First Look

Publications

SuperCorp: How Vanguard Companies Create Innovation, Profits, Growth, and Social Good

Abstract

Supercorp is based on a 3-year study involving more than 350 interviews in 20 countries to identify the leadership practices and operating methods of major companies seeking profitable growth through innovation that benefits society. For example, when the tsunami and earthquake struck India in 2006, IBM did not just write a check. It used its core competence—expertise in technology—and its skilled people to accomplish what government and relief agencies could not: an information system and supply chain that tracked and managed the flow of relief supplies. Its efforts were crucial in avoiding the all-too-familiar problem in disaster relief-chaos and mobs of desperate people. IBM's actions, as well as many others reported on by Rosabeth Moss Kanter, capture the emerging zeitgeist of business: the vanguard company simultaneously pursuing-and creating synergy between-opportunity, growth, profit, humanistic values, and social good. Vanguard companies have a sense of mission enabling them to deliver what their customers want in a way that is significantly better than the competition. As a formula for the future, it brings together the necessity of financial success shareholders demand and the social conscience demanded from the new generation moving up the corporate ranks.

Stimulate Creativity by Fueling Passion

Abstract

People will be most creative when they feel motivated primarily by the interest, enjoyment, satisfaction, and challenge of the work itself—and not by external pressures. This is the "Intrinsic Motivation Principle of Creativity" (Amabile, 1996), and it suggests that the social environment, particularly the presence or absence of external pressures in that environment, can influence creativity by influencing people's passion for their work. Managers can influence the level of creativity in their organizations by establishing work environments that support passion for the work. Intrinsic motivation is the motivation to do work because it is interesting, engaging, or positively challenging. In its highest form, it is called passion and can lead to complete absorption in the work (Csikszentmihalyi, 1990). The elements that make up intrinsic motivation include a sense of self-determination in doing the work (rather than a sense of being a pawn of someone else), a feeling that one's skills are being both fully utilized and further developed, and positive feelings about the work, which may be akin to positive affect or positive emotion (e.g., deCharms, 1968; Deci and Ryan, 1985; Lepper and Greene, 1978).

Log in/subscribe to read more: http://www.blackwellreference.com/public/tocnode?id=g9780631215066_chunk_g978063121506624

Peer-to-Peer File Sharing and the Market for Digital Information Goods

Abstract

We study competitive interaction between two alternative models of digital content distribution over the Internet: peer-to-peer (p2p) file sharing and centralized client-server distribution. We present microfoundations for a stylized model of p2p file sharing where all peers are endowed with standard preferences and show that the endogenous structure of the network is conducive to sharing by a significant number of peers, even if sharing is costlier than freeriding. We build on this model of p2p to analyze the optimal strategy of a profit-maximizing firm, such as Apple, that offers content available at positive prices. We characterize the size of the p2p network as a function of the firm's pricing strategy and show that the firm may be better off setting high prices, allowing the network to survive, and acknowledging that the p2p network may work more efficiently in the presence of the firm than in its absence.

An Exploration of Technology Diffusion

Abstract

We develop a model that, at the aggregate level, is similar to the one sector neoclasscal growth model, while, at the disaggregate level, has implications for the path of observable measures of technology adoption. We estimate our model using data on the diffusion of 15 technologies in 166 countries over the last two centuries. We evaluate the implications of our estimates for aggregate TFP and per capita income. Our results reveal that, on average, countries have adopted technologies 47 years after their invention. There is substantial variation across technologies and countries. Over the past two centuries, newer technologies have been adopted faster than old ones. The cross-country variation in the adoption of technologies accounts for at least a quarter of per capita income differences.

Download the paper: http://www.hbs.edu/research/pdf/08-093.pdf

Was the Wealth of Nations Determined in 1000 B.C.?

Abstract

We assemble a dataset on technology adoption in 1000 B.C., 0 A.D., and 1500 A.D. for the predecessors to today's nation states. We find that this very old history of technology adoption is surprisingly significant for today's national development outcomes. Our strong and robust results are for 1500 A.D. determining per capita income today. We find technological persistence across long epochs: from 1000 B.C. to 0 A.D., from 0 A.D. to 1500 A.D., and from 1500 A..D to the present. Although the data allow only some suggestive tests of rival hypotheses to explain long‐run technological persistence, we find the evidence to be most consistent with a model of endogenous technology adoption where the cost of adopting new technologies declines sufficiently with the current level of adoption. The evidence is less consistent with a dominant role for population as predicted by the semi‐endogenous growth models or for country-level factors like culture, genes, or institutions.

