Publications
Financial Development, Fixed Costs and International Trade
| Authors: | Bo Becker, David Greenberg, and Jinzhu Chen |
|---|---|
| Publication: | Review of Corporate Finance Studies (forthcoming) |
Abstract
Exporting firms face significant up-front costs in product design, marketing, and distribution, which likely would be difficult to finance externally. We argue that a developed financial system can facilitate exports, and we test three implications. First, a more developed financial system is associated with higher exports. Second, the impact of financial development is higher where fixed costs are large due to either product characteristics or the distance between exporter and importer. Finally, we find that in countries with well-developed finance, total exports and the allocation of exports across importers are more sensitive to exchange rates than in countries with lower financial development.
Payout Taxes and the Allocation of Investment
| Authors: | Bo Becker, Marcus Jacob, and Martin Jacob |
|---|---|
| Publication: | Journal of Financial Economics (forthcoming) |
Abstract
When corporate payout is taxed, internal equity (retained earnings) is cheaper than external equity (share issues). If there are no perfect substitutes for equity finance, payout taxes may therefore have an effect on the investment of firms. High taxes will favor investment by firms that can finance internally. Using an international panel with many changes in payout taxes, we show that this prediction holds well. Payout taxes have a large impact on the dynamics of corporate investment and growth. Investment is "locked in" in profitable firms when payout is heavily taxed. Thus, apart from any level effects, payout taxes change the allocation of capital.
Negotiation Processes as Sources of (and Solutions to) Interorganizational Conflict
| Authors: | Elizabeth Long Lingo, Colin Fisher, and Kathleen L. McGinn |
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| Publication: | In Handbook of Conflict Management Research, edited by Neal M. Ashkansy, Oluremi B. Ayoko, and Karen Jehn. Edward Elgar Publishing, forthcoming |
Abstract
We investigate how structural features of negotiations can affect interaction processes and how negotiations can be not only a solution to, but also a source of, inter-organizational conflict. Principals, agents, and teams face different sets of constraints and opportunities in negotiations. We develop grounded theory detailing how the micro-interactions comprising a negotiation are shaped by the representation structure (principals, agents, or teams) of the parties. In qualitative and quantitative analyses of negotiations carried out by principals, agents, and teams in a laboratory experiment, we find that negotiators' efforts to manage the constraints and opportunities of their representation structure are reflected in the micro-interactions, the broad improvisations, and the resulting substantive and relational outcomes.
Looking Up and Looking Out: Career Mobility Effects of Demographic Similarity among Professionals
| Authors: | Kathleen L. McGinn and Katherine L. Milkman |
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| Publication: | Organization Science (forthcoming) |
Abstract
We investigate the role of workgroup sex and race composition on the career mobility of professionals in "up-or-out" organizations. We develop a nuanced perspective on the potential career mobility effects of workgroup demography by integrating the social identification processes of cohesion, competition, and comparison. Using five years of personnel data from a large law firm, we examine the influence of demographic match with workgroup superiors and workgroup peers on attorneys' likelihood of turnover and promotion. Survival analyses reveal that higher proportions of same-sex and same-race superiors enhance junior professionals' career mobility. On the flip side, we observe mobility costs accruing to professionals in workgroups with higher proportions of same-sex and same-race peers. Qualitative data offer insights into the social identification processes underlying demographic similarity effects on turnover and promotion in professional service organizations.
Working Papers
Learning from My Success and from Others' Failure: Evidence from Minimally Invasive Cardiac Surgery
| Authors: | Diwas KC, Bradley R. Staats, and Francesca Gino |
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Abstract
Learning from past experience is central to an organization's adaptation and survival. A key dimension of prior experience is whether an outcome was successful or unsuccessful. While empirical studies have investigated the effects of success and failure in organizational learning, to date the phenomenon has received little attention at the individual level. Drawing on attribution theory in psychology, we investigate how individuals learn from their own past experiences with both failure and success and from the experiences of others. For our empirical analyses, we use 10 years of data from 71 cardiothoracic surgeons who completed over 6,500 procedures using a new technology for cardiac surgery. We find that individuals learn more from their own successes than from their own failures but learn more from the failures of others than from others' successes. We also find that individuals' prior successes and others' failures can help individuals overcome their inability to learn from their own failures. Together, these findings offer both theoretical and practical insights into how individuals learn directly from their prior experience and indirectly from the experiences of others.
