First Look

Abstract—This paper examines the approaches accounting researchers use to draw causal inferences using observational (or non-experimental) data. The vast majority of accounting research papers draws causal inferences notwithstanding the well-known difficulties in doing so with observational data. While a minority of papers seeks to use quasi-experimental methods to draw inferences, there are concerns about how these methods are typically applied. We believe that accounting research would benefit from a greater focus on the study of causal mechanisms (or causal pathways), increased emphasis on structural modeling of the phenomena of interest, and more in-depth descriptive research. We argue these changes are possible and offer a practical path forward for rigorous accounting research.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50473

Abstract—Seven experiments explore people's decisions to share or withhold personal information and the wisdom of such decisions. When people choose not to reveal information—to be "hiders"—they are judged negatively by others (experiment 1). These negative judgments emerge when hiding is volitional (experiments 2A and 2B) and are driven by decreases in trustworthiness engendered by decisions to hide (experiments 3A and 3B). Moreover, hiders do not intuit these negative consequences: given the choice to withhold or reveal unsavory information, people often choose to withhold, but observers rate those who reveal even questionable behavior more positively (experiments 4A and 4B). The negative impact of hiding holds whether opting not to disclose unflattering (drug use, poor grades, and sexually transmitted diseases) or flattering (blood donations) information including across decisions ranging from whom to date to whom to hire. When faced with decisions about disclosure, decision makers should be aware not just of the risk of revealing but of what hiding reveals.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50432

Abstract—In a real-effort laboratory experiment, labor supply decreases more with the introduction of a tax than with a financially equivalent drop in wages. This “tax aversion” is large in magnitude: when we decompose the productivity decrease that arises from taxation, we estimate that 40% is due to the lower net wage and the remaining 60% to tax aversion. This tax aversion affects labor supply more on the extensive margin (working less) than on the intensive margin (being less productive while working). The aversion is equally strong whether tax revenue goes to the U.S. government or back to the experimenter (a “laboratory tax”). We discuss the implications of our results for the relationship between labor supply and taxation.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50442

Abstract—This study examined whether the cultures of low- and high-power negotiators interact to influence cooperative behavior of low-power negotiators. Managers from four different cultural groups (Germany, Hong Kong, Israel, and the United States) negotiated face-to-face in a simulated power-asymmetric commons dilemma. Results supported an interaction effect in which cooperation of people with lower power was influenced by both their culture and the culture of the person with higher power. In particular, in a multicultural setting, low-power managers from Hong Kong, a vertical-collectivist culture emphasizing power differences and group alignment, adjusted their cooperation depending on the culture of the high-power manager with whom they interacted. This study contributes to understanding how culture shapes behavior of people with relatively low power, illustrates how a logic of appropriateness informs cooperation, and highlights the importance of studying multicultural social interactions in the context of negotiations, work teams, and global leadership.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50440

Abstract—No abstract available.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50349

Abstract—This study investigates the origins of variation in the structures of interorganizational networks across industries. We combine empirical analyses of existing interorganizational networks in six industries with an agent-based simulation model of network emergence. Using data on technology partnerships from 1983 to 1999 among firms in the automotive, biotechnology and pharmaceuticals, chemicals, microelectronics, new materials, and telecommunications industries, we find that differences in technological dynamism across industries and the concomitant demands for value creation engender variations in firms’ collaborative behaviors. On average, firms in technologically dynamic industries pursue more-open ego networks, which fosters access to new and diverse resources that help sustain continuous innovation. In contrast, firms in technologically stable industries on average pursue more-closed ego networks, which fosters reliable collaboration and helps preserve existing resources. We show that because of the observed cross-industry differences in firms’ collaborative behaviors, the emergent industry-wide networks take on distinct structural forms. Technologically stable industries feature clan networks, characterized by low network connectedness and rather strong community structures. Technologically dynamic industries feature community networks, characterized by high network connectedness and medium-to-strong community structures. Convention networks, which feature high network connectedness and weak community structures, were not evident among the empirical networks we examined. Taken together, our findings advance an environmental contingency theory of network formation, which proposes a close association between the characteristics of actors’ environment and the processes of network formation among actors.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50445

