Working Papers
The Rise of Business Forecasting Agencies in the United States
| Author: | Walter A. Friedman |
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Abstract
This paper analyzes the rise of business and economic forecasting agencies in the United States. The field was developed by entrepreneurs like Roger Babson and James Brookmire following the Panic of 1907, and advanced by professional economists, like Irving Fisher and Warren Persons, after World War I. By the late-1920s, about a dozen forecasters competed to sell businesspeople their predictions, usually in the form of weekly or monthly newsletters. Forecasters were part of a larger class of financial and managerial consultants who sought to refine business decision-making through the introduction of statistical data and scientific analysis. The failure of most forecasting agencies to predict the stock market crash of 1929, and to foresee the gravity of the ensuing depression, led to a crisis in the industry. Nonetheless, the pioneering group of forecasters shaped the core problems, and invented many of the techniques, that influenced the maturation of the industry in the decades that followed.
Warren Persons, the Harvard Economic Service, and the Problems of Forecasting
| Author: | Walter A. Friedman |
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Abstract
The Harvard Economic Service pioneered in the business of economic forecasting by publishing a quarterly journal on economic statistics and, starting in 1922, a weekly letter on economic conditions. The Harvard forecasting model, developed by the statistician and economist Warren Persons, gained international renown for its three-curve A-B-C chart, which rendered business fluctuations as the ebb and flow of speculation (A), business (B), and banking (C). The service was directed by C. J. Bullock, who promoted Harvard's forecasting service around the world by forming collaborative agreements with John Maynard Keynes, Lucien March, Corrado Gini, and other prominent economists of the time. Through these contacts, the Harvard method influenced the evolution of forecasting techniques in several European countries. The Harvard Economic Service, however, attracted criticism for its purely empirical approach, its failure to make consistently accurate predictions, and its pursuit of commercial objectives in a university setting. Harvard's efforts to build a forecasting service are an early chapter in the evolution of the social sciences, the growth of the financial analysts, and the commercialization of academic knowledge.
Noncompetes and Inventor Mobility: Specialists, Stars, and the Michigan Experiment
| Authors: | Matt Marx, Deborah Strumsky, and Lee Fleming |
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Abstract
Several scholars have documented the positive consequences of job-hopping by inventors, including knowledge spillovers and agglomeration and the concentration of spinoffs. This work investigates a possible antecedent of inventor mobility: regional variation in the enforcement of postemployment non-compete covenants. While previous research on non-competes has been largely focused on California and Silicon Valley, we exploit Michigan's inadvertent reversal of its non-compete enforcement legislation as a natural experiment to investigate the impact of non-competes on mobility. Using the U.S. patent database and a differences-in-differences approach between inventors in states that did not enforce and did not change enforcement of non-compete laws, we find that relative mobility decreased by 34 percent in Michigan after the state reversed its policies. Moreover, this effect was amplified 14 percent for "star" inventors and 17 percent for "specialist" inventors.
Download the paper: http://www.hbs.edu/research/pdf/07-042.pdf
Electronic Hierarchies and Electronic Heterarchies: Relationship-Specific Assets and the Governance of Interfirm IT
| Authors: | Andrew McAfee, Marco Bettiol, and Maria Chiarvesio |
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Abstract
This paper uses concepts from the theory of the firm and MIS research to argue that some types of information technology (IT) will be deployed only within hierarchical governance structures. This argument introduces a contingency into the 'electronic markets hypothesis,' which holds that greater use of IT is unidirectionally associated with reduced use of hierarchies. We revisit the assumption that interfirm IT is never a relationship-specific asset. While many types of interfirm IT are highly redirectable, others are not, and become relationship-specific assets once configured for a particular context; these assets are referred to here as enterprise information technologies. Because complete contracts over IT assets are not possible, relationship specificity is an important consideration; scholarship on the theory of the firm yields a consistent prescription that when assets are relationship specific and contracts incomplete, the single decision-making authority of a hierarchy is optimal. The paper therefore argues that when enterprise IT is required, so is an electronic hierarchy: a collaboration in which one member has all required decision rights over jointly used IT. This contingent theory yields three hypotheses, which are tested using data gathered from firms in Italian industrial districts. Because of this paper's focus on governance rather than price-setting, electronic hierarchies are contrasted not with electronic markets, but instead with electronic heterarchies.