Download the paper: http://www.hbs.edu/research/pdf/12-065.pdf
Rainmakers: Why Bad Weather Means Good Productivity
| Authors: | Jooa Julia Lee, Francesca Gino, and Bradley R. Staats |
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Abstract
People believe that weather conditions influence their everyday work life, but to date, little is known about how weather affects individual productivity. Most people believe that bad weather conditions reduce productivity. In this research, we predict and find just the opposite. Drawing on cognitive psychology research, we propose that bad weather increases individual productivity by eliminating potential cognitive distractions resulting from good weather. When the weather is bad, individuals may focus more on their work rather than thinking about activities they could engage in outside of work. We tested our hypotheses using both field and lab data. First, we use field data on employees' productivity from a mid-size bank in Japan, which we then match with daily weather data to investigate the effect of bad weather conditions (in terms of precipitation, visibility, and temperature) on productivity. Second, we use a laboratory experiment to examine the psychological mechanism explaining the relationship between bad weather and increased productivity. Our findings support our proposed model and suggest that worker productivity is higher on bad rather than good weather days. We discuss the implications of our findings for workers and managers.
Download the paper: http://www.hbs.edu/research/pdf/13-005.pdf
A Framework for Research on Corporate Accountability Reporting
| Authors: | Karthik Ramanna |
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Abstract
This paper provides an accounting-based conceptual framing of the phenomenon of corporate accountability reporting. Such reporting is seen as arising from a delegator's (e.g., a citizenry) demand to hold a delegate (e.g., shareholders) to account. When effective, corporate accountability reporting can internalize certain externalities into firms' resource-allocation decisions, although doing so will not always serve shareholders' interests. I leverage the positive accounting literature's current understanding of properties of financial reports to develop three hypotheses on corporate accountability reporting. I argue that an accountability reporting system is likely to be more useful to a delegator if it (1) mitigates information advantages across delegates and delegators, (2) reports both stocks and flows in the measures of account, and (3) has a mutually agreeable due process to match across periods the actions of delegates and the outcomes of those actions. I show how the successive incidence of these properties in observed corporate accountability reports can be used to determine whether and how those reports create or destroy value for shareholders and other constituencies.
Download the paper: http://ssrn.com/abstract=1934322
When Supply-Chain Disruptions Matter
| Authors: | William Schmidt and Ananth Raman |
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Abstract
Supply-chain disruptions have a material effect on company value, but this impact can vary considerably. Thus, it is important for managers and investors to recognize the types of disruptions and the organizational factors that lead to the worst outcomes. Prior research remains unsettled as to whether improvements to firm operational efficiency aggravate or alleviate the impact of disruptions. Improved operational efficiency may leave firms more exposed when a disruption occurs, or it may improve firms' agility and allow them to respond more effectively to a disruption. We hypothesize that the impact of improved operational efficiency depends on whether the disruption is due to factors that are internal versus external to the firm and its supply chain. We use a sample of over 500 disruptions collected from company press releases and find empirical evidence that a higher rate of improvement in operating performance aggravates the impact of internal disruptions but not external disruptions. By taking advantage of an exogenous policy shock regarding corporate disclosure rules, we also find that managers show systematic bias in the disruptions they choose to announce, and we control for this effect in our model specifications.
