First Look

March 11, 2014

Flexible Work Versus Work Redesign

Employers seek to accommodate employees with work-life issues by making changes in their hours or by offering work-at-home arrangements. Leslie Perlow makes the case that accommodation is often not enough—that a redesign of the work itself and culture changes can be more beneficial. Her article "Toward a Model of Work Redesign for Better Work and Better Life," coauthored by Erin L. Kelly, has been published in the February issue of Work and Occupations.

When Your Foreign Investment Is Closed By The Government

A case study by Dante Roscini and G.A. Donovan follows the options of foreign direct investors when Viva Macau airline, operating under a sub-concession agreement with the Macau government, is forced to suspend operations. The case "allows students to explore what Foreign Direct Investors can do to foresee a possible expropriation event and what options they might consider to protect themselves ex-ante or fight the outcome ex-post."

Returning Migrants Boost Performance

In a new study, Prithwiraj Choudhury exploits a natural experiment to explore the effects of returning migrants on local employees. He finds that local employees who report to return migrants file disproportionately more US patents, and knowledge transfers across borders increase. The work is reported in the working paper, Return Migration and Geography of Innovation in MNEs.

— Sean Silverthorne


  • August 2013
  • MIT Sloan Management Review

The Surprising Benefits of Nonconformity

By: Bellezza, Silvia, Francesca Gino, and Anat Keinan

Abstract—This research demonstrates that, under certain circumstances, people wearing unconventional attire are perceived as having higher status and greater competence.

  • August 2013
  • Business History Review

Charting Dynamic Trajectories: Multinational Firms in India

By: Choudhury, Prithwiraj, and Tarun Khanna

Abstract—In this article, we provide a synthesizing framework that we call the "dynamic trajectories" framework to study the evolution of multinational enterprises (MNEs) in host countries over time. We argue that a change in the policy environment in a host country presents an MNE with two sets of interrelated decisions. First, the MNE has to decide whether to enter, exit, or stay in the host country at the onset of each policy epoch; second, conditional on the first choice, it has to decide on its local responsiveness strategy at the onset of each policy epoch. India, which experienced two policy shocks-shutting down to MNEs in 1970 and then opening up again in 1991-offers an interesting laboratory to explore the "dynamic trajectories" perspective. We collect and analyze a unique dataset of all entry and exit events for Fortune 50 and FTSE 50 firms (as of 1991) in India in the period from 1858 to 2013 and, additionally, we document detailed case studies of four MNEs (that arguably represent outliers in our sample).

  • August 2013
  • Marketing Letters

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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  • August 2013
  • Organizations in Time: History, Theory, Methods

Schumpeter's Plea: Historical Reasoning in Entrepreneurial Theory and Research

By: Jones, Geoffrey, and R. Daniel Wadhwani

Abstract—This chapter draws on theories of entrepreneurship and history to explore the ways in which historical processes play an integral role in entrepreneurship. It builds off the plea by Joseph Schumpeter for an active exchange between historical approaches and theories of entrepreneurship and its role in the process of historical change. Sadly, the field of entrepreneurship as it has evolved in recent decades has become narrow and is often confined to little more than econometric testing of large datasets concerning high tech entrepreneurs in the United States. This chapter makes the case for the study of entrepreneurship to become bold again and transformational through re-engagement with history. Historical theories of time, context, and change are applied to entrepreneurship theory to demonstrate how they illuminate aspects of the entrepreneurial process that traditional social science reasoning about behavior and cognition miss. The chapter seeks to establish a theoretical foundation for a turn towards historicism in entrepreneurial studies, which is already partly underway. The authors stress that the path will not be easy, but that the prize will be a richer and deeper understanding of entrepreneurship and how it shapes and reshapes the modern world.

  • August 2013
  • HBR Guide to Getting the Mentoring You Need

Reaching Your Potential: Know Yourself-and Find Fulfillment

By: Kaplan, Robert Steven

Abstract—Despite racking up impressive accomplishments, you feel frustrated with your career-convinced you should be achieving more. You may even wish you had chosen a different career altogether. These feelings often stem from a common error: buying into others' definitions of success. To reach your potential, Kaplan suggests taking a deeply personal look at how you define success.

