- 21 Jul 2008
- Research & Ideas
Solving the Marketing Resources Allocation Puzzle
Television spots, word-of-mouth, viral ads. Marketing managers have more options at their disposal than ever before. But how to decide? Harvard Business School professors Sunil Gupta and Thomas Steenburgh offer a way for managers to conceptualize the most effective approach. Key concepts include: Managers are being held to higher standards to justify customer investments, and need to develop greater analytical skill. Companies are able to create sustainable competitive advantages by developing a deep understanding of what their customers want and how they behave. Marketing allocation problems need to be addressed in two steps: conduct demand analysis to predict how different marketing actions will affect consumer behavior, and use the economic-impact analysis to determine the best actions for the firm. Closed for comment; 0 Comments.
- 17 Jul 2008
- Working Paper Summaries
A Replication Study of Alan Blinder’s “How Many U.S. Jobs Might Be Offshorable?”
The movement of business activity from developed economies to developing economies—commonly called offshoring—has become the focus of heated debates. Behind these debates lies a pivotal question of scale: How much business activity and how many jobs are at stake? Official statistics are nearly silent, and private-sector researchers vary widely in their estimates of the number of U.S. jobs that have moved offshore, will move offshore, or could move offshore. In an effort to address this gap in prior literature, Princeton economist Alan Blinder released an innovative working paper in 2007 in which he personally reviewed more than 800 occupations in the United States, assessed the "offshorability" of each, and used the evaluations to estimate the total number of U.S. jobs that might be offshorable. Here, HBS research associate Troy Smith and Professor Jan W. Rivkin describe an online exercise that allowed 152 teams of HBS MBA students, collectively, to recreate Blinder's study and to develop insights about the future of offshoring. Key concepts include: The surge in the number of potentially offshorable jobs in recent decades suggests that fewer business activities are tied to a specific location. More often, the laws of economics drive the geography of business activity. Some of the most creative applications of offshoring have taken jobs, broken them down into component tasks, bundled them in new ways, and relocated each new bundle to the place where its tasks can be completed best or cheapest. This opportunity to rethink the fundamental grouping of tasks, not just to adjust the geographic array of historical "job" bundles, gives businesspeople a broad menu of new options for taking advantage of differences across borders. Closed for comment; 0 Comments.
- 16 Jul 2008
- Op-Ed
What Should Employers Do about Health Care?
Companies that cut health care costs without improving the overall value of care eventually pay a price in terms of employee absenteeism and chronic ailments. According to Harvard University professor and strategy expert Michael E. Porter and coauthors, the best way to truly reduce health care costs is to improve quality. Closed for comment; 0 Comments.
- 15 Jul 2008
- First Look
- 14 Jul 2008
- Research & Ideas
HBS Cases: Reforming New Orleans Schools After Katrina
The New Orleans public school system, ravaged by Hurricane Katrina in 2005, is now getting a boost from charter schools—today about half of the city's 80 schools are charter schools, says HBS lecturer and senior researcher Stacey M. Childress. She explains what New Orleans represents for entrepreneurial opportunities in U.S. public education. Key concepts include: Charter schools are public schools of choice that operate outside the governance and policies of their local school districts. Prior to the hurricane, the New Orleans school district was one of the worst in the country. Today no other large school district in the United States has such a high percentage of charter schools as does New Orleans. The organization New Schools for New Orleans (NSNO), the subject of an HBS case study, aims to create networks of schools to receive shared support services while avoiding the dysfunctions of a large urban district. NSNO developed a strategy to focus on a subset of charter schools that it believed could be helped most. Was it the right strategy? Or should NSNO support all schools, not just charter schools? Closed for comment; 0 Comments.
- 09 Jul 2008
- Research & Ideas
Starbucks’ Lessons for Premium Brands
After building a great franchise offering a unique customer experience, Starbucks diluted its brand when it overexpanded and offered too many new products. John Quelch thinks the trouble began when the company went public. Closed for comment; 0 Comments.
- 08 Jul 2008
- Research & Ideas
Colloquium: The Future of Social Enterprise
The field of social enterprise is undergoing a "confluence of forces" that is reshaping the way nonprofits and other organizations fund and measure their work. A new working paper born of a recent Harvard Business School colloquium on the future of social enterprise explores possible scenarios. Closed for comment; 0 Comments.
