First Look

February 18, 2014

Up On The Roof

In 2011, the Canadian company Lufa Farms created what is billed as the first commercial greenhouse operation built on rooftops. Two years later, founder Mohamed Hage is exploring growth opportunities, as chronicled in the new case "Lufa Farms" by José B. Alvarez, Robert Mackalski, Annelena Loeb, and Lisa Mazzanti. According to them, "This case explores the intricacies of a rooftop farming business, determines how Hage built a successful brand, and presents the challenges that might lie ahead for the company as the founder thinks about expansion."

Decision-making In The Governor's Office

Most executives at some point must weigh the "political" ramifications of their business decisions. A new case takes readers inside the world of government to see how a politician does it, in this instance former Indiana governor Mitch Daniels. The study, written by Robert Steven Kaplan and Wendy K. Winer, looks at how Daniels thought about trade-offs around a controversial right-to-work law.

Innovating When Information Is Plentiful

The information age, as promised, has dramatically increased the amount of valuable information available to decision makers. In a new book chapter, Michael Tushman and coauthors consider what this means for innovation management and future research. "Innovating without Information Constraints: Organization, Communities, and Innovation When Information Costs Approach Zero," appears in Oxford Handbook of Creativity, Innovation, and Entrepreneurship, now in press.

— Sean Silverthorne


  • August 2013
  • Oxford Handbook of Creativity, Innovation, and Entrepreneurship: Multilevel Linkages

Innovating without Information Constraints: Organization, Communities, and Innovation When Information Costs Approach Zero

By: Altman, Elizabeth J., Frank Nagle, and Michael Tushman

Abstract—Innovation has traditionally taken place within an organization's boundaries and/or with selected partners. This Chandlerian approach to innovation has been rooted in transaction costs, organizational boundaries, and information processing challenges associated with distant search. Information processing, storage, and communication costs have long been an important constraint on innovation and a reason for innovative activities to take place inside the boundaries of an organization. However, exponential technological progress has led to a dramatic decrease in information constraints. In a range of contexts, information costs approach zero. In this chapter, we discuss how sharply reduced information costs enable organizations to engage with communities of developers, professionals, and users for core innovative activities, frequently through platform-based businesses and ecosystems and by incorporating user innovation. We then examine how this ease of external engagement impacts the organization and its strategic activities. Specifically, we consider how this shift in information processing costs affects organization boundaries, business models, interdependence, leadership, identity, search, and intellectual property. We suggest that much of the received wisdom in these areas of organization theory requires revisiting. We then discuss the implications for an organization's management of innovation and conclude with research opportunities.

  • August 2013
  • Maximize Your Potential: Grow Your Expertise, Take Bold Risks, and Build an Incredible Career

Keeping a Diary to Catalyze Creativity

By: Amabile, Teresa, Steven Kramer, and Ela Ben-Ur

Abstract—No abstract available.

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  • August 2013
  • How CEOs Can Fix Capitalism

The Most Successful CEOs Come from Within

By: Bower, Joseph L.

Abstract—The financial crisis of 2008 and the Great Recession caused a crisis of public confidence in business and American-style capitalism, with its focus on maximizing shareholder value. Corporate leaders understood that reform was needed and that they needed to commit themselves to the dual goal of producing benefits for society and their firms' bottom lines-to creating "shared value." But the specific actions they could take to bring about this change were less clear. This ebook offers some of the freshest thinking today on practical measures that businesses can implement to create shared value. Originally published in an online forum hosted by Harvard Business Review, it offers valuable advice about how CEOs, other senior executives, and boards of directors can work together to engage stakeholders in new ways, change their companies' values, build healthier relationships with investors, revamp incentive systems to create long-term value, and develop stronger succession plans.