Abstract—Under fairly general assumptions, expected stock returns are a linear combination of two accounting-based characteristics—book to market and ROE. Empirical estimates based on this relation predict the cross section of out-of-sample returns in 26 of 29 international equity markets, with a highly significant average slope coefficient of 1.05. In sharp contrast, standard factor-model-based proxies fail to exhibit predictive power internationally. We show analytically and empirically that the importance of ROE in forecasting returns depends on the quality of accounting information. Overall, a tractable accounting-based valuation model provides a unifying framework for obtaining reliable proxies of expected returns worldwide.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=49238

Abstract—The authors examine prominent placement of search engines' own services and effects on users' choices. Evaluating a natural experiment in which different results were shown to users who performed similar searches, they find that Google's prominent placement of its Flight Search service increased the clicks on paid advertising listings by more than half while decreasing the clicks on organic search listings by about the same quantity. This effect appears to result from interactions between the design of search results and users' decisions about where and how to focus their attention: Users who decide what to click based on listings' relevance became more likely to select paid listings, while users who were influenced by listings' visual presentation and page position became more likely to click on Google's own Flight Search listing. The authors consider implications of these findings for competition policy and for online marketing strategies.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=44724

Abstract—This article seeks to encourage scholars to conduct research that is more relevant to the decisions faced by managers and policymakers. I define relevant research papers as those whose research questions address problems found (or potentially found) in practice and whose hypotheses connect independent variables within the control of practitioners to outcomes they care about using logic they view as feasible. I provide several suggestions for how scholars can enhance research relevance, including engaging practitioners in on-campus encounters, at managerial conferences, and at crossover workshops; conducting site visits and practitioner interviews; working as a practitioner; and developing a practitioner advisory team. I describe several ways that scholars can convey relevant research insights to practitioners, including presenting at practitioner conferences; writing for practitioners in traditional crossover journals and in shorter pieces like op-eds and blogs; and attracting the interest of those who write columns, blogs, and articles about research for practitioners. I conclude by describing a few ways that academic institutions can encourage more relevant research, focusing on journals, professional societies, and doctoral programs.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=50489

This case study examines a market-based approach to economic development through the eyes of NGO TechnoServe's project manager, implementing a $9.5 million five-year public-private partnership between Coca-Cola, IDB, and USAID. The case ends at the beginning of the final year of the project, presents the project’s advances, and invites students to position themselves in front of three options regarding the exit strategy to be deployed to ensure sustainability.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/616040-PDF-ENG

Ian Lee, Whirlpool's VP for North Asia, had been negotiating a possible acquisition with Jackie Jin, the chairman of a leading Chinese appliance manufacturer named Hefei Rongshida Sanyo Electric Company (Hefei Sanyo), for almost six months when suddenly Hefei Sanyo's stock price jumped 25% in the first two weeks of May 2013. The sudden price increase not only increased the likely acquisition price for an ownership stake in Hefei Sanyo, but also meant that Whirlpool had lost the luxury of both time and secrecy. Lee had to quickly decide how to structure a deal that enabled Whirlpool to acquire controlling ownership position (>50%) in the state-owned enterprise (SOE)—something that had not been done before; how much to pay for the stake; and how to ensure commercial, regulatory, and political approval for the deal.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/216019-PDF-ENG

This case concerns the proposed buyout of Acibadem, a leading hospital chain in Turkey. Abraaj, a MENA region private equity firm, proposes to make its first investment in Turkey. The case highlights the role of Turkish health care reform in driving the value. The case provides an opportunity to estimate the potential return on investment as well as to evaluate the structuring of the transaction.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/214021-PDF-ENG

This case provides an update on the ultimate outcome of the transaction presented in the (A) case.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/214022-PDF-ENG

Facebook celebrated its ten-year anniversary in February 2014. Over the past decade it has grown into the largest social network in the world with one billion users. After filing an IPO in 2012 at a $104 billion valuation (the third largest IPO in U.S. history), the stock price steadily declined but recovered after the company implemented an effective advertising strategy. Facebook worked to maintain its "hacker ethos" and remain nimble as it matured. The company was worth close to $200 billion. Could this kind of value sustain itself for years to come?

