. The researchers find several real-life examples in which firms faced pressure to underinvest, and how the firms chose to deal with those situations. One example is the decision by French upscale beauty brand Clarins Group to go private in 2008. The move relieved management of shareholder pressure for short-term profits and allowed them to pursue longer-term opportunities that eventually paid off. The model can be effectively applied regardless of whether the decision is about inventory or some other type of capacity investment, including plant expansions, capital expenditures, and contracting for production inputs. Closed for comment; 0 Comments.
- 13 Jun 2011
- HBS Case
Mobile Banking for the Unbanked
A billion people in developing countries have no need for a savings account–but they do need a financial service that banks compete to provide. The new HBS case Mobile Banking for the Unbanked, written by professor Kash Rangan, is a lesson in understanding the real need of customers.
- 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.
- 12 Jan 2011
- Working Paper Summaries
Modularity for Value Appropriation--How to Draw the Boundaries of Intellectual Property
Many firms have adopted models of "open innovation," in which they seek ideas from external sources such as university labs, independent entrepreneurs, customers, and other companies. While such a business model has the potential to create value, the inherent intellectual property issues can be sticky. This paper discusses how companies can address these issues by adopting a system of modularity, wherein innovation in one part of a project will not require changes in all the other parts. Research was conducted by Joachim Henkel of Technische Universität München and Harvard Business School professor Carliss Y. Baldwin. Key concepts include: Controlling too much of the system's intellectual property will deter outside innovation, but controlling too little can prevent a firm from capturing value. A system can use different, incompatible forms of intellectual property and still be IP-modular, provided that the incompatible chunks of knowledge are associated with different modules within the whole system. The optimal modular structure for capturing value is not necessarily the same as the optimal structure for creating value. 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.
- 01 Nov 2010
- Research & Ideas
How IT Shapes Top-Down and Bottom-Up Decision Making
What determines whether decisions happen on the bottom, middle, or top rung of the corporate ladder? New research from professor Raffaella Sadun finds that the answer often lies in the technology that a company deploys. Key concepts include: Enterprise Resource Planning software is a decentralizing technology: It provides information that enables lower-level managers to make more decisions without consulting their superiors. By the same token, Computer-Assisted Design and Computer-Assisted Manufacturing software creates a situation in which the plant worker needs less access to superiors in order to make a decision. The better the data network, the easier it is for workers to lean on superiors and rely on them to make decisions. It's also easier for executives to micromanage and keep all the decisions in the corporate office. Trust is also a key factor in determining whether decisions are centralized at headquarters or decentralized at the local level. Research finds that the average level of trust of a multinational's home country tends to influence the level of decentralization in that company. Open for comment; 0 Comments.
- 28 Oct 2010
- Working Paper Summaries
The Distinct Effects of Information Technology and Communication Technology on Firm Organization
At what point in the corporate food chain are big decisions made? It depends on technology, according to new research, which finds that information-based software will help to push decisions further down the corporate ladder, whereas communication technologies will push decisions up to the top. Research was conducted by Nicholas Bloom of Stanford University; Assistant Professor Raffaella Sadun of Harvard Business School; and Luis Garicano and John Van Reenen of the London School of Economics. Key concepts include: Enterprise Resource Planning software is a decentralizing technology: It provides information that enables lower-level managers to make more decisions without consulting their superiors. By the same token, Computer Assisted Design software creates a situation in which the worker needs less access to superiors in order to make a decision. On the other hand, the better the data network, the easier it is for workers to communicate with their superiors and to rely on them to make decisions. Closed for comment; 0 Comments.
How Will the “Age of Big Data” Affect Management?
Summing up: How do we avoid losing useful knowledge in a seemingly endless flood of data? Jim Heskett's readers offer some wise suggestions. What do you think? Closed for comment; 0 Comments.