Publications
The Labor Illusion: How Operational Transparency Increases Perceived Value
Authors: | Ryan W. Buell and Michael I. Norton |
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Publication: | Management Science (forthcoming) |
Abstract
A ubiquitous feature of even the fastest self-service technology transactions is the wait. Conventional wisdom and operations theory suggests that the longer people wait, the less satisfied they become; we demonstrate that due to what we term the labor illusion, when websites engage in operational transparency by signaling that they are exerting effort, people can actually prefer websites with longer waits to those that return instantaneous results—even when those results are identical. In five experiments that simulate service experiences in the domains of online travel and online dating, we demonstrate the impact of the labor illusion on service value perceptions, demonstrate that perceptions of service provider effort induce feelings of reciprocity that together mediate the link between operational transparency and increased valuation, and explore boundary conditions and alternative explanations.
Read the paper: http://www.people.hbs.edu/mnorton/buell%20norton.pdf
Working Papers
Platforms and Limits to Network Effects
Authors: | Hann Hałaburda and Mikołaj Jan Piskorski |
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Abstract
We model conditions under which agents in two-sided matching markets rationally prefer a platform restricting choice rather than a platform that offers more choice. We show that a platform that offers a restricted set of matching candidates may be attractive because it also reduces the competition among agents on the same side of the market. An agent who sees fewer candidates knows that these candidates also see fewer potential matches and so are more likely to accept the match. As agents on both sides have access to more candidates, initially positive indirect network effects decrease in strength, reach their limit, and eventually turn negative. The limit to network effects is different for different types of agents. For agents with low outside option, the limit to network effects is reached relatively quickly, and those agents choose the platform with a restricted number of candidates. This is because those agents value the higher rate of acceptance more than access to more candidates. In contrast, agents with higher outside option choose the market with a larger number of candidates. The model helps explain why platforms offering a restricted number of candidates can coexist alongside those offering a larger number of candidates, while charging higher prices.
Download the paper: http://www.hbs.edu/research/pdf/10-098.pdf
Strategy as Innovation: Emergent Goal Formation in a Nascent Industry
Authors: | Tiona Zuzul and Amy C. Edmondson |
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Abstract
Building on research in strategy formation and organizational innovation, this paper reports on a field study of a young company in the sustainable cities industry. We examine how company founders, facing the high ambiguity inherent in very early phases of a new industry, formed a strategic goal. Our data show goal formation as a phased social process. By aggregating previously encountered solutions to known problems, the founding team formed an emergent goal that presented an innovative solution to a new problem and the basis of the new company's business model. We analyze this process to explain how, under conditions of ambiguity, organizational goals can form through a collaborative social exchange that resembles the innovation process. Our research suggests that, under particular conditions, novel ideas can be generated and ambiguous contexts navigated without great foresight. Instead, entrepreneurs can arrive at innovative ideas through the collaborative integration of a disparate set of local problems and solutions. By illuminating the goal formation process in a nascent industry, we contribute to organizational literatures on strategy, decision making, and innovation.
Download the paper (HBS only): http://intranet.hbs.edu/dept/drfd/papers/1011/11-099.pdf
Cases & Course Materials
China Construction America (A): The Road Ahead
Regina M. Abrami and Weiqi Zhang
Harvard Business School Case 911-408
How did a Chinese state-owned construction company strike one deal after another in South Carolina despite political backlash and in New York where well-established competitors dominate? The case examines the U.S. market entry strategy of the CSCEC, China's leading state-owned construction company. It does so by way of the CEO of its U.S. subsidiary and his challenge to sustain the company's exceptional growth in the face of an unprecedented slowdown in the U.S. construction industry. The case also offers a window into the processes and related issues associated with the accelerated overseas expansion of Chinese state-owned businesses.
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China Construction America (B): The Baha Mar Resort Deal
Regina M. Abrami, Malcolm Riddell, and Weiqi Zhang
Harvard Business School Supplement 911-411
Why is a Chinese state-owned construction company building the largest mega-resort and casino in the Caribbean? This case examines the intricate dealmaking by which CSCEC, China's leading global engineering and construction contractor, emerged as a key market player. Having beat out Harrah's and other contenders for a stake in the Baha Mar Project, CSCEC now also has an equity stake in the Bahamas' gaming and resort industry. The case explores the growing role of project financing by way of China's Export-Import Bank and its implications for business dealmaking and the competitiveness of China's increasingly globalizing businesses.
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CNOOC: Building a World-class Energy Company
Joseph L. Bower, Nancy Hua Dai, and Michael Shih-ta Chen
Harvard Business School Case 311-074
Fu Chengyu is the fifth CEO to lead China National Offshore Oil Company-an SOE founded in 1982 to exploit Chinese offshore deposits. In 2010 he is trying to decide how to drive further growth in a company that has grown 556 times in less than 30 years, with profits grown 2,600 times. He believes that the way CNOOC has been managed, a blend of market orientation and concern for employees and the nation has contributed importantly to the success. His challenge is to allocate resources among new areas to explore for petroleum and new sources of energy and to develop managers with the capability of leading those businesses in the face of world-class competitors. Both technical talent and the ability to integrate the efforts of non-Chinese leaders are involved.
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http://cb.hbsp.harvard.edu/cb/product/311074-PDF-ENG
Herborist
John Deighton, Leora Kornfeld, Yanqun He, and Qingyun Jiang
Harvard Business School Case 511-051
Global brands such as L'Oreal and Oil of Olay dominate China's skin care market. A Chinese domestic brand, after some success in partnership with Sephora in Europe, aspires to challenge the French and U.S. brands' hold on the China market. It must decide how to segment the market, how to position against global assurances of quality and purity, and how to balance its Chinese heritage claims with claims of modernity. The China skin care market is growing extraordinarily fast. Is that an asset or a liability?
