First Look

December 6, 2016

Among the highlights included in new research papers, case studies, articles, and books released this week by Harvard Business School faculty:

Slavery’s importance to American Capitalism

The edited volume Slavery’s Capitalism: A New History of American Development, argues a strong tie between slavery and development of capitalism. The book "identifies slavery as the primary force driving key innovations in entrepreneurship, finance, accounting, management, and political economy that are too often attributed to the so-called free market,” according to the editors, Sven Beckert and Seth Rockman.

Is an overbooked calendar the new status symbol?

Spending money on products is often a way we signal our status to the world, but new research makes the case that lack of spare time may serve the same goal. “We argue that a busy and overworked lifestyle, rather than a leisurely lifestyle, has become an aspirational status symbol,” report researchers Silvia Bellezza, Neeru Paharia, and Anat Keinan. Conspicuous Consumption of Time: When Busyness and Lack of Leisure Time Become a Status Symbol is scheduled to be published in a forthcoming issue of Journal of Consumer Research.

It's good to hide inventory from customers

The retailing practice of assortment rotation—the regular shuffling of products on displayto customers—seems to keep buyers interested, but why? One reason: The possibility of product concealment may motivate some buyers to purchase more when products are on display, according to Assortment Rotation and the Value of Concealment, written by Kris Ferreira and Joel Goh.

A complete list of new research and publications from Harvard Business School faculty follows.

— Sean Silverthorne
 
  • 2016
  • Philadelphia: University of Pennsylvania Press

Slavery's Capitalism: A New History of American Economic Development

By: Beckert, Sven, and Seth Rockman, eds.

Abstract—During the nineteenth century, the United States entered the ranks of the world's most advanced and dynamic economies. At the same time, the nation sustained an expansive and brutal system of human bondage. This was no mere coincidence. Slavery's Capitalism argues for slavery's centrality to the emergence of American capitalism in the decades between the Revolution and the Civil War. According to editors Sven Beckert and Seth Rockman, the issue is not whether slavery itself was or was not capitalist but, rather, the impossibility of understanding the nation's spectacular pattern of economic development without situating slavery front and center. American capitalism—renowned for its celebration of market competition, private property, and the self-made man—has its origins in an American slavery predicated on the abhorrent notion that human beings could be legally owned and compelled to work under force of violence. Drawing on the expertise of sixteen scholars who are at the forefront of rewriting the history of American economic development, Slavery's Capitalism identifies slavery as the primary force driving key innovations in entrepreneurship, finance, accounting, management, and political economy that are too often attributed to the so-called free market. Approaching the study of slavery as the originating catalyst for the Industrial Revolution and modern capitalism casts new light on American credit markets, practices of offshore investment, and understandings of human capital. Rather than seeing slavery as outside the institutional structures of capitalism, the essayists recover slavery's importance to the American economic past and prompt enduring questions about the relationship of market freedom to human freedom.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51947

  • forthcoming
  • Journal of Consumer Research

Conspicuous Consumption of Time: When Busyness and Lack of Leisure Time Become a Status Symbol

By: Bellezza, Silvia, Neeru Paharia, and Anat Keinan

Abstract—While research on conspicuous consumption has typically analyzed how people spend money on products that signal status, we investigate conspicuous consumption in relation to time. We argue that a busy and overworked lifestyle, rather than a leisurely lifestyle, has become an aspirational status symbol. A series of studies shows that the positive inferences of status in response to busyness and lack of leisure are driven by the perceptions that a busy person possesses desired human capital characteristics (competence, ambition) and is scarce and in demand on the job market. This research uncovers an alternative kind of conspicuous consumption that operates by shifting the focus from the preciousness and scarcity of goods to the preciousness and scarcity of individuals. Furthermore, we examine cultural values (perceived social mobility) and differences among cultures (North America vs. Europe) to demonstrate moderators and boundary conditions of the positive associations derived from signals of busyness.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51948

  • November 7, 2016
  • Harvard Business Review

How Wikipedia Keeps Political Discourse from Turning Ugly

By: Greenstein, Shane, and Feng Zhu

Abstract—No abstract available.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51942

  • November 17, 2016
  • New England Journal of Medicine

Adding Value by Talking More

By: Kaplan, Robert S., Derek A. Haas, and Jonathan Warsh

Abstract—The prevailing fee-for-service payment model has led health care administrators and physician practices to impose severe constraints on the time physicians spend talking, for which they are reimbursed poorly or not at all. New value-based reimbursement models, however, such as bundled payments, accountable care organizations, and shared savings plans, provide powerful incentives for physicians to regain control over the quantity and quality of time they spend talking. We’ve identified many situations in which having physicians and other clinical personnel talk more with patients and each other can be the least expensive and most effective approach for producing better outcomes at lower total costs.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51939