Download the paper: http://www.hbs.edu/research/pdf/13-006.pdf
Level II Negotiations: Helping the Other Side Meet Its 'Behind the Table' Challenges
| Authors: | authors |
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Abstract
A long analytic tradition explores the challenge of productively synchronizing "internal" with "external" negotiations, especially focusing on how each side can best manage internal opposition to agreements negotiated "at the table." Implicit in much of this work is the view that each side's leadership is best positioned to manage its own internal conflicts, often 1) by pressing for deal terms that will meet internal objections and 2) by effectively "selling" the agreement to key constituencies. Far less familiar territory involves how each side can help the other side with the other's "behind-the-table" barriers to successful agreement. Following Robert Putnam's (1988) two-level games schema, I characterize such "behind the table," or "Level II," barriers more broadly, offer several innovative examples of how each side can help the other overcome them, and develop more general advice on doing so most effectively. As a fuller illustration of a Level II negotiator helping the other side with its formidable behind-the-table challenges, I pay special attention to the end-of-Cold-War negotiations over German reunification in which former U.S. Secretary of State James Baker played a key role.
Download the paper: http://www.hbs.edu/research/pdf/13-004.pdf
Children Develop a Veil of Fairness
| Authors: | A., N. Montinari Shaw, M. Piovesan, K.R. Olson, F. Gino, and M.I. Norton |
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Abstract
Previous research suggests that children develop an increasing concern with fairness over the course of development. Research with adults suggests that the concern with fairness has at least two distinct components: a desire to be fair but also a desire to signal to others that they are fair. We explore whether children's developing concern with behaving fairly towards others may in part reflect a developing concern with appearing fair to others. In Experiments 1-2, most 6- to 8-year-old children behaved fairly towards others when an experimenter was aware of their choices; fewer children opted to behave fairly, however, when they could be unfair to others yet appear fair to the experimenter. In Experiment 3, we explored the development of this concern with appearing fair by using a wider age range (6- to 11-year-olds) and a different method. In this experiment, children chose how to assign a good or bad prize to themselves and another participant by either unilaterally deciding who would get each prize or by using a fair procedure-flipping a coin in private. Older children were much more likely to flip the coin than younger children, yet were just as likely as younger children to assign themselves the good prize by reporting winning the coin flip more than chance would dictate. Overall, the results of these experiments suggest that as children grow older they become increasingly concerned with appearing fair to others, which may explain some of their increased tendency to behave fairly.
Download the paper: http://www.hbs.edu/research/pdf/13-003.pdf
Cases & Course Materials
Goldwind USA: Chinese Wind in the Americas
Regina M. Abrami, and Iacob Koch-Weser
Harvard Business School Case 912-416
Many Chinese firms have struggled in the United States. Renewable energy is a fledgling, high-risk market. Can Goldwind USA, a leading producer of wind turbines, overcome the odds? The case examines the many strategic choices Goldwind faced as it established its first major overseas subsidiary in Chicago: building a local team around a U.S. CEO, bridging cross-cultural differences among management, overcoming regulatory hurdles, sourcing from local suppliers, and facilitating turbine sales through innovative deal structures.
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Schuberg Philis
Thomas J. DeLong and Daniela Beyersdorfer
Harvard Business School Case 412-092
The Dutch professional service firm Schuberg Philis has within a few years grown into a well-known player in the Dutch IT outsourcing market and regularly wins high customer- satisfaction marks. The growing workload and 100% promise to customers have increased the pressure on its non-hierarchical teams of engineers, as well as the hiring speed, which some fear could dilute their corporate culture. The three owner-directors must decide whether it is time to stop customer acquisition for a while to "get their house in order." At that moment, though, one of Shuberg Philis perhaps most important business opportunities so far arises.
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People Express Airlines
Thomas R. Eisenmann and Lauren Barley
Harvard Business School Case 812-134
Recounts the history of People Express Airlines, which grew rapidly after its inception in 1980 then failed spectacularly in 1986. Profiles People's aggressive strategy and its distinctive approach to human resource management, which emphasized job rotation and minimal hierarchy.
