First Look

May 2, 2017

The value of a lenient patent application examiner

It stands to reason that some patent application examiners are tougher than others when it comes to granting patents. Joan Farre-Mensa, Deepak Hegde, and Alexander Ljungqvist examine the implications in the working paper What is a Patent Worth? Evidence from the U.S. Patent ‘Lottery.’ “Using unique data on all first-time applications filed at the U.S. Patent Office since 2001, we find that start-ups that win the patent ‘lottery’ by drawing lenient examiners have, on average, 55% higher employment growth and 80% higher sales growth five years later,” they write. “Patent winners also pursue more, and higher quality, follow-on innovation. Winning a first patent boosts a start-up’s subsequent growth and innovation by facilitating access to funding from VCs, banks, and public investors.”

Lessons from a public relations disaster

Thanks to the power of social media, millions of people have viewed the disturbing video of a passenger being dragged off a United Airlines plane last month. John Deighton discusses the consequences and lessons of the ongoing PR disaster in Companies Like United Need to Cultivate Good Judgment, and Free Their Employees to Use It, published on the Harvard Business Review website. “In customer service settings, it used to be that there were two modes: a friendly face of service delivery and a grim face, saying ‘call security,’” he writes. “It’s an outdated way of thinking, in the U.S. in particular, which practically invented the art of at-scale customer service design. And it fails to take into account the power of social media to punish companies whose employees go against their instincts as decent people because they felt bound to follow orders.”

How HR can support family caregivers

Many employees are responsible for taking care of ailing family members, and many employers are ill-equipped to give them the support they need. Keith Fengler, Joseph Fuller, and Scott Olsen look at this work/life issue in HR’s New Challenge: Whole Family Care, published on PwC’s strategy+business website. “The goal is to reassure employees that the right person will deliver the right care or service at the right time, relieving them of the burden of assembling, coordinating, and managing such resources,” they write. “This complex idea boils down to three core elements: more-tailored benefits packages, improved coordination and communication, and superior technology."

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

— Carmen Nobel
 
  • April 14, 2017
  • Harvard Business Review

Companies Like United Need to Cultivate Good Judgment, and Free Their Employees to Use It

By: Deighton, John A.

Abstract—United Airlines has pledged to improve its training programs and empower its employees to put customers first in the wake of a video showing a passenger being dragged from a plane. Of all the U.S. air carriers, United should have known the power of social media and public outrage. It had learned years earlier in a prominent case about how fast viral content spreads and the ability of consumers to talk back to corporations. But the moral of this story is not how to do crisis management faster and better in a lightning-fast digital world. It’s that even the nimblest and deftest crisis management response cannot contain the damage of going straight to “call security” and crossing the last line of defense in customer service design. And an audience of customers standing by with their smartphones to record any spectacle seems to have had, until now, unfortunately, no discernable impact on corporate policy guidelines for dealing with uncooperative customers. Companies building computer-assisted rules for customer management in predictably difficult situations need to understand that human judgment is still one of the most important tools. Company leaders need to offer better employee training on all these points.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=52591

  • April 17, 2017
  • Strategy + Business

HR's New Challenge: Whole-Family Care

By: Fengler, Keith, Joseph B. Fuller, and Scott Olsen

Abstract—No abstract available.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=52581

  • May–June 2017
  • Harvard Business Review

Reclaim Your Commute: Getting to and from Work Doesn't Have to Be Soul Crushing

By: Gino, Francesca, Bradley Staats, Jon M. Jachimowicz, Julia J. Lee, and Jochen I. Menges

Abstract—No abstract available.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=52592

  • 2016
  • A Commitment to Law, Development and Public Policy: A Festschrift in Honour of Nana Dr. SKB Asante

Should Governments Demand Equity in Foreign-Owned Extractive Projects?

By: Wells, Louis T.

Abstract—No abstract available.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=52573

  • 2016
  • The Challenge of BRIC Multinationals

Third World Multinationals: A Retrospective

By: Wells, Louis T.

Abstract—No abstract available.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=52575

The Cross Section of Bank Value

By: Egan, Mark, Stefan Lewellen, and Adi Sunderam

Abstract—We study the determinants of value creation within U.S. commercial banks. We begin by constructing two new measures of bank productivity: one focused on deposit-taking productivity and one focused on asset productivity. We then use these measures to evaluate the cross-section of bank value. Both productivity measures are strongly value relevant, with variation in banks' deposit productivity responsible for the majority of variation in bank value. We also find evidence consistent with synergies between deposit-taking and lending activities: banks with high deposit productivity have high asset productivity, a relationship driven by the tendency of deposit-productive banks to hold illiquid loans. Our results suggest that both sides of the balance sheet contribute meaningfully to bank value creation, with the liability side playing a primary role.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=52259

What Is a Patent Worth? Evidence from the U.S. Patent 'Lottery'

By: Farre-Mensa, Joan, Deepak Hegde, and Alexander Ljungqvist

Abstract—We provide evidence on the value of patents to start-ups by leveraging the random assignment of applications to examiners with different propensities to grant patents. Using unique data on all first-time applications filed at the U.S. Patent Office since 2001, we find that start-ups that win the patent “lottery” by drawing lenient examiners have, on average, 55% higher employment growth and 80% higher sales growth five years later. Patent winners also pursue more, and higher quality, follow-on innovation. Winning a first patent boosts a start-up’s subsequent growth and innovation by facilitating access to funding from VCs, banks, and public investors.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=50292

Monetary Policy and Global Banking

By: Ivashina, Victoria, and Falk Bräuning

Abstract—Global banks use their global balance sheets to respond to local monetary policy. However, sources and uses of funds are often denominated in different currencies. This leads to a foreign exchange (FX) exposure that banks need to hedge. If cross-currency flows are large, the hedging cost increases, diminishing the return on lending in foreign currency. We show that, in response to domestic monetary policy easing, global banks increase their foreign reserves in currency areas with the highest interest rate while decreasing lending in these markets. We also find an increase in FX hedging activity and its rising cost, as manifested in violations of covered interest rate parity.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=51348

  • Harvard Business School Case 917-539

Yushan Bicycles: Learning to Ride Abroad

Yushan Bicycles, one of Taiwan's leading bicycle manufacturers, is pursuing an international expansion strategy by increasing demand for its range of traditional and electric bicycles and shifting its product mix toward higher-margin models sold through specialty bicycle retail shops. However, the manager of its new Australian subsidiary has taken a different approach that focuses on selling lower-priced models through large sporting-goods retailers. The manager's strategy has yielded disappointing financial results so far, and he and company executives disagree on the cause and next steps. The Yushan case was specifically developed for international management and international business courses, but it can also be used in competitive strategy, corporate strategy, and general management programs. It is especially useful for analyzing situations in which issues of strategy, organization, and management converge.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/917539-PDF-ENG

  • Harvard Business School Case 917-540

Yushan Bicycles: Learning to Ride Abroad

Teaching Note for HBS No. 917-539.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/917540-PDF-ENG