- 08 Jul 2008
- First Look
- 07 Jul 2008
- Research & Ideas
Innovation Corrupted: How Managers Can Avoid Another Enron
The train wreck that was Enron provides key insights for improving corporate governance and financial incentives as well as organizational processes that strengthen ethical discipline, says HBS professor emeritus Malcolm S. Salter. His new book, Innovation Corrupted: The Origins and Legacy of Enron's Collapse, is a deep reflection on the present and future of business. Key concepts include: Enron's stated purpose was too general to permit disciplined and responsible decision-making in the face of difficulty. The lessons of Enron relate to strengthening board oversight, avoiding perverse financial incentives for executives, and instilling ethical discipline throughout business organizations. Directors of public companies can adapt key aspects of the private-equity governance model to ensure that they fulfill their oversight responsibilities. Incentive systems should reward accomplishments other than economic performance, and penalize failures. Companies can take steps to help senior executives avoid the two sources of leadership failure at Enron: personal opportunism and flights to utopianism. Closed for comment; 0 Comments.
- 03 Jul 2008
- Working Paper Summaries
The Future of Social Enterprise
This paper considers the confluence of forces that is shaping the field of social enterprise, changing the way that funders, practitioners, scholars, and organizations measure performance. The authors trace a growing pool of potential funding sources to solve social problems, much of it stemming from an intergenerational transfer of wealth and new wealth from financial and high-tech entrepreneurs. They further examine how these organizations can best access the untapped resources by demonstrating mission performance, and then propose three potential scenarios, outlined below, for how this sector might evolve. Key concepts include: Consolidation: In this scenario of sector evolution, funding will keep growing in a gradual, linear fashion, and organizations will compete for resources by demonstrating performance, with a focus on efficiency. The sector will consolidate. Entrepreneurial: In a more optimistic future, existing and new enterprises will apply strategies to achieve and demonstrate performance, improving efficiency and effectiveness and attracting new funding sources. Expressive: Rather than focusing exclusively on performance, funders and organizations may view their investment as an expressive civic activity. Closed for comment; 0 Comments.
- 03 Jul 2008
- What Do You Think?
Are Followers About to Get Their Due?
Online forum now closed. Leadership may be much-discussed, but followership merits equal attention, suggests HBS professor Jim Heskett. As a follower, what advice would you give other followers who want to have an impact on their jobs and organizations? As a leader, what do you do to foster good followership? Closed for comment; 0 Comments.
- 01 Jul 2008
- First Look
- 30 Jun 2008
- Research & Ideas
Rethinking Retirement Planning
Many of us are relying on defined contribution plans to help fund retirement. But Harvard Business School professor Robert C. Merton believes today's plans are not sustainable. So what's next? A new way to look at the problem. Key concepts include: Defined contribution plans currently offered by the majority of employers place an undue burden on workers who don't have the interest, time, or expertise to manage their finances. A new pension program focuses on an inflation-protected annuity rather than an endpoint with a lump sum of accumulated wealth. The program requires few interactions from users: "set it and forget it." Closed for comment; 0 Comments.
- 24 Jun 2008
- First Look
- 24 Jun 2008
- Working Paper Summaries
Bank Structure and the Terms of Lending to Small Businesses
Access to "soft information" and the greater sensitivity of decentralized banks to the local institutional environment can have both positive and negative consequences for small firms. Hence there may be a dark side to decentralized bank lending in certain instances. This paper argues that the same ability of decentralized banks to act on soft information also makes them more responsive to the local environment when setting terms of their loans. While this can be beneficial for small businesses in competitive markets, it also implies that the organizational structure of decentralized banks might allow them to better exploit their market power in concentrated banking markets by restricting credit or charging higher interest rates from small businesses. Key concepts include: According to the findings, small firms and those with greater "soft information" were more likely to get larger loans from decentralized banks, particularly in environments where the legal enforcements of financial contracts were relatively weak. On the other hand, decentralized banks were also more likely than centralized banks to cherry-pick the best firms, give smaller loans, and charge higher interest rates in concentrated banking markets. The relative benefit of decentralized bank structures for small business lending may therefore depend critically on the institutional and competitive environment in which banks are located. Public policy should consider promoting competition between decentralized banks in order to truly achieve the benefits associated with credit access for small businesses or those with more "soft information." Closed for comment; 0 Comments.