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RentJuice
Thomas R.Eisenmann and Liz Kind
Harvard Business School Case 811-069
RentJuice, founded in mid-2008, provided a subscription software service-sold via phone and live online webinars-that allowed real estate professionals like brokers and agents to manage and market rental listings, communicate with clients, and complete transaction paperwork (e.g., tenant applications, credit screening, lease documents), all through a single, intuitive, web-based interface. The case explores RentJuice's early development and the challenges it confronted in scaling its direct sales effort.
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Rent the Runway
Thomas R. Eisenmann and Laura Winig
Harvard Business School Case 812-077
Two months after a successful launch In November 2009, the cofounders of Rent the Runway (RTR), a website that rented designer dresses, are debating whether to grow their startup at a measured pace and focus on improving operational effectiveness, or raise a new round of venture capital sooner than originally planned. Raising more venture capital would allow RTR to aggressively expand its inventory and customer acquisition efforts, in order serve a broader range of customer segments with a wider selection of products, (e.g., accessories, maternity wear).
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The National Geographic Society (Abridged)
David A. Garvin and Annelena Lobb
Harvard Business School Case 312-120
In January 2010, John Fahey, president, CEO, and chairman of the board of trustees' executive committee of the Washington, D.C.-based National Geographic Society (NGS), must decide how best to organize the 121-year old mission-driven organization for a world of accelerating digital convergence and decreasing magazine sales. Historically a proponent of evolutionary change, he is considering a radical move: creating a senior management position responsible for e-commerce to coordinate web-based offerings and outreach across the Society's various departments, transition NGS from its many disparate and independent direct mail efforts to a more integrated and strategic e-commerce strategy, and leverage the NGS relationship with its members-currently defined as magazine subscribers, since a subscription comes with Society membership. Putting the final touches on the position and its reporting arrangements has led to significant debate within the organization, and Fahey is torn about how to proceed.
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A.P. Moller - Maersk Group: Evaluating Strategic Talent Management Initiatives
Boris Groysberg and Sarah L. Abbott
Harvard Business School Case 412-147
In 2012, Bill Allen and Maria Pejter, of Maersk Group's Human Resources Department, sat down to consider some key aspects of Maersk's talent management strategy. Headquartered in Copenhagen, Maersk was a global conglomerate with large shipping and oil & gas businesses. Among the talent management issues being discussed: an increase in employee turnover, internal training and development programs, hiring experienced talent from outside the firm, rehiring former employees ("boomerangs"), and increasing employee diversity.
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Bank of America: Mobile Banking (Abridged)
Sunil Gupta and Michael Norris
Harvard Business School Case 512-082
In January 2010, Bank of America is discussing its future mobile strategy. Should the company add complexity to its app, design multiple apps for business segments, or expand into other mobile channels?
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Parent Company P and 80 Percent Owned Subsidiary Company S
David F. Hawkins and F. Robert Madera
Harvard Business School Case 112-105
A simple consolidation exercise.
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Capitalizing for the Future: HSBC in 2010
Anette Mikes and Dominique Hamel
Harvard Business School Case 112-097
Following the financial crisis of 2007/2008, HSBC CEO Michael Geoghegan saw a fundamental change in global opportunities and risks. With increasing regulation and fierce competition between banks, the Western hemisphere was going to be a tougher place to do business. Emerging markets, however, offered many opportunities. Geoghegan reasoned that in HSBC's case, a turn to emerging markets would be a return to its roots and to managing risks that it knew. But HSBC needed to understand what the implications of the new strategy-"moving to emerging markets"-were for its portfolio and overall risk profile. Especially, how should HSBC reallocate capital freeing up in the West across its diverse geographies and business lines?
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Man Group (A)
Robert C. Pozen and Thomas M. Clay
Harvard Business School Case 312-128
The Man Group was a huge and successful UK-based hedge fund and fund of funds manager. Through acquisitions, the company had consciously diversified its portfolio of investment products. In 2007 Man had to decide whether or not to spin off its brokerage business. Man was also evaluating several new business opportunities with varying strategic and financial rationales. After the financial crisis, Man had to decide what to do in the fund of funds space.
