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New research on value from Harvard Business School faculty on issues including determining the value of products and services, lifetime customer value, and maximizing value.
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How Companies Can Increase Market Rewards for Sustainability Efforts

by Rachel Layne

There is a connection between public sentiment about a company and how the market rewards its corporate social performance, according to George Serafeim. Is your company undervalued? Open for comment; Comment(s) posted.

Expected Stock Returns Worldwide: A Log-Linear Present-Value Approach

by Akash Chattopadhyay, Matthew R. Lyle, and Charles C.Y. Wang

Over the last 20 years, shortcomings of classical asset-pricing models have motivated research in developing alternative methods for measuring ex ante expected stock returns. This study evaluates the main paradigms for deriving firm-level expected return proxies (ERPs) and proposes a new framework for estimating them.

The Cross Section of Bank Value

by Mark Egan, Stefan Lewellen, and Adi Sunderam

How do commercial banks create value? This paper represents the first attempt to empirically identify the primary determinants of cross-sectional variation in bank value. Among the findings: A bank's ability to produce deposits is by far the most important determinant in explaining cross-sectional variation in bank value.

Replicating Private Equity with Value Investing, Homemade Leverage, and Hold-to-Maturity Accounting

by Erik Stafford

This paper studies the asset selection of private equity investors and the risk and return properties of passive portfolios with similarly selected investments in publicly traded securities. Results indicate that sophisticated institutional investors appear to significantly overpay for the portfolio management services associated with private equity investments.

Become a Value Creator

by Dina Gerdeman

Managers who adopt a mindset to create value hold the key to becoming truly successful leaders, says Brian Hall. Closed for comment; 5 Comment(s) posted.

HBS Cases: Branding Yoga

by Kim Girard

As yoga's popularity has grown into a $6 billion business, a cast of successful entrepreneurs has emerged with their own styles of the ancient practice. Yet yoga's rise underscores a larger question for Professor Rohit Deshpandé: Is everything brandable? Closed for comment; 19 Comment(s) posted.

The ‘IKEA Effect’: When Labor Leads to Love

by Michael I. Norton, Daniel Mochon & Dan Ariely

Companies increasingly involve customers in the design and assembly of products, from Converse allowing customers to design their own shoes to IKEA asking customers to assemble their own furniture. In this paper researchers Michael I. Norton (Harvard Business School), Daniel Mochon (University of California at San Diego), and Dan Ariely (Duke) use the "IKEA Effect" to explain the increase in valuation we place on products we build ourselves. The researchers discuss the implications of the IKEA Effect for marketing managers and organizations more generally. Key concepts include: Successful assembly of products—no matter how amateurish—leads consumers to value them over and above the value that arises from merely purchasing a product. Labor increases valuation of completed products not just for consumers who profess an interest in "do-it-yourself" projects, but even for those who express a preference for buying preassembled products. Successful completion is an essential component for the link between labor and liking to emerge; participants who were not permitted to finish their creations did not show an increase in willingness-to-pay. The marketing challenge lies in convincing consumers to engage in the kinds of labor that will lead them to value products more highly, especially given their general aversion to such pursuits. The overvaluation that occurs as a result of the IKEA Effect has implications for organizations as a contributor to two key organizational pitfalls: sunk cost effects and the "not invented here" syndrome. Closed for comment; 0 Comment(s) posted.

From Strategy to Business Models and to Tactics

by Ramon Casadesus-Masanell & Joan Enric Ricart

Drivers such as globalization, deregulation, or technological change, just to mention a few, are profoundly changing the competitive game. Scholars and practitioners agree that the fastest-growing firms in this new environment appear to have taken advantage of these structural changes to compete "differently" and innovate in their business models. However, there is not yet agreement on what are the distinctive features of superior business models. This dispute may have arisen, in part, because of a lack of a clear distinction between the notions of strategy, business model, and tactics. HBS professor Ramon Casadesus-Masanell and Joan Enric Ricart present an integrative framework to distinguish and relate the concepts of business model, strategy, and tactics. Key concepts include: An integrative framework that cleanly separates the realm of business model, strategy, and tactics will help guide the search for novel, interesting, and profitable new ways to compete. "Business model" refers to the logic of the firm, the way it operates, and how it creates value for its stakeholders. "Strategy" refers to the choice of business model through which the firm will compete in the marketplace. "Tactics" refers to the residual choices open to a firm by virtue of the business model that it employs. Closed for comment; 0 Comment(s) posted.

Quantifying the Economic Impact of the Internet

by John Quelch

Businesses around the advertising-supported Internet have incredible multiplier effects throughout the economy and society. Professor John Quelch starts to put some numbers on the impact. Open for comment; 0 Comment(s) posted.

What Customers Want from Your Products

by Clayton M. Christensen, Scott Cook & Taddy Hall

Marketers should think less about market segments and more about the jobs customers want to do. A Harvard Business Review excerpt by HBS professor Clayton M. Christensen, Intuit’s Scott Cook, and Advertising Research Foundation’s Taddy Hall. Closed for comment; 0 Comment(s) posted.

Top Ten Legal Mistakes Made by Entrepreneurs

by Staff

The life of a startup can be precarious, a wrong turn disastrous. Harvard Business School professor Constance Bagley discusses the most frequent legal flops made by entrepreneurs, everything from hiring the wrong lawyer to puffing up the business plan. Closed for comment; 0 Comment(s) posted.