First Look

Abstract— Humans are an extremely prosocial species. Compared to most primates, humans provide more assistance to family, friends, and strangers, even when costly. Why do people devote their resources to helping others? In this chapter, we examine whether engaging in prosocial behavior promotes subjective well-being, which encompasses greater positive affect, lower negative affect, and greater life satisfaction. Next, we identify the conditions under which the well-being benefits of prosociality are most likely to emerge. Finally, we briefly highlight several levers that can be used to increase prosocial behavior, thereby potentially increasing well-being.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=55597

Abstract— The mobilization of resources is a central and defining feature of entrepreneurship. As the body of empirical research on entrepreneurial resource mobilization has grown, the literature has become increasingly fragmented. We review the literature on entrepreneurs’ mobilization of resources, spanning human, social, financial, and other forms of capital. We identify five critical issues that hold back progress in resource mobilization research. We then propose a path ahead for future research guided by two overarching goals. First, we advocate for a process perspective, focusing attention on how an individual actor’s disposition and situation shape her responses, how these responses interact with those of other actors, and how these individual and collective responses unfold over time to generate outcomes. Second, we call for stronger unification of theory within the entrepreneurial resource mobilization literature and across contiguous conversations in strategy and organization theory. Theoretical consilience will enable the accumulation of empirical research into a cohesive body of knowledge on entrepreneurial resource mobilization.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=55593

Abstract— Software has become an increasingly important component of medical device technology. Through legislation like the 21st Century Cures Act as well as Food and Drug Administration guidance documents, public statements, and workshops, U.S. policy makers and regulators have recently accelerated efforts to clarify policies and foster innovation around software-driven medical devices. We describe key recent events surrounding the regulation of software-driven medical technology and develop a framework for understanding how software-driven medical devices differ from traditional medical devices. We identify opportunities and challenges for regulators and innovators in three main areas: (1) software development processes, (2) product safety and security, and (3) data collection and privacy. Finally, we discuss emerging challenges surrounding software-driven medical devices, including open regulatory questions, advancements in underlying digital technology, and the likely necessity of new payment and reimbursement models.

Abstract— Brokerage and brokering are pervasive and consequential organizational phenomena. Prevailing models underscore social structure and focus on the consequences that come from brokerage—occupying a bridging position between disconnected others in a network. By contrast, emerging models underscore social interactions and focus on brokering—the behavioral processes through which organizational actors shape others’ relationships. Our review led us to develop a novel framework as a means to integrate and organize a wide range of theoretical insights and empirical findings on brokerage and brokering. The Changing Others’ Relationships (COR) framework captures the following ideas that emerged from our review: (a) Different triadic configurations enable different forms of brokering, which in turn produce distinct effects on others’ relationships; (b) brokering is a multifaceted social influence process that can take the form of intermediation (connecting disconnected others) or modification (changing others’ preexisting relationships); (c) comparing social relations, for instance prebrokering versus postbrokering, reveals a broker’s impact; (d) brokering can influence others’ relationships positively or negatively; and (e) information and incentives are two principal means through which individuals change others’ relationships. Overall, the current review integrates multiple streams of research relevant to brokerage and brokering—including those on structural holes, organizational innovation, boundary spanning, social and political skill, workplace gossip, third-party conflict managers, and labor relations—and links each of the emergent themes identified in the current review to promising directions for future research on brokerage and brokering.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=55601

Abstract— Eleven experiments provide evidence that people have a tendency to “shoot the messenger,” deeming innocent bearers of bad news unlikeable. In a preregistered lab experiment, participants rated messengers who delivered bad news from a random drawing as relatively unlikeable (Study 1). A second set of studies points to the specificity of the effect: Study 2A shows that it is unique to the (innocent) messenger and not mere bystanders. Study 2B shows that it is distinct from merely receiving information that one disagrees with. We suggest that people’s tendency to deem bearers of bad news as unlikeable stems in part from their desire to make sense of chance processes. Consistent with this account, receiving bad news activates the desire to sense-make (Study 3A), and in turn, activating this desire enhances the tendency to dislike bearers of bad news (Study 3B). Next, stemming from the idea that unexpected outcomes heighten the desire to sense-make, Study 4 shows that when bad news is unexpected, messenger dislike is pronounced. Finally, consistent with the notion that people fulfill the desire to sense-make by attributing agency to entities adjacent to chance events, messenger dislike is correlated with the belief that the messenger had malevolent motives (Studies 5A, 5B, & 5C). Studies 6A & 6B go further, manipulating messenger motives independently from news valence to suggest its causal role in our process account: the tendency to dislike bearers of bad news is mitigated when recipients are made aware of the benevolence of the messenger’s motives.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=55611