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  • August 2013
  • Review of Financial Studies

Frictions in Shadow Banking: Evidence from the Lending Behavior of Money Market Funds

By: Chernenko, Sergey, and Adi Sunderam

Abstract—We document the consequences of money market fund risk taking during the European sovereign debt crisis. Using a novel data set of security-level holdings of prime money market funds, we show that funds with large exposures to risky Eurozone banks suffered significant outflows between June and August 2011. Due to credit market frictions, these outflows have significant spillover effects on other firms: non-European issuers that typically rely on these funds raised less financing in this period. The results are not driven by issuers' riskiness or exposure to Europe: for the same issuer, money market funds with greater exposure to Eurozone banks decrease their holdings more than other funds. We show that relationships are important in short-term credit markets so that these spillover effects cannot be seamlessly offset, even though issuers are large, highly rated firms. Our results illustrate that instabilities associated with money market funds persist despite recent changes to the regulations governing them.

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  • August 2013
  • Accountancy Futures

The Investor Conundrum

By: Eccles, Robert G.

Abstract—No abstract available.

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  • August 2013
  • Administrative Science Quarterly

On the Causality and Cause of Returns to Organizational Status: Evidence from the grands crus classés of the Médoc

By: Malter, Daniel

Abstract—This paper addresses the recent debate about the causality of status effects and identifies the symbolic effect of status on the prices organizations charge for their products. I exploit the grand cru classification of the chateaux of the Médoc, created in 1855, as a fixed hierarchical symbol of class status. The classification cannot be reversely affected by the quality chateaux produce or the prices they charge, which greatly facilitates the estimation of the causal effect. To discern whether status serves as a signal of quality under uncertainty or satisfies the motive of conspicuous consumption, I study a period of time during which the uncertainty about quality has arguably declined. An instrumental variable and a matching estimator identify a symbolic effect of status on prices. The effect increases in a time of decreasing uncertainty, which supports the motive of conspicuous consumption as a driver of the effect. However, the results caution that we might commonly overestimate the symbolic value of status if we underestimate the disproportional value markets place on the pinnacle of quality, the enduring nature of reputation, and the effect of endogenous quality choices on status effect estimates.

  • August 2013
  • American Psychologist

J. Richard Hackman (1940-2013)

By: Wageman, Ruth, and Teresa M. Amabile

Abstract—When J. Richard Hackman died in Cambridge, Massachusetts, on January 8, 2013, psychology lost a giant. Six and a half feet tall, with an outsize personality to match, Richard was the leading scholar in two distinct areas: work design and team effectiveness. In both domains, his work is foundational. Throughout his career, Richard applied rigorous methods to problems of great social importance, tirelessly championing multi-level analyses of problems that matter. His impact on our field has been immense.

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Working Papers

Span of Control and Span of Attention

By: Bandiera, Oriana, Andrea Prat, Raffaella Sadun, and Julie Wulf

Abstract—Using novel data on CEO time use, we document the relationship between the size and composition of the executive team and the attention of the CEO. We combine information about CEO span of control for a sample of 65 companies with detailed data on how CEOs allocate their time, which we define as their span of attention. CEOs with larger executive teams do not save time for personal use or to cultivate external constituencies. Instead, CEOs with broader spans of control invest more in a "team" model of interaction. They spend more time internally, specifically in pre-planned meetings that have more participants from different functions. The complementarity between span of control and the team model of interaction is more prevalent in larger firms.

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To Groupon or Not to Groupon: The Profitability of Deep Discounts

By: Edelman, Benjamin, Sonia Jaffe, and Scott Duke Kominers

Abstract—We examine the profitability and implications of online discount vouchers, a relatively new marketing tool that offers consumers large discounts when they prepay for participating firms' goods and services. Within a model of repeat experience good purchase, we examine two mechanisms by which a discount voucher service can benefit affiliated firms: price discrimination and advertising. For vouchers to provide successful price discrimination, the valuations of consumers who have access to vouchers must generally be lower than those of consumers who do not have access to vouchers. Offering vouchers tends to be more profitable for firms that are patient or relatively unknown and for firms with low marginal costs. Extensions to our model accommodate the possibilities of multiple voucher purchases and firm price re-optimization. Despite the potential benefits of online discount vouchers to certain firms in certain circumstances, our analysis reveals the narrow conditions in which vouchers are likely to increase firm profits.