  • forthcoming
  • Management Science

Making the Numbers? 'Short Termism' and the Puzzle of Only Occasional Disaster

By: Rahmandad, Hazhir, Rebecca Henderson, and Nelson P. Repenning

Abstract—Much recent work in strategy and popular discussion suggests that an excessive focus on "managing the numbers"—delivering quarterly earnings at the expense of longer-term investments—makes it difficult for firms to make the investments necessary to build competitive advantage. "Short termism" has been blamed for everything from the decline of the U.S. automobile industry to the low penetration of techniques such as TQM and continuous improvement. Yet a vigorous tradition in the accounting literature establishes that firms routinely sacrifice long-term investment to manage earnings and are rewarded for doing so. This paper presents a model that reconciles these apparently contradictory perspectives. We show that if the source of long-term advantage is modeled as a stock of capability that accumulates over time, a firm's proclivity to manage short-term earnings at the expense of long-term investment can have very different consequences depending on whether the firm's capability is close to a critical "tipping threshold." When the firm operates above this threshold, managing earnings smoothes revenue and cash flow with few long-term consequences. Below it, managing earnings can tip the firm into a vicious cycle of accelerating decline. Our results have important implications for understanding managerial incentives and the internal processes that create sustained advantage.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51860

Assortment Rotation and the Value of Concealment

By: Ferreira, Kris Johnson, and Joel Goh

Abstract—Assortment rotation—the retailing practice of changing the assortment of products offered to customers—has recently been used as a competitive advantage for both brick-and-mortar and online retailers. Fast-fashion retailers have differentiated themselves by rotating their assortment multiple times throughout a standard selling season. Interestingly, the entire online flash sales industry was created using this idea as a cornerstone of its business strategy. In this paper we identify and investigate a new reason why frequent assortment rotations can be valuable to a retailer, particularly for products where consumers typically purchase multiple products in a given category during a selling season. Namely, by distributing its seasonal catalog of products over multiple assortments rotated throughout the season—as opposed to selling all products in a single assortment—the retailer effectively conceals a portion of its full product catalog from consumers. This injects uncertainty into the consumer's relative product valuations since she is unable to observe the entire catalog of products that the retailer will sell that season. Rationally acting consumers may respond to this additional uncertainty by purchasing more products, thereby generating additional sales for the retailer. We refer to this phenomenon as the value of concealment. A negative value of concealment is possible and represents the event that rationally acting consumers respond to the additional uncertainty by purchasing fewer products. We develop a consumer choice model and finite-horizon stochastic dynamic program to study when the value of concealment is positive or negative. We show that when consumers are myopic, the value of concealment is always positive. In contrast, we show that when consumers are strategic, the value of concealment is context dependent; we present insights and discuss intuition regarding which product categories likely lead to positive vs. negative values of concealment.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=49531

Precautionary Savings in Stocks and Bonds

By: Pflueger, Carolin, Emil Siriwardane, and Adi Sunderam

Abstract—We document a strong and robust relation between the one-year real rate and precautionary savings motives, as measured by the stock market. Our novel proxy for precautionary savings, based on the difference in valuations between low- and high-volatility stocks, explains 37% of variation in the real rate. In addition, the real rate forecasts returns on the low-minus-high volatility portfolio, though it appears unrelated with measures of the quantity of risk. Our results suggest that precautionary savings motives, and thus the real rate, are driven by time-varying attitudes towards risk. We rationalize these findings in a stylized model with segmented investor clienteles and habit formation.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=51958

  • Harvard Business School Case 716-062

Naranya: Created in Mexico

No abstract available.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/716062-PDF-ENG

  • Harvard Business School Case 817-018

InsideSales.com (A)

This case focuses on growth requirements for a company moving from its base in SMB customers (Small- and Mid-Sized businesses) to Enterprise customers (companies with more than 500 employees). It examines the differences in buying processes, product requirements, after-sale services, and the implications for organizing and deploying sales resources at InsideSales.com.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/817018-PDF-ENG

  • Harvard Business School Case 817-042

InsideSales.com (B)

Supplement to HBS No. 817-018. The (B) case briefly outlines what the co-founder and CEO want to do about the issues in the (A) case and the questions this response raises in the mind of the executive charged with implementing the CEO’s recommended initiative.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/817042-PDF-ENG

  • Harvard Business School Case 117-020

Accounting for the iPhone Upgrade Program

On September 9, 2015, Apple Inc. announced the “iPhone Upgrade Program,” a new way to purchase iPhone models 6s and 6s Plus in Apple’s retail stores throughout the United States. Next to the strategic implications of the Upgrade Program, financial analysts tried to understand the accounting implications, especially the recognition of revenue, which the Upgrade Program could have on Apple’s financials. Analysts’ reactions to the disclosure were mixed. Was Apple’s accounting system “right” for the iPhone Upgrade Program introduced in 2015?

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/117020-PDF-ENG

  • Harvard Business School Case 816-088

Residency Select or J3Personica?

No abstract available.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/816088-PDF-ENG

No abstract available.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/217032-PDF-ENG

  • Harvard Business School Case 116-029

Google to Alphabet: Ten Things We Know to Be True

Google’s founders wrote “10 Things We Know to Be True,” a document detailing founding principles and values, early in the company’s life. As the company expanded, added business units, and changed its name to Alphabet, were these principles and values still valid and relevant? If not, how should they be changed?

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/116029-PDF-ENG

  • Harvard Business School Case 116-046

Google to Alphabet: Two Job Opportunities

No abstract available.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/116046-PDF-ENG

  • Harvard Business School Case 217-029

Real Estate in China: A Technical Note for SOHO China

A technical note on the state of Chinese commercial real estate and the effects of China's slowing growth. This note was written in conjunction with the case study "SOHO China: Transformation in Progress.”

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/217029-PDF-ENG

No abstract available.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/312065-PDF-ENG

No abstract available.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/312066-PDF-ENG