Download the paper: http://www.hbs.edu/research/pdf/07-046.pdf
Cases & Course Materials
Broadcast Television in the Broadband World
Harvard Business School Note 707-486
What strategies have the top four (NBC, CBS, ABC, and FOX) broadcast television networks tested in response to changing media consumption behavior in the broadband world? Discusses the new distribution platforms, including downloads and video streaming. Also, provides a brief background of the evolution of the U.S. TV broadcast networks from the 1970s through the end of the 20th century.
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Corporate Venture Capital at Eli Lilly
Harvard Business School Case 806-092
Reviews the role of corporate venture capital and its history at Eli Lilly. Also presents a challenging venture investment opportunity.
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Endo Pharmaceuticals (A): From LBO to...?
Harvard Business School Case 806-064
Endo Pharmaceuticals was formed in 1997 as a leveraged buyout spin-off from DuPont Merck. In 1999, it must decide whether to do an IPO or merge with a smaller company.
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Endo Pharmaceuticals (B): Merger Decision
Harvard Business School Supplement 806-065
Supplements the (A) case.
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Endo Pharmaceuticals (C): An "at Risk" Launch?
Harvard Business School Supplement 806-066
Supplements the (A) case.
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Endo Pharmaceuticals (D): Hatch-Waxman Change
Harvard Business School Supplement 806-067
Supplements the (A) case.
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Endo Pharmaceuticals (E): Judge Stein Rules
Harvard Business School Supplement 806-081
Supplements the (A) case.
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Endo Pharmaceuticals (F): Appeals Court Ruling
Harvard Business School Supplement 806-082
Supplements the (A) case.
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Epodia: Demise of the HBS Case-Writing Monopoly?
Harvard Business School Case 605-077
Karl Ulrich, Wharton professor, must decide between a commercial and "open source" model for his new business case venture. Students analyze a variety of open source and proprietary business models and formulate strategic recommendations.
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Financial Reporting Problems at Molex, Inc. (B)
Harvard Business School Supplement 107-048
Supplements the (A) case.
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Financial Reporting Problems at Molex, Inc. (C)
Harvard Business School Supplement 107-049
Supplements the (A) case.
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Monsanto: Realizing Biotech Value in Brazil
Harvard Business School Case 507-018
In 2003, Monsanto's patented "Roundup Ready" technology was used illegally on 70-80 percent of the soybean area in southern Brazil. Under pressure from U.S. soybean growers, who were paying to license the technology, the firm implemented an innovative delivery-based collection system in Brazil. Growers paid a post-harvest "indemnity" fee for those soybeans grown with illegal seed. Although there were initial concerns by farmers and grain companies—who collected the fee on Monsanto's behalf—the system worked smoothly, with over 97 percent of the farmers "self-declaring" their Roundup soybeans the first year. Jerry Steiner, executive vice-president of commercial acceptance, must decide if the situation in Brazil is stable enough to support a significant increase in breeding and biotech spending to develop products specifically designed for the Brazilian market. In addition, outlines situations in Argentina and India, and asks if the world's leading biotechnology firm should develop similar delivery-based systems.
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RKS Guitars
Harvard Business School Case 507-003
RKS has designed a revolutionary electric guitar and needs to decide how to best market their innovation. The iconic status of existing electric guitars, and the lack of any recent radical innovations in the category, pose challenges in securing consumer adoption. If the company goes it alone, it needs to determine the type of consumer most likely to adopt the new product, taking into account the novel aspects of the RKS guitar. Alternatively, the company could find a marketing partner or license its novel design to a bigger player. Rich in descriptions of consumer behavior that enable a discussion of the process that would lead consumers to purchase a new product. Also, outlines the company's design philosophy, which was developed to help its designers get into the mind of the consumer.
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Tejas Networks India Pte.
Harvard Business School Case 807-058
Sanjay Nayak, co-founder of the Bangalore-based start-up, Tejas Networks, is faced with two completely different opportunities to choose between: pursing a short-term, quantifiable but unprofitable contract with Tejas' biggest telco customer in India, or an ill-defined, long-term, worldwide OEM agreement with one of the top-tier telecommunications equipment vendors. Both options require some investment in order to be profitable.