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Cases & Course Materials

  • Harvard Business School Case 711-464

Vodafone in Japan (A)

Despite a rough start in the Japanese telecom market, by late 2003, Vodafone seemed to have weathered the storm, largely based on the strength of their mobile phone unit. But was it simply the calm before the storm?

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  • Harvard Business School Case 711-469

Vodafone in Japan (B)

By 2005, Vodafone Group was losing its footing in the sophisticated Japanese telecom market. What were they doing wrong? Should they cut their losses and leave Japan, or could they learn from mistakes and turn things around?

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  • Harvard Business School Case 711-470

Vodafone in Japan (C)

An update to Vodafone cases (A) and (B), describing Softbank's acquisition of Vodafone and its performance in Japan.

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  • Harvard Business School Case 514-008

Lufa Farms

In 2013, Mohamed Hage, founder of the rooftop farming business called Lufa Farms, thought his company had reached a level of maturity where scaling the business model was the next logical step. With two greenhouses already in Canada, he was looking into other locations in the U.S. Though Lufa Farms' advanced cultivation technologies made the company stand out in its sector, the industry was still young, and investors were not fully comfortable putting their resources into rooftop farms. This case explores the intricacies of a rooftop farming business, determines how Hage built a successful brand, and presents the challenges that might lie ahead for the company as the founder thinks about expansion.

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  • Harvard Business School Case 309-111

Dr. Benjamin Hooks and Children's Health Forum

"Dr. Benjamin Hooks and Children's Health Forum" charts the many different career paths of Hooks, a civil right activist and pioneer. Hooks' positions ranged from lawyer, judge, preacher, entrepreneur to the first African American commissioner of the Federal Communications Commission (FCC) and to the head of the National Association for the Advancement of Colored People (NAACP) to the co-founder of the non-profit Children's Health Forum (CHF). CHF's mission was to eradicate lead poisoning in children in the United States. The case provides an overview of lead poisoning in the U.S., including how it is measured, its causes, and legislation enacted to prevent it. The case asks students to reflect on Hooks' leadership choices and his decision to launch CHF. How would they assess Hooks as a leader? What made him a strong leader? Given Hooks' past experiences, do they think that Hooks made the right decision to focus on lead poisoning after leaving the NAACP? Is this an area where he could have the most impact?

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  • Harvard Business School Case 414-049

Mitch Daniels and the State of Indiana

Mitch Daniels, Governor of the State of Indiana, knew he had to make a difficult choice as he sat in his office in December 2010. Should he aggressively push the state legislature to pass comprehensive education reform-a major priority of his administration-or, instead, push for a new "right-to-work" law that he believed might be critical to improving his state's competitiveness? He was concerned that he wouldn't be able to do both during his second term. He prided himself on being an action- and results-oriented governor. He prided himself on being able to work with both Democrats and Republicans in the state legislature. In the elections of fall 2010, the Republicans regained control of the Indiana House of Representatives. Passage of a right-to-work law was not a major part of their election platform because of the union opposition they thought it would generate. Quietly, however, Republicans did support a right-to-work law that was expected to attract more jobs to the state in a very difficult economic environment. Daniels had to weigh the political ramifications as he considered which initiative to pursue. He knew that despite his various accomplishments, this choice would likely impact his legacy as governor. As he weighed the decision, Daniels began to jot down notes about the tradeoffs relating to his various options.

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  • Harvard Business School Case 814-040

Carbon Engineering

Dr. David Keith, president of Carbon Engineering, a company based in Calgary, Alberta, is commercializing a technology to capture carbon dioxide (CO2) from the atmosphere. The company plans to market the captured CO2 to produce low carbon transportation fuels in markets such as California where regulation, derived from a state law designed to manage climate change, restricts the maximum carbon intensity of transportation fuel.