Abstract— This article highlights the benefits that rigorous use of oral history can offer to research on the contemporary business history of emerging markets. Oral history can help fill some of the major information voids arising from the absence of a strong tradition of creating and making accessible corporate archives in most countries in Africa, Asia, and Latin America. It also permits a level of nuance that is hard to obtain even if written archives are accessible. Oral histories provide insights into why events did not occur as well as why companies have chosen certain industries over others. Oral history can also shed light on hypersensitive topics, such corruption, which are rarely formally documented.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=55633

Abstract— No abstract available.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=55600

Abstract— Who benefits most from helping others? Previous research suggests that common polymorphisms of the oxytocin receptor gene (OXTR) predict whether people behave generously and experience increases in positive mood in response to socially focused experiences in daily life. Building on these findings, we conducted an experiment with a large, ethnically homogenous sample (N=437) to examine whether individual differences in three frequently studied single nucleotide polymorphisms of OXTR (rs53576, rs2268498, rs2254298) also predict differences in the positive mood benefits of financial generosity. Consistent with past research, participants who were randomly assigned to purchase items for others (vs. themselves) reported greater positive affect. Contrary to predictions, using Bayesian statistics, we found conclusive evidence that the benefits of generosity were not moderated by individual differences in OXTR SNPs. The current work highlights the importance of publishing null results to build cumulative knowledge linking neurobiological factors to positive emotional experiences.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=55599

Abstract— Depression and anxiety are costly for both employees and employers, in terms of direct medical costs as well as costs stemming from lost productive time and missed days at work. Resilience training has been shown to improve workplace functioning for employees, which suggests that it is a promising avenue for reducing some of these costs. However, existing resilience trainings are often conducted in-person, suffer from low levels of engagement, and are difficult to scale to large groups of employees. In the current study, we compared change in resilience over time among employees who were assigned to and used an online resilience intervention platform (Happify), employees who were assigned to and used a scaled-down psychoeducational version of the platform, and employees who did not use their assigned platform (i.e., a no-usage comparison group). We did this separately for users high in emotional distress (clinical levels of depression and/or anxiety) and users high in workplace distress (high levels of presenteeism and/or burnout). Across both samples, employees who used the Happify platform showed significantly greater increases in resilience over eight weeks than employees in the two other groups; the latter two comparison groups did not differ significantly from each other. These findings suggest that a technology-based resilience intervention, which employs a low-touch, cost-effective, easily scalable intervention format, can successfully improve resilience among vulnerable employee groups, which may have important benefits in workplace settings.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=55598

Abstract— We introduce diagnostic expectations into a standard setting of price formation in which investors learn about the fundamental value of an asset and trade it. We study the interaction of diagnostic expectations with two well-known mechanisms: learning from prices and speculation (buying for resale). With diagnostic (but not with rational) expectations, these mechanisms lead to price paths exhibiting three phases: initial underreaction, followed by overshooting (the bubble), and finally a crash. With learning from prices, the model generates price extrapolation as a byproduct of fast moving beliefs about fundamentals, which lasts only as the bubble builds up. When investors speculate, even mild diagnostic distortions generate substantial bubbles.

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Abstract— We study how transparency into the levels and changes of relative sustainability performance affects consumer choices. Our work considers two forms of transparency: process transparency, in which customers receive information about the company's sustainability performance relative to other companies, and customer transparency, in which customers receive information about their own sustainability performance relative to other customers. Through three studies with 7,308 participants, we observe that revealing the levels of relative performance is more motivating for customers in the process transparency domain, whereas revealing relative changes in performance is more motivating for customers in the customer transparency domain. We employ structural equation modeling to identify the underlying mechanisms for these results. We show that levels information is more reflective of objective performance comparison, thus strengthening motivation in the domain of process transparency. In contrast, changes information helps to mitigate self-serving attribution biases in the customer transparency domain, thus playing a more significant role in affecting motivation.

