First Look

Abstract—The Business of Platforms explores the strategic, economic, and technology management challenges of digital platform businesses. We have five major themes in the book: 1) The world’s most valuable companies are all platforms, in part because platforms have network effects, with the potential for a winner-take-all or winner-take-most outcome. 2) Platforms come in 3 flavors: innovation platforms, transaction platforms, and hybrid platforms. We suggest that the world is moving towards more and more hybrids, and we identify the key steps in building a successful platform. 3) Failure is more likely than winner-take-all: mispricing, mistrust, mistiming, and hubris lead to hundreds of failures. 4) Old “dogs” can learn new tricks: conventional companies can adapt to a platform world with a buy, build, or belong strategy. And 5) Platforms are a double-edge sword: abuse of power, bullying poor labor practices, and bad actors can undermine even the most successful platforms. The book concludes with an exploration of platform battles of the future, including voice wars (Alexa vs. Hey Google vs. Siri), ridesharing and autonomous car platforms, quantum computing, and CRISPR.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=56021

Abstract—The collapse of Lehman Brothers in September 2008 caught markets and regulators by surprise. Although the government rushed to rescue other financial institutions from a similar fate after Lehman, it could not prevent the deepest recession in postwar history. A Crisis of Beliefs makes us rethink the financial crisis and the nature of economic risk. In this authoritative and comprehensive book, two of today’s most insightful economists reveal how our beliefs shape financial markets, lead to expansions of credit and leverage, and expose the economy to major risks. Nicola Gennaioli and Andrei Shleifer carefully walk readers through the unraveling of Lehman Brothers and the ensuing meltdown of the U.S. financial system and then present new evidence to illustrate the destabilizing role played by the beliefs of home buyers, investors, and regulators. Using the latest research in psychology and behavioral economics, they present a new theory of belief formation that explains why the financial crisis came as such a shock to so many people—and how financial and economic instability persist. A must-read for anyone seeking insights into financial markets, A Crisis of Beliefs shows how even the smartest market participants and regulators did not fully appreciate the extent of economic risk and offers a new framework for understanding today’s unpredictable financial waters.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=56032

Abstract—People often speculate about why others make the choices they do. This paper investigates how such inferences are formed as a function of what is chosen. Specifically, when observers encounter someone else's choice (e.g., of political candidate), they use the chosen option's attribute values (e.g., a candidate's specific stance on a policy issue) to infer the importance of that attribute (e.g., the policy issue) to the decision-maker. Consequently, when a chosen option has an attribute whose value is extreme (e.g., an extreme policy stance), observers infer—sometimes incorrectly—that this attribute disproportionately motivated the decision-maker's choice. Seven studies demonstrate how observers use an attribute's value to infer its weight—the value-weight heuristic—and identify the role of perceived diagnosticity: more extreme attribute values give observers the subjective sense that they know more about a decision-maker's preferences and, in turn, increase the attribute's perceived importance. The paper explores how this heuristic can produce erroneous inferences and influence broader beliefs about decision-makers.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=54771

Abstract—We consider the effect of mergers between firms whose products are not viewed as direct substitutes for the same good or service but are bundled by a common intermediary. Focusing on hospital mergers across distinct geographic markets, we show that such combinations can reduce competition among merging hospitals for inclusion in insurers' networks, leading to higher prices (or lower-quality care). Using data on hospital mergers from 1996 to 2012, we find support that this mechanism operates within state boundaries: cross-market, within-state hospital mergers yield price increases of 7%–9% for acquiring hospitals, whereas out-of-state acquisitions do not yield significant increases.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=56018

Abstract—The first part of this commentary argues that because the production of dissent depends on the availability of information, greater attention should focus on government restrictions on access to official information. At no time is this more important than when information is monopolized by the government. If not constrained, government’s monopoly control of information, combined with its incentives to shape support for its policies, may at some times and in some ways reduce dissent. In the second part of the commentary, a cost-benefit approach is proposed to analyze an individual’s incentives to produce speech and is then applied to assess the role social communities play vis-à-vis individual dissent. This analysis underscores the important and complex (sometimes encouraging, sometimes discouraging) role that communities play in the generation of dissent. Our analysis uses economic tools, often accompanied by an antitrust perspective, to better understand the implications of government information control and social pressures upon speech and dissent.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=52372