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  • Harvard Business School Case 414-019

Cynthia Carroll at Anglo American (A)

In 2007, Cynthia Carroll, the newly appointed chief executive of mining giant Anglo American, was considering shutting down mines in South Africa for safety reasons, namely worker fatalities. No company had ever done so before. Carroll felt that operating a company whose goal was anything less than "zero harm" (meaning no fatalities or serious injuries) was unacceptable. As the first woman and non-South African to lead the century-old company, many were watching her closely. Should she go so far as to make the unprecedented move of shutting down the mines? What message would that send to the company and to the mining industry? The lives of others, Carroll's reputation, and the company's performance were all on the line.

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  • Harvard Business School Case 414-020

Cynthia Carroll at Anglo American (B)

In 2007, Cynthia Carroll, the newly appointed chief executive of mining giant Anglo American, ordered the temporary shutdown of Anglo American Platinum's Rustenburg, South Africa, mines in response to a spate of deaths at the operations. The case lays out Carroll's requirements of what had to be done before the Rustenburg mines could restart operations, including the implementation of a new safety program for tens of thousands of workers that called on the help of executives from other Anglo American businesses. The shutdown disrupted operations and incurred substantial costs.

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  • Harvard Business School Case 414-021

Cynthia Carroll at Anglo American (C)

When Cynthia Carroll, chief executive of Anglo American, ordered the shutdown of the company's Rustenburg, South Africa, mines in the summer of 2007, it was just the first of many steps the company would take under her leadership to achieve zero harm. The case describes Carroll's approach to stakeholder relationships (i.e., relationships with the government and unions), how the shutdown was used as a platform to change the culture at Anglo American as a whole, the challenges of sustaining such an endeavor, and Carroll's reflections on her career and leadership. In 2013, Carroll stepped down as chief executive, but her tenure at Anglo American had reverberated through the company, South Africa, and the mining industry.

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  • Harvard Business School Case 814-015

Value Retail: Opportunities for European Expansion

Scott Malkin, CEO of Value Retail, a developer and operator of European outlet villages serving luxury brands, is planning on developing a 18,503 m2 open-air outlet village to be built 98 kilometers south of Milan on land he was about to acquire for 7.26 million lira. Is this a good investment? What are the risks associated with the project? Could Value Retail pursue its outlet strategy in Italy? Includes color exhibits.

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  • Harvard Business School Case 814-013

Value Retail (B) China: Opportunities for Expansion

After spending two years evaluating China as a potential market for expansion, in 2012, Scott Malkin, chief executive of Value Retail, identifies a highly desirable site in Suzhou. Now Malkin must decide if it is the right opportunity to open a village in China.

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  • Harvard Business School Case 514-087

Digital Marketing Strategy

Digital Marketing Strategy is the process by which firms employ, either partially or exclusively, digital tools, techniques, and tactics to create value for customers.

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  • Harvard Business School Case 514-047

Groupon for Local Businesses

Local businesses' experiences with using Groupon to promote themselves ran the gamut of roaring success to absolute failure. Why is there such a large range in outcomes for firms that used daily deal sites such as Groupon? This case examines the effectiveness of online daily deal sites from the point of view of local businesses.

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  • Harvard Business School Case 514-071

Managing Online Reviews on TripAdvisor

In 2013, TripAdvisor was the most visited online travel site in the world. It hosted a massive repository of information on hotels and travel services and provided millions of reviews written by consumers. Consumers were becoming increasingly motivated to read and write reviews on TripAdvisor, largely as a means of informing other consumers about their personal experiences, but also to praise or complain to hotels about their experiences. In response, hotels were investing more time and marketing budget on managing the quantity, quality, and location of online reviews, with particular attention paid to TripAdvisor.

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  • Harvard Business School Case 814-059

Apple's Core (Graphic Novel Version)

This is a short case designed to introduce students to a wide variety of choices faced by founders, including whether to quit a big-company job to found a new venture, whether to found with a best friend, how to split the equity within the founding team, how to deal with tensions between the founders, and whether to take on outside investors who will change the venture's strategy and team.

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  • Harvard Business School Case 813-156

Curt Schilling's Next Pitch (B)

Continuation of the "Curt Schilling's Next Pitch" case series.

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