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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. We focus on product categories where consumers may purchase multiple products during a season and investigate a new reason why frequent assortment rotations can be valuable to a retailer. Namely, by distributing its seasonal catalog of products over multiple assortments rotated throughout the season—as opposed to selling all products in a single, fixed assortment—the retailer effectively conceals a portion of its full product catalog from consumers, injecting uncertainty into the consumer's relative product valuations. 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 and show that the retailer enjoys a positive and significant value of concealment under quite general conditions. However, we show that when consumers are forward-looking, the value of concealment is context-dependent; we present insights and discuss intuition regarding which product categories likely lead to a positive vs. negative value of concealment.

Abstract— This study sheds new light on first- and early-mover advantages. Research on this classic topic often assumes that each firm participates in the entirety of the innovation process. However, a division of labor between innovative new entrants and incumbents with complementary assets is common in many industries. In such settings, small new entrants have the additional option to be acquired in a “market for technology.” Using data from the U.S. medical device industry, we find that pioneers “pave the way” for a new product type to reduce the technological and market risks, where the former is of paramount importance. Pioneers ultimately realize a higher likelihood of acquisition but wait longer to be acquired. Therefore, to some extent, later movers can free ride on early-movers’ efforts.

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Abstract— How does the appearance of a new out-group affect the economic, social, and cultural integration of previous outsiders? We study this question in the context of the first Great Migration (1915–1930), when 1.5 million African Americans moved from the U.S. South to urban centers in the North, where 30 million Europeans had arrived since 1850. We test the hypothesis that black inflows led to the establishment of a binary black-white racial classification and facilitated the incorporation of—previously racially ambiguous—European immigrants into the white majority. We exploit variation induced by the interaction between 1900 settlements of southern-born blacks in northern cities and state-level outmigration from the U.S. South after 1910. Black arrivals increased both the effort exerted by immigrants to assimilate and their eventual Americanization. These average effects mask substantial heterogeneity: while initially less integrated groups (i.e., Southern and Eastern Europeans) exerted more assimilation effort, assimilation success was larger for those that were culturally closer to native whites (i.e., Western and Northern Europeans). These patterns are consistent with a framework in which changing perceptions of out-group distance among native whites lower the barriers to the assimilation of white immigrants.

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Abstract— This paper studies judgment aggregation from a large number of industry experts in the selection and development of early-stage ideas. Our context is the movie industry, in which customer appeal is difficult to predict and investment costs are high. The Black List, an annual publication, ranks unproduced scripts based on anonymous nominations from film executives. We find that listed scripts are twice as likely to be released as unlisted scripts and, conditional on release, generate a higher return on investment. Further evidence supports a causal interpretation of these differences in outcomes and suggests that by aggregating expert judgment, the List is able to discern good ideas from poor ones. We also find that scripts from less-experienced writers are more likely to be listed and to rank higher if listed. Yet in terms of release probability, even though being listed has a large and positive effect on less-experienced writers, the discrepancy relative to experienced writers remains large (even for the top-ranked scripts). These results on writer experience suggest a simple, albeit important, determinant of the data-generating process of such aggregations—the visibility of an idea among potential evaluators.

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Abstract— Copyright infringement may result from frictions preventing legal consumption, but may also reveal demand. Motivated by this fact, we run a field experiment in which we contact firms that are caught infringing on expensive digital images. Emails to all firms include a link to the licensing page of the infringed image; for treated firms, we add links to a significantly cheaper licensing site. Making infringers aware of the cheaper option leads to a fourteen-fold increase in the ex-post licensing rate. Two additional experimental interventions are designed to reduce search costs for (i) price and (ii) product information. Both intervention—immediate price comparison and recommendation of images similar to those infringed—have large positive effects. Our results highlight the importance of mitigating user costs in small-value transactions.

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Abstract— Many online stores are designed such that shoppers can easily access any available discounted products. We propose that deliberately increasing search frictions by placing small obstacles to locating discounted items can improve online retailers’ margins and even increase conversion. We demonstrate using a simple theoretical framework that inducing consumers to inspect higher-priced items first may simultaneously increase the average price of items sold and the overall expected purchase probability by inducing consumers to search more products. We test and confirm these predictions in a series of field experiments conducted with a dominant online fashion and apparel retailer. Furthermore, using information in historical transaction data about each consumer, we demonstrate that price-sensitive shoppers are more likely to incur search costs to locate discounted items. Our results show that increasing search frictions can be used as a self-selecting price discrimination tool to match high discounts with price-sensitive consumers and full-priced offerings with price-insensitive consumers.