Abstract—How can workplace rewards promote employee well-being and engagement? To answer these questions, we utilized self-determination theory to examine whether reward satisfaction predicted employee well-being, job satisfaction, intrinsic motivation, and affective commitment, as well as valuable organizational outcomes, such as workplace contribution and loyalty. Specifically, we investigated the role of three universal psychological needs—autonomy, competence, and relatedness—in explaining whether and why reward satisfaction matters for employees’ well-being. We tested our model in a large, cross-sectional study with full-time employees working for multinational corporations in six main world regions: Asia, Europe, India, Latin America, North America, and Oceania (N = 5,852). Consistent with our theorizing, we found cross-cultural evidence that reward satisfaction promoted greater employee functioning through psychological need satisfaction, contributing to better organizational outcomes. Critically, our results were consistent regardless of geographic location. As such, this study provides some of the strongest evidence to date for the power of understanding psychological mechanisms in the workplace: Regardless of the actual rewards that employees received, how workplace rewards made employees feel significantly predicted their optimal functioning.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=56020

Abstract—Although comparative politics is conventionally seen as the study of politics across countries, the field has a longstanding and increasingly prominent tradition in national contexts; focusing on subnational units, institutions, actors and processes. This book offers the first comprehensive assessment of the substantive, theoretical, and methodological contributions. With empirical chapters from across the contemporary Global South, including India, Mexico, and China, as well as Russia, the contributors show how subnational research provides useful insights about substantive themes in political science, from regimes and representation, to states and security, to social and economic development. In addition to methodological chapters with specific guidance about best practices for doing subnational research, this volume also proposes a set of strategies for subnational research, assesses their strengths and weaknesses, and offers illustrative empirical applications.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=56031

Abstract—Does diversity make a company more productive? Many say yes—some researchers argue that gender diversity leads to more innovative thinking and signals to investors that a company is competently run. Others say no—conflicting research indicates that gender diversity can disrupt social cohesion, making people less likely to collaborate. Most of this research, however, has looked at the question within a single country or industry. Could the conflicting research be due to differences in context? Region and industry might affect people’s opinions of gender diversity, and this might then affect whether or not diversity leads to stronger outcomes. In a recent study of 1069 leading firms across 35 countries and 24 industries, researchers found that gender diversity relates to more productive companies, as measured by market value and revenue, only in contexts where gender diversity is viewed as “normatively” accepted. By normative acceptance, they mean a widespread cultural belief that gender diversity is important. In other words, beliefs about gender diversity create a self-fulfilling cycle. Countries and industries that view gender diversity as important capture benefits from it. While those that don’t, don’t. The researchers outline three main reasons why opinions about the value of diversity matter so much to the actual value it brings. And these may provide lessons for managers who wish to capture the benefits of gender diversity.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=56034

No abstract available.

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“Our goal is to be the kind of start-up that would terrify Nike—if Nike didn’t already own us.” Ron Faris, general manager of S23NYC, a Manhattan-based digital studio owned by sports apparel giant Nike, is on the phone with Adam Sussman, Nike’s chief digital officer. It is June 1, 2018. Two years earlier, Sussman was behind Nike’s push to acquire Virgin Mega, a startup comprising Faris and his small team, which has since morphed into a studio that plays a pivotal role in Nike’s digital strategy. With the studio’s mobile app, SNKRS (pronounced “sneakers”), specifically, Nike seeks to strengthen its connection with the most fanatical of its fans—the sneakerheads—and “bring back the fun and emotion of buying,” as Sussman put it. Is Nike on the right path with its digital strategy and, in particular, with how it seeks to change the sneakers game and compete with rivals such as Adidas and Puma? Does it make sense for the company to pursue the kinds of innovations featured in the SNKRS app? And what kind of campaigns and activations should it prioritize in the future?

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In 2016, a trial began to determine the future of Sabine Oil & Gas Corporation’s $3 billion chapter 11 reorganization plan. The plan called for first- and second-lien-secured creditors to receive new claims representing approximately 98% of the reorganized company’s enterprise value, leaving unsecured creditors, owed $1.4 billion, to recover less than two cents on the dollar. The plan had the support of the secured creditors, but unsecured creditors were strongly opposed. At the heart of the unsecured creditors’ objections to the plan was a dramatically different view on valuation. How much were Sabine's oil and gas reserves worth today? How much were they worth at the time Sabine filed for chapter 11? And, based on these valuations, what was a fair recovery for Sabine's creditors?

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Jackie Taylor, an African American social entrepreneur, founded the Black Ensemble Theater in 1976. Since the ensemble’s inception, she has rented spaces where her group performed original musicals about black entertainers including Nina Simone, Etta James, and Marvin Gaye. After over a quarter century of success with this model, where she paid as much as $144,000 in annual rent, Jackie must decide whether to continue renting, proceed with the building of a new theater that will cost at least $15 million or delay it until the economy is better for fundraising. In addition to the decision regarding the facility, Jackie must also answer strategic questions regarding the future. Her audience is loyal but aging. What can she do to maintain this customer base, while attempting to attract a younger following?

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