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  • August 2013
  • Analyses of Social Issues and Public Policy

The Not-So-Common-Wealth of Australia: Evidence for a Cross-Cultural Desire for a More Equal Distribution of Wealth

By: Norton, Michael I., David T. Neal, Cassandra L. Govan, Dan Ariely, and Elise Holland

Abstract—Recent evidence suggests that Americans underestimate wealth inequality in the United States and favor a more equal wealth distribution (Norton & Ariely, 2011). Does this pattern reflect ideological dynamics unique to the United States, or is the phenomenon evident in other developed economies-such as Australia? We assessed Australians' perceived and ideal wealth distributions and compared them to the actual wealth distribution. Although the United States and Australia differ in the degree of actual wealth inequality and in cultural narratives around economic mobility, the Australian data closely replicated the United States findings. Misperceptions of wealth inequality as well as preferences for more equal distributions may be common across developed economies. In addition, beliefs about wealth distribution only weakly predicted support for raising the minimum wage, suggesting that attitudes toward inequality may not translate into preferences for redistributive policies.

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  • August 2013
  • Work and Occupations

Toward a Model of Work Redesign for Better Work and Better Life

By: Perlow, Leslie A., and Erin L. Kelly

Abstract—Flexible work accommodations provided by employers purport to help individuals struggling to manage work and family demands. The underlying model for change is accommodation-helping individuals accommodate their work demands with no changes in the structure of work or cultural expectations of ideal workers. The purpose of this article is to derive a Work Redesign Model and compare it with the Accommodation Model. This article centers around two change initiatives-Predictability, Teaming and Open Communication, and Results Only Work Environment-that alter the structure and culture of work in ways that enable better work and better lives.

  • August 2013
  • Tax Administration Review

Randomized Tax Enforcement Messages: A Policy Tool for Improving Audit Strategies

By: Pomeranz, Dina, Cristobal Marshall, and Pamela Castellon

Abstract—Reducing tax evasion is a key challenge for governments around the world, particularly in developing countries. This paper presents a methodology to generate information to optimize audit strategies. Randomly selected taxpayers receive a deterrence message. Comparing their subsequent tax payments to a control group allows estimating what types of taxpayers are more likely to respond to an increase in perceived audit probability. This information can be used to target audits toward taxpayers that respond particularly strongly and to construct risk indicators to predict taxpayers' responses. We show results from an application in Chile and describe lessons learned during the implementation.

  • August 2013
  • JAMA Surgery

Informal Peer Interaction and Practice Type as Predictors of Physician Performance on Maintenance of Certification Examinations

By: Valentine, Melissa A., S. Barsade, Amy C. Edmondson, A. Gal, and R. Rhodes

Abstract—Context: Physicians can demonstrate mastery of the knowledge that supports continued clinical competence by passing a Maintenance of Certification exam. Exam performance depends on professional learning and development, which may be enhanced by informal routine interactions with colleagues. Some physicians, such as those in solo practice, may have less opportunity for peer interaction, negatively influencing their exam performance. Objective: To determine the relationship between level of peer interaction, group and solo practice, and maintenance of certification exam performance. Design, Setting, and Participants: Longitudinal cohort study of 568 physicians taking the 2008 maintenance of certification exam. Survey responses reporting level of physicians' peer interactions and practice type were related to maintenance of certification exam scores, controlling for initial Qualifying Exam scores, practice type, and personal characteristics. Main Outcome Measure: Maintenance of certification exam scores and exam pass-fail status. Results: Of the 568 physicians in the study sample, 557 (98%) passed the exam. Higher levels of peer interaction were associated with a higher score (β, 0.91, 95% CI 0.31-1.52) and higher likelihood of passing the exam (OR 2.58, 95% CI, 1.08-6.16). Physicians in solo practice (vs. group practice) had fewer peer interactions (β, -0.49, 95% CI, -0.64 to -0.33), received lower scores (β -1.82, 95% CI, -2.94- -0.82), and were less likely to pass the exam (OR 0.22, 95% CI, 0.06-0.77). Level of peer interaction moderated the relationship between solo practice and maintenance of certification exam score: solo practitioners with high levels of peer interaction achieved maintenance of certification exam performance on par with group practitioners. Conclusion: Physicians in solo practice had poorer maintenance of certification exam performance. However, solo practitioners who reported high levels of peer interaction performed as well as those in group practice. Peer interaction is important for professional learning and quality care.