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Abstract— In this paper, I show that political opposition to immigration can arise even when immigrants bring economic prosperity. I exploit exogenous variation in European immigration to U.S. cities between 1910 and 1930 induced by World War I and the Immigration Acts of the 1920s, and instrument immigrants’ location decision relying on pre-existing settlement patterns. I find that immigration triggered hostile political reactions, such as the election of more conservative legislators, higher support for anti-immigration legislation, and lower public goods provision. Exploring the causes of natives’ backlash, I document that immigration increased natives’ employment and occupational standing and fostered industrial production and capital utilization. Even in occupations highly exposed to immigrants’ competition, there were no employment or wage losses among natives, suggesting that political discontent was unlikely to have economic roots. Consistent with this interpretation, I provide evidence that natives’ backlash was increasing in the cultural differences between immigrants and natives. These results indicate that diversity might be economically beneficial but politically hard to manage.

Life insurance is an asset owned by the majority of American adults (61%). Note that this 61% penetration rate is essentially at parity with home ownership (64%) and higher than that of 401(k) retirement account ownership (53%). Life settlements, or life insurance settlements, allow individuals to sell their life insurance policy in a secondary market. A life insurance policy is a tradable asset, for many individuals possibly the most valuable one in their portfolio after real estate and perhaps a retirement account. The fact that the policy is tradable, however, is hardly known to the general public. When surrendering a policy to the insurance carrier, the policyholder often incurs a substantial discount on its economic value. At the same time, the insurer keeps the difference between the policy’s economic value and its surrender value. By selling a policy in the secondary market, in contrast, it is common to achieve a price markedly above the surrender value. Hence, life settlements allow policyholders to capture a much larger, if not full, share of their contracts’ economic value. In this Industry Note, we lay out the basic structure of the market, the important players, and the basic economics. We also go into the potential ways to maximize returns in this market for both investors and policyholders.

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No abstract available.

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Shindigz provides party and celebratory items for various occasions and events through its branded online channel, through third-party retail and wholesale channels, and external online marketplaces. The case focuses on pricing challenges facing a venture with an historically premium-priced strategy in an ecommerce environment where promotions and discounts have become the norm. The case concerns the interaction of branding, channel, and pricing in a firm as well as the impact of Amazon Prime on consumer expectations for “free” shipping from vendors.

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No abstract available.

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Investment manager Eliza Baena confronts an apparent convertible bond arbitrage opportunity when she notices a narrowing spread between two Boston Properties (BXP) bonds, one a convertible bond and the other a straight bond, in the wake of the 2008 Lehman bankruptcy. Baena must decide if there is an opportunity, how to structure a trade to exploit it, and how much of her fund's capital to allocate. Case exposition includes descriptions of basic financing arrangements that support arbitrage strategies, such as rehypothecation and margin lending.

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No abstract available.

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In February 2018, the Remuneration Committee together with the full Board of Directors of the Scotland-based engineering company The Weir Group had to decide whether to seek a shareholder vote at the upcoming Annual General Meeting in April on a proposal to reform the company’s executive remuneration system. The stakes were high: two years earlier shareholders had so roundly rejected a proposal to reform the company’s executive pay arrangements that the result had hit the headlines. A new pioneering proposal had been put together—one that, if successful, would not only mark a dramatic change for the company but would also serve as a test case for executive pay reform in the whole United Kingdom. Should they go ahead? How would a second failure to get shareholders’ approval be recorded in the chronicle of a company soon to celebrate its 150th anniversary?

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Dr. William Carson, an African-American alum of Harvard University became the President and CEO of a multi-billion dollar division of Otsuka, a Japan-based pharmaceutical company. His ascension to this leadership position followed a thriving career in academic medicine as a professor. After a decade in the academy, he began a career in the pharmaceutical industry where he ran drug trials. As the Group Director of Bristol-Myers Squibb, Carson worked on the drug Aripiprazole, an antipsychotic drug that is more famously known as Abilify, which had been developed by Otsuka. Abilify was being co-marketed in the United States by Otsuka and Bristol Myers-Squibb. After a series of meetings with a colleague from Otsuka, Carson was offered the job of introducing Abilify to Japanese consumers. This new responsibility included the task of running clinical trials for Abilify in Japan. The project would require a deft cultural touch as well as a plan for how to run the trials. Should the trials be run in-house or outsourced? Should Carson hire employees who might eventually be laid off—an unpopular option in Japan—or could he find a company with enough cultural sensitivity to run the trials in Asia? Carson would have to rely on his intrapreneurial skills to find the answers.

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Supplements the (A) case.

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Supplements the (A) case.

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