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Tiberg Co.
Harvard Business School Case 487-079
Describes the efforts of a vice president of purchasing to coordinate and centralize purchasing procedures in a multinational company. He encounters a lack of active cooperation. A rewritten version of an earlier case by G. Lombard.
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The Vanderbilt University Endowment (2006)
Harvard Business School Case 207-062
As with many modern-day large pools of capital, the Vanderbilt University endowment is significantly invested in alternative assets such as hedge funds, private equity, real estate, and natural resources. The endowment's investment committee chair is attempting to understand the complexity of the portfolio and the risks that might be present. How should the risks of these sophisticated strategies be measured? And, in particular, what risks is the endowment exposed to by virtue of the many types of leverage inherent in alternative investment strategies. Finally, did the institution have sufficient resources to manage such a portfolio, and was the investment committee providing sufficient oversight.
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ViaGen: Revolutionizing the Livestock Industry
Harvard Business School Case 507-021
ViaGen has invested heavily to develop cloning technology for the livestock industry. Cloning has the potential to significantly improve the genetics of livestock, leading to higher quality meat, healthier animals, and more efficient production. Since 2003, the firm has been waiting for the FDA to declare that meat and milk from cloned animals are no different from non-clones. During that period the company has worked to educate regulators, consumers, and members of the livestock chain about cloning. In late 2006, the FDA announcement appears imminent. ViaGen CEO Mark Walton needs to develop different business plans to commercialize cloning technology in pigs, cattle, and horses, all of which have a different industry structure. At the same time, he must consider what to do if the announcement is delayed yet again.
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Where to Get Your News and Information: The Digital Disruption
Harvard Business School Note 707-442
What is the response by traditional news and information deliverers (newspapers and television networks) to declining audiences as media consumption moves to the digital medium? Provides a view of the news industry in mid-2006 and discusses the impact of an increasingly fractured media landscape and various media format's ability to capture advertising dollars. Both offline and online entities are discussed.
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Publications
Masters of Illusion: American Leadership in the Media Age
| Authors: | Steven Rosefielde and D. Quinn Mills |
|---|---|
| Publication: | New York: Cambridge University Press, 2007 |
Abstract
The United States will confront a series of fundamental challenges through the middle of the twenty-first century. Using a theory of economic systems to gauge present and future global conflicts, Steven Rosefielde and D. Quinn Mills see the challenges as posed sequentially by terrorism, Russia, China, and the European Union. In the cases of terrorism, Russia, and China, Western leaders appreciate aspects of these perils, but they are crafting unduly soft policies to deal with the challenges. The authors believe that "globalists"' notwithstanding, such views are myopic in an era where nuclear proliferation has invalidated the concept of mutually assured destruction. What America requires is a new security concept that the authors call "strategic independence" to enable keeping the peace in dangerous times and foster new generations of leaders capable of acting sanely despite a current public culture addicted to wishful thinking.
How Managers' Everyday Decisions Create—or Destroy—Your Company's Strategy
| Authors: | Joseph L. Bower and Clark Gilbert |
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| Periodical: | Harvard Business Review 85, no. 2 (February 2007) |
Abstract
Senior executives have long been frustrated by the disconnection between the plans and strategies they devise and the actual behavior of the managers throughout the company. This article approaches the problem from the ground up, recognizing that every time a manager allocates resources, that decision moves the company either into or out of alignment with its announced strategy. A well-known story—Intel's exit from the memory business—illustrates this point. When discussing what businesses Intel should be in, Andy Grove asked Gordon Moore what they would do if Intel were a company that they had just acquired. When Moore answered, "Get out of memory," they decided to do just that. It turned out, though, that Intel's revenues from memory were by this time only 4 percent of total sales. Intel's lower-level managers had already exited the business. What Intel hadn't done was to shut down the flow of research funding into memory (which was still eating up one-third of all research expenditures); nor had the company announced its exit to the outside world. Because divisional and operating managers—as well as customers and capital markets—have such a powerful impact on the realized strategy of the firm, senior management might consider focusing less on the company's formal strategy and more on the processes by which the company allocates resources. Top managers must know the track record of the people who are making resource allocation proposals; recognize the strategic issues at stake; reach down to operational managers to work across division lines; frame resource questions to reflect the corporate perspective, especially when large sums of money are involved and conditions are highly uncertain; and create a new context that allows top executives to circumvent the regular resource allocation process when necessary.