Working Papers

Abstract—I study whether return migrants and their direct reports facilitate knowledge production and transfer across borders for multinationals. Using unique personnel and patenting data for 1,315 inventors at an emerging market R&D center for a Fortune 50 technology firm, I exploit a natural experiment where the assignment of managers for newly hired college graduates is mandated by rigid HR rules and is uncorrelated to observable characteristics of the graduates. Given this assignment protocol, I find that local employees who report to return migrants file disproportionately more U.S. patents. I also find evidence that return migration facilitates knowledge transfer across borders.

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Abstract—Since the 1990s, several western firms have filed patents based on medicinal herbs from emerging markets, evoking protests from local stakeholders against "bio-piracy." We explore conditions under which firms and local stakeholders share rents from such patents. Our theoretical model builds on two distinct strategy literatures: firms appropriating rents from new technologies and firms managing stakeholders. We predict that a win-win outcome emerges when the patent strength is moderate and when local stakeholders form a coalition with larger national stakeholders to initiate litigation against the focal firm. We test our predictions using a two-pronged empirical strategy. Our empirical context relates to herbal patents from emerging markets, and given that we have a small sample (N=17), we employ a fuzzy set QCA methodology. In addition, we develop four in-depth qualitative case studies to support our predictions.

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Abstract—In the patenting literature, economists and legal scholars have focused on the question of improving the quality of prior art available to patent examiners and mitigating the filing and granting of patents where prior art exists in common knowledge. In this paper, we create a unique dataset of Chinese and Indian herbal patents filed on the USPTO and EPO between 1977 and 2010 and exploit a natural experiment where the USPTO and EPO adopted a codified database of traditional herbal prior art at different points in time. This initiative was titled the Traditional Knowledge Depository Library (TKDL) and was pioneered by Indian state-owned R&D labs and provided the EPO and USPTO with systematic evidence of prior art on herbal patents based on a translation of ancient Indian texts. We conduct additional analyses to establish that the time lag of the USPTO adopting the TKDL agreement compared to the EPO was related to idiosyncratic differences in how the agreements were structure and negotiated, not differences in policy towards herbal patents at the EPO and USPTO. We also find that the adoption of TKDL appears to shift patenting in the West from pure herbal remedies that can be contested in court to new applications involving herbals and synthetics, which are less contestable. Further, we study the ethnic origins of the inventors of herbal patents filed on the USPTO. For this analysis, we use ethnic name matching for all patentees of herbal patents. We also exploit an exogenous reduction in H1B (visa) quotas and find that herbal patents filed by western firms based in the U.S. are driven by scientists of ethnic Indian and Chinese origin.

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Abstract—Our study is one of the first natural experiments around the role of leaders in the context of firms. Also while most prior natural experiments around leadership in the policy world have exploited the death of the leader, we exploit an alternate exogenous shock-rigid bureaucratic rules that constrain the appointment of leaders to 42 Indian public R&D labs with 12,500 employees. The bureaucratic rules ensure that the timing of leadership change is uncorrelated with observable or unobservable firm level characteristics. This enables us to circumvent the issues related to the use of manager fixed effects in the prior empirical literature. Efforts to incentivize individual employees to file and license patents did not meet with immediate success. However patenting and licensing both increased once leaders at individual labs were replaced.