- 23 Jun 2008
- Working Paper Summaries
Using Financial Innovation to Support Savers: From Coercion to Excitement
This paper acknowledges the wide range of solutions to the problem of low family savings. Families, and of particular interest to the authors, low-income families, save for a wide variety of purposes, including identifiable reasons such as education and retirement and others that are more broad, like rainy days or emergencies. Given societal pressures to consume, and given the diversity among people, it is unlikely that there is a single solution to the savings problem. Yet a number of programs described by Tufano and Schneider have great promise in supporting household savings. Tufano and Schneider discuss each program from the perspectives of would-be savers as well as from that of other key stakeholders. Key concepts include: Researchers must be sensitive to the needs of low- and moderate-income families, whose concerns about having the resources to cope with short-term emergencies are just as legitimate as needs to plan for a retirement that may be decades away. The continuum of solutions highlighted in this paper ranges from those that force families to save (coercion) to others that seek to work consumers into a frenzy about savings (excitement). These varied solutions emphasize different elements of human behavior or impediments to savings. Some solutions to low savings require massive government policy, some require small changes in existing regulations, and still others are completely market oriented. Some require large subsidies, while others might be profitable on their own. Closed for comment; 0 Comments.
- 23 Jun 2008
- Research & Ideas
Innovative Ways to Encourage Personal Savings
Saving money doesn't need to be so difficult. According to HBS professor Peter Tufano, "The most interesting ideas—indeed the oldest—try to make savings a fun or satisfying experience." As Tufano describes in this Q&A, different solutions appeal to different people. Here's what government policy, the private sector, and nonprofits can do. Key concepts include: A variety of levers can be used to support people who want to save (not to force someone to save who doesn't want to). Some levers are simple changes that make the process of savings easier. Other levers involve providing various incentives, be they financial or sociological. The oldest and most interesting ideas try to make savings a fun or satisfying experience. Closed for comment; 0 Comments.
- 19 Jun 2008
- Working Paper Summaries
Accounting Information as Political Currency
The study of accounting and the political process has long been viewed through the political cost hypothesis, the basic premise of which is that firms manage earnings in order to extract first-order benefits (or avoid first-order costs) from regulators. This paper develops and tests a distinct, yet likely, complementary hypothesis: Firms manage reported earnings in order to supply first-order benefits to regulators. Focusing on Democratic and Republican candidates in congressional races in 2004, Ramanna and Roychowdhury test whether the management of accounting information is in some circumstances akin to a political contribution from firms to politicians: in other words, whether accounting information can be used as political currency. The authors predict and find that identified corporate donors to candidates in closely watched races in 2004 managed information related to outsourcing, a hot-button issue in those races. Key concepts include: While corporate donors in general do not exhibit evidence of downward earnings management, corporate donors to candidates in closely watched congressional races exhibit significant evidence of downward earnings management in the second and third quarters of 2004. The evidence of downward earnings management is stronger for firms likely to have greater outsourcing activities. These findings are consistent with firms managing accounting information in circumstances where this is likely to benefit allied politicians, thus supporting the idea of a "political currency" hypothesis. Closed for comment; 0 Comments.
- 18 Jun 2008
- Working Paper Summaries
Evaluating the Impact of SA 8000 Certification
The Social Accountability 8000 Standard (SA 8000), along with other types of certification standards and corporate codes of conduct, represents a new form of voluntary "private-governance" of working conditions in the private sector, initiated and implemented by companies, labor unions, and nongovernmental activist groups cooperating together. There is an ongoing debate about whether this type of governance represents real and substantial progress or mere symbolism. This paper reviews prior evaluations of private codes of conduct governing workplace conditions, including Ethical Trading Initiative's Base Code, Nike's Code of Conduct, and Fair Trade certification. The authors then discuss several best practices that should be employed in future evaluations of such codes of conduct. Key concepts include: An ongoing debate is raging about whether such codes represent substantive efforts to improve working conditions or are merely symbolic efforts that allow organizations to score marketing points and counteract stakeholder pressure by merely filing some paperwork. Evaluations designed with the features described in this paper will help introduce systematic evidence to these important debates. This could help identify which particular codes are best able to distinguish organizations possessing superior working conditions. Such evaluations may shed light on which elements of the codes are most effective, which types of monitoring systems represent best practices, and which areas are most in need of improvement. Closed for comment; 0 Comments.
Financial Development, Bank Ownership, and Growth. Or, Does Quantity Imply Quality?
Government ownership of banks, a common phenomenon, is among the most important policy tools used to influence financial development. But what is the actual effect of such ownership on the financial development of a country? This paper uses a policy experiment in India to evaluate the effect of government ownership of banks on development. Key concepts include: Had the Indian government required bank expansion into rural areas and set lending targets, without nationalizing banks, rural areas might have achieved the same, or better, outcomes. Despite a substantial increase in agricultural credit, there is no evidence of improved agricultural outcomes in markets with nationalized banks. Bank nationalization may have slowed the growth of employment in the more developed sectors of trade and services. Closed for comment; 0 Comments.