First Look

August 22, 2017

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

You want to publish my salary where? early on established transparency as a clear company value—to the point of publishing staff salaries and equity details companywide. In a new case study, company leadership considers the next step: sharing compensation information with the general public. The case was written by Susanna Gallani, Tiffany Y. Chang, Brian J. Hall, and Jee Eun Shin.

How to punch up your sales training

Though US companies spend $70 billion annually on salesforce training, the ROI is “disappointing,” write Frank Cespedes and Yuchun Lee in Harvard Business Review online. The authors provide actionable steps to improve participant retention. Your Sales Training Is Probably Lackluster. Here's How to Fix It.

Young leadership confronts a toxic culture

At Webasto Roof Systems Americas, poor performance and turmoil were constants. Top management had turned over three tims in five years. A case written by Francesca Gino and Paul Green follows yet another leadership team in their effort to reboot the toxic culture. Webasto Roof Systems Americas: Leadership Through Change.

Other new publications from Harvard Business School faculty are listed below.

— Sean Silverthorne
  • forthcoming
  • Handbook of Structural Transformation

Location Fundamentals, Agglomeration Economies, and the Geography of Multinational Firms

By: Alfaro, Laura, and Maggie Xiaoyang Chen

Abstract—Multinationals exhibit distinct agglomeration patterns, which have transformed the global landscape of industrial production (Alfaro and Chen, 2014). Using a unique worldwide plant-level dataset that reports detailed location, ownership, and operation information for plants in over 100 countries, we construct a spatially continuous index of pairwise-industry agglomeration and investigate the patterns and determinants underlying the global economic geography of multinational firms. In particular, we run a horserace between two distinct economic forces: location fundamentals and agglomeration economies. We find that location fundamentals, including market access and comparative advantage, and agglomeration economies, including capital-good market externality and technology diffusion, play a particularly important role in multinationals' economic geography. These findings remain robust when we use alternative measures of trade costs, address potential reverse causality, and explore regional patterns.

Publisher's link:

  • June 12, 2017
  • Harvard Business Review

Your Sales Training Is Probably Lackluster. Here's How to Fix It

By: Cespedes, Frank V., and Yuchun Lee

Abstract— U.S. companies spend over $70 billion annually on training and an average of $1,459 per salesperson—almost 20% more than they spend on workers in all other functions. Yet, when it comes to equipping sales teams with relevant knowledge and skills, the ROI of sales training is disappointing. Studies indicate that participants in traditional curriculum-based training forget more than 80% of the information they were taught within 90 days. To increase retention and effectiveness, companies should offer reps additional training at times of need, provide them with access to supplemental material that reinforces what they’ve already been taught, and allow them opportunities to practice their skills in time frames connected to actual buying processes. They can do so by using the same technologies that are “disrupting” their customer-contact activities: videos and mobile apps that reps can view on their devices before, during, and after training initiatives. In addition to providing reps with easier and timelier access to information, videos and apps improve comprehension when someone hears information, they remember about 10% of it three days later, but, when a picture is added, retention increases to 65%.

Publisher's link:

  • July 2017
  • Business and Human Rights Journal

Business Responsibilities for Human Rights: A Commentary on Arnold

By: Hsieh, Nien-hê

Abstract—Human rights have come to play a prominent role in debates about the responsibilities of business. In the business ethics literature, there are two approaches to the question of whether businesses have human rights obligations. The “moral” approach conceives of human rights as antecedently existing basic moral rights. The “institutional” approach starts with contemporary human rights practice in which human rights refer to rights enumerated in the Universal Declaration of Human Rights and subsequent international documents, and in which states are the primary duty bearers of human rights. This commentary argues that the implications of adopting one or the other approach are much greater than most scholars recognize, and that we have reason to reject the moral approach and to adopt the institutional approach instead. The commentary highlights key questions that need to be addressed if human rights are to play a central role in framing the responsibilities of business and helping managers meet their responsibilities.

Publisher's link:

  • 2017
  • The Entrepreneur's Roadmap: From Concept to IPO

Entrepreneurship in Larger Companies

By: Kerr, William R.

