First Look

Abstract—Intermediaries can choose between functioning as a marketplace (on which suppliers sell their products directly to buyers) or as a reseller (purchasing products from suppliers and selling them to buyers). We model this as a choice between whether control rights over a non-contractible decision variable (the level of marketing activities) are better held by suppliers (the marketplace-mode) or by the intermediary (the reseller-mode). Whether the marketplace- or the reseller-mode is preferred depends on whether independent suppliers or the intermediary are better suited to optimally tailor marketing activities for each specific product. We show that this tradeoff is shifted towards the reseller-mode when marketing activities create spillovers across products and when network effects lead to unfavorable expectations about supplier participation, whereas it is shifted towards the marketplace for long-tail products. We thus provide a theory of which products an intermediary should offer in each mode.

Download working paper: http://www.hbs.edu/faculty/Pages/download.aspx?name=13-092.pdf

Abstract—This working paper examines the evolution of concepts of the responsibility of business in a historical and global perspective. It shows that from the nineteenth century American, European, Japanese, Indian, and other business leaders discussed the responsibilities of business beyond making profits, although until recently such views have not been mainstream. There was also a wide variation concerning the nature of this responsibility. This paper argues that four factors drove such beliefs: spirituality, self-interest, fear of government intervention, and the belief that governments were incapable of addressing major social issues.

Download working paper: http://ssrn.com/abstract=2291145

Abstract—Restaurant hygiene inspections are often cited as a success story of public disclosure. Hygiene grades influence customer decisions and serve as an accountability system for restaurants. However, cities (which are responsible for inspections) have limited resources to dispatch inspectors, which in turn limits the number of inspections that can be performed. We argue that Natural Language Processing (NLP) can be used to improve the effectiveness of inspections by allowing cities to target restaurants that are most likely to have a hygiene violation. In this work, we report the first empirical study demonstrating the utility of review analysis for predicting restaurant inspection results.

Download working paper: http://ssrn.com/abstract=2293165

Abstract—Hybrid organizations that combine multiple, existing organizational forms are frequently proposed as a source of organizational innovation, yet little is known about the origins of such organizations. We propose that individual founders of hybrid organizations acquire imprints from past exposure to work environments, thus predisposing them to incorporate the associated logics in their subsequent ventures, even when doing so requires deviation from established organizational templates. We test our theory on a novel dataset of over 700 founders of social ventures, all guided by a social welfare logic. Some of them also incorporate a commercial logic along with the social welfare logic, thereby creating a hybrid social venture. We find evidence of three sources of commercial imprints: the founder's own, direct work experience, as well as the indirect influence of parental work experiences and professional education. Our findings further suggest that the effects of direct imprinting are strongest from the early tenure of for-profit experience but diminish with longer tenure. In supplementary analyses, we parse out differences between the sources of imprints and discuss implications for how imprinting functions as an antecedent to the creation of new, hybrid forms.

Download working paper: http://ssrn.com/abstract=2291686

Abstract—Review sites have become increasingly important sources of information for consumers. Because these reviews affect sales, businesses have the incentive to game the system by leaving positive reviews for themselves or negative reviews for their competitors. Such review fraud undermines the trustworthiness of consumer reviews and constitutes a major risk factor for review sites. In this paper, we investigate review fraud on the popular consumer review site Yelp. We construct a novel data set to analyze this problem, combining restaurant reviews with Yelp's algorithmic indicator of fake reviews. Using this imperfect indicator as a proxy, we develop an empirical methodology to identify the points in the life cycle of a business during which review fraud is most prevalent. We find that a restaurant's changing reputation affects its decision to engage in review fraud. Specifically, a restaurant is more likely to seek a positive fake review when its reputation is weak, i.e., when it has few reviews, or it has recently received bad reviews. Consistent with theory, we find that chains are less likely than independent restaurants to engage in review fraud. We then turn our attention to negative review fraud and find that increased competition by similar restaurants is the driving force behind it.

Download working paper: http://ssrn.com/abstract=2293164