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/616012-PDF-ENG

By 2015, India-based employment assessment and certification provider Aspiring Minds had helped facilitate over 300,000 job matches through its assessment tools. Aspiring Minds' flagship product, the Aspiring Minds Computer Adaptive Test (AMCAT), used machine-learning algorithms to evaluate the abilities of job seekers and provide feedback by measuring not only skills and knowledge, but also personality and behavior traits. Since its founding in 2007, the company developed several new assessment products, including SVAR, a spoken-English evaluation; Automata, a programming skills evaluator; a customer service test; and TESLA, a suite of products that assessed and provided certification for vocational skills. The company had recently expanded into parts of Africa, the Middle East, the Philippines, the U.S., and most recently, China. Aspiring Minds had seen success as a business-to-business (B2B) entity, creating and selling technology products geared towards industry verticals. By 2015 the business-to-consumer (B2C) side of the business in India had been quite successful as well, generating revenues equal to that of the B2B side. As Aspiring Minds worked to establish a presence in China, cofounders Himanshu and Varun Aggarwal considered whether a B2B or B2C approach would best help the company achieve scale.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/616013-PDF-ENG

Sachin Bansal and Binny Bansal, cofounders of India's largest e-commerce company, Flipkart, were reviewing the foregoing Facebook post, which had gone viral and received more than 20,000 likes. A third-party seller listed a pair of women's sandals on Flipkart's website at 799 Indian rupees (₹) and offered it on promotion at ₹399. However, upon close examination of the product's display photo, consumers noticed a ₹399 price tag printed on the strap. Consistent with stated goals of transparency and building trusted relationships with customers, the Bansals immediately drafted an apology and terminated the seller's agreement with Flipkart.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/516017-PDF-ENG

Management at Deutsche Post DHL Group is designing a three-country test of investment in a new health and wellbeing strategy.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/516049-PDF-ENG

Petrom was privatized by the Romanian state in 2004 and acquired by Austrian oil company OMV, with the state retaining a 20.6% stake in the company. The situation was particularly challenging for the foreign investor since the sector in which the company operated was strategic, was regulated by the Romanian state, and was a key employer and tax payer in a country that was undergoing major structural change. Under OMV and CEO Mariana Gheorghe's leadership, OMV Petrom saw its net profit and sales almost double since 2005, while headcount was reduced by 50%. Gheorghe had negotiated challenges stemming from Petrom's legacy as a state-owned company, such as lack of investment, aged assets, operational inefficiency, and bureaucracy while successfully managing the triangular partnership between the acquirer OMV, acquiree OMV Petrom, and the Romanian government.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/716035-PDF-ENG

The case describes Rubicon Global, a startup that aimed to disrupt the waste management industry. The company started with a bold idea: create a cloud-based, full-service waste management company providing low-cost, highly efficient, and environmentally friendly service anywhere in the country through a national network of independent waste haulers and recyclers. A player in the sharing economy, Rubicon was developing an on-demand mobile application that did for waste management what Uber had done for taxi service. Rubicon had made great progress since introducing its service. They had signed up large multi-national customers and had a number of large potential contracts in the negotiation phase. The team needed more capital to build out the network and technology platform. Management and the board had to make a number of critical decisions: how much should the company raise, for what purpose, from whom, and on what terms?

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/816015-PDF-ENG

This case is set inside IBM Research's efforts to build a computer that can successfully take on human challengers playing the game show Jeopardy! It opens with the machine named Watson offering the incorrect answer "Toronto" to a seemingly simple question during the championship match. Was the answer a reflection of a strategic weakness, or was it actually consistent with design principles established by the development team? The case seeks to expand students' view of the product development process. Traditional software development projects begin with gathering requirements, analyzing the problem, and writing a detailed specification. The Jeopardy! problem is different—it requires a probabilistic approach where there is no closed-form solution. Instead statistical patterns in the data are important, and there is no obvious mapping to the way queries are expressed. Such problems are increasingly common in data mining, optimization problems, or Internet applications where the goal is to find an acceptably good solution in a short amount of time when a deterministic approach might be less fruitful or impractical. We aspire for students to recognize that product development can take many forms and that these are enabled by creativity and the right organizational flexibility and mindset. This abridged version of the case focuses on the choice of Jeopardy! as the development target and the approach taken by the development team. The original case, HBS No. 612-017, has much more detail on the design strategy for the Watson system.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/616025-PDF-ENG

Upwork, the world's largest freelance talent platform, was the result of a merger between the two leading online freelancing companies in 2014, Elance and oDesk. After the merger, the company operated as Elance-oDesk and continued to manage two online platforms—Elance.com and oDesk.com—independently of one another. However in 2015, the company relaunched as Upwork, with both a new brand and a new platform. The company began to migrate Elance.com members and functionalities over to the new platform, which was based on the technical infrastructure of oDesk.com. This case helps students consider the challenges and opportunities associated with such a platform merger, from strategy to implementation.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/616027-PDF-ENG