Download the paper: http://www.hbs.edu/research/pdf/09-052.pdf

A Theory of Growth and Volatility at the Aggregate and Firm Level

Abstract

This paper presents an endogenous growth model that explains the evolution of the first and second moments of productivity growth at the aggregate and firm level during the post-war period. Growth is driven by the development of both (i) idiosyncratic R&D innovations and (ii) general innovations that can be freely adopted by many firms. Firm-level volatility is affected primarily by the Schumpeterian dynamics associated with the development of R&D innovations. On the other hand, the variance of aggregate productivity growth is determined mainly by the arrival rate of general innovations. Ceteris paribus, the share of resources spent on development of general innovations, increases with the stability of the market share of the industry leader. As market shares become less persistent, the model predicts an endogenous shift in the allocation of resources from the development of general innovations to the development of R&D innovations. This results in an increase in R&D, an increase in firm-level volatility, and a decline in aggregate volatility. The effect on productivity growth is ambiguous. On the empirical side, this paper documents an upward trend in the instability of market shares. It shows that firm volatility is positively associated with R&D spending, and that R&D is negatively associated with the correlation of growth between sectors which leads to a decline in aggregate volatility.

Download the paper from SSRN ($5): http://www.nber.org/papers/w11503

Synthesis by Microbes or Chemists? Pharmaceutical Research and Manufacturing in the Antibiotic Era

Abstract

This article presents a case study of the rise of Pfizer as a leading pharmaceutical company, with a focus on changing relationships between manufacturing technology and R&D between the mid-1940s and the mid-1960s. Pfizer first moved into pharmaceuticals through participation in the U.S. government's penicillin effort during World War II. Having greatly expanded its biological manufacturing capacity to meet state needs, Pfizer adopted an R&D program to find new microbial antibiotics suited to its manufacturing technology after the war ended. In the 1950s and 1960s, Pfizer transformed itself into a chemistry-orientated pharmaceutical firm by reorienting its R&D toward chemistry. This led to a growing divergence between R&D and manufacturing and the eventual replacement of biological manufacturing with chemical manufacturing. The article explores the changing trajectories of R&D and manufacturing at Pfizer, their shifting positions within the firm, and the consequences of these changes and shifts for the firm's success, strategy, and organization.

A Choice Prediction Competition, for Choices from Experience and from Description

Abstract

Erev, Ert, and Roth organized three choice prediction competitions focused on three related choice tasks: one-shot decisions from description (decisions under risk), one-shot decisions from experience, and repeated decisions from experience. Each competition was based on two experimental datasets: an estimation dataset and a competition dataset. The studies that generated the two datasets used the same methods and subject pool and examined decision problems randomly selected from the same distribution. After collecting the experimental data to be used for estimation, the organizers posted them on the Web, together with their fit with several baseline models, and challenged other researchers to compete to predict the results of the second (competition) set of experimental sessions. Fourteen teams responded to the challenge: the last seven authors of this paper are members of the winning teams. The results highlight the robustness of the difference between decisions from description and decisions from experience. The best predictions of decisions from descriptions were obtained with a stochastic variant of prospect theory assuming that the sensitivity to the weighted value decreases with the distance between the cumulative payoff functions. The best predictions of decisions from experience were obtained with models that assume reliance on small samples. Merits and limitations of the competition method are discussed.

Download the paper: http://ie.technion.ac.il/Home/Users/erev/QuantitativeCompetition_Aug_12_2009.pdf

Self-regulatory Institutions for Solving Environmental Problems: Perspectives and Contributions from the Management Literature

Abstract

Scholars of management have long considered how institutions can help resolve market imperfections and thereby improve human welfare. Most previous research has emphasized the use of for-profit firms. Such institutions cannot effectively address many environmental problems, however, because environmental problems often transcend firm boundaries. As a result, management scholars have begun to explore the use of more distributed institutional forms. In this article, we review the emerging scholarship on the formation and function of self-regulatory institutions.

Download the paper: http://www.people.hbs.edu/mtoffel/publications/King_Toffel_2009.pdf

Clusters and Industrial Districts: Common Roots, Different Perspectives

Introduction to chapter: http://intranet.hbs.edu/dept/drfd/new_publications/papers/Porter-Ketels/clusters.pdf

Board Interlocks and the Propensity to Be Targeted in Private Equity Transactions

Abstract

In this paper, we examine the propensity for U.S. public companies to become targets for private equity-backed, take-private transactions. We consider the characteristics of 483 private equity-backed deals in the 2000-2007 period relative to public companies, and find that, in addition to the financial drivers studied in previous works, board characteristics and director networks are also associated with deal generation. We find that a company that has a director who has had LBO experience through prior board service is approximately 40% more likely to receive a private equity offer, and that the strength of this effect varies with the influence of the director and the quality of the prior LBO experience. This effect is robust to the most likely alternative explanations and supports the idea that directors and social networks play an influential role in change-of-control transactions.