Publications
- March 2015
- Partners or Creditors? Attracting Foreign Investment and Productive Development to Central America and Dominican Republic
Foreign Direct Investment: Effects, Complementarities, and Promotion
Abstract—No abstract available.
Publisher's link: http://publications.iadb.org/bitstream/handle/11319/6820/Socios%20o%20acreedores%20ENG%202-25-15%20web.pdf?sequence=1
- March 2015
- The Routledge Handbook of Responsible Investment
Reliable Sustainability Ratings: The Influence of Business Models on Information Intermediaries
Abstract—A new generation of corporate reporting-integrated reporting-is emerging that will help investors and other key stakeholders such as employees, customers, suppliers, and NGOs develop a deeper and more comprehensive appreciation of corporate performance than what is currently provided by GAAP financial reporting. The purpose of this paper is to examine the optimal design of information intermediaries that can increase the impact of sustainability information on corporate conduct. Specifically, we focus on two issues: who pays for the information and which performance metrics should be included in assessing the sustainability performance of a company.
Publisher's link: http://www.routledge.com/books/details/9780415624510/
Abstract—This article discusses a research program investigating the workings of both the sell and buy sides of financial analysis, tackles how the U.S. securities industry research adds value in financial markets, and evaluates the business model problems that the industry encounters and how the model has been impacted by regulatory changes.
Publisher's link: http://ezp-prod1.hul.harvard.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=101124706&site=ehost-live&scope=site
- March 2015
- Journal of Financial Intermediation
Financial Innovation and Endogenous Growth
Abstract—Is financial innovation necessary for sustaining economic growth? To address this question, we build a Schumpeterian model in which entrepreneurs earn profits by inventing better goods, and profit-maximizing financiers arise to screen entrepreneurs. The model has two novel features. First, financiers engage in the costly but potentially profitable process of innovation: they can invent better methods for screening entrepreneurs. Second, every screening process becomes less effective as technology advances. The model predicts that technological innovation and economic growth eventually stop unless financiers innovate. Empirical evidence is consistent with this dynamic, synergistic model of financial and technological innovation.
Publisher's link: http://www.hbs.edu/faculty/Publication%20Files/financial_innovation_final_7apr2014_a3bd0d92-464d-45af-9e9d-fed885129ee6.pdf
- March 2015
- American Economic Journal: Macroeconomics
A Behavioral Model of the Popularity and Regulation of Demandable Liabilities
Abstract—Overoptimism regarding one's ability to arrive early in a queue is shown to rationalize deposit contracts in which people can withdraw their funds on demand even if consumption takes place later. Capitalized institutions serving overoptimistic depositors emerge in equilibrium even if depositors and bank owners have identical preferences and investment opportunities. Consistent with the evidence, runs can lead people to move their deposits from one intermediary to another. Regulatory policies, including deposit insurance, minimum capital requirements, and restrictions on the assets held by depository institutions can increase the ex ante welfare of depositors.
Working Papers
Capital Requirements, Risk Choice, and Liquidity Provision in a Business Cycle Model
Abstract—This paper develops a quantitative dynamic general equilibrium model in which households' preferences for safe and liquid assets constitute a violation of Modigliani and Miller. I show that the scarcity of these coveted assets created by increased bank capital requirements can reduce overall bank funding costs and increase bank lending. I quantify this mechanism in a two-sector business cycle model featuring a banking sector that provides liquidity and has excessive risk-taking incentives. Under reasonable parameterizations, the marginal benefit of higher capital requirements related to this channel significantly exceeds the marginal cost, indicating that U.S. capital requirements have been sub-optimally low.
Download working paper: http://ssrn.com/abstract=2576277
Design of Search Engine Services: Channel Interdependence in Search Engine Results
Abstract—The authors examine prominent placement of search engines' own services and effects on users' choices. Evaluating a natural experiment in which different results were shown to users who performed similar searches, they find that Google's prominent placement of its Flight Search service increased the clicks on paid advertising listings by more than half while decreasing the clicks on organic search listings by about the same quantity. This effect appears to result from interactions between the design of search results and users' decisions about where and how to focus their attention: users who decide what to click based on listings' relevance became more likely to select paid listings, while users who are influenced by listings' visual presentation and page position became more likely to click on Google's own Flight Search listing. The authors consider implications of these findings for competition policy and for online marketing strategies.
Download working paper: http://www.benedelman.org/publications/gfs-2015-03-09.pdf
Markets with Price Coherence
Abstract—In markets with price coherence, the purchase of a given good via an intermediary is constrained to occur at the same price as a purchase of that same good directly from the seller (or through another competing intermediary). We examine ten markets with price coherence, including their origin and outcomes as well as concerns and policy interventions.
Download working paper: http://www.benedelman.org/publications/pricecoherence-markets-2015-03-12.pdf
Corporate Sustainability: First Evidence on Materiality
Abstract—An increasing number of companies make sustainability investments, and an increasing number of investors integrate sustainability performance data in their capital allocation decisions. To date, however, the prior academic literature has not distinguished between investments in material versus immaterial sustainability issues. We develop a novel dataset by hand-mapping data on sustainability investments classified as material for each industry into firm-specific performance data on a variety of sustainability investments. This allows us to present new evidence on the value implications of sustainability investments. Using calendar-time portfolio stock return regressions we find that firms with good performance on material sustainability issues significantly outperform firms with poor performance on these issues, suggesting that investments in sustainability issues are shareholder-value enhancing. Further, firms with good performance on sustainability issues not classified as material do not underperform firms with poor performance on these same issues, suggesting investments in sustainability issues are at a minimum not value-destroying. Finally, firms with good performance on material issues and concurrently poor performance on immaterial issues perform the best. These results speak to the efficiency of firms' sustainability investments, and also have implications for asset managers who have committed to the integration of sustainability factors in their capital allocation decisions.