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Danish National Advanced Technology Foundation
Willy Shih and Margaret Pierson
Harvard Business School Case 612-091
Danish National Advanced Technology Foundation (DNATF), a government agency, invests in public-private partnerships to stimulate commercialization of Danish scientific research within the country's industry. DNATF established a process for evaluating proposals, making project awards, and then actively managing those projects to try to improve the likelihood of success. DNATF has a small staff of project managers who act as single points of contact (SPOCs) for the projects. SPOCs are confronted with a broad range of projects rich in scientific complexity and technical issues, well beyond one individual's ability to maintain subject matter expertise. The case poses several questions: How does the organization manage and evaluate scientific and technical progress in circumstances when it is difficult to have subject matter expertise? How do managers know if they are pushing hard enough, or if they are taking too aggressive a stance?
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Dovernet
Robert L. Simons and Natalie Kindred
Harvard Business School Case 112-061
This case illustrates the implications of using stringent performance measurement systems to create performance pressure, motivate employee achievement, and sharpen a firm's competitiveness. It opens by describing the downsides of the ruthlessly competitive culture at Zynga, a young, successful online gaming company. A similar data-driven performance measurement system is employed at Dovernet, a Vancouver-based provider of enterprise communications and social-networking technologies. Dovernet's founder and CEO sees performance measurement systems as vital for cultivating the competitive, innovative workforce necessary for Dovernet to win in a fiercely competitive industry. Dovernet uses quarterly top-down reviews and stack ranking (with major implications for bonuses), as well as bottom-up reviews, to reward top achievers and put low performers on notice. The practical challenges of applying this system are illustrated in three brief vignettes. In the first two, students can assume the role of a manager charged with interpreting and acting on the negative reviews given to two employees with unique (but are they mitigating?) personal circumstances. The third vignette puts students in the role of an employee conducting a bottom-up review, as he struggles to balance honesty with the potential repercussions of giving his manager less-than-perfect feedback. The case allows students to consider the benefits and risks of different performance evaluation strategies and their implications for a firm's performance, culture, and employee morale. Are there certain types of firms or industries for which such systems are more appropriate? Do the integrity and effectiveness of a performance measurement system depend on managers' applying cold objectivity, or is there room for flexibility? In highly competitive industries, can firms lacking a strong performance emphasis beat competitors like Dovernet and Zynga?
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Remicade/Simponi: Confidential Instructions for Johnson & Johnson
Guhan Subramanian and Rhea Ghosh
Harvard Business School Exercise 911-045
This two-party negotiation exercise features a real-life dispute between Merck and Johnson & Johnson regarding European distribution rights to two highly lucrative drugs.
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Remicade/Simponi: Confidential Instructions for Merck
Guhan Subramanian and Rhea Ghosh
Harvard Business School Exercise 911-044
This two-party negotiation exercise features a real-life dispute between Merck and Johnson & Johnson regarding European distribution rights to two highly lucrative drugs.
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http://hbr.org/search/911044-PDF-ENG
Remicade/Simponi: Legal Memorandum
Guhan Subramanian and Rhea Ghosh
Harvard Business School Supplement 911-046
Supplements "Remicade/Simponi: Confidential Instructions for Johnson & Johnson" and "Remicade/Simponi: Confidential Instructions for Merck."
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Innovation Magic
Stefan Thomke and Jason Randal
Harvard Business School Note 612-099
Why do certain product and service experiences seem like magic, making them all but destined for success, while other items languish on store shelves? For a better understanding of that, perhaps there's no better place to turn to than the world of magic. Consider that some professional magicians are constantly under pressure to come up with new "effects" that will wow the audience and ultimately result in a transformational customer experience. As such, these magicians can't just be innovative on a whim; they must have a systematic way of doing so on a regular basis. The note provides some practical insights into a process of creation that is common to both the "tricks" that awe a spellbound audience and what companies need to do to give customers unforgettable product and service experiences.
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