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http://cb.hbsp.harvard.edu/cb/product/511051-PDF-ENG
Terror at the Taj Bombay: Customer-Centric Leadership
Rohit Deshpandé
Harvard Business School Multimedia/Video Case 511-703
On November 26, 2008, heavily armed terrorists launched a series of attacks throughout the western-Indian city of Mumbai (formerly Bombay). One of the locations attacked was the Taj Mahal Palace and Tower, which was occupied by the terrorists for over three days, resulting in the deaths of 34 people and 28 people injured. However, the Taj received praise in the aftermath of the attacks for the selfless actions of the staff in placing the safety of the hotel's guests before their own and working to save the lives of its guests. This case seeks to address how leaders develop a customer-centric organization, as well as how an organization saves its flagship brand after a crisis.
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Aardvark
Thomas Eisenmann, Alison Berkley Wagonfeld, and Lauren Barley
Harvard Business School Case 811-064
Aardvark is an online social search service that allows users to pose questions and receive answers from other users in their extended social network. The case explores the process that Aardvark's founders used to design and develop their product based on intensive customer feedback.
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http://cb.hbsp.harvard.edu/cb/product/811064-PDF-ENG
oDesk: Changing How the World Works
Boris Groysberg, David A. Thomas, and Jennifer M. Tydlaska
Harvard Business School Case 411-078
It is 2010, and Gary Swart, CEO of oDesk, is contemplating the next steps for his organization. Founded in 2004 in California, oDesk operates an online marketplace that matches Employers with Contractors. oDesk provides fact-based information on Contractors, including experience, skills, and certifications, to Employers who use this information as a basis for interviewing and hiring Contractors. oDesk's online marketplace also includes a payment platform and tools that allow Employers to audit and verify Contractors' work and time sheets. oDesk collects commissions, approximately 10% of gross services, on all work that goes through its platform. oDesk has enjoyed robust growth since its inception and, to date, has focused on a very distinct market segment: small- and medium-sized employers, Contractors who provide computer programming services, and U.S.-based employers hiring overseas Contractors. Swart believes that the time has come for oDesk to expand beyond this niche, but he is concerned about maintaining oDesk's strong reputation and market positioning, and, as such, he wants to grow in a very focused manner. Should oDesk expand its customer focus to include large employers? Broaden the services its marketplace offers beyond computer programming? Or, widen its geographic reach? Each of these growth options offers opportunities and entails costs. Swart considers each of these in turn.
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http://cb.hbsp.harvard.edu/cb/product/411078-PDF-ENG
Intellectual Property intermediaries
Andrei Hagiu
Harvard Business School Case 711-486
During the past 5 to 10 years, several different intermediation business models have emerged for the intellectual property (IP) market. This note describes the most prominent ones: non-practicing entities (or patent trolls), defensive patent aggregators, online IP platforms, live IP auctions, and IP exchanges.
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http://cb.hbsp.harvard.edu/cb/product/711486-PDF-ENG
Volkswagen do Brasil: Driving Strategy with the Balanced Scorecard
Robert S. Kaplan and Ricardo Reisen de Pinho
Harvard Business School Case 111-049
A new management team at VW do Brazil develops and deploys a strategy map and Balanced Scorecard to accomplish a turnaround and cultural change after eight consecutive years of financial losses and market share declines. The team uses the strategy map to align financial and project resources to the strategy and to motivate its more than 20,000 employees by communicating the strategy in multiple ways and installing reward and recognition programs. It also establishes new programs to align the extensive networks of suppliers and dealers to the strategy. But after a sharp decline in sales triggered by the global financial crisis of 2008, the executive team faces a dilemma: should it cut back production levels and funding for strategic initiatives until sales recover, or should it continue to invest for the future?
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The Fox Island Wind Project (B)
Joseph B. Lassiter III, and Evan Richardson
Harvard Business School Supplement 811-051
Fox Island Wind Cooperative faces criticism from local residents.
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Zopa: The Power of Peer-to-Peer Lending
Mikołaj Jan Piskorski, Isabel Fernandez-Mateo, and David Chen
Harvard Business School Case 709-469
Zopa, a U.K.-based peer-to-peer lending company, connected individual lenders and borrowers via an online interface. The company charged a small fee for completed loan transactions but has not turned a profit. Zopa offered two platforms: Markets and Listings. Markets was an automated system that assembled loans by combining lowest loan offers from different Zopa lenders. Zopa Listings allowed prospective borrowers to post eBay-like listings explaining who they were, how much money they needed, and how they would use it. Lenders then made offers specifying how much they were willing to lend and at what rate. Neither platform met with much success. In February 2009, the CEO of Zopa is considering withdrawing from Listings and focusing on Markets, even though a company in the U.S., Prosper, had attracted many users with a product akin to Zopa Listings.
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http://cb.hbsp.harvard.edu/cb/product/709469-PDF-ENG
Gilt Groupe
Michael J. Roberts, William A. Sahlman, and Tamara Obradov
Harvard Business School Case 811-049
The case explores decisions faced by Gilt Groupe co-founders in 2009 regarding how rapidly to grow, which growth strategies to pursue, and how much capital to raise.
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http://cb.hbsp.harvard.edu/cb/product/811049-PDF-ENG