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Abstract—High ability individuals can be constrained from commensurate employment opportunities due to their geographic location. In the face of physical, informational, and social barriers to migration, firms with nation-wide hiring practices can benefit from facilitating the migration of high ability individuals from low employment districts to regions with better employment opportunities. We exploit a natural experiment within an Indian technology firm where the pre-existence of a computer generated talent allocation protocol allows us to isolate the relation between an employee's prior home town/village and subsequent performance within the firm. Using unique personnel data for entry level undergraduates and leveraging the fact that the assignment of an employee to one of many technology centers within the firm is uncorrelated to observable characteristics of the employee, we find that employees hired from low employment districts (remote employees) outperform their non-remote counterparts in the short-term. They continue to outperform their non-remote counterparts in the long-term once we control for the distance of migration. As a possible explanation of our result, we test for selection and find that employees hired from low employment districts outperform their non-remote counterparts in standardized verbal and logical tests at the recruitment stage. To explain why the firm might be more likely to select high ability individuals from remote districts, we additionally conduct a survey of randomly selected urban and rural colleges and document statistically significant differences in employment opportunities for rural and urban graduates. Our survey results also indicate that not every firm follows the policy of hiring from low employment districts.

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Abstract—In this paper, we build on the standard resource dependence theory and its departure suggested by Vernon to offer a novel explanation for why state-owned entities might seek a global footprint and global cash flows: to achieve resource independence from other state actors. In the context of state-owned entities, the power use hypothesis of standard resource dependence theory can be used to analyze the dependence of SOEs on other state actors, such as government ministries and government agencies that have ownership and control rights in the SOE. Building on Vernon, we argue that the SOE can break free from this power imbalance and establish resource independence from other state actors by becoming a multinational firm and/or by generating global cash flows. We leverage a natural experiment in India and outline both quantitative and qualitative evidence from 42 Indian state-owned laboratories to support this argument.

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Abstract—In traditional markets, the price mechanism directs the flow of resources and governs the process through which supply and demand are brought into equilibrium. In the investment-research industry, broker votes perform these functions. Using detailed clinical data from a midsized investment bank for the years 2004 to 2007, we present evidence that institutional investors use broker votes to budget future aggregate commission payments across brokerage firms; that these votes are responsive to actions that brokerage-house analysts take to communicate with client investors; and that brokerage firms use client-supplied votes as a quasi allocation base to indirectly reward individual analysts for contributions to brokerage-wide commission payments. Overall, our results suggest that broker votes function as the nexus for a set of implicit contractual relationships between sell-side brokers, their affiliated analysts, and their buy-side clients.

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Cases & Course Materials

  • Harvard Business School Case 614-044

Infection Control at Massachusetts General Hospital

The case explores the challenges facing Massachusetts General Hospital concerning the adoption of a new infection control policy, which promises to improve operational performance, patient safety, and profitability. The new policy requires coordination between different departments within the hospital, namely the Emergency Department, the Infection Control Unit, and Admission Services. Students are initially asked to assess the operational, financial, and clinical implications of the new policy. They are then asked to examine different approaches to its implementation. Objective: The case allows readers to examine a setting where internal coordination across different departments provides significant aggregate benefits for an organization. Coordination in this case, however, also leads to inequitable allocation of costs and benefits across the different departments, which then provides students with an opportunity to explore various implementation challenges and strategies.

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Ministry of Supply is an entrepreneurial venture in the apparel sector. The firm focuses on a specific segment-"performance professional wear"-within the sector, specializing in clothes that use fabrics with high-tech performance features (such as moisture-wicking, deodorizing, and temperature control) to make professional attire (button-down shirts, dress pants, etc.) for men. The firm has had success in fundraising, and its innovative product has garnered it good publicity, but the unusual combination of seemingly contradictory features-performance fabrics commonly used in outdoor leisure activities and a professional look and design-in the product has also generated cognitive challenges among consumers. How, if at all, can the firm increase the sales of its products?

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  • Harvard Business School Case 714-024

Viva Macau (A)

A fast-growing Macau-based airline backed by private U.S. investors faces a dramatic expropriation in the wake of the first change of head of government since the former Portuguese colony became a Special Administrative Region of China. The case allows students to explore what Foreign Direct Investors can do to foresee a possible expropriation event and what options they might consider to protect themselves ex-ante or fight the outcome ex-post.

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  • Harvard Business School Case 114-060

Mara Group

Mara Group is a rapidly growing Pan-African conglomerate run by its entrepreneurial CEO Ashish Thakkar. The case explores Thakkar's decision on which African markets to expand operations.

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