Discovering Your Authentic Leadership
| Authors: | Bill George, Peter Sims, Andrew N. McLean, and Diana Mayer |
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| Periodical: | Harvard Business Review 85, no. 2 (February 2007) |
Abstract
The ongoing problems in business leadership over the past five years have underscored the need for a new kind of leader in the 21st century: the authentic leader. Author Bill George, a Harvard Business School professor and the former chairman and CEO of Medtronic, and his colleagues, conducted the largest leadership development study ever undertaken. They interviewed 125 business leaders from different racial, religious, national, and socioeconomic backgrounds to understand how leaders become, and remain, authentic. Their interviews showed that you do not have to be born with any particular characteristics or traits to lead. You also do not have to be at the top of your organization. Anyone can learn to be an authentic leader. The journey begins with leaders understanding their life stories. Authentic leaders frame their stories in ways that allow them to see themselves not as passive observers but as individuals who learn from their experiences. These leaders make time to examine their experiences and to reflect on them, and in doing so they grow as individuals and as leaders. Authentic leaders also work hard at developing self-awareness through persistent and often courageous self-exploration. Denial can be the greatest hurdle that leaders face in becoming self-aware, but authentic leaders ask for, and listen to, honest feedback. They also use formal and informal support networks to help them stay grounded and lead integrated lives. The authors argue that achieving business results over a sustained period of time is the ultimate mark of authentic leadership. It may be possible to drive short-term outcomes without being authentic, but authentic leadership is the only way to create long-term results.
Making the Best of M&A
| Author: | Jay W. Lorsch |
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| Periodical: | Directors & Boards 3, no. 3 (fall 2006): 6 |
Download the paper:
http://www.directorsandboards.com/BBFall06.pdf
Shifting Frames in Team-diversity Research: From Difference to Relationships
| Authors: | Robin Ely and Laura Morgan Roberts |
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| Publication: | In Diversity at Work, edited by Arthur P. Brief. Cambridge University Press, forthcoming |
Abstract
No abstract available.
Exploring Black Greek Letter Organizations through a Positive Organizing Lens
| Authors: | Laura Morgan Roberts and L. P. Wooten |
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| Publication: | In Our Fight Has Just Begun: The Relevance of Black Greek Fraternities and Sororities in the 21st Century, edited by G. Parks. The University of Kentucky Press, forthcoming |
Abstract
No abstract available.
Bringing Your Whole Self to Work: Lessons in Authentic Engagement from Women Leaders
| Author: | Laura Morgan Roberts |
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| Publication: | In Women and Leadership: The State of Play and Strategies for Change, edited by D. Rhode and B. Kellerman. Jossey-Bass, forthcoming |
Abstract
No abstract available.
From Proving to Becoming: How Positive Relationships Create a Context for Self-discovery and Self-actualization
| Author: | Laura Morgan Roberts |
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| Publication: | In Exploring Positive Relationships at Work: Building a Theoretical and Research Foundation, edited by J. Dutton and B. Ragins. Erlbaum, in press |
Abstract
No abstract available.
Developments in Asset Allocation Modeling
| Author: | Luis M. Viceira |
|---|---|
| Publication: | In Global Perspectives on Investment Management: Learning from the Leaders, edited by Rodney N. Sullivan, 145-157. CFA Institute, 2006 |
Abstract
The "traditional" approach to designing policy portfolios assumes that expected returns, risk, and real interest rates do not change over time so that short-term and long-term risk properties of asset returns are the same. Thus, target asset allocations are the same regardless of investment horizon and remain constant over time. The "modern" approach, in contrast, recognizes that expected returns, risk, and real interest rates may change over time. This view creates a wedge between the short-term and long-term risk properties of asset returns and implies that target allocations may vary with investment horizon and over time. One implication of this view is that short-term bonds may not be the "safe asset" for long-term investors.