Abstract—Entrepreneurship in large and established companies is vital for their long-term success. Incumbent firms face many challenges ranging from global competition to digitization. In times past, being caught flat-footed might have set a company back several years, but it could recover. Today, the threats are existential in nature, and competition can emerge quickly and from the places one least expects. Successful incumbents must ensure that they do not become self-complacent but instead look to renew themselves through corporate entrepreneurship (sometimes also called intrapreneurship). Many books and articles document the overall importance of corporate entrepreneurship and associated business renewal, and many advisors consider the important perspective of the CEO looking across the whole company. An example is Leading Breakthrough Innovation in Established Companies (Harvard Business School Press), which provides a longer reference set for the CEO and corporate-wide perspective. This chapter uses a different lens—it focuses instead on the perspective of a middle-to-upper-level manager contemplating a potential assignment to lead an internal venture in a large company. Befitting this series, we build lists of important considerations that this manager should evaluate. These lists are not exhaustive, but they offer corporate leaders a starting point for a careful due diligence and action plan around new ventures.

Publisher's link:

Abstract—Over the past few years, there has been a significant increase in the number of initiatives seeking to mobilize investor voice toward positive social impact. In this paper, I provide a framework outlining the role of investors as stewards of the commons. While companies are increasingly addressing environmental and social issues that also improve their economic value, for some of these issues individual company action is costly. At the same time, for a further subset of those issues, company action coupled with collaboration between companies is value enhancing. However, collaboration between companies is notoriously difficult and fragile requiring commitment mechanisms. I suggest that a small set of large institutional investors, importantly, but not exclusively, index investors, could provide this commitment mechanism. Common ownership of competitors within industries and long-time horizons in ownership of shares are key characteristics for investors that could act as stewards of the commons. Social pressure fueled by small socially responsible investment funds and nonprofit organizations and customer pressure from individual investors are critical in mitigating free-rider problems among asset managers and sustaining engagement practices. Finally, I explore the limits and anticompetitive concerns to the theory of change presented here.

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  • Harvard Business School Case 917-019

Social media company Buffer wanted to establish clear company values early in its growth. One of these values was a commitment to transparency in its company practices. Buffer openly shared its business strategies and fundraising decks, among lots of other information. Even when they were hacked, the company live-blogged updates to keep their users informed as the situation unfolded. Having internally released each employee's salary and equity details with no pushback, the company now contemplated sharing compensation information transparently with the general public.

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  • Harvard Business School Case 917-020 (B)

Buffer decided to release its salaries and compensation calculation formula to the public, and the public reaction was greater and more positive than they would have imagined. The company experienced both an increase in volume and a change in the kinds of inbound applications they received. As the company continued to grow, Buffer's senior leaders continued to revise the compensation formula based on feedback both internally and from the public. Particularly, they hoped to strengthen the link between pay and performance, which in the current version of the formula was incorporated using a loosely defined "experience level" component. However, defining clear performance metrics and experience levels was not an easy task.

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Webasto Roof Systems, Americas, the North American subsidiary of Germany-based Webasto Group, limped into 2014 in poor financial and operational shape. The company's early optimism emerging from the financial downturn had proven naive, and now, five years later, the company was consistently losing money and was battling severe operational challenges affecting quality and threatening customer relationships. Furthermore, senior leadership had completely turned over three times in the five-year period. Now, the new—and young—leadership is attempting to navigate that crisis and repair the organization, which was full of skittish and disengaged employees. Philipp Schramm, the new CFO, must figure out how to enact positive change with a team of unenthusiastic employees and a near-toxic culture.

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Supplements the (A) case.

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  • Harvard Business School Case 317-043

Ebony Magazine

For nearly 75 years, the Johnson Publishing Company has been the most successful African American magazine publisher. Its flagship Ebony magazine was an iconic coffee table fixture for decades in black households of all classes, making founder John H. Johnson the first African American to make the Forbes 400 list of richest Americans. But the privately held company was now in the hands of his daughter, and it faced the bracing, debilitating winds besetting the entire magazine and newspaper industry. Linda Johnson Rice now had to decide what to do with the company’s publications and brands.

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  • Harvard Business School Case 217-082

Cambridge Franchise Partners

Two partners commence a rollup in the quick-service restaurant segment. They focus on operating improvements and spinning-off real estate.

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