Download working paper: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2575912
Cases & Course Materials
- Harvard Business School Case 515-011
Muñoz Group: Sustaining Global Vertical Integration Through Innovation
Muñoz Group, which supplied supermarket chains and food distribution chains around the world with fruit, flowers, juice, and ice cream, was at a strategic crossroads in 2014. CEO Alvaro Muñoz had to choose the best way to achieve profit goals and provide his company with a sustainable competitive advantage. The company had already developed innovative citrus, grape, and flower breeding units in efforts to keep its product pipeline on the cutting edge. The company also worked to integrate vertically-to own or control every viable piece of the supply chain-in an effort to manage the flower and produce businesses from plant to retailer. The company's stronghold was its UK and European markets, but it had expanded into North America and also eyed new opportunities in Asia. Muñoz had to decide where to focus his efforts against a backdrop of margin squeezes in the food business; competition for product from the developing world; ever more stringent quality, sustainability, and environmental standards from clients; and perennial hiring challenges.
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https://cb.hbsp.harvard.edu/cbmp/product/515011-PDF-ENG
- Harvard Business School Case 515-066
JBS
JBS is a Brazilian protein company that started in beef, but has quickly expanded into pork and chicken, taking the business around the world. The company has many critics who say it has expanded too quickly and that it is overextended financially. The case allows the reader to form his or her own opinion and consider whether the success/failure of the company is due to the personal style of the CEO, Wesley Batista. A current issue is the recent expansion of the company into value-added protein products in a division called JBS Foods.
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https://cb.hbsp.harvard.edu/cbmp/product/515066-PDF-ENG
- Harvard Business School Case 515-069
Note on Agriculture in Argentina
This note describes the history of Argentinian agriculture and how it has been affected by government policies and new technologies.
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https://cb.hbsp.harvard.edu/cbmp/product/515069-PDF-ENG
- Harvard Business School Case 515-069
Burberry in 2014
In February 2014, Burberry's chief executive officer Angela Ahrendts is preparing to hand the reins of the English luxury fashion company to chief creative officer Christopher Bailey. Under their partnership, in place since 2006, Burberry's revenues have tripled to more than two billion English pounds, and operating profits have more than doubled. Ahrendts has led Burberry to become a brand that once again stands for luxury and that has a strong global and digital footprint. Yet, the leadership change is met with skepticism. Is Burberry's current strategy also the right one for the future, and can Bailey continue Burberry's transformation?
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https://cb.hbsp.harvard.edu/cbmp/product/515054-PDF-ENG
- Harvard Business School Case 915-401
Peter Guber: The 'Me' vs. 'We' Brand
Well-known film producer Peter Guber must decide whether to commit to a time-consuming personal project. He is about to sign a contract for a business book in which he will share what he has learned in his long career. At the same time, he is keenly aware of problems and uncertainties affecting Mandalay Entertainment, a privately owned company in which he is principal. Mandalay produces movies and television content, owns minor league baseball teams, and is pushing into digital content. Mandalay is trying to reinvigorate its core movie and television businesses, maintain growth in the sports business, and be prepared for the opportunity to buy a major league professional sports franchise. Does Guber eliminate all personal projects and stay tightly focused on guiding his company? On the other hand, there may never be a good time to write a book. He also has to consider the potential impact of a book project on his personal brand and the Mandalay company brand.
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https://cb.hbsp.harvard.edu/cbmp/product/915401-PDF-ENG
- Harvard Business School Case 415-045
Sergio Marchionne at Chrysler
Chrysler recently exited from the bankruptcy process, with U.S. government support and with Sergio Marchionne as CEO. Now was the time to work out how to create synergies with FIAT; how to improve the current manufacturing, product, and distribution-network configuration; and how to define the future product portfolio to compete over the long-term. In 2004, Marchionne was appointed CEO of FIAT Group, headquartered in Turin, Italy, when the company had faced a near-hopeless crisis. He performed an extreme makeover and turned the company around. In 2008 the entire global automotive industry had entered a deep crisis; in response, FIAT and Chrysler had forged a partnership, and Marchionne now found himself in the same situation again.
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https://cb.hbsp.harvard.edu/cbmp/product/415045-PDF-ENG
- Harvard Business School Case 715-010
Syngenta: Committing to Africa
In 2012, Syngenta, one of the world's largest agricultural input companies, committed to build a $1 billion business in Africa over the next 10 years. In mid-2014, CEO Michael Mack and Africa Venture Team head Dimitri Pauwels are reviewing progress. Was the company's commitment to Africa still relevant and achievable?
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https://cb.hbsp.harvard.edu/cbmp/product/715010-PDF-ENG
- Harvard Business School Case 815-108
Venture Capital and Private Equity Simulation Administrators' Guide
No abstract available.
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https://cb.hbsp.harvard.edu/cbmp/product/815108-PDF-ENG
- Harvard Business School Case 915-020
Henry A. Kissinger as Negotiator: Background and Key Accomplishments
Following a brief summary of Henry A. Kissinger's career, this case describes three of his most pivotal negotiations: the historic establishment of U.S. diplomatic relations with the People's Republic of China; the easing of geopolitical tension with the Soviet Union, symbolized by the signing of the first Strategic Arms Limitation Treaty ("SALT I"); and the mediation of the agreement on Sinai disengagement between Egypt and Israel. An appendix lists other important negotiations in which Kissinger played key roles.
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https://cb.hbsp.harvard.edu/cbmp/product/915020-PDF-ENG